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 quarterly period ended ~~October~~April 3130, ~~2022~~2023

☐ 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: 001-38828

SEACHANGE INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)


Delaware		04-3197974
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

177 Huntington Ave, Ste 1703 PMB 73480, Boston, MA		02115
(Address of principal executive offices)		(Zip Code)

(978) 897-0100

(Registrant’s telephone number, including area code)

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, $0.01 par value per share	SEAC	The Nasdaq ~~Global~~Capital ~~Select~~ Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 the 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 ☒

The number of shares outstanding of the registrant’s Common Stock on ~~December~~June 9, ~~2022~~2023 was 502,~~189~~584,~~458.~~293 (This number represents post-reverse stock split shares.)

SEACHANGE INTERNATIONAL, INC.

Table of Contents

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)	3
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows (Unaudited)	65
	Notes to Condensed Consolidated Financial Statements (Unaudited)	76
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2321
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3026
Item 4.	Controls and Procedures	3026
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	3128
Item 1A.	Risk Factors	3128
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3128
Item 3.	Defaults Upon Senior Securities	3128
Item 4.	Mine Safety Disclosures	3128
Item 5.	Other Information	3128
Item 6.	Exhibits	3129
SIGNATURES		3330

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

SEACHANGE INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	October 31,			January 31,
	April 30,			January 31,
	2022			2022
	2023			2023
	(Unaudited)			(Audited)
Assets
Current assets:
Cash and cash equivalents	$	1413,~~498~~790		$	1713,~~528~~415
Accounts receivable, net of allowance for doubtful accounts of $585 and $500 at October 31, 2022 and January 31, 2022, respectively		7,011			8,819
Marketable securities, available for sale, fair value		1,409			1,244
Unbilled receivables, net		9,350			9,160
Accounts receivable, net of allowances for credit losses		7,362			10,382
Prepaid expenses and other current assets		2,545			2,310
Unbilled receivables, net of allowances for credit losses		8,354			7,757
Total current assets		33,404			37,817
Prepaid expenses and other current assets		2,834			2,314
Property and equipment, net		686			902
Total current assets		33,749			35,112
Operating lease right-of-use assets		1,392			2,031
Property and equipment, net		670			713
Goodwill		-			9,882
Operating lease right-of-use assets		1,215			1,360
Unbilled receivables, net		2,680			3,952
Unbilled receivables, net of allowances for credit losses		4,659			5,044
Other assets		~~404~~415			~~612~~430
Total assets	$	3840,~~566~~708		$	5542,~~196~~659
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	31,~~529~~852		$	21,~~960~~541
Accrued expenses		2,~~825~~352			43,~~217~~813
Deferred revenue		25,~~507~~087			35,~~947~~172
Total current liabilities		89,~~861~~291			1110,~~124~~526
Deferred revenue		4792			77130
Operating lease liabilities		~~787~~489			~~1,361~~691
Taxes payable		98			~~110~~98
Other liabilities		3			—3
Total liabilities		9,~~796~~973			1211,~~672~~448
Commitments and contingencies (Note 5)
Stockholders' equity:
Stockholders’ equity:
Common stock, $0.01 par value per share; 100,000,000 shares authorized; 50,361,378 shares issued and 50,189,458 shares outstanding at October 31, 2022; 49,347,604 shares issued and 49,175,684 shares outstanding at January 31, 2022		503			493
Common stock, $0.01 par value per share; 100,000,000 shares authorized; 2,533,482 shares issued and 2,524,886 shares outstanding at April 30, 2023; 2,519,319 shares issued and 2,510,723 shares outstanding at January 31, 2023		25			25
Additional paid-in capital		~~266~~267,~~352~~481			~~265~~267,~~644~~120
Treasury stock, at cost; 171,920 shares at October 31, 2022 and January 31, 2022		(227	)		(227	)
Treasury stock, at cost; 8,596 shares at April 30, 2023 and January 31, 2023		(227	)		(227	)
Accumulated other comprehensive loss		(21,~~314~~795	)		(~~973~~1,890	)
Accumulated deficit		(~~235~~234,~~544~~749	)		(~~222~~233,~~413~~817	)
Total stockholders' equity		28,770			42,524
Total stockholders’ equity		30,735			31,211
Total liabilities and stockholders' equity	$	38,566		$	55,196
Total liabilities and stockholders’ equity	$	40,708		$	42,659

Share information reflects the effect of a 1-for-20 reverse stock split. See Note 1.

See accompanying notes to the unaudited condensed consolidated financial statements.

SEACHANGE INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

(In thousands, except per share data)

	For the Three MonthsEnded October 31,						For the Nine MonthsEnded October 31,
	For the Three Months Ended April 30,
	2022			2021			2022			2021
	2023			2022
Revenue:
Product	$	21,~~183~~540		$	32,~~511~~826		$	~~7,995~~		$	~~7,840~~
Service		65,~~105~~452			3,~~640~~897			~~14,340~~			~~10,903~~
Total revenue		86,~~288~~992			76,~~151~~723			~~22,335~~			~~18,743~~
Cost of revenue:
Product		~~1,622~~971			1,~~609~~645			~~4,114~~			~~2,708~~
Service		1,~~511~~868			1,~~830~~858			~~5,087~~			~~5,375~~
Total cost of revenue		32,~~133~~839			3,~~439~~503			~~9,201~~			~~8,083~~
Gross profit		54,~~155~~153			3,~~712~~220			~~13,134~~			~~10,660~~
Operating expenses:
Research and development		21,~~012~~797			21,~~090~~707			~~5,675~~			~~6,971~~
Selling and marketing		~~1,086~~907			~~1,449~~982			~~3,002~~			~~4,472~~
General and administrative		2,~~085~~113			2,~~110~~286			~~6,479~~			~~6,897~~
Severance and restructuring costs		~~379~~44			75165			~~572~~			~~646~~
Transaction costs		598			—816			~~1,203~~			—
Loss on impairment of goodwill		3,255			—			9,098			—
Total operating expenses		4,959			5,956
Total operating expenses		8,822			5,724			26,029			18,986
Loss from operations		(806	)		(2,736	)
Loss from operations		(3,667	)		(2,012	)		(12,895	)		(8,326	)
Other income (expense), net		141			(259	)
Other expense, net		(20	)		(67	)		(243	)		(83	)
Loss before income taxes		(665	)		(2,995	)
Gain on extinguishment of debt		—			—			—			2,440
Income tax provision		(49	)		(1	)
Loss before income taxes		(3,687	)		(2,079	)		(13,138	)		(5,969	)
Net loss	$	(714	)	$	(2,996	)
Income tax (benefit) provision		(3	)		26			(7	)		(23	)
Net loss per share, basic and diluted	$	(0.28	)	$	(1.21	)
Net loss	$	(3,684	)	$	(2,105	)	$	(13,131	)	$	(5,946	)
Weighted average common shares outstanding, basic and diluted		2,521			2,469
Net loss per share, basic and diluted	$	(0.07	)	$	(0.04	)	$	(0.26	)	$	(0.13	)
Comprehensive loss:
Weighted average common shares outstanding, basic and diluted		50,291			49,040			49,599			46,334
Net loss	$	(714	)	$	(2,996	)
Comprehensive loss:
Other comprehensive income (loss), net of tax:
Net loss	$	(3,684	)	$	(2,105	)	$	(13,131	)	$	(5,946	)
Foreign currency translation adjustments		105			(576	)
Other comprehensive loss, net of tax:
Unrealized losses on marketable securities		(10	)		—
Foreign currency translation adjustments		(290	)		(291	)		(1,341	)		(649	)
Total other comprehensive income (loss)		95			(576	)
Unrealized gains on marketable securities		—			—			—			1
Comprehensive loss	$	(619	)	$	(3,572	)
Total other comprehensive loss		(290	)		(291	)		(1,341	)		(648	)
Comprehensive loss	$	(3,974	)	$	(2,396	)	$	(14,472	)	$	(6,594	)

Share and per share information reflects the effect of a 1-for-20 reverse stock split. See Note 1.

See accompanying notes to the unaudited condensed consolidated financial statements.

SEACHANGE INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands, except number of shares)

	Common Stock				Additional						AccumulatedOther						Total
	Number ofShares		Par Value		Paid-inCapital			TreasuryStock			ComprehensiveLoss			AccumulatedDeficit			Stockholders'’ Equity
Balances at July 31, 2022		50,176,824	$	501	$	266,177		$	(227	)	$	(2,024	)	$	(231,860	)	$	32,567
Balances at January 31, 2023		2,519,319	$	25	$	267,120		$	(227	)	$	(1,890	)	$	(233,817	)	$	31,211
Issuance of common stock pursuant to vesting of restricted stock units		184,554		2		(2	)		—			—			—			—
Cumulative adjustment pursuant to adoption of ASC 326		—		—		—			—			—			(218	)		(218	)
Stock-based compensation expense		—		—		177			—			—			—			177
Issuance of common stock pursuant to vesting of stock units		14,163		—		—			—			—			—			—
Foreign currency translation adjustments		—		—		—			—			(290	)		—			(290	)
Stock-based compensation expense		—		—		361			—			—			—			361
Net loss		—		—		—			—			—			(3,684	)		(3,684	)
Unrealized losses on marketable securities		—		—		—			—			(10	)		—			(10	)
Balances at October 31, 2022		50,361,378	$	503	$	266,352		$	(227	)	$	(2,314	)	$	(235,544	)	$	28,770
Foreign currency translation adjustments		—		—		—			—			105			—			105
	Common Stock				Additional						AccumulatedOther						Total
Net loss		—		—		—			—			—			(714	)		(714	)
	Number ofShares		Par Value		Paid-inCapital			TreasuryStock			ComprehensiveLoss			AccumulatedDeficit			Stockholders'Equity
Balances at April 30, 2023		2,533,482	$	25	$	267,481		$	(227	)	$	(1,795	)	$	(234,749	)	$	30,735
Balances at July 31, 2021		49,212,173	$	492	$	264,972		$	(227	)	$	(430	)	$	(218,824	)	$	45,983
Stock-based compensation expense		—		—		274			—			—			—			274
Foreign currency translation adjustments		—		—		—			—			(291	)		—			(291	)
Net loss		—		—		—			—			—			(2,105	)		(2,105	)
Balances at October 31, 2021		49,212,173	$	492	$	265,246		$	(227	)	$	(721	)	$	(220,929	)	$	43,861


	Common Stock				Additional					Accumulated Other						Total
	Number of Shares		Par Value		Paid-in Capital		Treasury Stock			Comprehensive Loss			Accumulated Deficit			Stockholders' Equity
Balances at January 31, 2022		2,467,380	$	25	$	266,112	$	(227	)	$	(973	)	$	(222,413	)	$	42,524
Issuance of common stock pursuant to vesting of stock units		3,556		—		—		—			—			—			—
Stock-based compensation expense		—		—		284		—			—			—			284
Foreign currency translation adjustments		—		—		—		—			(576	)		—			(576	)
Net loss		—		—		—		—			—			(2,996	)		(2,996	)
Balances at April 30, 2022		2,470,936	$	25	$	266,396	$	(227	)	$	(1,549	)	$	(225,409	)	$	39,236

Share information reflects the effect of a 1-for-20 reverse stock split. See Note 1.

See accompanying notes to the unaudited condensed consolidated financial statements.

SEACHANGE INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands, except number of shares)

	Common Stock				Additional						AccumulatedOther						Total
	Number ofShares		Par Value		Paid-inCapital			TreasuryStock			ComprehensiveLoss			AccumulatedDeficit			Stockholders'Equity
Balances at January 31, 2022		49,347,604	$	493	$	265,644		$	(227	)	$	(973	)	$	(222,413	)	$	42,524
Issuance of common stock pursuant to vesting of restricted stock units		1,013,774		10		(10	)		—			—			—			—
Stock-based compensation expense		—		—		711			—			—			—			711
Foreign currency translation adjustments		—		—		—			—			(1,341	)		—			(1,341	)
Short swing profit settlement		—		—		7			—			—			—			7
Net loss		—		—		—			—			—			(13,131	)		(13,131	)
Balances at October 31, 2022		50,361,378	$	503	$	266,352		$	(227	)	$	(2,314	)	$	(235,544	)	$	28,770
	Common Stock				Additional						AccumulatedOther						Total
	Number ofShares		Par Value		Paid-inCapital			TreasuryStock			ComprehensiveLoss			AccumulatedDeficit			Stockholders'Equity
Balances at January 31, 2021		37,811,224	$	378	$	246,446		$	(227	)	$	(73	)	$	(214,983	)	$	31,541
Issuance of common stock pursuant to vesting of restricted stock units		981,927		10		(10	)		—			—			—			—
Issuance of common stock pursuant to exercise of stock options		95,538		1		136			—			—			—			137
Issuance of common stock, net of issuance costs		10,323,484		103		17,359			—			—			—			17,462
Stock-based compensation expense		—		—		1,315			—			—			—			1,315
Unrealized gains on marketable securities		—		—		—			—			1			—			1
Foreign currency translation adjustments		—		—		—			—			(649	)		—			(649	)
Net loss		—		—		—			—			—			(5,946	)		(5,946	)
Balances at October 31, 2021		49,212,173	$	492	$	265,246		$	(227	)	$	(721	)	$	(220,929	)	$	43,861

See accompanying notes to the unaudited condensed consolidated financial statements.

SEACHANGE INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

	For the Nine MonthsEnded October 31,
	For the Three Months Ended April 30,
	2022			2021
	2023			2022
Cash flows from operating activities:
Net loss	$	(~~13,131~~714	)	$	(52,~~946~~996	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		187			1,098
Depreciation expense		64			67
Loss on disposal of fixed assets		—			75
Discount accretion and premium amortization on marketable securities		(8	)		—
Gain on write-off of operating lease right-of-use assets and liabilities related to termination		—			(328	)
Provision for credit losses		34			88
Gain on extinguishment of debt		—			(2,440	)
Stock-based compensation expense		361			284
Provision for bad debts		256			(135	)
Realized and unrealized foreign currency transaction loss		84			357
Stock-based compensation expense		711			1,315
Realized and unrealized foreign currency transaction loss		547			399
Loss on impairment of goodwill		9,098			—
Other		—			1
Changes in operating assets and liabilities:
Accounts receivable		13,~~477~~156			~~709~~1,351
Unbilled receivables, net		~~927~~(564	)		~~397~~104
Prepaid expenses and other current assets and other assets		(~~240~~455	)		~~2,007~~(359	)
Accounts payable		~~683~~284			(93652	)
Accrued expenses and other liabilities		(1,~~241~~572	)		~~(230~~79	)
Deferred revenue		(~~1,394~~91	)		~~(2,329~~934	)
Net cash used in operating activities		(2,120	)		(5,500	)
Net cash provided by (used in) operating activities		579			(743	)
Cash flows from investing activities:
Purchases of property and equipment		~~(124~~—	)		(7815	)
Proceeds from sales and maturities of marketable securities		—			252
Proceeds from sales of marketable securities		500			—
Net cash (used in) provided by investing activities		(124	)		174
Purchases of marketable securities		(667	)		—
Cash flows from financing activities:
Net cash used in investing activities		(167	)		(15	)
Proceeds from stock option exercises		—			137
Effect of exchange rate on cash, cash equivalents and restricted cash		(26	)		(328	)
Proceeds from issuance of common stock, net of issuance costs		—			17,462
Net increase (decrease) in cash, cash equivalents and restricted cash		386			(1,086	)
Proceeds from short swing profit settlement		7			—
Cash, cash equivalents and restricted cash at beginning of period		13,726			17,856
Net cash provided by financing activities		7			17,599
Cash, cash equivalents and restricted cash at end of period	$	14,112		$	16,770
Effect of exchange rate on cash, cash equivalents and restricted cash		(838	)		(467	)
Net (decrease) increase in cash, cash equivalents and restricted cash		(3,075	)		11,806
Cash, cash equivalents and restricted cash at beginning of period		17,856			6,084
Cash, cash equivalents and restricted cash at end of period	$	14,781		$	17,890
Supplemental disclosure of cash flow information
Income tax payments	$	205		$	132
Non-cash activities:
Purchases of property and equipment included in accounts payable	$	—		$	72
Cumulative adjustment to retained earnings pursuant to adoption of ASC 326	$	(218	)	$	—

See accompanying notes to the unaudited condensed consolidated financial statements.

SEACHANGE INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Nature of Business and Basis of Presentation

SeaChange International, Inc. (“SeaChange,” or the “Company”~~, "we" or similar terms~~), was incorporated under the laws of the state of Delaware on July 9, 1993. SeaChange is ana ~~industry~~leading ~~leader~~provider inof ~~the~~video delivery ~~of multiscreen~~, advertising, streaming platforms, and ~~premium~~emerging ~~over~~Free Ad-~~the-top~~Supported Streaming TV services (“~~OTT~~FAST”) ~~video management solutions~~development. ~~The~~Our ~~Company’s~~ software products and services facilitate the aggregation, licensing, management and distribution of video and advertising content for service providers, telecommunications companies, satellite operators, broadcasters and other content providers. ~~The~~SeaChange ~~Company~~technology enables ~~service~~operators, ~~providers~~broadcasters, and content owners to ~~offer~~cost-effectively ~~other~~launch ~~interactive~~and ~~television~~grow ~~services~~premium ~~that~~linear ~~allow~~TV ~~subscribers~~and direct-to-consumer ~~receive~~streaming ~~personalized~~ services ~~and~~to ~~interact~~manage, ~~with~~curate, and monetize their ~~video~~content. ~~devices,~~SeaChange ~~thereby~~helps ~~enhancing~~protect ~~their~~existing ~~viewing~~and ~~experience~~develop new and incremental advertising revenues for traditional linear TV and streaming services with its unique advertising technology. Further, the Company’s products provide customers an opportunity to insert advertising into broadcast and video on demand (“VOD”) content.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.”) (“GAAP”). The Company consolidates the financial statements of its wholly owned subsidiaries and all intercompany transactions and account balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation.

The accompanying unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with the instructions to Quarterly Report on Form 10-Q and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to applicable rules and regulations, although the Company believes the disclosures made are adequate to make the information not misleading. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for a fair presentation. The year-end condensed consolidated balance sheet data as of January 31, ~~2022~~2023 was derived from our audited consolidated financial statements and may not include all disclosures required by GAAP. The results of operations for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2022~~2023 are not necessarily indicative of the results to be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 31, ~~2022~~2023, filed with the SEC on April 817, ~~2022 and as amended on May 26, 2022~~2023.

Liquidity

~~The~~As of April 30, 2023, the Company had $1413.58 million of available cash asand cash equivalents and $1.4 million of ~~October~~marketable 31securities, ~~2022,~~ excluding $0.3 million of restricted cash.

The Company believes that existing cash and cash equivalents, marketable securities and cash expected to be provided by future operating results will be adequate to satisfy its working capital, capital expenditure requirements and other contractual obligations for at least 12 months from the date of this filing.

If the Company’s expectations are incorrect, it may need to raise additional funds to fund its operations or take advantage of unanticipated strategic opportunities in order to strengthen its financial position. In the future, the Company may enter into other arrangements for potential investments in, or acquisitions of, complementary businesses, services or technologies, which could require itus to seek additional equity or debt financing. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of market opportunities, to develop new products or to otherwise respond to competitive pressures.

~~Impact~~Notice of ~~COVID-19~~Delisting ~~Pandemic~~or Failure to Satisfy a Continued Listing Rule or Standard and Reverse Stock Split

~~COVID-19~~On ~~was~~June ~~declared~~17, a2022, ~~pandemic~~the byCompany received notification from the ~~World~~Listing ~~Health~~Qualifications ~~Organization~~Department onof ~~March~~The ~~11,~~Nasdaq ~~2020~~Stock Market (“Nasdaq”) stating that the Company did not comply with the minimum $1.00 Inbid price requirement for continued listing set forth in Nasdaq (the ~~first~~“Bid ~~quarter~~Price ofRequirement”). ~~fiscal~~In ~~2021~~accordance with Nasdaq listing rules, ~~concerns~~the ~~related~~Company was afforded 180 calendar days (until December 14, 2022) to regain compliance with the ~~spread~~Bid ofPrice ~~COVID-19~~Requirement. ~~created~~On ~~global~~December ~~business~~15, ~~disruptions~~2022, asthe ~~well~~Company asreceived ~~disruptions~~written innotice from Nasdaq stating that, although the Company’s ~~operations~~had ~~and~~not ~~created~~regained ~~potential~~compliance ~~negative~~with ~~impacts~~the onBid ~~its~~Price ~~revenues~~Requirement ~~and~~by ~~other~~December ~~financial~~14, ~~results.~~2022, ~~However~~in accordance with Nasdaq listing rules, the ~~duration~~Company ~~and~~is ~~intensity~~eligible offor ~~the~~an ~~COVID-19~~additional ~~pandemic~~180 ~~and~~calendar ~~any~~day ~~resulting~~period, ~~disruption~~or until June 12, 2023 (the “Extended Compliance Date”), to regain compliance with the ~~Company~~Bid Price Requirement. Nasdaq’s ~~operations~~determination ~~remains~~was ~~uncertain~~based on, ~~and~~among other things, (1) the Company’s ~~will~~written ~~continue~~notice of its intention to ~~assess~~transfer ~~the~~to ~~impact~~The ofNasdaq Capital Market (the ~~COVID-19~~“Capital ~~pandemic~~Market”) (as issuers on ~~its~~The ~~business,~~Nasdaq ~~financial~~Global ~~condition,~~Select ~~liquidity,~~Market ~~and~~(the ~~financial~~“Global ~~results.~~Select Market”) are not eligible for an additional 180-day compliance

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 the SeaChange team’s sales activities could foreclose future business opportunities, particularly as its customers limit spending, which could negatively 6

7period) and to cure the deficiency by the Extended Compliance Date by effecting a reverse stock split, if necessary, and (2) the Company meeting the continued listing requirement for market value of publicly held shares and all other initial listing requirements for the Capital Market, with the exception of the Bid Price Requirement. On December 15, 2022, Nasdaq approved the Company’s transfer from the Global Select Market to the Capital Market, a continuous trading market that operates in substantially the same manner as the Global Select Market.

~~impact~~In an effort to regain compliance with the ~~willingness~~Bid Price Requirement, on April 6, 2023, the Company's board of directors (the “Board”) approved a discretionary reverse stock split of the Company’s ~~customers~~common stock in the range of 1-for‑15 shares and 1‑for-25 shares (the “Reverse Stock Split”), subject to ~~enter~~stockholder ~~into~~approval orat ~~renew~~the ~~contracts~~Company’s annual meeting of stockholders held on May 19, 2023 (the “Annual Meeting”). ~~SeaChange~~At ~~continues~~the Annual Meeting, the stockholders approved the Reverse Stock Split at a ratio in the range of 1-for-15 to ~~realize~~1-for-25, ~~its~~with onsuch ratio to be determined at the discretion of the Board. On May 19, 2023, the Board approved a reverse stock split of 1-~~going~~for-20 ~~cost~~to ~~optimization~~also ~~efforts~~be effective as of May 19, 2023. As a result of the Reverse Stock Split, every 20 shares of the Company’s issued and outstanding common stock was automatically combined into one issued and outstanding share of common stock, without any change in ~~response~~the par value per share. No fractional shares were issued as a result of the Reverse Stock Split. Instead, any fractional shares of Common Stock that would have otherwise resulted from the Reverse Stock Split were rounded up to the ~~impact~~nearest whole share. The Certificate of Amendment did not amend the ~~pandemic~~number of authorized shares of common stock, which remained unchanged at 100,000,000 shares. The ~~Company~~common ~~may~~stock ~~take~~began ~~further~~trading ~~actions~~on ~~that~~a ~~alter~~post-split ~~its~~basis ~~business~~on ~~operations~~Nasdaq as of the ~~situation~~open ~~evolves.~~of trading on May 23, 2023.

~~Notice~~Proportionate adjustments were made to the exercise price and number of ~~Delisting~~shares orissuable ~~Failure~~upon the exercise of the options outstanding under the Company’s equity incentive plans, and the number of shares subject to ~~Satisfy~~restricted astock ~~Continued~~units ~~Listing~~(“RSUs”), ~~Rule~~deferred orstock ~~Standard~~units (“DSUs”) and performance stock units (“PSUs”) under the Company’s equity incentive plans.

OnAll ~~June~~references ~~17,~~to ~~2022,~~common ~~the Company received a deficiency letter from the Nasdaq Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that~~stock, ~~for~~equity-based ~~the last 30 consecutive business days, the closing bid price for the Company’s~~ common stock ~~has~~awards ~~been~~and ~~below~~all ~~the~~share ~~minimum~~and ~~$1.00~~ per share ~~required~~data ~~for~~contained ~~continued~~in ~~listing~~this onQuarterly ~~The~~Report ~~Nasdaq~~on ~~Global~~Form ~~Select~~10-Q ~~Market pursuant to Nasdaq Listing Rule 5450~~(~~a)(1)~~this ~~(the~~ “~~Minimum~~Form ~~Bid Price Requirement~~10-Q”). ~~The~~have ~~Nasdaq~~been ~~deficiency~~adjusted ~~letter~~to ~~has~~reflect ~~no immediate effect on~~ the ~~listing~~Reverse ofStock ~~the~~Split ~~Company’s~~unless ~~common~~explicitly ~~stock,~~stated ~~and its common stock will continue to trade on The Nasdaq Global Select Market under the symbol “SEAC” at this time~~otherwise.

InFrom ~~accordance~~the ~~with~~May ~~Nasdaq~~23, ~~Listing~~2023 ~~Rule~~date ~~5810(c)(3)(A),~~that the Company's ~~has~~common ~~been~~stock ~~given~~began ~~180~~trading ~~calendar~~on ~~days,~~a orpost-split ~~until~~basis ~~December~~on 14Nasdaq, ~~2022, to regain compliance with~~ the ~~Minimum~~Company ~~Bid~~has ~~Price~~maintained ~~Requirement.~~a Ifminimum ~~at any time before December 14, 2022, the~~ bid price of ~~the Company’s common stock closes at~~ $1.00 per common share orin ~~more~~excess ~~for a minimum~~ of 10 consecutive business days, as required under the ~~Staff~~Bid ~~will~~Price ~~provide~~Requirement, ~~written~~and, ~~confirmation~~on ~~that~~June 7, 2023, Nasdaq notified the Company ~~has~~that ~~achieved~~it had regained compliance with the Bid Price Requirement.

IfMerger ~~the~~Agreement Company does not regain compliance with the Minimum Bid Price Requirement by December 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~~Subsequent 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 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.Termination

~~The~~In ~~Company~~December ~~intends~~2021, ~~to monitor~~ the ~~closing~~Company ~~bid~~and ~~price~~Triller ofHold ~~its~~Co ~~common stock and may~~LLC, ifa ~~appropriate,~~Delaware ~~consider~~limited ~~available~~liability ~~options~~company ~~to regain compliance with the Minimum Bid Price Requirement~~(“Triller”), ~~including~~entered ~~initiating~~into aan ~~reverse~~Agreement ~~stock~~and ~~split.~~Plan ~~However,~~of ~~there~~Merger ~~can~~(the be“Merger noAgreement”) ~~assurance~~pursuant ~~that~~to ~~the~~which ~~Company~~Triller ~~will~~planned ~~be able~~ to ~~regain~~merge ~~compliance~~ with ~~the~~and ~~Minimum~~into ~~Bid~~SeaChange, ~~Price Requirement or will otherwise be in compliance~~ with ~~other~~the ~~Nasdaq~~separate ~~Listing~~existence ~~Rules.~~of ~~The~~Triller ~~Company~~ceasing, ~~filed~~and anSeaChange ~~application~~continuing toas bethe ~~listed~~surviving ~~on The Nasdaq Capital Market on December 6, 2022~~corporation.

In December 2021, the Company and Triller Hold Co LLC, a Delaware limited liability company (“Triller”), entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) pursuant to which Triller planned to merge with and into SeaChange, with the separate existence of Triller ceasing and SeaChange continuing as the surviving corporation (the “Merger”).

On June 13, 2022, SeaChange and Triller entered into a Termination Agreement and Release (the “Termination Agreement”) pursuant to which SeaChange 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 the SEC on June 14, 2022. Transaction costs related to the Merger and charged to the condensed consolidated statements of operations and comprehensive loss amounted to less than $1.2 million for the nine months ended October 31, 2022.

Significant Accounting Policies

Use of Estimates

The preparation of these unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosure of contingent assets and liabilities. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, those related to revenue recognition, allowance for ~~doubtful~~credit ~~accounts~~losses, ~~goodwill and intangible assets, impairment of long-lived assets,~~ management’s going concern assessment, accounting for income taxes, and the valuation of stock-based awards. The Company bases its estimates on historical experience, known trends and other market-specific or relevant factors that are believed to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ materially from those estimates or assumptions.

management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include cash on hand and on deposit and highly liquid investments in ~~money~~treasury ~~market~~bills ~~mutual~~with ~~funds~~remaining maturities at the date of purchase of 90 days or less. All cash equivalents are carried at cost, which approximates fair value. Restricted cash represents cash that is restricted as to withdrawal or usage and consists primarily of cash held as collateral in relation to obligations set forth by the landlord of ~~the~~our ~~Company’s~~facility ~~Poland~~in ~~facility~~Poland.

The following table provides a summary of (i) cash and cash equivalents and (ii) restricted cash in the condensed consolidated statements of cash flows as of the periods presented:

	As of October 31,
	As of April 30,
	2022		2021
	2023		2022
	(Amounts in thousands)
Cash and cash equivalents	$	1413,~~498~~790	$	1716,~~551~~465
Restricted cash		~~283~~322		~~339~~305
Total cash, cash equivalents and restricted cash	$	14,~~781~~112	$	1716,~~890~~770


	As of January 31,
	2023		2022
	(Amounts in thousands)
Cash and cash equivalents	$	13,415	$	17,528
Restricted cash		311		328
Total cash, cash equivalents and restricted cash	$	13,726	$	17,856

Restricted cash is included as a component of other assets in the condensed consolidated balance sheets.

	As of January 31,
	2022		2021
	(Amounts in thousands)
Cash and cash equivalents	$	17,528	$	5,856
Restricted cash		328		228
Total cash, cash equivalents and restricted cash	$	17,856	$	6,084

Marketable Securities

The Company’s investments, consisting of debt securities, are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive loss in stockholders’ equity. Realized gains and losses and declines in value determined to be other than temporary are based on the specific identification method and are included as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.

The Company assesses its available-for-sale debt securities under the available-for-sale debt security impairment model in ASC 326 as of each reporting date in order to determine if a portion of any decline in fair value below carrying value recognized on its available-for-sale debt securities is the result of a credit loss. The Company records credit losses in the condensed consolidated statements of operations and comprehensive loss as credit loss expense within other expense, net, which is limited to the difference between the fair value and the amortized cost of the marketable security. To date, the Company has not recorded any credit losses on its available-for-sale debt securities.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

•

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

•

Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

•

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company’s cash equivalents and marketable securities are carried at fair value determined according to the fair value hierarchy described above. The carrying values of accounts and other receivables, unbilled receivables, net, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

~~The~~Accounts ~~Company’s~~Receivable, ~~quantitative~~Unbilled ~~goodwill impairment tests performed as of July 31~~Receivables, ~~2022~~ and ~~October~~Allowance ~~31, 2022 (see Note 4~~ for ~~further~~Credit ~~details) utilized unobservable inputs (Level 3), including projections of future revenue and operating income.~~Losses

Trade accounts receivable are recorded at invoiced amounts, net of allowance for credit losses, if applicable, and are unsecured and do not bear interest. Unbilled receivables are derived from the allocation of contract consideration for products and services, such as software licenses, which is recognized when such products and services are transferred to the customer. Payment for unbilled

receivables is received over the contract term, which typically ranges between one and five years. Unbilled receivables are presented net of allowances for credit losses.

The allowance for credit losses is based on the probability of future collection under the current expect credited loss (“CECL”) impairment model under ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Assets, which was adopted by the Company on February 1, 2023, as discussed below within Recently Adopted Accounting Pronouncements. Under the CECL impairment model, the Company determines its allowance by applying a loss-rate method based on an aging schedule using the Company’s historical loss rate. The Company also considers reasonable and supportable current information in determining its estimated loss rates, such as external forecasts, macroeconomic trends or other factors including customers’ credit risk and historical loss experience. The adequacy of the allowance is evaluated on a regular basis. Account balances are written off after all means of collection are exhausted and the balance is deemed uncollectible. Subsequent recoveries are credited to the allowance. Changes in the allowance are recorded as adjustments to the provision for credit losses in the period incurred.

Prior to February 1, 2023, trade and unbilled receivables were presented net of allowance for credit losses based on the credit risk of specific clients, past collection history, and management’s evaluation of other risks. Subsequent to February 1, 2023, under the CECL impairment model, expected credit losses stemming from unbilled receivables expected to be billed between one to five years from each balance sheet are estimated based on factors such as projected inflation, projected decreases in GDP, and projected unemployment, which include additional risk premiums based on the lengths of contracts.

Concentration of Credit Risk and of Significant Customers

Financial instruments, which potentially expose the Company to concentrations of credit risk, include cash, cash equivalents, ~~and~~ restricted cash, marketable securities and accounts receivable. The Company has cash investment policies which, among other things, limit investments to investment-grade securities ~~and corporate bonds~~. The Company restricts its cash equivalents and marketable securities to repurchase agreements with major banks and U.S. government and corporate securities, ~~some of~~ which are subject to ~~certain~~ credit and market ~~risks~~risk, and are currently protected by limits offered through the Securities Investor Protection Corporation. The Company performs ongoing credit evaluations of ~~its~~the Company’s customers.

9On March 10, 2023, one of the financial institutions that the Company has accounts, Silicon Valley Bank (“SVB”), was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (the "FDIC") as receiver. To protect depositors, the FDIC transferred all deposits and substantially all of the assets of SVB to a receivership bank to be operated by FDIC as it markets the institution to potential bidders. In addition, the FDIC ultimately guaranteed all of our deposits formerly held with SVB. At the time of the SVB closure, the Company had funds deposited with SVB in various domestic and foreign accounts totaling approximately $5.0 million. On March 13, 2023, the receivership bank opened, and the Company had access to its accounts and has since transferred $5.0 million to other financial institutions.

The Company sells its software products and services worldwide primarily to service providers consisting of operators, telecommunications companies, satellite operators and broadcasters. ~~Two~~A ~~customers~~single ~~each~~customer accounted for 1314% ~~of total revenue for the three months ended October 31, 2022~~ and ~~one customer accounted for 19~~26% of total revenue for the three months ended ~~October~~April 3130, ~~2021.~~2023 ~~One~~and ~~customer~~2022, ~~accounted for 15% of total revenue for the nine months ended October 31~~respectively, ~~2022~~ and ~~one~~a single customer accounted for 1222% ofand ~~total revenue for the nine months ended October 31, 2021. One customer accounted for 10~~21% of the combined accounts receivable, net and unbilled receivables, net balance as of ~~October~~April 3130, ~~2022.~~2023 ~~Two customers each accounted for 10% of the combined accounts receivable, net~~ and ~~unbilled receivables, net balance as of~~ January 31, ~~2022~~2023, respectively.

Goodwill and Other Intangible Assets

The Company records goodwill when consideration paid in a business acquisition exceeds the value of the net assets acquired. The Company estimates of fair value are based upon assumptions believed to be reasonable at that time but such estimates are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate and unanticipated events or circumstances may occur, which may affect the accuracy or validity of such assumptions, estimates or actual results.

Goodwill is tested for impairment annually on August 1st each year, and more frequently if events and circumstances indicate that the asset might be impaired. The Company has determined it is a single reporting unit for the purpose of conducting the goodwill impairment assessment. A goodwill impairment charge is recorded if the amount by which the Company’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Factors that could lead to a future impairment include material uncertainties such as a significant reduction in projected revenues, a deterioration of projected financial performance, future acquisitions and/or mergers, and a decline in the Company’s market value as a result of a significant decline in the Company’s stock price.

As a result of the significant decrease in the Company’s publicly quoted share price and market capitalization during the second quarter of fiscal year 2023, the Company accelerated its annual impairment test and performed a quantitative test of its goodwill as of July 31, 2022. As a result of this analysis, the Company recognized a $5.8 million non-cash impairment charge during the second quarter of fiscal year 2023.

In the current fiscal quarter ending October 31, 2022, the Company performed a quantitative test of its goodwill as of October 31, 2022 due to continued decline in the Company's publicly quoted share price and market capitalization, and recognized a non-cash impairment charge of $3.3 million. As a result of this non-cash impairment charge, goodwill was fully written off the balance sheet as of October 31, 2022. See Note 4 for further details. There were no triggering events or impairment charges during the three and nine months ended October 31, 2021.

Intangible assets are recorded at their estimated fair values at the date of acquisition. The Company amortizes intangible assets over their estimated useful lives based on the pattern of consumption of the economic benefits or, if that pattern cannot be readily determined, on a straight-line basis.

Revenue Recognition

Overview

The Company recognizes revenue following the guidance under Accounting Standards Codification (“ASC”) ~~Topic~~ 606, Revenue from Contracts with Customers. The Company’s revenue is derived from sales of software licenses and associated third-party hardware and support services, as well as professional services and support fees related to the Company’s software licenses.

The Company recognizes revenue from contracts with customers using a five-step model, which is described below:

•

identify the customer contract;

•

identify performance obligations in the contract;

•

determine the transaction price;

•

allocate the transaction price to the performance obligations; and

•

recognize revenue as the performance obligations are satisfied.

Identify the customer contract

A customer contract is generally identified when there is approval and commitment from both the Company and its customer, the rights have been identified, payment terms are identified, the contract has commercial substance and collectability and consideration is probable.

Identify performance obligations in the contract

The Company enters into contracts that include combinations of license, support and professional services, and third-party products, which are accounted for as separate performance obligations. A performance obligation is a promise to provide a distinct good or service or a series of distinct goods or services. A good or service that is promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and a company’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

Determine the transaction price

The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding sales and value-added taxes ("VAT") that are collected on behalf of government agencies. Some contracts provide the customer a license to use the Company’s functional intellectual property in exchange for royalty payments. These arrangements may include fixed, minimum guaranteed amounts of consideration as well as a variable amount that is contingent on the revenues earned by the customer related to the license.

Allocate the transaction price to the contract performance obligations

The Company’s contracts typically contain multiple performance obligations. The transaction price is allocated to each performance obligation based on the relative standalone selling prices (“SSP”) of the goods or services being provided to the customer for which it accounts for individual performance obligations separately.

Recognize revenue as the performance obligations are satisfied

The Company’s ~~enters into~~ contracts ~~that~~may ~~include~~contain ~~combinations~~multiple ~~of license, support and professional services, and third-party products, which are accounted for as separate~~ performance obligations with differing revenue recognition patterns. Revenue is recognized when or as control of the promised goods or services is transferred to customers. The Company’s software licenses may be perpetual, whereby the customer receives rights to use the software for an indefinite time period, or the license may be for a specified term. Transfer of the license and revenue recognition, including minimum guaranteed license royalties, occurs at the point in time the customer has the ability to download, use or access the software. Variable license royalties contingent on customer sales of products are recognized when the subsequent sales occur and the contingency is resolved. The Company’s customers may also contract for a Software as a Service (“SaaS”) offering whereby the customer only has a right to access the Company'’s software for a defined term. SaaS licenses are recognized ratably over the subscription period beginning on the date the license is made available to customers.

The Company’s services revenue is comprised of support services and professional services. Support services consist of software upgrades on a when-and-if available basis, telephone support, bug fixes or patches and general hardware maintenance support. Revenue related to support services is recognized ratably over the term of the contract. Professional services are recognized as the services are performed.

Revenues attributable to third-party products typically consist of hardware and related support contracts. Hardware products are typically recognized when control is transferred to the customer, which is defined as the point in time when the client can use and benefit from the hardware. In situations where the hardware is distinct and it is delivered before services are provided and is functional without services, control is transferred upon delivery or acceptance by the customer. Revenue attributable to third-party support contracts is recognized ratably over the term of the contract.

Significant Judgments

The Company’s contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Once the Company determines the performance obligations, it determines the transaction price, which includes estimating the amount of variable consideration to be included in the transaction price, if any. The Company then allocates the transaction price to each performance obligation in the contract based on the SSP. The corresponding revenue is recognized as the related performance obligations are satisfied.

Judgment is required to determine the SSP for each distinct performance obligation. The Company determines SSP based on the observable ~~prices~~price of goods and services when the Company sells those goods and services separately in similar circumstances to similar customers. The Company estimates the SSP of certain goods and services when there is no directly observable separate pricing under the guidance of ASC 606-10-32-33. If the SSP is not observable through past transactions, the SSP is estimated, taking into account available information such as market conditions, expected margins and internally approved pricing guidelines related to the performance obligations. The Company enters into contracts with its customers that may include promises to transfer multiple performance obligations in the arrangement, such as software licenses, support, and professional services. The total fee of the contract may consist of one fixed price for all of the performance obligations or each performance obligation may be separately stated in the contract. Regardless of how the performance obligations are priced in the contract, the

1110

~~Company~~account ~~must~~available ~~determine~~information ~~the~~such transaction price to be allocated to each identified performance obligation. The Company recognizes the portion of the transaction price allocated to the software license on a residual basis. The residual basis is used to allocate revenue when the contract arrangement includes a software license and has at least one performance obligation for which the SSP is observable (i.e., hardware and/or support services). The residual method is used as ~~the~~market selling price for software licenses in circumstances when the transaction price is highly variable and the SSP is not discernable from past transactions or other observable evidence. The Company periodically re-evaluates its use of the residual approach estimate compared to all available observable data before concluding the estimate is representative of SSP. In these contractsconditions, ~~the~~expected ~~Company typically has observable SSP for the associated support services~~margins, and ~~hardware,~~internally ifapproved ~~applicable.~~pricing ~~The~~guidelines ~~Company~~related ~~also provides SaaS offerings, combining access~~ to the ~~Company's~~performance ~~software platform with support services (inclusive of technical support and unspecified upgrades and bug fixes). The SaaS offering and support services are stand ready~~ obligations ~~with the same pattern of transfer of control~~. SaaS offerings do not include the right for the customer to take possession of the software during the contract term. Typically, SaaS offerings include one distinct performance obligation, satisfied over time, with revenue recognized ratably over the contract term as the customer consumes the services.

~~Services~~The ~~revenue~~Company isenters ~~comprised~~into ofcontracts ~~software~~with ~~license~~its ~~implementation,~~customers ~~engineering,~~that ~~training~~may ~~and~~include ~~reimbursable~~promises ~~expenses.~~to ~~Services~~transfer ~~are~~multiple ~~sold~~performance onobligations ~~both~~in athe ~~standalone~~arrangement, ~~basis~~such ~~and~~ as ~~part~~software oflicenses, ~~our~~support, ~~customer~~and ~~contracts~~professional services. The ~~Company~~total ~~has~~fee ~~concluded~~of ~~these~~the ~~services~~contract ~~are~~may ~~typically~~consist ~~distinct~~of one fixed price for all of the performance obligations. ~~For~~or ~~implementation,~~each ~~engineering~~performance ~~and~~obligation ~~training~~may ~~services,~~be ~~revenue~~separately isstated ~~recognized~~in onthe ancontract. ~~input~~Regardless ~~method~~of ashow ~~hours~~the performance obligations are ~~incurred~~priced ~~and~~in ~~services~~the ~~are~~contract, ~~provided~~the ~~compared~~Company must determine the transaction price to ~~total~~be ~~estimated~~allocated ~~hours~~to each identified performance obligation. The Company ~~estimates~~recognizes the ~~SSP~~portion ~~for~~of ~~fixed~~the transaction price ~~services~~allocated ~~based~~to onthe ~~estimated~~software ~~hours~~license ~~adjusted~~on ~~for~~a ~~historical~~residual ~~experience~~basis. ~~using~~The ~~the~~residual ~~time~~basis ~~and~~is ~~materials~~used ~~rates~~to ~~charged~~allocate inrevenue ~~standalone~~when ~~service~~the ~~arrangements.~~contract ~~When~~arrangement ~~sold~~includes on a ~~time~~software license and ~~materials~~has ~~basis,~~at ~~SSP~~least one performance obligation for ~~services~~which isthe ~~determined~~SSP byis observable ~~prices~~(i.e., inhardware ~~standalone~~and/or ~~service~~support ~~arrangements~~services). ~~Certain~~The ~~engineering~~residual ~~services~~method ~~sold~~is ~~with~~used ~~support~~as ~~contracts~~the ~~are~~selling ~~not~~price ~~distinct~~for software licenses in circumstances when the ~~context~~transaction ofprice ~~the~~is ~~contract~~highly variable and ~~those~~the ~~services~~SSP ~~are~~is ~~bundled~~not ~~with~~discernable from past transactions or other ~~distinct~~observable ~~services~~evidence. The Company periodically re-evaluates its use of the residual approach estimate compared to ~~form~~all aavailable ~~single~~observable ~~stand~~data ~~ready~~before ~~performance~~concluding ~~obligation~~the ~~which~~estimate is ~~recognized~~representative ~~ratably~~of ~~over~~SSP. In these contracts, the ~~relevant~~Company ~~service~~typically ~~period~~has observable SSP for the associated support services, and hardware, if applicable.

The Company ~~has~~also ~~utilized~~provides ~~the~~SaaS ~~cost-plus~~offerings, ~~margin~~combining ~~method~~access to ~~determine~~ the ~~SSP~~Company’s ~~for~~ software platform with support services ~~offerings~~(inclusive of technical support and ~~hardware~~unspecified ~~sales~~upgrades ~~when~~and ~~observable~~bug ~~standalone~~fixes). ~~pricing~~The ~~for~~SaaS offering and support ~~service~~services are stand-ready obligations with the same pattern of transfer of control. SaaS offerings ~~are~~do not ~~readily~~include ~~available~~the right for the customer to take possession of the software during the contract term. ~~When~~Typically, ~~support~~SaaS offerings include one distinct performance obligation, satisfied over time, with revenue recognized ratably over the contract term as the customer consumes the services. Services revenue is comprised of software license implementation, engineering, training and reimbursable expenses. Services are sold on anboth “a lastandalone ~~carte”~~ basis ~~with~~and as part of the Company’s ~~software~~customer ~~offerings,~~contracts. ~~the~~The Company has concluded these services are typically ~~determines~~distinct ~~the~~performance ~~SSP~~obligations. ofFor ~~these~~implementation, ~~support~~engineering and training services, ~~based~~revenue is recognized on ~~this~~an ~~pricing~~input ~~relationship~~method as hours are incurred and ~~observable~~services ~~data~~are ~~from~~provided ~~standalone~~compared ~~sales~~to oftotal ~~support~~estimated ~~contracts~~hours. The ~~expected~~Company ~~cost-plus~~estimates ~~margin~~the SSP for ~~hardware~~fixed isprice services based on ~~the~~estimated ~~cost~~hours ofadjusted for historical experience using the ~~hardware~~time ~~from~~and ~~third~~materials ~~parties,~~rates ~~plus~~charged in standalone service arrangements. When sold on a ~~reasonable~~time ~~markup~~and ~~that~~materials ~~the~~basis, ~~Company~~SSP ~~believes~~for services is ~~reflective~~determined by observable prices in standalone service arrangements. Certain engineering services sold with support contracts are not distinct in the context of the contract and those services are bundled with other distinct services to form a ~~market~~single stand-~~based~~ready ~~reseller~~performance ~~margin~~obligation which is recognized ratably over the relevant service period.

~~Some~~The ~~contracts~~Company ~~have~~has ~~payment~~utilized ~~terms that differ from~~ the ~~timing~~cost-plus ofmargin ~~revenue~~method ~~recognition, which requires the Company~~ to ~~assess~~determine ~~whether~~ the ~~transaction~~SSP ~~price~~ for ~~those~~software ~~contracts~~support ~~include~~services aofferings ~~significant~~and ~~financing~~hardware ~~component.~~sales ~~The~~when ~~Company~~observable ~~has~~standalone ~~elected~~pricing ~~the~~for ~~practical~~support ~~expedient~~service ~~that~~offerings ~~permits~~are annot ~~entity~~readily toavailable. ~~not~~When ~~adjust~~support ~~for~~services ~~the~~are ~~effects~~sold ofon an “a-la-carte” ~~significant~~basis ~~financing~~with ~~component if~~ the Company’s ~~expects~~software ~~that at the contract inception~~offerings, the ~~period~~Company ~~between~~typically ~~when~~determines the ~~entity~~SSP ~~transfers~~of athese ~~promised~~support ~~good~~services orbased ~~service~~on tothis apricing ~~customer~~relationship and ~~when~~observable ~~the~~data ~~customer~~from ~~pays~~standalone ~~for~~sales ~~that~~of ~~good~~support ~~or service, will be one year or less~~contracts. ~~For~~The ~~those~~expected ~~contracts in which the period exceeds the one~~cost-~~year~~plus ~~threshold,~~margin ~~this~~for ~~assessment,~~hardware asis ~~well~~based ason the ~~quantitative~~cost ~~estimate~~ of the ~~financing~~hardware ~~component~~from ~~and~~third ~~its relative significance~~parties, ~~requires~~plus ~~judgment.~~a ~~The~~reasonable ~~Company~~markup ~~estimates~~that the ~~significant~~Company ~~financing~~believes ~~component~~is ~~provided~~reflective ~~to its customers with extended payment terms by determining the present value~~ of ~~the~~a ~~future~~market-based ~~payments~~reseller ~~by applying an average standard industry discount rate that reflects the customer’s creditworthiness~~margin.

Some contracts have payment terms that differ from the timing of revenue recognition, which requires the Company to assess whether the transaction price for those contracts includes a significant financing component. The Company has elected the practical expedient that permits an entity to not adjust for the effects of a significant financing component if the Company expects that at the contract inception, the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service, will be one year or less. For those contracts in which the period exceeds the one-year threshold, this assessment, as well as the quantitative estimate of the financing component and its relative significance, requires judgment. The Company estimates the significant financing component provided to its customers with extended payment terms by determining the present value of the future payments by applying an average standard industry discount rate that reflects the customer’s creditworthiness.

Payment terms with customers typically require payment 30 days from invoice date. Agreements with customers do not provide for any refunds for services or products and therefore no specific reserve for such is maintained. In the infrequent instances where customers raise a concern over delivered products or services, the Company has endeavored to remedy the concern and all costs related to such matters have been insignificant in all periods presented.

The Company occasionally enters into amendments to previously executed contracts that may constitute contract modifications. The amendments are assessed to determine if (1) the additional products and services are distinct from the product and services in the original arrangement; and (2) the amount of consideration expected for the added products and services reflects the SSP of those products and services. An amendment or contract modification meeting both criteria is accounted for as a separate contract. A contract modification not meeting both criteria is considered a change to the original contract and is accounted for on either a prospective basis as a termination of the existing contract and the creation of a new contract or a cumulative catch-up basis.

Contract Balances

When either party to a contract has performed, an entity shall present the contract in the statement of financial position as a contract asset or a contract liability, depending on the relationship between the entity’s performance and the customer’s payment. An entity shall present any unconditional rights to consideration separately as a receivable. Contract liabilities, which consist primarily of

1211

~~consist primarily of~~ deferred revenue as of ~~October~~April 3130, ~~2022~~2023 and January 31,~~2022~~ 2023, are classified as current liabilities if expected to be invoiced or recognized within the next year. There were no contract assets as of ~~October~~April 3130, ~~2022~~2023 and January 31, ~~2022~~2023.

Costs to Obtain and Fulfill a Contract

The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year. The Company has determined that commissions and special incentive payments (“Spiffs”) for hardware and software maintenance and support and professional services paid under ~~its~~the Company’s sales incentive programs meet the requirements to be capitalized under ASC 340-40. Costs to obtain a contract are amortized as selling and marketing expense over the expected period of benefit in a manner that is consistent with the transfer of the related goods or services to which the asset relates. Significant judgments made in determining the amount of costs capitalized include whether the commissions are in fact incremental and would not have occurred absent the customer contract, and the estimate of the amortization period. The commissions and Spiffs related to professional services are amortized over time as work is completed. The commissions and Spiffs for hardware and software maintenance are amortized over the life of the contract. These costs are periodically reviewed for impairment. The Company determined that no impairment of these assets existed as of ~~October~~January 31, ~~2022~~2023 or ~~January 31,~~ 2022. The Company has elected to apply the practical expedient and recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. Total deferred capitalized commission costs were $~~208~~144 thousand ~~as of October 31, 2022~~ and $~~297~~162 thousand as of April 30, 2023 and January 31, ~~2022~~2023, respectively. Current deferred capitalized commission costs are included in prepaid expense and other current assets in the Company’s condensed consolidated balance sheets and non-current deferred capitalized commission costs are included in other assets in the Company’s condensed consolidated balance sheets. Capitalized commissions expensed during the three ~~and nine~~ months ended ~~October~~April 3130, ~~2022~~2023 ~~were $19 thousand~~ and ~~$90~~2022 ~~thousand, respectively, and during the three and nine months ended October 31, 2021~~ were $5918 thousand and $~~182~~37 thousand, respectively, and are included in the condensed consolidated statement of operations and comprehensive loss.

Leases

The Company accounts for leases in accordance with ASC Topic 842, Leases. A contract is accounted for as a lease when the Company has the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines if an arrangement is a lease or contains an embedded lease at inception. For arrangements that meet the definition of a lease, the Company determines the initial classification and measurement of its right-of-use operating lease asset and corresponding liability at the lease commencement date. The Company determines the classification and measurement of a modified lease at the date it is modified. The lease term includes only renewal options that are reasonably assured to exercise. The present value of lease payments is typically determined by using the Company’s estimated secured incremental borrowing rate for the associated lease term as interest rates implicit in the leases are not normally readily determinable. Management’s policy is to utilize the practical expedient to not record leases with an original term of twelve months or less on the Company’s condensed consolidated balance sheets, and lease payments are recognized in the condensed consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term.

The Company’s existing leases are for facilities only. None of our leases are with related parties. In addition to rent, office leases may require the Company to pay additional amounts for taxes, insurance, maintenance and other expenses, which are generally referred to as non-lease components. As a practical expedient, the Company accounts for the non-lease components together with the lease components as a single lease component for all leases. Only the fixed costs for leases are accounted for as a single lease component and recognized as part of a right-of-use asset and liability.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss byavailable ~~the~~to ~~weighted average number of unrestricted~~ common ~~shares~~stockholders ~~outstanding during the period. Diluted net loss per share is computed~~ by ~~dividing net loss by~~ the ~~sum of the~~ weighted average number of unrestricted common shares outstanding during the period and the weighted average number of potential common shares from the assumed exercise of stock options and the vesting of shares of restricted stock units, performance stock units and deferred stock units using the “treasury stock” method when the effect is not anti-dilutive. ~~In periods in which we report a net loss, diluted net loss per share is the same as basic net loss per share.~~

Diluted net loss per share is computed by dividing net loss by the sum of the weighted average number of unrestricted common shares outstanding during the period and the weighted average number of potential common shares from the assumed exercise of stock options and the vesting of shares of RSUs , DSUs , and PSUs using the “treasury stock” method when the effect is not anti-dilutive. For periods in which the Company reports a net loss, diluted net loss per share is the same as basic net loss per share.

The number of common shares used in the computation of diluted net loss per share for the periods presented does not include the effect of the following potentially outstanding common shares because the effect would have been antidilutive:


	For the Three Months Ended April 30,
	2023		2022
	(Amounts in thousands)
Stock options		33		61
RSUs and DSUs		98		61
PSUs		42		15
		173		137

	For the Three Months Ended October 31,				For the Nine Months Ended October 31,
	2022		2021		2022		2021
	(Amounts in thousands)				(Amounts in thousands)
Stock options		1,061		1,287		1,157		1,542
Performance stock units		15		—		—		—
Restricted stock units		1,224		273		287		120
Deferred stock units		—		62		—		41
		2,300		1,622		1,444		1,703

Recently Adopted Accounting Pronouncement

~~Pending~~In June 2016, the Financial Accounting ~~Pronouncements~~Standards Board issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326), which introduces a new methodology for accounting for credit losses on financial instruments, including available-for-sale debt securities and accounts receivable. The guidance establishes a new “expected loss model” that requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information. Any expected credit losses are to be reflected as allowances rather than reductions in the amortized cost of available-for-sale debt securities.

InThe ~~June~~amendments ~~2016,~~are ~~the~~effective ~~Financial~~on ~~Accounting~~February ~~Standards~~1, ~~Board~~2023 ~~issued~~for ~~Accounting~~the ~~Standards~~Company, ~~Update~~and ~~(“ASU”)~~must ~~No.~~be ~~2016-13,~~applied ~~Financial~~using ~~Instruments—Credit~~a ~~Losses~~modified ~~(Topic~~retrospective ~~326),~~approach ~~which~~with ~~introduces~~ a ~~new~~cumulative-effect ~~methodology~~adjustment ~~for~~through ~~accounting~~retained ~~for~~earnings ~~credit~~as ~~losses~~of onthe ~~financial~~beginning ~~instruments,~~of ~~including~~the ~~available-for-sale~~fiscal ~~debt~~year ~~securities~~upon ~~and~~adoption ~~accounts~~as ~~receivable~~required. ~~The~~While ~~guidance~~the ~~establishes~~standard amodifies ~~new~~the ~~“expected~~measurement ~~loss~~of ~~model”~~the ~~that~~allowance ~~requires~~for ~~entities~~credit tolosses, ~~estimate~~it ~~current~~does ~~expected~~not alter the credit ~~losses~~risk onof ~~financial~~our ~~instruments~~trade byor ~~using~~unbilled ~~all~~receivables. ~~practical~~The ~~and~~Company ~~relevant~~adopted ~~information~~ASU No. ~~Any~~2016-13 using an estimated expected credit losses ~~are~~using tothe behistorical ~~reflected~~loss asrate ~~allowances~~method ~~rather~~for ~~than~~its ~~reductions~~trade inaccounts ~~the~~receivable ~~amortized~~and ~~cost~~unbilled receivables as of ~~available-for-sale~~January ~~debt~~31, ~~securities.~~2023, ~~ASU~~with ~~2016-13~~additional isrisk ~~effective~~premiums infor ~~the~~unbilled ~~first~~receivables ~~quarter~~expected ofto ~~fiscal~~be billed after January 31, 2024 (one year after the adoption date). The ~~Company~~adoption isof ~~currently~~the ~~evaluating~~standard ifresulted ~~this~~in ~~guidance~~a ~~will~~cumulative ~~have~~beginning aof ~~material~~year ~~effect~~retained toearnings ~~its~~adjustment ~~consolidated~~of ~~financial~~$0.2 ~~statements~~million.

~~All other ASUs issued but not yet effective are not expected to have a material effect on the Company’s future financial statements.~~ 12

Under the CECL impairment model, the Company develops and documents its allowance for credit losses on its trade and unbilled receivables based on four portfolio segments by customer geographic location: North America, Latin America, Europe, and Other. The determination of portfolio segments is based primarily on the qualitative consideration of the credit risks driven by macroeconomic and geopolitical factors affecting customers in these geographic locations.

Our quantitative allowance for credit loss estimates under CECL was determined using the loss rate method, which is impacted by certain forecasted economic factors. In addition to our quantitative allowance for credit losses, we also incorporate qualitative adjustments that may relate to unique risks, changes in current economic conditions that may not be reflected in quantitatively derived results, or other relevant factors to further inform our estimate of the allowance for credit losses.

Additionally, due to the expansion of the time horizon over which we are required to estimate future credit losses, we may experience increased volatility in our future provisions for credit losses. Factors that could contribute to such volatility include, but are not limited to, changes in the composition and credit quality of customer base, economic conditions and forecasts, the allowance for credit loss models that are used, the data that is included in the models, the associated qualitative allowance framework, and our estimation techniques.

Condensed Consolidated Balance Sheet Detail

Property and Equipment, Net

Property and equipment, net consisted of the following:

	As of
	October 31, 2022			January 31, 2022
	(Amounts in thousands)
Computer equipment, software and demonstration equipment	$	3,642		$	3,689
Office furniture and equipment		231			263
Leasehold improvements		126			143
		3,999			4,095
Less: Accumulated depreciation and amortization		(3,313	)		(3,193	)
Total property and equipment, net	$	686		$	902

Depreciation expense was $54 thousand and $48 thousand for the three months ended October 31, 2022 and 2021, respectively, and $187 thousand and $151 thousand for the nine months ended October 31, 2022 and 2021, respectively.

Accrued Expenses

Accrued expenses consisted of the following:

	As of
	October 31, 2022		January 31, 2022
	April 30, 2023		January 31, 2023
	(Amounts in thousands)
Accrued employee compensation and benefits	$	~~1,162~~686	$	1,~~138~~603
Accrued professional fees		7143		~~433~~77
Sales tax and VAT payable		3692		~~133~~82
Current obligation - right of use operating leases		~~652~~726		~~762~~713
Third-party hardware		—		12
Accrued other		805		1,338
Accrued other		904		1,739
Total accrued expenses	$	2,352	$	3,813
Total accrued expenses	$	2,825	$	4,217

14Fair Value Measurements

~~Goodwill~~The Company accounts for certain financial assets at fair value on a recurring basis. The following table presents information about the Company’s financial assets that are measured at fair value as of April 30, 2023 and ~~Intangible~~January ~~Assets~~31, 2023, and indicate the level within the fair value hierarchy where each measurement is classified.

Goodwill represents the difference between the purchase price and the estimated fair value of identifiable assets acquired and liabilities assumed. The Company performs impairment tests related to its goodwill on an annual basis or when certain triggering events or circumstances are identified that would more likely than not reduce the estimated fair value of the goodwill below its carrying amount.


	As of April 30, 2023
	Total		Level 1		Level 2		Level 3
	(Amounts in thousands)
Assets:
Cash equivalents	$	2,399	$	2,399	$	—	$	—
Marketable securities:
Corporate bonds		1,409		1,409		—		—
	$	3,808	$	3,808	$	—	$	—

Due to the significant decrease in the Company’s publicly quoted share price and market capitalization during the second quarter of fiscal year 2023, the Company accelerated its annual impairment test and performed a quantitative test of its goodwill as of July 31, 2022 that resulted in a $5.8 million non-cash impairment charge during the second quarter of fiscal year 2023.


	As of January 31, 2023
	Total		Level 1		Level 2		Level 3
	(Amounts in thousands)
Assets:
Cash equivalents	$	2,389	$	2,389	$	—	$	—
Marketable securities:
Corporate bonds		1,244		1,244		—		—
	$	3,633	$	3,633	$	—	$	—

As a result of continued significant decrease in the Company’s publicly quoted share price and market capitalization during the third quarter of fiscal year 2023, the Company performed a quantitative impairment test of its goodwill as of October 31, 2022. Based on this quantitative test, the Company incurred a non-cash impairment charge during the third quarter of fiscal year 2023 of $3.3 million, which represents a write-off of the entire balance of the Company's goodwill. 13

~~The~~Cash ~~following~~equivalents ~~table~~at ~~represents~~April ~~the~~30, ~~changes~~2023 and January 31, 2023 consisted of $2.4 million, in ~~goodwill~~each ~~since~~period presented, of U.S. Treasury Securities with a maturity date of three months or less, respectively. During the periods presented above, no assets were transferred between the fair value hierarchy categories. The Company had no liabilities measured at fair value on a recurring basis at April 30, 2023 or January 31, ~~2022:~~2023.

	Goodwill
	(Amounts inthousands)
Balance as of January 31, 2022	$	9,882
Translation adjustment		(784	)
Impairment		(9,098	)
Balance as of October 31, 2022	$	-

The following table summarizes the Company’s investments in marketable securities, classified as available-for-sale as of April 30, 2023 and January 31, 2023:

The Company’s finite-lived intangible assets were fully amortized as of January 31, 2022.


	As of April 30, 2023
	Amortized Cost		Gross Unrealized Loss			Fair Value
	(Amounts in thousands)
Corporate bonds		1,444		(35	)		1,409
	$	1,444	$	(35	)	$	1,409

The Company recognized amortization expense of finite-lived intangible assets in the following operating expense categories:


	As of January 31, 2023
	Amortized Cost		Gross Unrealized Loss			Fair Value
	(Amounts in thousands)
Corporate bonds		1,269		(25	)		1,244
	$	1,269	$	(25	)	$	1,244

	For the Three Months Ended October 31,				For the Nine Months Ended October 31,
	2022		2021		2022		2021
	(Amounts in thousands)				(Amounts in thousands)
Selling and marketing	$	—	$	184	$	—	$	574
Research and development		—		114		—		356
	$	—	$	298	$	—	$	930

The amortized cost and fair values of the above referenced debt and fixed-maturity securities as of April 30, 2023 are shown by contractual maturity in the table below. Actual maturities can differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Amortized Cost		Fair Value
	(Amounts in thousands)
Due within one year through three years	$	3,360	$	3,358
Due after three years through five years		483		450
Due after five years		—		—
	$	3,843	$	3,808

Commitments and Contingencies

Litigation

Certain conditions may exist as of the date the condensed consolidated financial statements are issued which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to pending legal proceedings, or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company'’s condensed consolidated financial statements. If ~~our~~the Company’s assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed, unless they involve guarantees, in which case the guarantees would be disclosed. InAs ~~December~~of ~~2022~~April 30, ~~the~~2023 ~~Company~~there ~~received~~are ano ~~demand~~current ~~letter~~pending ~~from~~legal aproceedings, ~~customer~~ in ~~connection with an infringement claim related to~~ the ~~indemnification~~opinion ~~clauses~~of ~~noted~~management, ~~below.~~that ~~Management~~would ~~cannot~~have ~~reasonably~~a ~~estimate~~material ~~any~~adverse ~~potential~~effect ~~loss~~on ~~for~~the ~~this~~Company’s ~~claim~~financial position, ~~however~~results ~~management~~from ~~does~~operations ~~not~~or ~~believe~~cash ~~any potential loss would be material to the financial statements~~flow.

15The Company is currently under audit from a third-party software partner regarding licenses embedded on hardware supplied by the Company during the implementation of its software solutions. The preliminary third-party software partner's audit results have shown that a number of licenses have lapsed from support. However, the Company has evaluated this matter and has determined that the ultimate outcome is not currently estimable or determinable and is actively pursuing a solution that is acceptable for both parties.

Indemnification and Warranties

The Company provides indemnification, to the extent permitted by law, to its officers, directors, employees and agents for liabilities arising from certain events or occurrences while the officer, director, employee or agent is, or was, serving at the Company’s request in such capacity. With respect to acquisitions, the Company provides indemnification to, or assumes indemnification obligations for, the current and former directors, officers and employees of the acquired companies in accordance with the acquired companies’ governing documents. As a matter of practice, the Company has maintained directors’ and officers’ liability insurance including coverage for directors and officers of acquired companies.

The Company enters into agreements in the ordinary course of business with customers, resellers, distributors, integrators and suppliers. Most of these agreements require the Company to defend and/or indemnify the other party against intellectual property infringement claims brought by a third party with respect to its products. From time to time, the Company also indemnifies customers and business partners for damages, losses and liabilities they may suffer or incur relating to personal injury, personal property damage, product liability, and environmental claims relating to the use of its products and services or resulting from the acts or omissions of the Company, employees, authorized agents or subcontractors. From time to time, the Company has received requests from customers for indemnification of patent litigation claims. ~~Management cannot reasonably estimate any potential losses, but these claims could result in material liability.~~ There are no current pending legal proceedings, that in the opinion of management, ~~that~~ would have a material adverse effect on the Company’s financial position, results from operations and cash flows. ~~There~~However, there is no assurance that future legal proceedings arising from ordinary course of business or otherwise, will not have a material adverse effect on the Company’s financial position, results from operations or cash flows.

The Company warrants its products, including software products, will substantially perform in accordance with standard published specifications in effect at the time of delivery. In addition, the Company provides maintenance support to its customers and therefore allocates a portion of the product purchase price to the initial warranty period and recognizes revenue on a straight-line basis over that warranty period related to both the warranty obligation and the maintenance support agreement. When the Company receives revenue for extended warranties beyond the standard duration, it is deferred and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred.

Operating Leases

The Company has operating leases for facilities expiring at various dates through 2025.

The components of lease expense included in the condensed consolidated statements of operations and comprehensive loss are as follows:

	For the Three Months Ended October 31,		For the Nine Months Ended October 31,
	For the Three Months Ended April 30,
	2022		2022
	2023		2022
	(Amounts in thousands)
Operating lease cost	$	~~111~~110	$	~~381~~143
Short term lease cost, net		3		11
Short-term lease cost, net		3		4
Total lease cost	$	~~114~~113	$	~~392~~147

Supplemental balance sheet information related to the Company’s operating leases was as follows:

	As of October 31, 2022			As of January 31, 2022
	As of April 30, 2023			As of January 31, 2023
	(Amounts in thousands)
Operating lease right-of-use assets	$	1,~~392~~215		$	21,~~031~~360
Current portion, operating lease liabilities		~~652~~726			~~762~~713
Operating lease liabilities, long term		~~787~~489			~~1,361~~691
Total operating lease liabilities	$	1,~~439~~215		$	21,~~123~~404
Weighted average remaining lease term (years)		21.38			32.0
Weighted average incremental borrowing rate		5.0	%		5.0	%

1615

Supplemental cash flow information related to the Company’s leases was as follows:

	For the Three MonthsEnded October 31,				For the Nine MonthsEnded October 31,
	For the Three Months Ended April 30,
	2022		2021		2022		2021
	2023		2022
	(Amounts in thousands)				~~(Amounts in thousands)~~
Cash paid for amounts included in themeasurement of lease liabilities
Operating cash flows from operating leases	$	~~123~~110	$	~~218~~143	$	~~430~~	$	~~951~~

The current portion, operating lease liabilities is included as a component of accrued expenses in the condensed consolidated balance sheets.

Future minimum lease payments for operating leases, with initial or remaining terms in excess of one year as of ~~October~~April 3130, ~~2022~~2023 are as follows:

	Payments forOperating Leases
For the Fiscal Years Ended January 31,	(Amounts in thousands)
2023	$	165
2024	$	557
2024		670
2025		765
2025		691
Total lease payments		1,322
Total lease payments		1,526
Less interest		107
Less interest		87
Total operating lease liabilities	$	1,215
Total operating lease liabilities	$	1,439

In the first nine months of fiscal 2022, the Company entered into a sublease termination agreement (the “Lease Termination Agreement”) with respect to its former headquarters in Waltham, Massachusetts. In connection to the Lease Termination Agreement, the Company agreed to pay the sublandlord a total of $0.4 million in termination payments for the nine months ended October 31, 2021. The Company also wrote off all related operating lease right-of-use assets and liabilities as of the termination date, resulting in a $0.3 million non-cash gain, which partially offset the loss on termination payments. The net $0.1 million loss on lease termination is reported as a component of severance and restructuring expense on the condensed consolidated statements of operations and comprehensive loss for the nine months ended October 31, 2021. Prior to the execution of the Lease Termination Agreement, the sublease had been scheduled to expire in February 2025.

The Company has entered into four operating sublease agreements (collectively, the “Subleases”) with respect to part of its existing Poland facility lease (the “Head Lease”), two in fiscal 2022 and two in fiscal 2023. The Company accounted for the Head Lease and the Subleases as separate contracts and there was no effect on the right-of-use asset or lease liability associated with the Head Lease. One of the Subleases entered into fiscal 2022 ended during the three months ended October 31, 2022. The remaining Subleases entered into fiscal 2022 and 2023 have effective dates ranging from less than one year to more than two years from October 31, 2022, respectively. The Head Lease rent expense is presented net of income related to the Subleases and reported as a component of operating expenses on the condensed consolidated statements of operations and comprehensive loss. The Company recorded $66 thousand and $170 thousand of income related to the Subleases for the three and nine months ended October 31, 2022, respectively, and $32 thousand of sublease income for the three and nine months ended October 31, 2021.

Severance and Restructuring Costs

OnSeverance ~~August 3, 2022, Michael Prinn resigned (the “Resignation”) as the Executive Vice President, Chief Financial Officer~~ and ~~Treasurer~~restructuring of the Company. Mr. Prinn remained with the Company until September 30, 2022, to assist with the transition pursuant to the Employee Transition Separation Agreement and General Release signed on August 24, 2022 (the “Release Agreement). Total severance costs ~~incurred~~for ~~during~~ the three ~~and nine~~ months ended ~~October~~April 3130, 2022 ~~related~~consisted ~~to the Resignation was $0.4 million, primarily consisting~~ of aBoard ~~salary continuation~~ and ~~bonus~~employee-related ~~for~~termination ~~remaining~~benefits ~~with~~in the ~~Company~~amount ~~during~~of ~~August and September. Remaining cash payments under this Release Agreement total~~ $0.32 million ~~as of October 31, 2022~~. InThere ~~addition,~~were ~~the~~less ~~Company~~than ~~is providing COBRA benefits for Mr~~$0.1 ~~Prinn~~million ~~until~~severance ~~the~~and ~~sooner~~restructuring ofcosts ~~(a) December 31, 2022 or (b) when he becomes eligible~~ for ~~benefits at a new employer, and~~ the ~~Release~~three ~~Agreement~~months ~~includes~~ended ~~accelerated~~April ~~vesting of the remaining final tranche of 4~~30,~~762~~ ~~restricted stock units ("RSUs") from his RSU grant dated May 26, 2020~~2023.

Following the Resignation, on August 3, 2022, the Board appointed Kathleen Mosher as Senior Vice President, Chief Financial Officer and Treasurer of the Company.

During the three and nine months ended October 31, 2022, the Company incurred severance costs of $0.4 million and $0.6 million, respectively, primarily for employee-related termination benefits.

Stockholders’ Equity

Preferred Stock Authorization

The Board is authorized to issue from time to time up to an aggregate of 5,000,000 shares of preferred stock, in one or more series. Each such series of preferred stock shall have the number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges to be determined by the Board, including dividend rights, voting rights, redemption rights and sinking fund provisions, liquidation preferences, conversion rights and preemptive rights. No preferred stock has been issued as of April 30, 2023.

Equity Plans

Compensation and Incentive Plans

The Company’s Second Amended and Restated 2011 Compensation and Incentive Plan (the “2011 Plan”) provided for the grant of incentive stock options (“ISOs”), nonqualified stock options (“NQs”), ~~restricted stock, restricted stock units (“~~RSUs”), ~~deferred stock units (“~~DSUs~~”),~~ ~~performance~~and ~~stock units (“~~PSUs”) and other equity based non-stock option awards as determined by the plan administrator to its officers, employees, consultants and directors. The 2011 Plan expired on July 20, 2021.

The Company’s 2021 Compensation and Incentive Plan (the “2021 Plan”) was proposed by the Board and adopted by the Company’s stockholders in July 2021 to permit the continued issuance of equity-based compensation, including the granting of ISOs, NQs, restricted stock, RSUs, DSUs, PSUs, and other equity based non-stock option awards as determined by the plan administrator to officers, employees, consultants and directors. Under the 2021 Plan, the Company may satisfy awards upon the exercise of stock options or the vesting of stock units with newly issued shares or treasury shares. The Board, or a committee of independent members of the Board (the “Committee”), is responsible for the administration of the 2021 Plan and determining the terms of each award, award exercise price, the number of shares for which each award is granted and the rate at which each award vests. In certain instances, the Board or Committee may elect to modify the terms of an award.

Nonemployee members of the Board may elect to receive DSUs or stock options in lieu of RSUs. The number of units subject to the DSUs is determined as of the grant date and shall fully vest one year from the grant date. The shares underlying the DSUs are not vested and issued until the earlier of the director ceasing to be a member of the Board (provided such time is subsequent to the first day of the succeeding fiscal year) or immediately prior to a change in control. 16

Nonemployee members of the Board may elect to receive DSUs or stock options in lieu of RSUs. The number of units subject to the DSUs is determined as of the grant date and shall fully vest one year from the grant date. The shares underlying the DSUs are not issued until the earlier of the director ceasing to be a member of the Board (provided such time is subsequent to the first day of the succeeding fiscal year) or immediately prior to a change in control.

Option awards may be granted at an exercise price per share of not less than 100% of the fair market value per common share on the date of the grant and not less than 110% of the fair market value per common share on the date of the grant with respect to ISOs granted to employees owning stock possessing more than 10% of the total combined voting power of all classes of stock of the Company. Option awards granted under the 2021 Plan generally vest over a period of one to three years and expire ten years from the date of the grant.

Following Board approval and recommendation, on August 5, 2022 the Company’s stockholders voted in favor of changes to the 2021 ~~Compensation and Incentive~~ Plan (the “Amended and Restated 2021 Plan”). The purpose of the Amended and Restated 2021 Plan is to provide equity and cash incentives to the employees of the Company in order to attract, motivate and retain qualified employees. Changes made to the Amended and Restated 2021 Plan include the addition of 3150,000~~,000~~ new shares authorized for issuance under the Amended and Restated 2021 Plan and the inclusion of additional methods to satisfy the tax obligations that arise for granted equity awards. The number of shares authorized for issuance under the Amended and Restated 2021 Plan at ~~October~~April 3130, ~~2022~~2023 is 7394,~~896~~844,~~878,~~ including 2119,~~396,878~~844 shares awarded under the 2011 Plan that may become available for issuance under the 2021 Plan due to the expiration, termination, surrender, or forfeiture of such outstanding awards. As of ~~October~~April 3130, ~~2022~~2023, there were 2135,~~406,953~~580 shares available for future grants.

The Company has a Long-Term Incentive Program, adopted in fiscal 2016, under which the named executive officers and other key employees may receive long-term equity-based incentive awards, which are intended to align the interests of named executive officers and other key employees with the long-term interests of stockholders and to emphasize and reinforce the Company’s focus on team success. Long-term equity-based incentive compensation awards are made in the form of stock options, RSUs and PSUs subject to vesting based in part on the extent to which employment continues. under the Amended and Restated 2021 Plan.

2015 Employee Stock Purchase Plan

Under the Company’s 2015 Employee Stock Purchase Plan (the “ESPP”), six-month offering periods begin on October 1 and April 1 of each year during which eligible employees may elect to purchase shares of common stock according to the terms of the offering. On each purchase date, eligible employees can purchase stock at a price per share equal to 85% of the closing price of the Company’s common stock on the exercise date, but no less than par value. The maximum number of shares of the Company'’s common stock authorized for sale under the ESPP is 157,~~150,000~~500 shares, of which 153,~~075,024~~751 remain available under the ESPP as of ~~October~~April 3130, ~~2022~~2023. There were no shares purchased under the ESPP during the ~~nine~~three months ended ~~October~~April 3130, ~~2022~~2023 and ~~2021~~2022 as the Company suspended the ESPP as of April 1, 2020 and is still evaluating when the suspension will be lifted, if at all.

Award Activity

In the ~~nine~~three months ended ~~October~~April 3130, ~~2022~~2023, the Company granted 19,~~819,405~~170 ~~RSUs~~RSU awards at a grant date weighted average fair value of $08.5173 per share and ~~740~~3,000 ~~PSUs~~PSU awards at a grant date weighted average fair value of $04.2160 per share. In the three months ended April 30, 2023, 14,773 RSU awards and 1,250 PSU awards were released, with 1,861 RSU shares exchanged to pay employee tax withholdings, pursuant to the terms of the RSU agreements. There were ~~327~~2,~~083~~708 option awards, 3,250 RSU awards and 553,~~357~~000 ~~RSU~~PSU awards canceled in the ~~nine~~three months ended ~~October~~April 3130, ~~2022~~2023.

The PSUs granted in fiscal year 2023 and 2024 represent market-based awards to certain officers in connection with their appointment. The PSUs will vest on the attainment of a closing share price of $2.50.00 that is held for twenty consecutive trading days within three years from the grant date. In the event of a change in control of the Company, the vesting of the PSUs is based on the employee'’s time of service from the grant date.

Stock-Based Compensation

The Company recognized stock-based compensation expense within the condensed consolidated statements of operations and comprehensive loss as follows:

	For the Three MonthsEnded October 31,				For the Nine MonthsEnded October 31,
	For the Three MonthsEnded April 30,
	2022		2021		2022		2021
	2023		2022
	(Amounts in thousands)				~~(Amounts in thousands)~~
Cost of revenue	$	11	$	4	$	26	$	28
Cost of revenue, service	$	3	$	8
Research and development		813		76		20		~~(72~~	)
Sales and marketing		54		21		80		89
Selling and marketing		81		11
General and administrative		~~104~~264		~~242~~259		~~585~~		~~1,270~~
	$	~~177~~361	$	~~274~~284	$	~~711~~	$	~~1,315~~

As of October 31, 2022, unrecognized stock-based compensation expense related to unvested stock options was approximately $0.1 million, which is expected to be recognized over a weighted average period of 1.5 years. As of October 31, 2022, unrecognized stock-based compensation expense related to unvested RSUs was approximately $1.2 million, which is expected to be recognized over weighted average amortization periods of 2.1 years. Additionally, as of October 31, 2022, unrecognized stock-based compensation expense related to unvested PSUs was $0.1 million, which is expected to be recognized over a weighted average amortization period of 1.6 years.17

~~Accounts~~As ~~Receivables~~of April 30, ~~Unbilled~~2023, ~~Receivables~~unrecognized stock-based compensation expense related to unvested stock options was approximately $0.1 million, which is expected to be recognized over a weighted average period of 1.2 years. As of April 30, 2023, unrecognized stock-based compensation expense related to unvested RSU awards and ~~Contract~~DSU ~~Liabilities~~awards was approximately $0.7 million, which is expected to be recognized over weighted average amortization periods of 1.4 years. Additionally, as of April 30, 2023, unrecognized stock-based compensation expense related to unvested PSU awards was $0.1 million, which is expected to be recognized over a weighted average amortization period of 1.2 years.

Accounts Receivables, Unbilled Receivables, Allowance for Credit Losses and Contract Liabilities

Receivables

A receivable is the Company’s right to consideration that is unconditional and subject solely to the passage of time.

The following table summarizes the Company’s accounts receivable, net and unbilled receivables, net:

	As of October 31,		As of January 31,
	As of April 30,2023		As of January 31,2023
	2022		2022
	(Amounts in thousands)
Accounts receivable, net	$	7,~~011~~362	$	810,~~819~~382
Unbilled receivables, current		9,350		9,160
Unbilled receivables, net - current		8,354		7,757
Unbilled receivables, long-term		2,680		3,952
Unbilled receivables, net - long-term		4,659		5,044
	$	1920,~~041~~375	$	2123,~~931~~183

As of ~~October~~April 30, 2023 and January 31, ~~2022~~2023, the allowance for credit losses on current accounts receivable was $0.6 million and $0.8 million, respectively. As of April 30, 2023, the allowance for credit losses on current unbilled receivables was $0.4 million and $0.2 million on long-term unbilled receivables. As of January 31, ~~2022~~2023, the allowance for credit losses on current unbilled receivables was $0.2 million, and there was no allowance for credit losses provided for long-term unbilled receivables~~, net~~.

Unbilled Receivables, Net

Unbilled receivables, net consist of amounts recognized as revenue as performance obligations were transferred to customers for which the Company does not currently have the right to invoice. Unbilled receivables, net are primarily derived from the allocation of contract consideration to products and services, such as software licenses, recognized at the point of time transferred when the payment of such consideration is contingent on transferring support and maintenance services over the subsequent period which is frequently one to three years. There were no impairment losses recognized during the three ~~and nine~~ months ended ~~October~~April 3130, 2023 or 2022.

Unbilled receivables, net are expected to be billed in the future as follows (amounts in thousands, except percentage amounts):

	As of October 31,
	As of April 30,
	2022		Percentage
	2023		Percentage
1 year or less	$	98,~~350~~354		7864	%
1-2 years		12,~~711~~280		1418	%
2-5 years		~~969~~2,379		818	%
Total unbilled receivables, net	$	1213,~~030~~013		100	%

Allowance for Credit Losses

The following table summarizes the Company’s allowance for credit losses for the three months ended April 30, 2023:


	Trade Accounts Receivable			Unbilled Receivables		Total Receivables
	(Amounts in thousands)
Balance as of February 1, 2023	$	841		$	168	$	1,009
Impact of CECL adoption		(151	)		369		218
Adjustment to allowance for expected credit losses		1			33		34
Write-offs charged against allowance		(111	)		—		(111	)
Balance as of April 30, 2023	$	580		$	570	$	1,150

Contract Liabilities

Contract liabilities consist of deferred revenue and customer deposits that arise when amounts are billed to or collected from customers in advance of revenue recognition. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current deferred revenue and the remaining portion is recorded as deferred revenue, long-term. The change in deferred revenue as of ~~October~~April 3130, ~~2022~~2023 is due to new billings in advance of revenue recognition offset by revenue recognized during the period.

	Deferred Revenue
	Current			Long-Term
	(Amounts in thousands)
Balance as of January 31, 2022	$	3,947		$	77
Balance as of January 31, 2023	$	5,172		$	130
Decrease		(1,440	)		(30	)
Decrease, net		(85	)		(38	)
Balance as of October 31, 2022	$	2,507		$	47
Balance as of April 30, 2023	$	5,087		$	92

The Company recognized $02.70 million of revenue ~~for the three months ended October 31, 2022~~ that was included in deferred revenue at the beginning of the period, ~~and~~offset by an additional $3.1.9 million of ~~revenue~~new contract liabilities for the ~~nine~~three months ended ~~October~~April 3130, ~~2022 that was included in deferred revenue at the beginning of the period~~2023.

Remaining Performance Obligations

The aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied or are partially satisfied as of ~~October~~April 3130, ~~2022~~2023 is $2720.5 million and consists primarily of undelivered software, service, and support obligations. This amount in part includes amounts billed for undelivered services that are included in deferred revenue reported on the condensed consolidated balance sheets. The Company expects to recognize $1813.78 million as revenue within one year, an additional $53.68 million in the following year, and the remaining revenue thereafter. The Company expects to recognize substantially all of the remaining performance obligations by the second quarter of fiscal ~~2028~~2029. Revenue recognized for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2022~~2023 related to remaining performance obligations as of the previous fiscal year ended January 31, ~~2022~~2023 was $4.20 million ~~and $14~~.2 ~~million, respectively.~~

10.

Disaggregated Revenue and Geographic Information

Disaggregated Revenue

The following table disaggregates revenue by revenue stream:

For the Three MonthsEnded October 31,

For the Nine MonthsEnded October 31,

For the Three Months Ended April 30,

2022

2021

2022

2021

2023

2022

(Amounts in thousands)

~~(Amounts in thousands)~~

Product revenue:

License and subscription

1,430

2,172

5,428

6,306

License

1,072

1,222

Hardware

~~753~~468

1,~~339~~604

~~2,567~~

~~1,534~~

Total product revenue

21,~~183~~540

32,~~511~~826

~~7,995~~

~~7,840~~

Service revenue:

Maintenance and support

3,~~144~~091

32,~~003~~939

~~9,371~~

~~9,207~~

Professional services and other

2,~~961~~361

~~637~~958

~~4,969~~

~~1,696~~

Total service revenue

65,~~105~~452

3,~~640~~897

~~14,340~~

~~10,903~~

Total revenue

86,~~288~~992

76,~~151~~723

~~22,335~~

~~18,743~~

The following table disaggregates revenue by timing of transfer of goods or services:

	For the Three MonthsEnded October 31,				For the Nine MonthsEnded October 31,
	For the Three Months Ended April 30,
	2022		2021		2022		2021
	2023		2022
	(Amounts in thousands)				~~(Amounts in thousands)~~
Transferred at a point in time
Product revenue	$	~~1,533~~841	$	2,~~893~~250	$	~~6,288~~	$	~~6,058~~
Service revenue
Transferred over time(1)
Transferred over time(1)
Product revenue		699		576
Product revenue		650		618		1,707		1,782
Service revenue		5,452		3,897
Service revenue		6,105		3,640		14,340		10,903
Total revenue	$	6,992	$	6,723
Total revenue	$	8,288	$	7,151	$	22,335	$	18,743

(1) Comprised of SaaS, hosting, support contracts, and professional services.

Geographic Information

The following summarizes revenue by customers’ geographic locations:

	For the Three Months Ended October 31,						For the Nine Months Ended October 31,
	For the Three Months Ended April 30,
	2022		%	2021		%	2022		%	2021		%
	2023		%	2022		%
	(Amounts in thousands, except percentages)						~~(Amounts in thousands, except percentages)~~
Revenue by customers' geographic locations:
Revenue by customers’ geographic locations:
North America(1)	$	54,~~220~~076	6358%	$	4,~~683~~328	6564%	$	~~12,694~~	~~58%~~	$	~~11,713~~	~~63%~~
Europe and Middle East		21,~~091~~890	2528%		1,~~770~~393	2521%		~~4,993~~	~~22%~~		~~5,310~~	~~28%~~
Latin America		~~794~~725	10%		~~502~~761	711%		~~4,100~~	~~18%~~		~~1,193~~	6%
Asia Pacific		~~183~~301	24%		~~196~~241	34%		~~548~~	2%		~~527~~	3%
Total revenue	$	86,~~288~~992		$	76,~~151~~723		$	~~22,335~~		$	~~18,743~~

(1) Includes total revenue for the U.S. for the periods shown as follows:

	For the Three MonthsEnded October 31,						For the Nine MonthsEnded October 31,
	For the Three MonthsEnded April 30,
	2022			2021			2022			2021
	2023			2022
	(Amounts in thousands,except percentages)						~~(Amounts in thousands,except percentages)~~
U.S. Revenue	$	43,~~648~~888		$	43,~~142~~874		$	~~11,228~~		$	~~10,037~~
% of total revenue		56	%		58	%		50	%		54	%

The following summarizes long-lived assets by geographic locations:

	As of October 31, 2022		%	As of January 31, 2022		%
	As of April 30, 2023		%	As of January 31, 2023		%
	(Amounts in thousands, except percentages)
Long-lived assets by geographic locations(1):
Long-lived assets by geographic locations:
North America	$	46,~~178~~039	8187%	$	6,~~208~~553	8386%
Europe and Middle East		~~953~~889	1812%		~~1,258~~963	1713%
Asia Pacific		31	1%		31	01%
Total long-lived assets by geographic location	$	56,~~162~~959		$	7,~~497~~547

11.

(1) Excludes goodwill.

Income Taxes

Each interim period is considered an integral part of the annual period and, accordingly, the Company measures income tax expense using an estimated annual effective tax rate. The Company is required, at the end of each interim reporting period, to make its best estimate of the annual effective tax rate for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, as adjusted for discrete taxable events that occur during the interim period.

21The Company recorded an income tax provision of less than $0.1 million for each of the three months ended April 30, 2023 and 2022. The Company’s effective tax rate in fiscal 2024, and in future periods, may fluctuate on a quarterly basis as a result of changes in jurisdictional forecasts where losses cannot be benefitted due to the existence of valuation allowances on deferred tax assets, changes in actual results versus estimates, or changes in tax laws, regulations, accounting principles or interpretations thereof.

The Company ~~recorded~~reviews anall ~~income~~available ~~tax~~evidence ~~benefit~~to ofevaluate ~~less than $0.1 million for~~ the ~~three~~recovery ~~and~~of ~~nine~~deferred ~~months~~tax ~~ended October 31~~assets, ~~2022.~~including ~~The~~the ~~Company~~recent ~~recorded~~history ~~an income tax provision~~ of ~~less~~losses ~~than~~in ~~$0.1~~all ~~million for the three months ended October 31, 2021 and recorded an income~~ tax ~~benefit of less than $0.1 million for the nine months ended October 31~~jurisdictions, ~~2021.~~as ~~The~~well ~~Company’s~~as ~~effective~~its ~~tax~~ability ~~rate~~to ingenerate ~~fiscal~~income ~~2023, and~~ in future periods,. ~~may~~As ~~fluctuate on a quarterly basis as a result~~ of ~~changes~~April in30, ~~jurisdictional~~2023, ~~forecasts~~due ~~where~~to ~~losses~~the ~~cannot~~uncertainty berelated ~~benefitted due~~ to the ~~existence~~ultimate use of ~~valuation~~certain ~~allowances on~~ deferred income tax assets, ~~changes~~we inhave ~~actual~~recorded ~~results~~a ~~versus~~valuation ~~estimates,~~allowance oron ~~changes~~certain indeferred ~~tax laws, regulations, accounting principles or interpretations thereof~~assets.

The Company ~~reviews~~files ~~all~~income ~~available~~tax ~~evidence~~returns toin ~~evaluate~~ the ~~recovery~~U.S. offederal ~~deferred~~jurisdiction, ~~tax~~various ~~assets,~~state ~~including~~jurisdictions ~~the~~and ~~recent~~various ~~history~~foreign ofjurisdictions. ~~losses~~As inof ~~all~~April ~~tax~~30, ~~jurisdictions~~2023, asthe ~~well~~Company asis ~~its~~subject ~~ability~~ to ~~generate~~U.S. Federal income intax ~~future~~examinations ~~periods.~~and Asother ofjurisdictions ~~October~~for ~~31,~~the years 2016 through 2022. However, ~~due~~the totaxing ~~the~~authorities ~~uncertainty~~will ~~related~~still tohave the ~~ultimate~~ability ~~use~~to review the propriety of certain ~~deferred~~tax ~~income~~attributes created in closed years if such tax ~~assets,~~attributes weare ~~have~~utilized ~~recorded~~in aan ~~valuation~~open ~~allowance~~tax onyear, ~~certain~~such ~~deferred~~as ~~assets~~federal research and development credit carryovers.

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various foreign jurisdictions. The Company has closed out an audit with the Internal Revenue Service for its U.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 federal research and development credit carryovers.20

Subsequent Event

On November 22, 2022, the Board of Directors voted to amend the Company's investment policy to expand the categories of investments. Subsequent to the quarter end the Company purchased $4.9 million of short-term government securities and $0.5 million of corporate bonds.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 the SEC on April 817, ~~2022~~2023 ~~and as amended on May 26, 2022~~ (the “Form 10-K”), for our fiscal year ended January 31, ~~2022~~2023 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~~State of Delaware on July 9, 1993., ~~SeaChange~~ is a leading provider of video delivery, ~~video~~ advertising ~~insertion~~, streaming ~~enablement~~platforms, and emerging ~~Free~~FAST ~~Ad-Supported~~development. ~~Television~~Our ~~("FAST")~~software products and services facilitate the aggregation, licensing, management and distribution of video and advertising content for service providers, telecommunications companies, satellite operators, broadcasters and other content ~~owners globally~~providers. SeaChange’s technology ~~portfolio~~ enables ~~clients~~operators, broadcasters, and content owners to cost-effectively launch and grow premium linear TV, and direct-to-consumer streaming ~~and FAST channel~~ services onto ~~all~~manage, ~~device types such as Set-Top-Boxes~~curate, ~~mobile~~and ~~devices~~monetize ortheir ~~connected TVs~~content. SeaChange’s ~~mission~~helps isprotect toexisting ~~maximize~~and ~~the~~develop ~~value~~new ofand ~~video~~incremental ~~content~~advertising byrevenues ~~providing~~for ~~sophisticated~~traditional ~~monetization~~linear ~~tools~~TV ~~that help protect existing~~ and ~~generate~~streaming ~~new~~services ~~and~~with ~~incremental~~its ~~revenue~~unique ~~streams~~advertising ~~for~~technology. ~~the SeaChange clients~~Further, ~~especially by providing state-of-~~the ~~art~~Company’s ~~video~~products adprovide ~~insertion~~customers ~~technology~~an opportunity to ~~drive~~insert advertising ~~revenues~~into ~~across~~broadcast ~~linear TV, streaming~~ and ~~connected~~VOD ~~TV inventory~~content. ~~SeaChange~~We ~~markets~~sell ~~its~~our software products and services worldwide, primarily to service providers including: operators, such as VIDAA USA Inc., 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 DirecTV and Dish Network Corporation; ~~connected~~and ~~TV players such as Hisense VIDAA, or~~ broadcasters.

~~SeaChange~~Our ~~serves~~software anproducts ~~exciting~~and ~~global~~services ~~marketplace~~are ~~where~~designed ~~content~~to ~~access~~empower ~~becomes~~video ~~ubiquitous,~~providers ~~and~~to ~~where~~create, ~~consumption~~manage and ~~monetization~~monetize ~~continue~~the toincreasingly ~~transition~~personalized, ~~from~~highly ~~linear~~engaging TVexperiences ~~and~~that ~~subscription~~viewers ~~services to advertising-driven models on connected TVs~~demand. ~~With~~Using ~~its~~our ~~rich~~products ~~product portfolio~~ and ~~the~~services, ~~strategic~~we ~~focus~~believe tocustomers ~~maximize~~can ~~SeaChange~~increase ~~partners’~~revenue ~~advertising~~by ~~inventory~~offering ~~value with~~ services such as ~~targeting,~~VOD ~~personalization~~programming ~~and~~on ~~multi-screen~~a ~~engagement,~~variety ~~the~~of ~~Company~~consumer isdevices, ~~well~~including ~~positioned~~televisions, tosmart ~~expand~~phones, ~~its~~PCs, ~~market~~tablets ~~share~~and in over-the-top ~~booming global video advertising and~~ streaming ~~markets~~players. ~~Providing~~Our ~~SeaChange~~solutions ~~customers~~enable ~~with~~service ~~more~~providers ~~scalable and cloud-native software platforms enables them~~ to ~~further~~offer ~~reduce~~other ~~their~~interactive ~~infrastructure~~television ~~costs,~~services ~~improve~~that ~~reliability~~allow ~~and expand service offerings to their~~ subscribers ~~or viewers. Additionally, SeaChange is well positioned~~ to ~~capitalize~~receive onpersonalized ~~new~~services ~~customers~~and ~~entering~~interact ~~the~~with ~~streaming~~their ~~and~~ video ~~advertising~~devices, ~~marketplace~~thereby ~~and~~enhancing ~~increasingly~~their ~~serve~~viewing ~~adjacent markets~~experience. Our ~~core technologies provide a foundation for software~~ products ~~and~~also ~~services~~allow ~~that~~our ~~can~~customers beto ~~deployed~~insert inadvertising ~~next~~into ~~generation~~broadcast ~~video delivery~~ and ~~monetization~~VOD ~~systems capable of increased levels of subscriber activity and inventory transactions across multiple devices~~content.

InSeaChange ~~January~~serves ~~2021,~~an ~~our~~exciting ~~Chief~~global ~~Executive~~marketplace ~~Officer~~where ~~resigned,~~content ~~and~~access ~~Robert~~is ~~Pons~~becoming ubiquitous, aand ~~member~~where ofconsumption ~~the~~and ~~Board~~monetization ~~was~~continue ~~subsequently~~to ~~appointed~~transition ~~Executive~~from ~~Chairman~~linear TV and ~~Principal~~subscription ~~Executive~~services ~~Officer~~to inadvertising-driven ~~the~~models ~~interim.~~on Inconnected ~~September~~TVs. ~~2021,~~With ~~Peter~~our ~~Aquino~~rich ~~was~~product ~~appointed~~portfolio asand the ~~Company~~strategic focus to maximize SeaChange partners’s ~~President~~advertising ~~and~~inventory ~~Chief~~value ~~Executive~~with ~~Officer.~~services ~~Upon~~such ~~the~~as ~~appointment~~targeting, ofpersonalization ~~Mr.~~and ~~Aquino~~multi-screen engagement, ~~Mr.~~we ~~Pons~~are ~~resigned~~well aspositioned to expand our market share in the ~~Company’s~~booming ~~Executive~~global ~~Chairman~~video advertising and ~~Principal~~streaming ~~Executive~~markets. ~~Officer,~~Providing ~~but~~SeaChange ~~remained~~customers ~~Chairman~~with ofmore ~~the~~scalable ~~Board~~and ~~until~~cloud-native ~~his~~software ~~resignation~~platforms ~~effective~~enable ~~July~~them 12to further reduce their infrastructure costs, ~~2022.~~improve Inreliability ~~connection~~and ~~with~~expand ~~Mr.~~service ~~Pons’~~offerings ~~resignation~~to their subscribers or viewers. Additionally, we are well positioned to capitalize on ~~July~~new ~~15,~~customers ~~2022,~~entering the ~~Board~~streaming ~~appointed~~and ~~(i)~~video ~~Peter~~advertising ~~Aquino~~marketplace asand ~~Chairman~~increasingly ofserve ~~the~~adjacent ~~Board,~~markets. inOur ~~addition~~core totechnologies ~~remaining~~provide asa ~~the~~foundation ~~Company’s~~for ~~President~~software products and ~~Chief~~services ~~Executive~~that ~~Officer,~~can ~~and~~be ~~(ii)~~deployed ~~Matthew~~in ~~Stecker,~~next ageneration ~~current~~video ~~member~~delivery ofand ~~the~~monetization ~~Board,~~systems ascapable ~~Lead~~of ~~Independent~~increased ~~Director~~levels of ~~the~~subscriber ~~Board~~activity and inventory transactions across multiple devices.

~~Other~~Merger ~~changes~~Agreement ~~in management include the resignation of Michael Prinn, the Executive Vice President, Chief Financial Officer,~~ and ~~Treasurer~~Subsequent of SeaChange on August 3, 2022, effective immediately. Following the resignation, on August 3, 2022, the Board appointed Kathleen Mosher as Senior Vice President, Chief Financial Officer and Treasurer of the Company, effective immediately.Termination

OnIn ~~August 4,~~December ~~2022~~2021, ~~Julian~~the ~~Singer~~Company ~~resigned~~and asTriller, aentered ~~member~~into of the ~~Board,~~Merger ~~effective~~Agreement ~~immediately.~~pursuant Onto ~~August~~which 5,Triller ~~2022,~~planned ~~Igor~~to ~~Volshteyn~~merge ~~was~~with ~~elected~~and tointo ~~the~~SeaChange, ~~Board~~with asthe aseparate ~~Class~~existence IIof ~~Director.~~Triller ~~On August 17~~ceasing, ~~2022,~~and ~~Mr.~~SeaChange ~~Aquino~~continuing ~~delegated his role~~ as ~~President~~the ofsurviving ~~SeaChange,~~ corporation.

23On June 13, 2022, SeaChange and Triller entered into the Termination Agreement pursuant to which SeaChange 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. Transaction costs related to the transactions contemplated by the Merger Agreement and charged to the

~~to Mr. Christoph Klimmer, the Company’s then-current Senior Vice President and Chief Revenue Officer effective immediately, to rebalance executive roles and responsibilities.~~21

Incondensed ~~February~~consolidated ~~2021,~~statements ~~the Company filed a Registration Statement on Form S-3 with the SEC, which registered an indeterminate number~~ of ~~securities~~operations ~~using~~and acomprehensive ~~“shelf”~~loss ~~registration~~amounted orto ~~continuous~~approximately ~~offering process~~$1.2 ~~Under~~million ~~this~~and ~~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~~1.5 million. ~~The~~for ~~shelf~~the ~~registration~~years ~~was~~ended ~~declared~~January ~~effective~~31, by2023 ~~the~~and ~~SEC on March 16~~2022, ~~2021~~respectively.

In connection with the shelf registration statement, the Company entered into an underwriting agreement with Aegis Capital Corp. on March 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 on April 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.

In March 2021, we entered into a Lease Termination Agreement with respect to our former headquarters in Waltham, Massachusetts. Prior to the execution of the Lease Termination Agreement, the sublease had been scheduled to expire in February 2025. As a result of the Lease Termination Agreement, we expect annualized savings of approximately $0.6 million in facilities costs through the former lease term.

Termination of Merger Agreement

In December 2021, the Company and Triller entered into a Merger Agreement pursuant to which Triller planned to merge with and into SeaChange, with the separate existence of Triller ceasing and with SeaChange continuing as the surviving corporation.

On June 13, 2022, SeaChange and Triller entered into a Termination Agreement pursuant to which SeaChange 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 the SEC on June 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 as of and for the three months ended April 30, 2023 and 2022.

Revenue and Gross Profit

The components of our total revenue and gross profit are described in the following table:

	For the Three Months Ended October 31,						Change						For the Nine Months Ended October 31,						Change
	For the Three Months Ended April 30,						Change
	2022			2021			$			%			2022			2021			$			%
	2023			2022			$			%
	(Amounts in thousands, except for percentage data)												~~(Amounts in thousands, except for percentage data)~~
Revenue:
Product revenue:
License and Subscription	$	1,430		$	2,172		$	(742	)		(34.2	%)	$	5,428		$	6,306		$	(878	)		(13.9	%)
License	$	1,072		$	1,222		$	(150	)		(12.3	%)
Hardware		~~753~~468			1,~~339~~604			(~~586~~1,136	)		(4370.8	%)		~~2,567~~			~~1,534~~			~~1,033~~			~~67.3~~	%
Total product revenue		21,~~183~~540			32,~~511~~826			(1,~~328~~286	)		(3745.85	%)		~~7,995~~			~~7,840~~			~~155~~			~~2.0~~	%
Service revenue:
Maintenance and support		3,~~144~~091			32,~~003~~939			~~141~~152			45.72	%		~~9,371~~			~~9,207~~			~~164~~			~~1.8~~	%
Professional services and other		2,~~961~~361			~~637~~958			21,~~324~~403			~~364~~146.85	%		~~4,969~~			~~1,696~~			~~3,273~~			~~193.0~~	%
Total service revenue		65,~~105~~452			3,~~640~~897			21,~~465~~555			6739.79	%		~~14,340~~			~~10,903~~			~~3,437~~			~~31.5~~	%
Total revenue		86,~~288~~992			76,~~151~~723			~~1,137~~269			154.90	%		~~22,335~~			~~18,743~~			~~3,592~~			~~19.2~~	%
Cost of product revenue		~~1,622~~971			1,~~609~~645			13(674	)		0(41.80	%)		~~4,114~~			~~2,708~~			~~1,406~~			~~51.9~~	%
Cost of service revenue		1,~~511~~868			1,~~830~~858			~~(319~~10	)		~~(17~~0.45	%)		~~5,087~~			~~5,375~~			~~(288~~	)		~~(5.4~~	%)
Total cost of revenue		32,~~133~~839			3,~~439~~503			(~~306~~664	)		(819.90	%)		~~9,201~~			~~8,083~~			~~1,118~~			~~13.8~~	%
Gross profit	$	54,~~155~~153		$	3,~~712~~220		$	~~1,443~~933			3829.90	%	$	~~13,134~~		$	~~10,660~~		$	~~2,474~~			~~23.2~~	%
Product gross profit margin		2536.79	%		5441.28	%					(284.59	%)		~~48.5~~	%		~~65.5~~	%					~~(16.9~~	%)
Service gross profit margin		7565.27	%		4952.73	%					2513.54	%		~~64.5~~	%		~~50.7~~	%					~~13.8~~	%
Gross profit margin		6259.24	%		5147.9	%					1011.35	%		~~58.8~~	%		~~56.9~~	%					~~1.9~~	%

One ~~Two~~customer ~~customers each~~ individually accounted for 1314% of total revenue for the three months ended ~~October~~April 3130, ~~2022~~2023 and one customer accounted for 1926% of total revenue for the three months ended ~~October~~April 3130, ~~2021~~2022. ~~One customer accounted for 15% of~~

24International revenue accounted for 44% and 42% of total revenue in each of the three months ended April 30, 2023 and 2022, respectively. The increase in international sales as a percentage of total revenue for the three months ended April 30, 2023 as compared to the three months ended April 30, 2022 is primarily attributable to an increase in international revenue of $0.3 million, due to an increase in services revenue of $0.4 million, partially offset by a reduction in product revenue of $0.1 million.

total revenue for the nine months ended October 31, 2022 and one customer accounted for 12% of total revenue for the nine months ended October 31, 2021. See Part I, Item I, Note 2, “Significant Accounting Policies,” to this Form 10-Q for more information.

International revenue accounted for 44% and 42% of total revenue for the three months ended October 31, 2022 and 2021, respectively, and 50% and 46% of total revenue for the nine months ended October 31, 2022 and 2021, respectively. The increase in international sales as a percentage of total revenue for the three months ended October 31, 2022 as compared to the three months ended October 31, 2021 is primarily attributable to an increase in international revenue of $0.6 million, driven by increased product sales. U.S. revenue increased by $0.5 million, driven by increased services offset by a reduction in product sales, but the increase was at a lower rate than international revenue. The increase in international sales as a percentage of total revenue for the nine months ended October 31, 2022 as compared to the nine months ended October 31, 2021 is primarily attributable to an increase in international revenue at a higher rate of increase than U.S. revenue. The increase to international revenue is driven by higher license sales, while the increase in U.S. revenue is driven by increased services, offset by a reduction in product 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 by SeaChange, the goods are purchased from a third-party provider, and we record revenue and cost of goods sold on a gross basis. Product revenue decreased by $1.3 million for the three months ended ~~October~~April 3130, ~~2022~~2023 compared to the three months ended ~~October~~April 3130, ~~2021~~2022, primarily due to athe ~~decrease~~delivery inof ~~perpetual license sales as well as a decrease in~~ third-party ~~product~~products, ~~sales.~~which ~~Product~~included ~~revenue~~a ~~increased~~large byone-time ~~$0.2~~customer ~~million~~delivery ~~for~~during the ~~nine~~three months ended ~~October~~April 3130, 2022 ~~compared~~that todid not recur for the ~~nine~~three months ended ~~October~~April 3130, ~~2021, primarily due to the delivery of third-party products, partially offset by a decrease in perpetual license sales~~2023.

Service Revenue

Service revenue consists of maintenance and support and professional services and other. Service revenue increased by $21.56 million ~~and $3.4 million~~ for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2022~~2023, ~~respectively,~~ as compared to the three ~~and nine~~ months ended ~~October~~April 3130, ~~2021~~2022, respectively. The increase in ~~both~~ the three ~~and nine~~ months ended ~~October~~April 3130, ~~2022~~2023 is primarily due to an increase in professional services revenue, driven by ~~increased~~customer ~~sales~~demand for project work and ~~higher~~leading to increased customer utilization of the professional services team. Additionally, ~~while~~ maintenance and support revenue ~~remained~~had ~~relatively~~an ~~consistent~~increase related to the renewal of maintenance contracts at higher rates for market increases.

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 3912% for the three months ended ~~October~~April 3130, ~~2022~~2023 as compared to the three months ended ~~October~~April 3130, ~~2021~~2022, reflecting an increased professional services margin, driven primarily by ~~a dedicated, fully-utilized team for one significant customer. Gross profit margin~~ increased ~~23%~~demand ~~for the nine months ended October 31, 2022 as compared to the nine months ended October 31, 2021, reflecting an increase~~ in ~~services margin, driven by the high-margin~~ professional services ~~revenue~~and ~~previously~~a ~~mentioned~~dedicated, ~~partially offset by a decrease in product margin due to lower~~fully-~~margin~~utilized ~~third-party~~team ~~products~~for ~~delivered~~one insignificant ~~the period~~customer. Service gross profit margin increased ~~154~~13% ~~and 67%~~ for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2022~~2023, ~~respectively,~~ as compared to the three ~~and nine~~ months ended ~~October~~April 3130, ~~2021~~2022, ~~respectively,~~ primarily due to an increase in demand for professional services ~~revenue,~~resulting ~~due~~in to higher utilization of the professional services team, while associated costs ~~remained~~were ~~relatively~~reduced ~~consistent. Product gross profit margin decreased~~ by ~~71%~~nearly ~~and~~$0.5 ~~24%~~million for the three and nine months ended October 31, 2022, respectively, as compared to the three and nine months ended October 31, 2021, respectively, primarily due to the sale and cost of lower margin third-party products.

related to headcount attrition, incentive compensation and lower third-party costs were offset by $0.5 million increase in contract labor and related contractor expenses primarily required for a single significant customer. Product gross profit margin decreased by 5% for the three months ended April 30, 2023 as compared to the three months ended April 30, 2022, primarily due to sales of lower margin third-party products at a lower margin than the previous year, which included a large one-time customer delivery.

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 Ended April 30,						Change
	2023			2022			$		%
	(Amounts in thousands, except for percentage data)
Research and development expenses	$	1,797		$	1,707		$	90		5.3	%
% of total revenue		25.7	%		25.4	%

~~allocation~~Research ofand ~~related~~development ~~facility~~ expenses increased by $0.1 ~~The~~million ~~following~~for ~~table~~the ~~provides~~three ~~information~~months ~~regarding~~ended April 30, 2023 as compared to the ~~change~~three months ended April 30, 2022. The increase in research and development expenses ~~during~~for the ~~periods~~three ~~presented:~~months ended April 30, 2023 was primarily due to a $0.1 million increase in salaries and compensation for new hires.

	For the Three Months Ended October 31,						Change						For the Nine Months Ended October 31,						Change
	2022			2021			$			%			2022			2021			$			%
	(Amounts in thousands, except for percentage data)												(Amounts in thousands, except for percentage data)
Research and development expenses	$	2,012		$	2,090		$	(78	)		(3.7	%)	$	5,675		$	6,971		$	(1,296	)		(18.6	%)
% of total revenue		24.3	%		29.2	%								25.4	%		37.2	%

Research and development expenses decreased by $0.1 million and $1.3 million for the three and nine months ended October 31, 2022, respectively, as compared to the three and nine months ended October 31, 2021, respectively. The decrease in research and development expenses for the three months ended October 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. These decreases were partially offset by an increase in contract labor of $0.2 million. The decrease in research and development expenses for the nine months ended October 31, 2022 were primarily due to a $0.7 million decrease in salaries and compensation costs and a $0.4 million decrease in contract labor associated with the reduction in headcount and outside services in relation to cost-saving efforts implemented in fiscal 2022, and a $0.4 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 Ended October 31,						Change						For the Nine Months Ended October 31,						Change
	For the Three Months Ended April 30,						Change
	2022			2021			$			%			2022			2021			$			%
	2023			2022			$			%
	(Amounts in thousands, except for percentage data)												~~(Amounts in thousands, except for percentage data)~~
Selling and marketing expenses	$	~~1,086~~907		$	~~1,449~~982		$	(~~363~~75	)		(257.16	%)	$	~~3,002~~		$	~~4,472~~		$	~~(1,470~~	)		~~(32.9~~	%)
% of total revenue		13.10	%		2014.36	%								~~13.4~~	%		~~23.9~~	%

Selling and marketing expenses decreased by $0.~~4 million and $~~1.5 million for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2022~~2023, ~~respectively,~~ as compared to the three ~~and nine~~ months ended ~~October~~April 3130, ~~2021, respectively~~2022. ~~The~~Although costs remained relatively consistent, the decreases in selling and marketing expenses for the three months ended ~~October~~April 3130, ~~2022~~2023 were primarily ~~due~~attributable to a reduction in contract labor of ~~$0.1~~about ~~million, a~~ $0.~~2 million decrease in intangible asset amortization and a $0.~~1 million ~~decrease in professional fees and outside services~~. The decrease for the nine months ended October 31, 2022 are primarily attributable to a $0.6 million decrease in compensation associated with the reduction in headcount in relation to cost-saving efforts implemented in fiscal 2022, a $0.2 million reduction in professional fees and outside services, a $0.1 million reduction in contract labor, and a $0.6 million decrease in intangible asset amortization due to the intangible assets being fully amortized.

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 Ended October 31,						Change						For the Nine Months Ended October 31,						Change
	For the Three Months Ended April 30,						Change
	2022			2021			$			%			2022			2021			$			%
	2023			2022			$			%
	(Amounts in thousands, except for percentage data)												~~(Amounts in thousands, except for percentage data)~~
General and administrative expenses	$	2,~~085~~113		$	2,~~110~~286		$	(25173	)		(17.26	%)	$	~~6,479~~		$	~~6,897~~		$	~~(418~~	)		~~(6.1~~	%)
% of total revenue		2530.2	%		2934.50	%								~~29.0~~	%		~~36.8~~	%

26General and administrative expenses decreased by $0.2 million for the three months ended April 30, 2023 as compared to the three months ended April 30, 2022. The decrease in general and administrative expenses for the three months ended April 30, 2023 was primarily attributable to a $0.1 million reduction in provision for credit losses and a $0.2 million reduction in professional fees related to reduced audit fees and the transition of our contracted third-party accounting resourcing program offset by a $0.1 million increase in salaries for new internal staff hires to perform accounting services in-house.

General and administrative expenses decreased by less than $0.1 million and $0.4 million for the three and nine months ended October 31, 2022, respectively, as compared to the three and nine months ended October 31, 2021, respectively, The decrease in general and administrative expenses for the three months ended October 31, 2022 were primarily due to a $0.1 million decrease in share-based compensation expense, offset by a $0.1 million increase in legal and outside professional fees. The decrease in general and administrative expenses for the nine months ended October 31, 2022 were primarily due to a $0.7 million decrease in share-based compensation expense and a $0.2 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 $0.4 million increase in the provision for bad debts.23

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 Ended October 31,						Change						For the Nine Months Ended October 31,						Change
	For the Three Months Ended April 30,						Change
	2022			2021			$			%			2022			2021			$			%
	2023			2022			$			%
	(Amounts in thousands, except for percentage data)												~~(Amounts in thousands, except for percentage data)~~
Severance and restructuring costs	$	~~379~~44		$	75165		$	~~304~~(121	)		~~405~~(73.3	%)	$	~~572~~		$	~~646~~		$	~~(74~~	)		~~(11.5~~	%)
% of total revenue		40.6	%		12.05	%								~~2.6~~	%		~~3.4~~	%

Severance and restructuring costs ~~increased by $0.3 million and~~ decreased by $0.1 million for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2022~~2023, ~~respectively,~~ as compared to the three ~~and nine~~ months ended ~~October~~April 3130, ~~2021, respectively. Severance and restructuring costs for the three months ended October 31,~~ 2022 ~~were less than $0~~.4 ~~million.~~ Severance ~~and restructuring~~ costs ~~for the nine months ended October 31, 2022~~ consisted ~~primarily~~ of employee-related termination benefits ~~in the amount of $0~~.~~4 million.~~

Transaction Costs

Transaction costs related to ~~the~~merger ~~terminated~~and ~~Merger~~acquisition ~~totaled~~activity ~~less~~were ~~than~~ $0.1 million ~~and~~for the three months ended April 30, 2023, compared to fees related to the terminated Merger Agreement of $10.28 million for ~~the~~ three ~~and nine~~ months ended ~~October~~April 3130, 2022,. ~~respectively,~~Transaction ~~and~~costs ~~included~~include third-party direct costs such as legal, accounting, and other professional fees. ~~Transaction costs were expensed as incurred.~~

Loss on Impairment of Goodwill

As a result of the significant decrease in our publicly quoted share price and market capitalization during the second and third quarters of fiscal 2023, we performed a quantitative test of our goodwill as of July 31, 2022 and October 31, 2022. As a result of these quantitative tests, we identified an impairment to goodwill resulting in recognition of a $5.8 million non-cash goodwill impairment charge in the second quarter of fiscal 2023 and a $3.3 million non-cash goodwill impairment charge in the third quarter of fiscal 2023, for a total of $9.1 million for the nine months ended October 31, 2022. There were no impairment charges recorded during the three and nine months ended October 31, 2021.

Other Income (Expense), Net

The table below provides detail regarding our other income (expense), net:

	For the Three Months Ended October 31,						Change						For the Nine Months Ended October 31,						Change
	For the Three Months Ended April 30,						Change
	2022			2021			$			%			2022			2021			$			%
	2023			2022			$			%
	(Amounts in thousands, except for percentage data)												~~(Amounts in thousands, except for percentage data)~~
Interest income, net	$	~~105~~217		$	8075		$	25142			31189.3	%	$	~~270~~		$	~~188~~		$	82			~~43.6~~	%
Foreign exchange loss, net		(~~129~~91	)		(~~198~~357	)		69266			(3474.85	%)		~~(547~~	)		~~(399~~	)		~~(148~~	)		~~37.1~~	%
Miscellaneous income, net		415			5123			(478	)		(9234.28	%)		34			~~128~~			~~(94.00~~	)		~~(73.4~~	%)
	$	(20	)	$	(67	)	$	47					$	(243	)	$	(83	)	$	(160	)
		141		$	(259	)	$	400

Interest income consists of interest received from our bank accounts and our investments in U.S. Treasury Securities and corporate bonds. Our foreign exchange loss, net is primarily due to the revaluation of intercompany notes.

Income Tax Provision

We recorded income tax ~~benefits~~provision ~~and provisions~~ of less than $0.1 million for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2022~~2023 and ~~2021~~2022. 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 benefited 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 of ~~October~~April 3130, ~~2022~~2023, due to the uncertainty related to the ultimate use of ~~certain~~ deferred income tax assets, we have recorded a valuation allowance on ~~certain~~these deferred assets.

We file income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various foreign jurisdictions. WeAs ~~have~~of ~~closed~~April ~~out~~30, an2023, ~~audit with~~ the ~~Internal~~Company ~~Revenue~~is ~~Service~~subject ~~for~~to ~~our~~ U.S. Federal income tax ~~returns~~examinations ~~through~~and ~~fiscal~~other ~~2013;~~jurisdictions ~~however~~for the years 2016 through 2022. 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 Nine Months Ended October 31,
	2022			2021
	(Amounts in thousands)
Net cash used in operating activities	$	(2,120	)	$	(5,500	)
Net cash (used in) provided by investing activities		(124	)		174
Net cash provided by financing activities		7			17,599
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(838	)		(467	)
Net (decrease) increase in cash, cash equivalents and restricted cash		(3,075	)	$	11,806

Historically, we have financed our operations and capital expenditures primarily with our cash and investments. Our cash, cash equivalents, and restricted cash totaled $14.8 million as of October 31, 2022. In December 2022, we purchased $4.9 million of short-term government securities and $0.5 million of corporate bonds.


	For the Three Months Ended April 30,
	2023			2022
	(Amounts in thousands)
Net cash provided by (used in) operating activities	$	579		$	(743	)
Net cash used in investing activities		(167	)		(15	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(26	)		(328	)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	386		$	(1,086	)

~~In the first nine months of fiscal 2022~~Historically, we ~~entered~~have ~~into~~financed ~~the Lease Termination Agreement with respect to~~ our ~~former~~operations ~~headquarters~~and incapital ~~Waltham,~~expenditures ~~Massachusetts.~~primarily ~~In connection~~ with ~~the~~our ~~early~~cash ~~termination~~and ~~of the sublease the Company paid the sublandlord a termination payment of approximately $0~~investments.4 ~~million~~Our ~~against an obligation of approximately $2.8 million. Prior to the execution of the Lease Termination Agreement~~cash, ~~the~~cash ~~sublease had been scheduled to expire in February 2025. As a result of the Lease Termination Agreement~~equivalents, werestricted ~~expect~~cash ~~annualized savings of approximately $0.6 million in facilities costs through the former lease term. Additionally, in the first nine months of fiscal 2022, we issued~~ and ~~sold~~marketable ~~10,323,484~~securities ~~shares~~totaled ~~of common stock at a public offering price of~~ $115.~~85 per share. The Offering resulted in approximately $17.~~5 million inat ~~proceeds,~~April ~~net of underwriting discounts and commissions of 6.5%~~30, ~~or $0~~2023.~~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~~Net ~~Nasdaq~~cash ~~Listing~~provided by (used in) operating activities

OnNet ~~June~~cash ~~17,~~provided ~~2022,~~by weoperating ~~received~~activities awas ~~deficiency~~$0.6 ~~letter~~million ~~from~~for the ~~Staff~~three ~~notifying~~months usended ~~that~~April 30, ~~for~~2023, ~~the~~resulting ~~last~~from 30(i) ~~consecutive~~our ~~business~~net ~~days~~loss of $0.7 million, ~~the~~(ii) ~~closing~~an ~~bid~~offset ~~price~~of $0.5 cumulative non-cash charges consisting of $0.1 million for ~~our~~depreciation, ~~common~~$0.4 million for stock-based ~~has~~compensation ~~been~~and ~~below~~$0.1 ~~the~~million ~~Minimum~~for ~~Bid~~foreign ~~Price~~currency ~~Requirement~~transaction loss, and (iii) a net change in working capital of $0.8 ~~The~~million, ~~Nasdaq~~including ~~deficiency~~a ~~letter~~$3.2 ~~has~~million nodecrease ~~immediate~~in ~~effect~~accounts onreceivable due to the ~~listing~~timing of ~~our~~collections ~~common~~and ~~stock~~a $0.3 million increase in accounts payable, ~~and~~partially ~~our~~offset ~~common~~by ~~stock~~a ~~will~~$0.6 ~~continue~~million increase in unbilled receivables due to ~~trade~~timing onof ~~The~~milestone ~~Nasdaq~~billings, ~~Global~~a ~~Select~~$0.5 ~~Market~~million ~~under~~increase in prepaid expenses and other current assets and other assets due to our annual insurance renewal in the ~~symbol~~quarter ~~“SEAC”~~ended April 30, 2023, a $1.6 million decrease in accrued expenses and other liabilities due to April 2023 payments of bonuses and commissions accrued for at ~~this~~January ~~time~~31, 2023 and a $0.1 million decrease in deferred revenue.

28Net cash used in operating activities was $0.7 million for the three months ended April 30, 2022 due to our (i) 3.0 million net loss, (ii) operating activity non-cash adjustments of $0.8 million, including $0.1 million of depreciation expense, a $0.1 million provision for bad debt, $0.3 million of stock-based compensation expense, and $0.4 million of realized and unrealized foreign currency transaction losses, and (iii) net cash inflows of $1.5 million provided by changes in our operating assets and liabilities, including (but not limited to) a $1.4 million decrease in accounts receivable attributable to the collection of perpetual license invoices, a $0.1 million decrease in unbilled receivables attributable to the passage of time on installment invoicing of perpetual licenses previously sold for which we recognized revenue at the time of delivery, a $0.4 million increase in prepaid expenses and other current assets and other assets primarily attributable to the prepayment of annual insurance premiums, a $0.7 million decrease in accounts payable attributable to the timing of vendor payments, a $0.1 million increase in accrued expenses and other liabilities for goods and services received but not yet billed for, and a $0.9 million increase in deferred revenue attributable to up-front invoicing for which we recognize revenue over a period of time.

InNet ~~accordance~~cash ~~with~~used ~~Nasdaq~~in ~~Listing~~investing Rule 5810(c)(3)(A), we have been given 180 calendar days, or until December 14, 2022, to regain compliance with the Minimum Bid Price Requirement. If at any time before December 14, 2022, the bid price of our 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.activities

IfNet wecash doused ~~not~~in ~~regain~~investing ~~compliance~~activities ~~with~~was ~~the Minimum Bid Price Requirement by December 14, 2022, we may be afforded a second 180 calendar day period to regain compliance~~$0.2 Tomillion ~~qualify, we 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~~three ~~Bid~~months ~~Price~~ended ~~Requirement.~~April ~~In addition~~30, we2023 ~~would~~due ~~be required~~ to ~~notify~~purchases ~~Nasdaq~~ of ~~our~~marketable ~~intent~~securities toof ~~cure the deficiency during the second compliance period~~$0.2 Following a transfer to The Nasdaq Capital Market, we will be afforded the second 180 calendar day period to regain compliance, unless it does not appear to Nasdaq that it is possible for us to cure the deficiencymillion. IfNet wecash doprovided ~~not regain compliance with the Minimum Bid Price Requirement~~ by ~~the~~investing ~~end~~activities ofwas ~~the~~less ~~compliance~~than ~~period (or the second compliance period, if applicable), our common stock will become subject to delisting~~0.1 Inmillion for the ~~event~~three ~~that~~months weended ~~receive~~April ~~notice that our common stock is being delisted~~30, ~~the~~2022 ~~Nasdaq~~due ~~listing rules permit us~~ to ~~appeal~~purchases aof ~~delisting~~property ~~determination~~and ~~by the Staff to a hearings panel~~equipment.

WeContinued intend to monitor the closing bid price of our 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 we will be able to regain compliance with the Minimum Bid Price Requirement or will otherwise be in compliance with other Nasdaq Listing ~~Rules.~~and ~~compliance~~Reverse ~~with~~Stock ~~the Minimum Bid Price Requirement or will otherwise be in compliance with other Nasdaq Listing Rules. The Company filed an application to be listed on The Nasdaq Capital Market on December 6, 2022.~~Split

~~Net~~On ~~cash~~June ~~used~~17, 2022, we received notification from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) stating that the Company did not comply with the minimum $1.00 bid price requirement for continued listing set forth in ~~operating~~Nasdaq ~~activities~~(the “Bid Price Requirement”). In accordance with Nasdaq listing rules, the Company was afforded 180 calendar days (until December 14, 2022) to regain compliance with the Bid Price Requirement. On December 15, 2022, the Company received written notice from Nasdaq stating that, although the Company had not regained compliance with the Bid Price Requirement by December 14, 2022, in accordance with Nasdaq listing rules, the Company is eligible for an additional 180 calendar day period, or until June 12, 2023 (the “Extended Compliance Date”), to regain compliance with the Bid Price Requirement. Nasdaq’s determination was based on, among

Net cash used in operating activities was $2.1 million for the nine months ended October 31, 2022. Net cash used in operating activities was primarily the result of our net loss of $13.1 million, offset by a $9.1 million non-cash goodwill impairment charge, $0.2 million non-cash expense for depreciation and amortization, a $0.7 million non-cash expense for stock-based compensation and a $0.5 million non-cash foreign currency transaction loss, and changes in working capital, which include a $1.5 million decrease in accounts receivable, a $0.9 million increase in unbilled receivables, a $0.2 million increase in prepaid expenses and other current assets and other assets, a $0.7 million increase in accounts payable, a $1.2 million decrease in accrued expenses and other liabilities and a $1.4 million decrease in deferred revenue.25

~~Net~~other ~~cash~~things, ~~used~~(1) ~~in operating activities was $5.5 million for~~ the ~~nine~~Company’s ~~months~~written ~~ended~~notice ~~October~~of ~~31,~~its ~~2021.~~intention ~~Net~~to ~~cash~~transfer ~~used~~to inThe ~~operating~~Nasdaq ~~activities~~Capital ~~was~~Market ~~primarily~~ (the ~~result~~“Capital ofMarket”) ~~our~~(as ~~net~~issuers ~~loss~~on ofThe ~~$5.9~~Nasdaq ~~million,~~Global aSelect ~~$1.1~~Market ~~million~~(the ~~non-cash~~“Global ~~expense~~Select ~~for~~Market”) ~~depreciation~~are ~~and~~not ~~amortization,~~eligible afor ~~$1.3~~an ~~million~~additional ~~non~~180-~~cash~~day ~~expense~~compliance ~~for~~period) ~~stock-based~~and ~~compensation,~~to acure ~~$0.3~~the ~~million~~deficiency ~~non-cash~~by ~~gain on~~ the ~~write-off~~Extended ofCompliance ~~our~~Date ~~operating~~by ~~lease~~effecting ~~right-of-use~~a ~~assets~~reverse ~~and~~stock ~~liabilities~~split, inif ~~relation to the Waltham lease termination~~necessary, aand $(2.4) ~~million~~the ~~non-cash~~Company ~~gain~~meeting onthe ~~extinguishment~~continued oflisting ~~debt~~requirement ~~related~~for tomarket ~~the~~value ~~fully~~of ~~forgiven~~publicly ~~Paycheck~~held ~~Protection~~shares ~~Program~~and ~~note,~~all aother ~~$0.4~~initial ~~million~~listing ~~non-cash~~requirements ~~foreign~~for ~~currency~~the ~~transaction~~Capital ~~loss~~Market, ~~and~~with ~~changes~~the inexception ~~working~~of ~~capital,~~the ~~which~~Bid ~~include~~Price ~~a $0~~Requirement.7 ~~million~~On ~~decrease~~December ~~in accounts receivable~~15, ~~a $0.4 million decrease in unbilled receivables~~2022, aNasdaq ~~$2.0~~approved ~~million~~the ~~decrease~~Company’s intransfer ~~prepaid~~from ~~expenses~~the ~~and~~Global ~~other~~Select ~~current~~Market ~~assets~~to ~~and~~the ~~other~~Capital ~~assets~~Market, a ~~$0.1~~continuous ~~million~~trading ~~decrease~~market inthat ~~accounts~~operates ~~payable, a $0.2 million decrease~~ in ~~accrued~~substantially ~~expenses~~the ~~and~~same ~~other~~manner ~~liabilities,~~as ~~and~~the aGlobal ~~$2.3~~Select ~~million decrease in deferred revenue~~Market.

~~Net~~In ~~cash~~an ~~(used~~effort to regain compliance with the Bid Price Requirement, on April 6, 2023, the Board approved a discretionary reverse stock split of the Company’s common stock in the range of 1-for‑15 shares and 1‑for-25 shares (the “Reverse Stock Split”), ~~provided~~subject byto ~~investing~~stockholder ~~activities~~approval at the Company’s annual meeting of stockholders held on May 19, 2023 (the “Annual Meeting”). At the Annual Meeting, the stockholders approved the Reverse Stock Split at a ratio in the range of 1-for-15 to 1-for-25, with such ratio to be determined at the discretion of the Board. On May 19, 2023, the Board approved a reverse stock split of 1-for-20 to also be effective as of May 19, 2023. Proportionate adjustments were made to the exercise price and number of shares issuable upon the exercise of the options outstanding under the Company’s equity incentive plans, and the number of shares subject to restricted stock units, deferred stock units and performance stock units under the Company’s equity incentive plans. No fractional shares of common stock were issued in connection with the Reverse Stock Split. Instead, any fractional shares of common stock that would have otherwise resulted from the Reverse Stock Split were rounded up to the nearest whole share.

~~Net~~All ~~cash~~references ~~used~~to incommon ~~investing activities was $0.1 million for the nine months ended October 31~~stock, ~~2022~~equity-based ~~due~~common tostock ~~purchases~~awards ~~of property~~ and ~~equipment.~~all ~~Net~~share ~~cash~~and ~~provided~~per byshare ~~investing~~data ~~activities~~contained ~~was~~in ~~$0.2~~this ~~million~~Form ~~for~~10-Q ~~the~~have ~~nine~~been ~~months~~adjusted ~~ended October 31, 2021 due~~ to ~~proceeds~~reflect ~~from~~ the ~~sales~~Reverse ~~and~~Stock ~~maturities~~Split ofunless ~~our~~explicitly ~~marketable~~stated ~~securities, partially offset by purchases of property and equipment~~otherwise.

~~Net~~If, ~~cash~~at ~~provided~~any bytime ~~financing~~before ~~activities~~the Extended Compliance Date, the bid price for the Company’s common stock shares closes at $1.00 or more for a minimum of 10 consecutive business days as required under the Bid Price Requirement, Nasdaq will provide written notification to the Company that it complies with the Bid Price Requirement. From the May 23, 2023 date that the Company's common stock began trading on a post-split basis on Nasdaq, the Company has maintained a minimum bid price of $1.00 in excess of 10 consecutive business days as required under the Bid Price Requirement, and, on June 7, 2023, Nasdaq notified the Company that it had regained compliance with the Bid Price Requirement.

The Company had less than $0.1 million in financing activities for the nine months ended October 31, 2022. Net cash provided by financing activities was $17.6 million for nine months ended October 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 the World Health Organization on March 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.

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 ~~nine~~three months ended ~~October~~April 3130, ~~2022~~2023 from those disclosed in our financial statements and the related notes and other financial information included in our Form 10-K on file with the SEC, except for additional updated disclosures as described in Part I, Item I, Note 2, “Significant Accounting Policies, Revenue Recognition” ofto this Form 10-Q and the removal of goodwill, intangible assets and impairment of long-lived assets as described in Part V, Item 15, Note 2, “Significant Accounting Policies, Use of Estimates, Goodwill and Other Intangible Assets and Impairment of Long-lived Assets” to the Company's Form 10-K filed with the SEC on April 17, 2023.

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 SEC.

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.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for this reporting period and are not required to provide the information required under this item.

ITEM 4. Controls and Procedures

Evaluation of disclosure controls and procedures. We maintain “disclosure controls and procedures,” as defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of October 31, 2022, in accordance with the requirements under Rule 13a-15(b) of the Exchange Act, our principal executive officer and principal financial officer concluded that, as of that date, our disclosure controls and procedures were effective.26

~~Changes~~or insubmit ~~internal~~under ~~control~~the ~~over~~Exchange ~~financial~~Act ~~reporting.~~is ~~There~~(1) ~~were~~recorded, noprocessed, ~~changes~~summarized inand ~~our~~reported, ~~internal~~within ~~controls~~the ~~over~~time ~~financial~~periods ~~reporting~~specified ~~during~~in the ~~quarter~~SEC’s ~~ended~~rules ~~October~~and ~~31,~~forms ~~2022~~and ~~that~~(2) ~~have~~accumulated ~~materially~~and ~~affected,~~communicated ~~or are reasonably likely~~ to ~~materially~~our ~~affect~~management, including our ~~internal~~principal ~~controls~~executive ~~over~~officer ~~financial~~and ~~reporting.~~principal Wefinancial ~~have~~officer, ~~not experienced any material impact~~ to ~~our~~allow ~~internal~~timely ~~controls~~decisions ~~over~~regarding ~~financial~~required ~~reporting~~disclosure. ~~despite~~Management ~~the~~recognizes ~~fact~~ that ~~most~~any ofcontrols ~~our~~and ~~employees~~procedures, ~~are~~no ~~working~~matter ~~remotely~~how ~~due~~well todesigned ~~the~~and ~~COVID-19~~operated, ~~pandemic.~~can Weprovide ~~are~~only ~~continually~~reasonable ~~monitoring~~assurance ~~and~~of ~~assessing~~achieving ~~the~~their ~~COVID-19~~objectives ~~situation~~and onmanagement ~~our~~necessarily ~~internal~~applies ~~controls~~its tojudgment ~~minimize~~in evaluating the ~~impact~~cost-benefit onrelationship ~~their~~of ~~design~~possible controls and ~~operating effectiveness~~procedures.

Based on the evaluation of our disclosure controls and procedures as of April 30, 2023, in accordance with the requirements under Rule 13a-15(b) of the Exchange Act, our principal executive officer and principal financial officer concluded that, as of that date, our disclosure controls and procedures were effective.

Changes in internal control over financial reporting. There were no changes in our internal controls over financial reporting during the quarter ended April 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

We are not currently a party to any material legal proceedings. From time to time, we may be subject to various legal proceedings and claims that arise in the ordinary course of our business activities. Regardless of the outcome, litigation can have a material adverse effect on us because of defense and settlement costs, diversion of management resources, and other factors.

Further, we enter into agreements in the ordinary course of business with customers, resellers, distributors, integrators and suppliers. Most of our historical agreements require us to defend and/or indemnify the other party against intellectual property infringement claims brought by a third party with respect to our products. From time to time, we also indemnify customers and business partners for damages, losses and liabilities they may suffer or incur relating to personal injury, personal property damage, product liability, and environmental claims relating to the use of our products and services or resulting from the acts or omissions of us, our employees, authorized agents or subcontractors. Management cannot reasonably estimate any potential losses, but these claims could result in material liability for us (see Part I, Item I, Note 25, “Commitments and Contingencies” to this Form 10-Q for more information).

In December 2022, we received a demand letter from a customer in connection with an infringement claim. Management cannot reasonably estimate any potential loss related to this claim, however management does not believe any potential loss would be material to the financial statements.

ITEM 1A. Risk Factors

In addition to the other information set forth in this Form 10-Q, you should carefully consider the risks discussed in our ~~Quarterly Report on~~ Form 10-~~Q filed with the SEC on June 8, 2022 (the “June 2022 10-Q”), our Form 10-~~K and those set forth from time to time in our other filings with the SEC. There have been no material changes in our risk factors from those described in our Form 10-K ~~and our June 2022 10-Q~~. The risks described in such reports are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or future results.

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

None.

ITEM 3. Defaults Upon Senior Securities

Not applicable.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

ITEM 6. Exhibits

The following list of exhibits includes exhibits submitted with this Form 10-Q as filed with the SEC and those incorporated by reference to other filings.

Index to Exhibits

No.		Description
3.1		Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q previously filed on June 11, 2021 with the SEC and incorporated herein by reference).
10.1*		Form of Restricted Stock Unit Agreement for Unregistered Shares to Non-Employee Directors pursuant to the Company's Amended and Restated 2021Compensation and Incentive Plan.
3.2		Amended and Restated By-laws of the Company (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K previously filed on May 18, 2021 with the SEC and incorporated herein by reference).
10.1		Offer Letter, dated August 3, 2022, by and between SeaChange International, Inc. and Kathleen Mosher. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K previously filed on August 9, 2022 with the SEC and incorporated herein by reference).
10.2		Managing Director Service Contract dated August 16, 2022 between SEAC Germany GmbH and Christoph Klimmer (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K previously filed on August 17, 2022 with the SEC and incorporated herein by reference).
10.3		Supplement to Managing Director Service Contract dated August 16, 2022 between SEAC Germany GmbH and Christoph Klimmer (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K previously filed on August 17, 2022 with the SEC and incorporated herein by reference).
10.4		Employee Transition Separation Agreement and General Release between SeaChange International, Inc. and Michael Prinn dated August 24, 2022 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K previously filed on August 30, 2022 with the SEC and incorporated herein by reference).
10.5		SeaChange International, Inc. Amended and Restated 2021 Compensation and Incentive Plan and forms of Non-Employee Director Deferred Stock Unit Agreement, Non-Employee Director Restricted Stock Unit Agreement, Employee Restricted Stock Unit Agreement, Employee Performance Stock Unit Agreement, Section 16 Officer Restricted Stock Unit Agreement, Section 16 Officer Performance Stock Unit Agreement, Incentive Stock Option Agreement and Non-Qualified Stock Option Agreement thereunder (filed as Exhibit 99.1 to SeaChange’s Registration Statement on Form S-8 previously filed on September 16, 2022 with the SEC and incorporated herein by reference).
31.1*		Certification Pursuant to Rule 13a-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification Pursuant to Rule 13a-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		Inline XBRL Instance Document. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH*		Inline XBRL Taxonomy Extension Schema Document.
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 filed herewith).

* Filed herewith.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, SeaChange International, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: ~~December~~June 1412, ~~2022~~2023

SEACHANGE INTERNATIONAL, INC. by: /s/ PETER AQUINO Peter Aquino Chief Executive Officer(Principal Executive Officer) by: /s/ ~~KATHLEEN~~MARK ~~MOSHER~~SZYNKOWSKI ~~Kathleen~~Mark ~~Mosher~~Szynkowski Chief Financial Officer,Senior Vice President and Treasurer(Principal Financial Officer and Principal Accounting Officer)

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