SEACHANGE INTERNATIONAL, INC. Forward-Looking Statements
This Form 10-Q contains or incorporates forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements involve risks and uncertainties. The following information should be read in conjunction with the condensed consolidated financial information and the notes thereto included in this Form 10-Q. You should not place undue reliance on these forward-looking statements. Actual events or results may differ materially due to competitive factors and other factors referred to in Part II, Item 1A. "Risk Factors" in our Annual Report on Form 10-K filed with theSEC onApril 8, 2022 and as amended onMay 26, 2022 (the "Form 10-K"), for our fiscal year endedJanuary 31, 2022 and elsewhere in this Form 10-Q. These factors may cause our actual results to differ materially from any forward-looking statement. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate, and management's beliefs and assumptions. We undertake no obligation to publicly update or revise the statements in light of future developments. In addition, other written or oral statements that constitute forward-looking statements may be made by us or on our behalf. Words such as "expect," "seek," "anticipate," "intend," "plan," "believe," "could," "estimate," "may," "target," "project," or variations of such words and similar expressions are intended to identify such forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict.
Business Overview
SeaChange International, Inc. , ("SeaChange ," the "Company," "we" or similar terms) was incorporated under the laws of the state ofDelaware onJuly 9, 1993 .SeaChange is a leading provider of video delivery, video advertising insertion, streaming enablement and emerging Free Ad-Supported Television ("FAST") products and services for operators, broadcasters and content owners globally.SeaChange's technology portfolio enables clients to launch and grow premium linear TV, direct-to-consumer streaming and FAST channel services on all device types such as Set-Top-Boxes, mobile devices or connected TVs.SeaChange's mission is to maximize the value of video content by providing sophisticated monetization tools that help protect existing and generate new and incremental revenue streams for theSeaChange clients, especially by providing state-of-the art video ad insertion technology to drive advertising revenues across linear TV, streaming and connected TV inventory.SeaChange markets its software products and services worldwide, primarily to service providers including: operators, such as Liberty Global, plc., Altice NV,Cox Communications, Inc. and Rogers Communications, Inc.; telecommunications companies, such as Verizon Communications, Inc., and Frontier Communications Corporation; satellite operators such as Dish Network Corporation; connected TV players such as Hisense VIDAA, or broadcasters.SeaChange serves an exciting global marketplace where content access becomes ubiquitous, and where consumption and monetization continue to transition from linear TV and subscription services to advertising-driven models on connected TVs. With its rich product portfolio and the strategic focus to maximizeSeaChange partners' advertising inventory value with services such as targeting, personalization and multi-screen engagement, the Company is well positioned to expand its market share in the booming global video advertising and streaming markets. ProvidingSeaChange customers with more scalable and cloud-native software platforms enables them to further reduce their infrastructure costs, improve reliability and expand service offerings to their subscribers or viewers. Additionally,SeaChange is well positioned to capitalize on new customers entering the streaming and video advertising marketplace and increasingly serve adjacent markets. Our core technologies provide a foundation for software products and services that can be deployed in next generation video delivery and monetization systems capable of increased levels of subscriber activity and inventory transactions across multiple devices. InJanuary 2021 , our Chief Executive Officer resigned, andRobert Pons , a member of the Board was subsequently appointed Executive Chairman and Principal Executive Officer in the interim. InSeptember 2021 ,Peter Aquino was appointed as the Company's President and Chief Executive Officer. Upon the appointment ofMr. Aquino ,Mr. Pons resigned as the Company's Executive Chairman and Principal Executive Officer, but remained Chairman of the Board until his resignation effectiveJuly 12, 2022 . In connection withMr. Pons' resignation, onJuly 15, 2022 , the Board appointed (i)Peter Aquino as Chairman of the Board, in addition to remaining as the Company's President and Chief Executive Officer, and (ii)Matthew Stecker , a current member of the Board, as Lead Independent Director of the Board. Other changes in management include the resignation ofMichael Prinn , the Executive Vice President, Chief Financial Officer, and Treasurer ofSeaChange onAugust 3, 2022 , effective immediately. Following the resignation, onAugust 3, 2022 , the Board appointedKathleen Mosher as Senior Vice President, Chief Financial Officer and Treasurer of the Company, effectiveAugust 3, 2022 . OnAugust 4, 2022 ,Julian Singer resigned as a member of the Board, effective immediately. OnAugust 5, 2022 ,Igor Volshteyn was elected to the Board as a Class II Director. OnAugust 17, 2022 ,Mr. Aquino delegated his role as President ofSeaChange , 23 -------------------------------------------------------------------------------- to Mr.Christoph Klimmer , the Company's then-current Senior Vice President and Chief Revenue Officer effective immediately, to rebalance executive roles and responsibilities. InFebruary 2021 , the Company filed a Registration Statement on Form S-3 with theSEC , which registered an indeterminate number of securities using a "shelf" registration or continuous offering process. Under this shelf registration, we may, from time to time, sell any combination of the securities in one or more offerings up to a total aggregate offering price of$200 million . The shelf registration was declared effective by theSEC onMarch 16, 2021 . In connection with the shelf registration statement, the Company entered into an underwriting agreement withAegis Capital Corp. onMarch 30, 2021 , to issue and sell 10,323,484 shares of common stock,$0.01 par value per share ("common stock"), at a public offering price of$1.85 per share (the "Offering"). The Offering closed onApril 1, 2021 and resulted in approximately$17.5 million in proceeds, net of underwriting discounts and commissions of 6.5%, or $0.12025 per share of common stock, and offering expenses of approximately$0.2 million . In addition to the Offering, the Company also granted the underwriters a 45-day option (the "Underwriter Option") to purchase up to an additional 1,548,522 shares of common stock at a purchase price of$1.85 per share, less underwriting discounts and commissions. The Underwriter Option was not exercised and has expired. InMarch 2021 , we entered into a Lease Termination Agreement with respect to our former headquarters inWaltham, Massachusetts . Prior to the execution of the Lease Termination Agreement, the sublease had been scheduled to expire inFebruary 2025 . As a result of the Lease Termination Agreement, we expect annualized savings of approximately$0.6 million in facilities costs for each of the next three years.
Termination of Merger Agreement
In
OnJune 13, 2022 ,SeaChange and Triller entered into a Termination Agreement pursuant to whichSeaChange and Triller mutually agreed to terminate the Merger Agreement. Each party bore its own costs and expenses in connection with the terminated transaction, and neither party paid a termination fee to the other in connection with the terminated transactions. The Termination Agreement also contains mutual releases, whereby each party released the other from any claims of liability relating to the transactions contemplated by the Merger Agreement. The Termination Agreement and related documents are summarized in more detail in the Company's Current Report on Form 8-K filed with theSEC onJune 14, 2022 .
Results of Operations
The following discussion summarizes the key factors our management believes are necessary for an understanding of our condensed consolidated financial statements.
Revenue and Gross Profit
The components of our total revenue and gross profit are described in the following table:
For the Three Months For the Six Months
Ended July 31, Change Ended July 31, Change
2022 2021 $ % 2022 2021 $ %
(Amounts in thousands, except for percentage data) (Amounts in thousands, except for percentage data)
Revenue:
Product revenue:
License and
Subscription $ 2,776 $ 2,514 $ 262 10.4 % $ 3,998 $ 4,134 $ (136 ) (3.3 %)
Hardware 210 195 15 7.7 % 1,814 195 1,619 830.3 %
Total product revenue 2,986 2,709 277 10.2 % 5,812 4,329 1,483 34.3 %
Service revenue:
Maintenance and
support 3,288 3,306 (18 ) (0.5 %) 6,227 6,283 (56 ) (0.9 %)
Professional services
and other 1,050 525 525 100.0 % 2,008 980 1,028 104.9 %
Total service revenue 4,338 3,831 507 13.2 % 8,235 7,263 972 13.4 %
Total revenue 7,324 6,540 784 12.0 % 14,047 11,592 2,455 21.2 %
Cost of product
revenue 847 693 154 22.2 % 2,492 1,099 1,393 126.8 %
Cost of service
revenue 1,718 1,730 (12 ) (0.7 %) 3,576 3,545 31 0.9 %
Total cost of revenue 2,565 2,423 142 5.9 % 6,068 4,644 1,424 30.7 %
Gross profit $ 4,759 $ 4,117 $ 642 15.6 % $ 7,979 $ 6,948 $ 1,031 14.8 %
Gross product profit
margin 71.6 % 74.4 % (2.8 %) 57.1 % 74.6 % (17.5 %)
Gross service profit margin 60.4 % 54.8 % 5.6 % 56.6 % 51.2 % 5.4 % Gross profit margin 65.0 % 63.0 % 2.0 % 56.8 % 59.9 % (3.1 %) One customer accounted for 24% of total revenue for the three months endedJuly 31, 2022 . Two customers each accounted for 15% of total revenue and one customer accounted for 12% of total revenue for the three months endedJuly 31, 2021 . Two 24 -------------------------------------------------------------------------------- customers each individually, accounted for 16% and 13% for the six months endedJuly 31, 2022 . One customer accounted for 14% and two customers each accounted for 10% of total revenue for the six months endedJuly 31, 2021 . See Part I, Item I, Note 2, "Significant Accounting Policies," to this Form 10-Q for more information. International revenue accounted for 63% and 43% of total revenue for the three months endedJuly 31, 2022 and 2021, respectively, and 53% and 49% of total revenue for the six months endedJuly 31, 2022 and 2021, respectively. The increase in international sales as a percentage of total revenue for the three months endedJuly 31, 2022 as compared to the three months endedJuly 31, 2021 is primarily attributable to an increase in international revenue of$1.8 million , driven by increased license sales, and a decrease of$1.0 million inU.S. revenue, driven by decreased license sales. The increase in international sales as a percentage of total revenue for the six months endedJuly 31, 2022 as compared to the six months endedJuly 31, 2021 is primarily attributable to an increase in international revenue at a higher rate of increase thanU.S. revenue. The increase to international revenue is driven by higher license sales.
Product Revenue
Product revenue consists of software, both licenses and subscriptions, and third-party hardware and software revenue. In transactions that include hardware and software not provided bySeaChange , the goods are purchased from a third-party provider and we record revenue and cost of goods sold on a gross basis. Product revenue increased by$0.3 million for the three months endedJuly 31, 2022 compared to the three months endedJuly 31, 2021 primarily due to an increase in license and subscription sales. Product revenue increased$1.5 million for the six months endedJuly 31, 2022 compared to the six months endedJuly 31, 2021 , primarily due to the delivery of third-party products, partially offset by a small decrease in license and subscription revenue.
Service Revenue
Service revenue consists of maintenance and support and professional services and other. Service revenue increased by$0.5 million and$1.0 million for the three and six months endedJuly 31, 2022 , respectively, as compared to the three and six months endedJuly 31, 2021 , respectively, primarily due to an increase in professional services revenue which is driven by both increased sales and higher utilization of the professional services team, while maintenance and support revenue remained relatively consistent.
Gross Profit and Margin
Cost of revenue consisted primarily of the cost of resold third-party products and services, purchased components and subassemblies, labor and overhead, testing and implementation, and ongoing maintenance of complete systems.
Our gross profit margin increased 2% for the three months endedJuly 31, 2022 as compared to the three months endedJuly 31, 2021 , reflecting increased utilization of the professional services team. Gross profit margin decreased 3% for the six months endedJuly 31, 2022 as compared to the six months endedJuly 31, 2021 , reflecting an increase in lower margin third-party products. Gross service profit margin increased 6% and 5% for the three and six months endedJuly 31, 2022 , respectively, as compared to the three and six months endedJuly 31, 2021 , respectively, primarily due to an increase in professional services revenue, due to higher utilization of the professional services team, while associated costs remained relatively consistent. Gross product profit margin decreased by 3% and 17% for the three and six months endedJuly 31, 2022 , respectively, as compared to the three and six months endedJuly 31, 2021 , respectively, primarily due to the sale and cost of lower margin third-party products. Operating Expenses Research and Development Research and development expenses consist of salaries and related costs, including stock-based compensation for personnel in software development and engineering functions, contract labor costs, depreciation of development and test equipment and an allocation of related facility expenses. The following table provides information regarding the change in research and development expenses during the periods presented: For the Three Months For the Six Months Ended July 31, Change Ended July 31, Change 2022 2021 $ % 2022 2021 $ % (Amounts in thousands, except for percentage data) (Amounts in thousands, except for percentage data)
Research and development expenses$ 1,956 $ 2,213 $ (257 ) (11.6 %)$ 3,663 $ 4,881 $ (1,218 ) (25.0 %) % of total revenue 26.7 % 33.8 % 26.1 % 42.1 % 25
-------------------------------------------------------------------------------- Research and development expenses decreased by$0.3 million and$1.2 million for the three and six months endedJuly 31, 2022 , respectively, as compared to the three and six months endedJuly 31, 2021 , respectively. The decrease in research and development expenses for the three months endedJuly 31, 2022 was primarily due to a$0.2 million decrease in salaries and compensation costs associated with the reduction in headcount and outside services in relation to cost-saving efforts implemented in fiscal 2022, and a$0.1 million decrease in asset intangible amortization expense. The decrease in research and development expenses for the six months endedJuly 31, 2022 were primarily due to$0.5 million decreases in each of salaries and compensation costs and contract labor associated with the reduction in headcount and outside services in relation to cost-saving efforts implemented in fiscal 2022, and a$0.2 million decrease in intangible asset amortization expense.
Selling and Marketing
Selling and marketing expenses consist of salaries and related costs, including
stock-based compensation for personnel engaged in selling and marketing
functions, commissions, travel expenses, certain promotional expenses and an
allocation of related facility expenses. The following table provides
information regarding the change in selling and marketing expenses during the
periods presented:
For the Three Months For the Six Months
Ended July 31, Change Ended July 31, Change
2022 2021 $ % 2022 2021 $ %
(Amounts in thousands, except for percentage data) (Amounts in thousands, except for percentage data)
Selling and
marketing
expenses $ 934 $ 1,643 $ (709 ) (43.2 %) $ 1,916 $ 3,023 $ (1,107 ) (36.6 %)
% of total
revenue 12.8 % 25.1 % 13.6 % 26.1 %
Selling and marketing expenses decreased by $0.7 million and $1.1 million for
the three and six months ended July 31, 2022 , respectively, as compared to the
three and six months ended July 31, 2021 , respectively. The decreases in selling
and marketing expenses were primarily due to decreases of $0.4 million and $0.6
million in salaries and compensation costs for the three and six months ended
July 31, 2022 , respectively, associated with the reduction in headcount and
outside services in relation to cost-saving efforts implemented in fiscal 2022,
and decreases of $0.2 million and $0.4 million in intangible asset amortization
expenses for the three and six months ended July 31, 2022 , respectively.
General and Administrative
General and administrative expenses consist of salaries and related costs,
including stock-based compensation for personnel in executive, finance, legal,
human resources, information technology and administrative functions, as well as
legal and accounting services, insurance premiums and an allocation of related
facilities expenses. The following table provides information regarding the
change in general and administrative expenses during the periods presented:
For the Three Months For the Six Months
Ended July 31, Change Ended July 31, Change
2022 2021 $ % 2022 2021 $ %
(Amounts in thousands, except for percentage data) (Amounts in thousands, except for percentage data)
General and
administrative
expenses $ 2,108 $ 2,682 $ (574 ) (21.4 %) $ 4,394 $ 4,787 $ (393 ) (8.2 %)
% of total
revenue 28.8 % 41.0 % 31.3 % 41.3 %
General and administrative expenses decreased by $0.6 million and $0.4 million
for the three and six months ended July 31, 2022 , respectively, as compared to
the three and six months ended July 31, 2021 , respectively, The decrease in
general and administrative expenses for the three months ended July 31, 2022
were primarily due to a $0.5 million decrease in share-based compensation
expense and a $0.4 million decrease in legal and outside professional fees,
partially offset by a $0.3 million increase in the provision for bad debts. The
decrease in general and administrative expenses for the six months ended July
31, 2022 were primarily due to a $0.5 million decrease in share-based
compensation expense, a $0.1 million decrease in legal and outside professional
fees and a $0.1 million decrease in salaries and compensation associated with
the reduction in headcount in relation to cost-saving efforts implemented in
fiscal 2022, partially offset by a $0.3 million increase in the provision for
bad debts.
26
--------------------------------------------------------------------------------Severance and Restructuring Costs
Severance consists of employee-related termination benefits and other severance
costs not related to a restructuring plan. Restructuring consists of
employee-related termination benefits and facility closure costs. The following
table provides information regarding the change in severance and restructuring
costs during the periods presented:
For the Three Months For the Six Months
Ended July 31, Change Ended July 31, Change
2022 2021 $ % 2022 2021 $ %
(Amounts in thousands, except for percentage data) (Amounts in thousands, except for percentage data)
Severance and
restructuring costs $ 28 $ 87 $ (59 ) (67.8 %) $ 193 $ 571 $ (378 ) (66.2 %)
% of total revenue 0.4 % 1.3 % 1.4 % 4.9 %
Severance and restructuring costs decreased by $0.1 million and $0.4 million for
the three and six months ended July 31, 2022 , respectively, as compared to the
three and six months ended July 31, 2021 , respectively. Severance and
restructuring costs for the three months ended July 31, 2022 were less than $0.1
million . Severance and restructuring costs for the six months ended July 31,
2022 consisted primarily of employee-related termination benefits in the amount
of $0.2 million .
Transaction Costs
Transaction costs related to the terminated Merger totaled
Loss on Impairment of
As a result of the significant decrease in our publicly quoted share price and market capitalization during the second quarter of 2022, we performed a quantitative test of our goodwill as ofJuly 31, 2022 . As a result of this quantitative test, we identified an impairment to goodwill resulting in recognition of a$5.8 million non-cash goodwill impairment charge for the three and six months endedJuly 31, 2022 . There were no impairment charges recorded during the three or six months endedJuly 31, 2021 .
Other Income (Expense), Net
The table below provides detail regarding our other income (expense), net:
For the Three Months For the Six Months
Ended July 31, Change Ended July 31, Change
2022 2021 $ % 2022 2021 $ %
(Amounts in thousands, except for percentage data) (Amounts in thousands, except for percentage data)
Interest income,
net $ 90 $ 82 $ 8 9.8 % $ 165 $ 108 $ 57 52.8 %
Foreign exchange
loss, net (61 ) 62 (123 ) (198.4 %) (418 ) (201 ) (217 ) 108.0 %
Miscellaneous
income, net 7 68 (61 ) (89.7 %) 30 77 (47.00 ) (61.0 %)
$ 36 $ 212 $ (176 ) $ (223 ) $ (16 ) $ (207 ) Our foreign exchange loss, net is primarily due to the revaluation of intercompany notes.
Income Tax Provision
We recorded income tax benefits of less than$0.1 million for the three and six months endedJuly 31, 2022 and 2021. Our effective tax rate in fiscal 2023 and in future periods may fluctuate on a quarterly basis as a result of changes in our jurisdictional forecasts where losses cannot be benefitted due to the existence of valuation allowances on our deferred tax assets, changes in actual results versus our estimates, or changes in tax laws, regulations, accounting principles or interpretations thereof. We review all available evidence to evaluate the recovery of deferred tax assets, including the recent history of losses in all tax jurisdictions, as well as our ability to generate income in future periods. As ofJuly 31, 2022 , due to the uncertainty related to the ultimate use of certain deferred income tax assets, we have recorded a valuation allowance on certain deferred assets. 27 -------------------------------------------------------------------------------- We file income tax returns in theU.S. federal jurisdiction, various state jurisdictions and various foreign jurisdictions. We have closed out an audit with the Internal Revenue Service for ourU.S. income tax returns through fiscal 2013; however, the taxing authorities will still have the ability to review the propriety of certain tax attributes created in closed years if such tax attributes are utilized in an open tax year, such as our federal research and development credit carryovers.
Liquidity and Capital Resources
The following table includes key line items of our condensed consolidated
statements of cash flows:
For the Six Months
Ended July 31,
2022 2021
(Amounts in thousands)
Net cash used in operating activities $ (2,602 ) $ (4,333 )
Net cash (used in) provided by investing activities (20 ) 175
Net cash provided by financing activities 7
17,599
Effect of exchange rate changes on cash, cash equivalents and restricted cash (615 ) (242 ) Net (decrease) increase in cash, cash equivalents and restricted cash$ (3,230 ) $ 13,199 Historically, we have financed our operations and capital expenditures primarily with our cash and investments. Our cash, cash equivalents, and restricted cash totaled$14.6 million as ofJuly 31, 2022 . In the first six months of fiscal 2022, we entered into the Lease Termination Agreement with respect to our former headquarters inWaltham, Massachusetts . In connection with the early termination of the sublease the Company paid the sublandlord a termination payment of approximately$0.4 million against an obligation of approximately$2.8 million . Prior to the execution of the Lease Termination Agreement, the sublease had been scheduled to expire inFebruary 2025 . As a result of the Lease Termination Agreement, we expect annualized savings of approximately$0.6 million in facilities costs for each of the next three years. Additionally, in the first six months of fiscal 2022, we issued and sold 10,323,484 shares of common stock at a public offering price of$1.85 per share. The Offering resulted in approximately$17.5 million in proceeds, net of underwriting discounts and commissions of 6.5%, or $0.12025 per share of common stock, and Offering expenses of approximately$0.2 million . We believe that existing cash and cash equivalents and cash expected to be provided by future operating activities will be adequate to satisfy our working capital, capital expenditure requirements and other contractual obligations for at least 12 months from the date of this filing. If our expectations are incorrect, we may need to raise additional funds to fund our operations or take advantage of unanticipated strategic opportunities in order to strengthen our financial position. In the future, we may enter into other arrangements for potential investments in, or acquisitions of, complementary businesses, services or technologies, which could require us to seek additional equity or debt financing. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of market opportunities, to develop new products or to otherwise respond to competitive pressures.
Continued Nasdaq Listing
OnJune 17, 2022 , the Company received a deficiency letter from the Staff notifying the Company that, for the last 30 consecutive business days, the closing bid price for the Company's common stock has been below the Minimum Bid Price Requirement. The Nasdaq deficiency letter has no immediate effect on the listing of the Company's common stock, and its common stock will continue to trade on The Nasdaq Global Select Market under the symbol "SEAC" at this time. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been given 180 calendar days, or untilDecember 14, 2022 , to regain compliance with the Minimum Bid Price Requirement. If at any time beforeDecember 14, 2022 , the bid price of the Company's common stock closes at$1.00 per share or more for a minimum of 10 consecutive business days, the Staff will provide written confirmation that the Company has achieved compliance. If the Company does not regain compliance with the Minimum Bid Price Requirement byDecember 14, 2022 , the Company may be afforded a second 180 calendar day period to regain compliance. To qualify, the Company would be required to transfer to The Nasdaq Capital Market, to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, except for the Minimum Bid Price Requirement. In addition, the Company would be required to notify Nasdaq of its intent to cure the deficiency during the second compliance period. Following a transfer to The Nasdaq Capital Market, the Company will be afforded the second 180 calendar day period to regain 28 -------------------------------------------------------------------------------- compliance, unless it does not appear to Nasdaq that it is possible for the Company to cure the deficiency. If the Company does not regain compliance with the Minimum Bid Price Requirement by the end of the compliance period (or the second compliance period, if applicable), the Company's common stock will become subject to delisting. In the event that the Company receives notice that its common stock is being delisted, the Nasdaq listing rules permit the Company to appeal a delisting determination by the Staff to a hearings panel. The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider available options to regain compliance with the Minimum Bid Price Requirement, including initiating a reverse stock split. However, there can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement or will otherwise be in compliance with other Nasdaq Listing Rules.
Net cash used in operating activities
Net cash used in operating activities was$2.6 million for the six months endedJuly 31, 2022 . Net cash used in operating activities was primarily the result of our net loss of$6.7 million , offset by a$5.8 million non-cash goodwill impairment charge,$0.1 million non-cash expense for depreciation and amortization, a$0.5 million non-cash expense for stock-based compensation, a$0.4 million non-cash foreign currency transaction loss and a$0.3 million increase in allowance for doubtful accounts, and changes in working capital, which include a$1.9 million decrease in accounts receivable, a$1.6 million increase in unbilled receivables, a$0.1 million decrease in prepaid expenses and other current assets and other assets, a$0.9 million decrease in accounts payable and a$0.2 million decrease in deferred revenue. Net cash used in operating activities was$4.3 million for the six months endedJuly 31, 2021 . Net cash used in operating activities was primarily the result of our net loss of$3.8 million , a$0.7 million non-cash expense for depreciation and amortization, a$1.0 million non-cash expense for stock-based compensation, a$0.3 million non-cash gain on the write-off of our operating lease right-of-use assets and liabilities in relation to theWaltham lease termination, a$2.4 million non-cash gain on extinguishment of debt related to the fully forgiven Paycheck Protection Program ("PPP") note, a$0.2 million non-cash foreign currency transaction loss, and changes in working capital, which include a$0.6 million decrease in accounts receivable, a$1.2 million decrease in unbilled receivables, a$0.4 million decrease in prepaid expenses and other current assets and other assets, a$0.5 million decrease in accounts payable, a$0.2 million decrease in accrued expenses and other liabilities, and a$1.1 million decrease in deferred revenue.
Net cash (used in) provided by investing activities
Net cash used in investing activities was less than$0.1 million for the six months endedJuly 31, 2022 due to purchases of property and equipment. Net cash provided by investing activities was$0.2 million for the six months endedJuly 31, 2021 due to proceeds from the sales and maturities of our marketable securities, partially offset by purchases of property and equipment.
Net cash provided by financing activities
The Company had less than$0.1 million in financing activities for the six months endedJuly 31, 2022 . Net cash provided by financing activities was$17.6 million for six months endedJuly 31, 2021 due to$17.5 million in proceeds from the issuance of common stock, net of issuance costs and$0.1 million in proceeds from stock option exercises.
Impact of COVID-19 Pandemic
COVID-19 was declared a pandemic by theWorld Health Organization onMarch 11, 2020 . In the first quarter of fiscal 2021, concerns related to the spread of COVID-19 created global business disruptions as well as disruptions in the Company's operations and created potential negative impacts on its revenues and other financial results. However, the duration and intensity of the COVID-19 pandemic and any resulting disruption to the Company's operations remains uncertain, and the Company will continue to assess the impact of the COVID-19 pandemic on its business, financial condition, liquidity, and financial results. The Company continues to conduct business with substantial modifications to employee travel, employee work locations, virtualization or cancellation of customer and employee events, and remote sales, implementation, and support activities, among other modifications. These decisions may delay or reduce sales and harm productivity and collaboration. The Company has observed other companies and governments making similar alterations to their normal business operations, and in general, the markets are experiencing a significant level of uncertainty at the current time. Virtualization of theSeaChange team's sales activities could foreclose future business opportunities, particularly as its customers limit spending, which could negatively impact the willingness of the Company's customers to enter into or renew contracts.SeaChange continues to realize its on-going cost optimization efforts in response to the impact of the pandemic. The Company may take further actions that alter its business operations as the situation evolves. 29 --------------------------------------------------------------------------------
Critical Accounting Policies and Significant Judgments and Estimates
We prepare our condensed consolidated financial statements in accordance with GAAP. The preparation of condensed consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. There have been no material changes to our critical accounting policies and estimates during the six months endedJuly 31, 2022 from those disclosed in our financial statements and the related notes and other financial information included in our Form 10-K on file with theSEC , except for additional updated disclosures as described in Part I, Item I, Note 2, "Significant Accounting Policies, Revenue Recognition" of this Form 10-Q.
Off-Balance Sheet Arrangements
During the periods presented herein, we did not have, and we do not currently
have, any off-balance sheet arrangements, as defined in the rules and
regulations of the
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Part I, Item I, Note 2, "Significant Accounting Policies" to this Form 10-Q for more information.
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