000089248212/312021Q3False00008924822021-01-012021-09-30xbrli:shares00008924822021-10-29iso4217:USD00008924822021-09-3000008924822020-12-31iso4217:USDxbrli:shares0000892482us-gaap:LicenseAndServiceMember2021-07-012021-09-300000892482us-gaap:LicenseAndServiceMember2020-07-012020-09-300000892482us-gaap:LicenseAndServiceMember2021-01-012021-09-300000892482us-gaap:LicenseAndServiceMember2020-01-012020-09-300000892482us-gaap:ServiceMember2021-07-012021-09-300000892482us-gaap:ServiceMember2020-07-012020-09-300000892482us-gaap:ServiceMember2021-01-012021-09-300000892482us-gaap:ServiceMember2020-01-012020-09-3000008924822021-07-012021-09-3000008924822020-07-012020-09-3000008924822020-01-012020-09-300000892482us-gaap:CommonStockMember2019-12-310000892482us-gaap:AdditionalPaidInCapitalMember2019-12-310000892482us-gaap:RetainedEarningsMember2019-12-310000892482us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-3100008924822019-12-310000892482us-gaap:RetainedEarningsMember2020-01-012020-03-3100008924822020-01-012020-03-310000892482us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310000892482us-gaap:CommonStockMember2020-01-012020-03-310000892482us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310000892482us-gaap:CommonStockMember2020-03-310000892482us-gaap:AdditionalPaidInCapitalMember2020-03-310000892482us-gaap:RetainedEarningsMember2020-03-310000892482us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-3100008924822020-03-310000892482us-gaap:RetainedEarningsMember2020-04-012020-06-3000008924822020-04-012020-06-300000892482us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300000892482us-gaap:CommonStockMember2020-04-012020-06-300000892482us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300000892482us-gaap:CommonStockMember2020-06-300000892482us-gaap:AdditionalPaidInCapitalMember2020-06-300000892482us-gaap:RetainedEarningsMember2020-06-300000892482us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-3000008924822020-06-300000892482us-gaap:RetainedEarningsMember2020-07-012020-09-300000892482us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300000892482us-gaap:CommonStockMember2020-07-012020-09-300000892482us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300000892482us-gaap:CommonStockMember2020-09-300000892482us-gaap:AdditionalPaidInCapitalMember2020-09-300000892482us-gaap:RetainedEarningsMember2020-09-300000892482us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-3000008924822020-09-300000892482us-gaap:CommonStockMember2020-12-310000892482us-gaap:AdditionalPaidInCapitalMember2020-12-310000892482us-gaap:RetainedEarningsMember2020-12-310000892482us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000892482us-gaap:RetainedEarningsMember2021-01-012021-03-3100008924822021-01-012021-03-310000892482us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000892482us-gaap:CommonStockMember2021-01-012021-03-310000892482us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000892482us-gaap:CommonStockMember2021-03-310000892482us-gaap:AdditionalPaidInCapitalMember2021-03-310000892482us-gaap:RetainedEarningsMember2021-03-310000892482us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-3100008924822021-03-310000892482us-gaap:RetainedEarningsMember2021-04-012021-06-3000008924822021-04-012021-06-300000892482us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300000892482us-gaap:CommonStockMember2021-04-012021-06-300000892482us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300000892482us-gaap:CommonStockMember2021-06-300000892482us-gaap:AdditionalPaidInCapitalMember2021-06-300000892482us-gaap:RetainedEarningsMember2021-06-300000892482us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-3000008924822021-06-300000892482us-gaap:RetainedEarningsMember2021-07-012021-09-300000892482us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000892482us-gaap:CommonStockMember2021-07-012021-09-300000892482us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300000892482us-gaap:CommonStockMember2021-09-300000892482us-gaap:AdditionalPaidInCapitalMember2021-09-300000892482us-gaap:RetainedEarningsMember2021-09-300000892482us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-30qumu:segmentqumu:reporting_unit0000892482us-gaap:LicenseAndServiceMembersrt:ScenarioPreviouslyReportedMember2020-07-012020-09-300000892482us-gaap:LicenseAndServiceMembersrt:ScenarioPreviouslyReportedMember2020-01-012020-09-300000892482srt:ScenarioPreviouslyReportedMemberqumu:SubscriptionmaintenanceandsupportMember2020-07-012020-09-300000892482qumu:SubscriptionmaintenanceandsupportMember2020-07-012020-09-300000892482srt:ScenarioPreviouslyReportedMemberqumu:SubscriptionmaintenanceandsupportMember2020-01-012020-09-300000892482qumu:SubscriptionmaintenanceandsupportMember2020-01-012020-09-300000892482qumu:ProfessionalservicesandotherMembersrt:ScenarioPreviouslyReportedMember2020-07-012020-09-300000892482qumu:ProfessionalservicesandotherMember2020-07-012020-09-300000892482qumu:ProfessionalservicesandotherMembersrt:ScenarioPreviouslyReportedMember2020-01-012020-09-300000892482qumu:ProfessionalservicesandotherMember2020-01-012020-09-300000892482srt:ScenarioPreviouslyReportedMemberus-gaap:ServiceMember2020-07-012020-09-300000892482srt:ScenarioPreviouslyReportedMemberus-gaap:ServiceMember2020-01-012020-09-300000892482srt:ScenarioPreviouslyReportedMember2020-07-012020-09-300000892482srt:ScenarioPreviouslyReportedMember2020-01-012020-09-300000892482us-gaap:CustomerRelationshipsMember2021-09-300000892482us-gaap:DevelopedTechnologyRightsMember2021-09-300000892482us-gaap:TrademarksAndTradeNamesMember2021-09-300000892482us-gaap:CustomerRelationshipsMember2020-12-310000892482us-gaap:DevelopedTechnologyRightsMember2020-12-310000892482us-gaap:TrademarksAndTradeNamesMember2020-12-310000892482us-gaap:CostOfSalesMember2021-07-012021-09-300000892482us-gaap:CostOfSalesMember2020-07-012020-09-300000892482us-gaap:CostOfSalesMember2021-01-012021-09-300000892482us-gaap:CostOfSalesMember2020-01-012020-09-300000892482us-gaap:OperatingExpenseMember2021-07-012021-09-300000892482us-gaap:OperatingExpenseMember2020-07-012020-09-300000892482us-gaap:OperatingExpenseMember2021-01-012021-09-300000892482us-gaap:OperatingExpenseMember2020-01-012020-09-300000892482qumu:KuluValleyLtdMember2021-09-3000008924822021-01-15xbrli:pure00008924822021-01-152021-01-150000892482us-gaap:PrimeRateMember2021-01-150000892482srt:ScenarioForecastMember2021-10-012021-12-310000892482srt:ScenarioForecastMember2022-01-012022-03-310000892482srt:ScenarioForecastMember2022-04-012022-06-300000892482srt:ScenarioForecastMember2022-07-012022-09-300000892482srt:ScenarioForecastMember2022-10-012022-12-310000892482srt:ScenarioForecastMember2023-01-012023-03-310000892482qumu:ESWHoldingsInc.Member2021-01-150000892482qumu:ESWHoldingsInc.Member2018-01-120000892482qumu:ESWHoldingsInc.Member2020-05-010000892482qumu:SynacorMember2021-09-300000892482qumu:SynacorMember2020-06-292020-06-290000892482qumu:HaleCapitalLLPMember2021-09-300000892482qumu:IStudyCo.Ltd.Member2021-09-300000892482us-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMemberqumu:HaleCapitalLLPMember2021-09-300000892482us-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMemberqumu:HaleCapitalLLPMemberus-gaap:FairValueInputsLevel1Member2021-09-300000892482us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMemberqumu:HaleCapitalLLPMember2021-09-300000892482us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMemberqumu:HaleCapitalLLPMember2021-09-300000892482qumu:IStudyCo.Ltd.Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMember2021-09-300000892482qumu:IStudyCo.Ltd.Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMemberus-gaap:FairValueInputsLevel1Member2021-09-300000892482us-gaap:FairValueInputsLevel2Memberqumu:IStudyCo.Ltd.Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMember2021-09-300000892482us-gaap:FairValueInputsLevel3Memberqumu:IStudyCo.Ltd.Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMember2021-09-300000892482us-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMember2021-09-300000892482us-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMemberus-gaap:FairValueInputsLevel1Member2021-09-300000892482us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMember2021-09-300000892482us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMember2021-09-300000892482us-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300000892482us-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2021-09-300000892482us-gaap:FairValueInputsLevel2Memberus-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300000892482us-gaap:FairValueInputsLevel3Memberus-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300000892482us-gaap:FairValueMeasurementsRecurringMember2021-09-300000892482us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2021-09-300000892482us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-09-300000892482us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-09-300000892482us-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMemberqumu:HaleCapitalLLPMember2020-12-310000892482us-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMemberqumu:HaleCapitalLLPMemberus-gaap:FairValueInputsLevel1Member2020-12-310000892482us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMemberqumu:HaleCapitalLLPMember2020-12-310000892482us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMemberqumu:HaleCapitalLLPMember2020-12-310000892482qumu:IStudyCo.Ltd.Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMember2020-12-310000892482qumu:IStudyCo.Ltd.Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMemberus-gaap:FairValueInputsLevel1Member2020-12-310000892482us-gaap:FairValueInputsLevel2Memberqumu:IStudyCo.Ltd.Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMember2020-12-310000892482us-gaap:FairValueInputsLevel3Memberqumu:IStudyCo.Ltd.Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMember2020-12-310000892482us-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMember2020-12-310000892482us-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMemberus-gaap:FairValueInputsLevel1Member2020-12-310000892482us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMember2020-12-310000892482us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMember2020-12-310000892482us-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310000892482us-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310000892482us-gaap:FairValueInputsLevel2Memberus-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310000892482us-gaap:FairValueInputsLevel3Memberus-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310000892482us-gaap:FairValueMeasurementsRecurringMember2020-12-310000892482us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310000892482us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310000892482us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310000892482us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:WarrantMember2021-01-012021-09-300000892482us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-01-012021-09-300000892482us-gaap:FairValueInputsLevel3Memberus-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMember2021-01-012021-09-300000892482qumu:SoftwareLicenseAndAppliancesMember2021-07-012021-09-300000892482qumu:SoftwareLicenseAndAppliancesMember2020-07-012020-09-300000892482qumu:SoftwareLicenseAndAppliancesMember2021-01-012021-09-300000892482qumu:SoftwareLicenseAndAppliancesMember2020-01-012020-09-300000892482qumu:SubscriptionmaintenanceandsupportMember2021-07-012021-09-300000892482qumu:SubscriptionmaintenanceandsupportMember2021-01-012021-09-300000892482qumu:ProfessionalservicesandotherMember2021-07-012021-09-300000892482qumu:ProfessionalservicesandotherMember2021-01-012021-09-300000892482qumu:ServicesMember2021-07-012021-09-300000892482qumu:ServicesMember2020-07-012020-09-300000892482qumu:ServicesMember2021-01-012021-09-300000892482qumu:ServicesMember2020-01-012020-09-300000892482srt:NorthAmericaMember2021-07-012021-09-300000892482srt:NorthAmericaMember2020-07-012020-09-300000892482srt:NorthAmericaMember2021-01-012021-09-300000892482srt:NorthAmericaMember2020-01-012020-09-300000892482srt:EuropeMember2021-07-012021-09-300000892482srt:EuropeMember2020-07-012020-09-300000892482srt:EuropeMember2021-01-012021-09-300000892482srt:EuropeMember2020-01-012020-09-300000892482srt:AsiaMember2021-07-012021-09-300000892482srt:AsiaMember2020-07-012020-09-300000892482srt:AsiaMember2021-01-012021-09-300000892482srt:AsiaMember2020-01-012020-09-3000008924822021-10-012021-09-300000892482us-gaap:EmployeeStockOptionMember2021-07-012021-09-300000892482us-gaap:EmployeeStockOptionMember2020-07-012020-09-300000892482us-gaap:EmployeeStockOptionMember2021-01-012021-09-300000892482us-gaap:EmployeeStockOptionMember2020-01-012020-09-300000892482qumu:RestrictedStockAndRestrictedStockUnitsMember2021-07-012021-09-300000892482qumu:RestrictedStockAndRestrictedStockUnitsMember2020-07-012020-09-300000892482qumu:RestrictedStockAndRestrictedStockUnitsMember2021-01-012021-09-300000892482qumu:RestrictedStockAndRestrictedStockUnitsMember2020-01-012020-09-300000892482us-gaap:PerformanceSharesMember2021-07-012021-09-300000892482us-gaap:PerformanceSharesMember2020-07-012020-09-300000892482us-gaap:PerformanceSharesMember2021-01-012021-09-300000892482us-gaap:PerformanceSharesMember2020-01-012020-09-300000892482qumu:A2007StockIncentivePlanMember2021-01-012021-09-300000892482us-gaap:WarrantMember2021-07-012021-09-300000892482us-gaap:WarrantMember2020-07-012020-09-300000892482us-gaap:WarrantMember2021-01-012021-09-300000892482us-gaap:WarrantMember2020-01-012020-09-300000892482us-gaap:WarrantMember2021-07-012021-09-300000892482us-gaap:WarrantMember2020-07-012020-09-300000892482us-gaap:WarrantMember2021-01-012021-09-300000892482us-gaap:WarrantMember2020-01-012020-09-300000892482us-gaap:RestrictedStockUnitsRSUMember2021-07-012021-09-300000892482us-gaap:RestrictedStockUnitsRSUMember2020-07-012020-09-300000892482us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-09-300000892482us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 September 30, 2021
OR
    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: 000-20728
qumu-20210930_g1.jpg
QUMU CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota41-1577970
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
400 S 4th St,Suite 401-412
Minneapolis,Minnesota55415
(Address of principal executive offices)(Zip Code)
(612) 638-9100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol
Name of each exchange on which registered
Common Stock, $0.01 par valueQUMUThe Nasdaq Stock Market LLC
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 (as defined in Rule 12b-2 of the Exchange Act):
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes No
As of October 29, 2021, the registrant had 17,782,045 outstanding shares of $.01 par value common stock.


Table of Contents
QUMU CORPORATION
FORM 10-Q
TABLE OF CONTENTS
FOR THE QUARTER ENDED SEPTEMBER 30, 2021
 DescriptionPage
 
 
 
 
 
 
 

2

Table of Contents
PART 1 – FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
QUMU CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September 30,
2021
December 31,
2020
Assets(unaudited)
Current assets:
Cash and cash equivalents$18,199 $11,878 
Receivables, net of allowance for credit losses of $42 and $42, respectively
4,703 5,612 
Contract assets430 467 
Income tax receivable393 479 
Prepaid expenses and other current assets2,142 2,302 
Total current assets25,867 20,738 
Property and equipment, net of accumulated depreciation of $1,501 and $1,376, respectively
373 249 
Right of use assets – operating leases194 332 
Intangible assets, net1,574 2,143 
Goodwill7,366 7,455 
Deferred income taxes, non-current19 19 
Other assets, non-current402 490 
Total assets$35,795 $31,426 
Liabilities and Stockholders’ Equity  
Current liabilities:  
Accounts payable and other accrued liabilities$2,495 $2,705 
Accrued compensation1,227 2,145 
Deferred revenue11,442 12,918 
Operating lease liabilities709 735 
Financing obligations96 406 
Note payable 1,800 
Derivative liability 37 
Warrant liability881 2,910 
Total current liabilities16,850 23,656 
Long-term liabilities:  
Deferred revenue, non-current2,144 3,488 
Income taxes payable, non-current624 608 
Operating lease liabilities, non-current82 554 
Financing obligations, non-current126 75 
Other liabilities, non-current160 160 
Total long-term liabilities3,136 4,885 
Total liabilities19,986 28,541 
Commitments and contingencies (Note 3)
Stockholders’ equity:  
Preferred stock, $0.01 par value, authorized 250,000 shares, no shares issued and outstanding
  
Common stock, $0.01 par value, authorized 29,750,000 shares, issued and outstanding 17,779,267
 and 13,780,823, respectively
178 138 
Additional paid-in capital104,995 79,489 
Accumulated deficit(86,844)(74,328)
Accumulated other comprehensive loss(2,520)(2,414)
Total stockholders’ equity15,809 2,885 
Total liabilities and stockholders’ equity$35,795 $31,426 
See accompanying notes to unaudited condensed consolidated financial statements.
3

Table of Contents
QUMU CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited – in thousands, except per share data)
 Three Months Ended
 September 30,
Nine Months Ended
 September 30,
 2021202020212020
Revenues:    
Software licenses and appliances$742 $887 $1,091 $6,736 
Service5,683 5,743 17,021 15,455 
Total revenues6,425 6,630 18,112 22,191 
Cost of revenues:    
Software licenses and appliances63 219 190 2,344 
Service1,481 1,435 4,470 4,337 
 Total cost of revenues1,544 1,654 4,660 6,681 
Gross profit4,881 4,976 13,452 15,510 
Operating expenses:    
Research and development2,305 2,105 6,519 5,973 
Sales and marketing4,490 2,044 14,139 6,443 
General and administrative1,881 2,142 6,550 7,055 
Amortization of purchased intangibles163 165 488 492 
Total operating expenses8,839 6,456 27,696 19,963 
Operating loss(3,958)(1,480)(14,244)(4,453)
Other income (expense):    
Interest expense, net(12)(33)(81)(38)
Decrease (increase) in fair value of derivative liability (1)37 104 
Decrease (increase) in fair value of warrant liability94 (332)1,469 (730)
Gain on sale of BriefCam, Ltd.50  50  
Other, net4 (55)(23)(252)
Total other income (expense), net136 (421)1,452 (916)
Loss before income taxes(3,822)(1,901)(12,792)(5,369)
Income tax benefit(77)(43)(276)(147)
Net loss$(3,745)$(1,858)$(12,516)$(5,222)
Net loss per share – basic:
Net loss per share – basic$(0.21)$(0.14)$(0.72)$(0.39)
Weighted average shares outstanding – basic17,872 13,579 17,358 13,555 
Net loss per share – diluted:
Loss attributable to common shareholders$(3,788)$(1,858)$(13,985)$(5,516)
Net loss per share – diluted$(0.21)$(0.14)$(0.80)$(0.41)
Weighted average shares outstanding – diluted17,881 13,579 17,525 13,575 
See accompanying notes to unaudited condensed consolidated financial statements.

4

Table of Contents
QUMU CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited - in thousands)
 Three Months Ended
 September 30,
Nine Months Ended
 September 30,
 2021202020212020
Net loss$(3,745)$(1,858)$(12,516)$(5,222)
Other comprehensive income (loss):   
Net change in foreign currency translation adjustments(229)380 (106)(118)
Total other comprehensive income (loss)(229)380 (106)(118)
Total comprehensive loss$(3,974)$(1,478)$(12,622)$(5,340)

See accompanying notes to unaudited condensed consolidated financial statements.

5

Table of Contents
QUMU CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited – in thousands)

Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
 SharesAmount
Balance at December 31, 201913,553 $136 $78,061 $(65,128)$(2,861)$10,208 
Net loss— — — (2,672)— (2,672)
Other comprehensive loss, net of taxes— — — — (480)(480)
Issuance of stock under employee stock plan, net of forfeitures4 — — — — — 
Redemption of stock related to tax withholdings on employee stock plan issuances(29)— (53)— — (53)
Stock-based compensation— — 245 — — 245 
Balance at March 31, 202013,528 $136 $78,253 $(67,800)$(3,341)$7,248 
Net loss— — — (692)— (692)
Other comprehensive loss, net of taxes— — — — (18)(18)
Issuance of stock under employee stock plan, net of forfeitures1 (1)— — — (1)
Redemption of stock related to tax withholdings on employee stock plan issuances — (1)— — (1)
Stock-based compensation— — 164 — — 164 
Balance at June 30, 202013,529 $135 $78,416 $(68,492)$(3,359)$6,700 
Net loss— — — (1,858)— (1,858)
Other comprehensive loss, net of taxes— — — — 380 380 
Issuance of stock under employee stock plan, net of forfeitures206 2 236 — — 238 
Redemption of stock related to tax withholdings on employee stock plan issuances(22)— (105)— — (105)
Stock-based compensation— — 211 — — 211 
Balance at September 30, 202013,713 $137 $78,758 $(70,350)$(2,979)$5,566 

6

Table of Contents
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
 SharesAmount
Balance at December 31, 202013,780 $138 $79,489 $(74,328)$(2,414)$2,885 
Net loss— — — (4,450)— (4,450)
Other comprehensive loss, net of taxes— — — — (21)(21)
Issuance of common stock3,709 37 23,048 — — 23,085 
Warrant exercise50 — 560 — — 560 
Issuance of stock under employee stock plan, net of forfeitures52 1 141 — — 142 
Redemption of stock related to tax withholdings on employee stock plan issuances— — (3)— — (3)
Stock-based compensation— — 589 — — 589 
Balance at March 31, 202117,591 $176 $103,824 $(78,778)$(2,435)$22,787 
Net loss— — — (4,321)— (4,321)
Other comprehensive loss, net of taxes— — — — 144 144 
Issuance of stock under employee stock plan, net of forfeitures34 — 85 — — 85 
Redemption of stock related to tax withholdings on employee stock plan issuances(1)— (3)— — (3)
Stock-based compensation— — 566 — — 566 
Balance at June 30, 202117,624 $176 $104,472 $(83,099)$(2,291)$19,258 
Net loss— — — (3,745)— (3,745)
Other comprehensive loss, net of taxes— — — — (229)(229)
Issuance of stock under employee stock plan, net of forfeitures171 2 316 — — 318 
Redemption of stock related to tax withholdings on employee stock plan issuances(16)— (41)— — (41)
Stock-based compensation— — 248 — — 248 
Balance at September 30, 202117,779 $178 $104,995 $(86,844)$(2,520)$15,809 


See accompanying notes to unaudited condensed consolidated financial statements.

7

Table of Contents
QUMU CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited – in thousands)
 Nine Months Ended
 September 30,
 20212020
Operating activities:  
Net loss$(12,516)$(5,222)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization738 935 
Loss on disposal of property and equipment3  
Stock-based compensation1,403 620 
Accretion of debt discount and issuance costs35 52 
Gain on sale of BriefCam, Ltd.(50) 
Decrease in fair value of derivative liability(37)(104)
Increase (decrease) in fair value of warrant liability(1,469)730 
Deferred income taxes 9 
Changes in operating assets and liabilities:
Receivables913 (1,107)
Contract assets37 296 
Income taxes receivable / payable107 70 
Prepaid expenses and other assets264 268 
Accounts payable and other accrued liabilities(607)(629)
Accrued compensation(915)617 
Deferred revenue(2,800)4,338 
Other non-current liabilities 264 
 Net cash provided by (used in) operating activities(14,894)1,137 
Investing activities:  
Proceeds from sale of BriefCam, Ltd.50  
Purchases of property and equipment(216)(68)
Net cash used in investing activities(166)(68)
Financing activities:  
Principal payments on financing obligations(342)(286)
Principal payment on line of credit(1,840) 
Proceeds from line of credit1,840  
Principal payment on term loan(1,833) 
Payment for term loan issuance costs(25) 
Net proceeds from common stock issuance23,085  
Proceeds from issuance of common stock under employee stock plans545 238 
Common stock repurchases to settle employee withholding liability(47)(160)
Net cash provided by (used in) financing activities21,383 (208)
Effect of exchange rate changes on cash(2)(148)
Net increase in cash and cash equivalents6,321 713 
Cash and cash equivalents, beginning of period11,878 10,639 
Cash and cash equivalents, end of period$18,199 $11,352 
Supplemental disclosures of net cash paid (received) during the period:  
Income taxes, net$(372)$(264)
Interest, net$41 $12 
Non-cash financing activity:
Issuance of note payable and derivative liability for cancellation of warrant$ $1,855 
Reclassification from warrant liability to additional paid-in capital for non-cash exercise$560 $ 

See accompanying notes to unaudited condensed consolidated financial statements.
8

Table of Contents
QUMU CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(1)     Nature of Business and Basis of Presentation
Qumu Corporation ("Qumu" or the "Company") provides the tools to create, manage, secure, distribute and measure the success of live and on-demand video for enterprises. The Qumu platform enables global organizations to drive employee engagement, increase access to video, and modernize the future workplace by providing a more efficient and effective way to share knowledge. Qumu's customers, which include some of the world’s largest organizations, leverage the Qumu platform for a variety of cloud, on-premise and hybrid deployments. Use cases include, but are not limited to, CEO and executive town halls, self-service webcasting, sales enablement, training, employee onboarding, internal communications, product releases and training, regulatory compliance and customer engagement. The Company and its channel partners market Qumu's products to customers primarily in North America, Europe and Asia.
The Company views its operations and manages its business as one segment and one reporting unit. Factors used to identify the Company's single operating segment and reporting unit include the financial information available for evaluation by the chief operating decision maker in making decisions about how to allocate resources and assess performance. The Company markets its products and services through regional sales representatives and independent distributors in the United States and international markets.
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The accompanying condensed consolidated financial statements are unaudited and have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Pursuant to such rules and regulations, certain financial information and footnote disclosures normally included in a complete set of financial statements have been condensed or omitted. However, in the opinion of management, the financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the financial position and results of operations and cash flows of the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2020.
Reclassification
Certain reclassification have been made to prior period revenue in order to conform to the current period presentation. During the quarter ended September 30, 2021, the Company reclassified revenue recognized for term software license agreements from service revenue to software licenses and appliances revenue, similar to perpetual software licenses. These term software licenses have significant standalone functionality and, subsequent to delivery of the software, Qumu's activities do not substantively change the functionality and do not significantly affect the use of the software delivered. The reclassifications had no effect on previously reported stockholders' equity, net loss or net cash flows.
Revenue for the three and nine months ended September 30, 2020 as reported and as reclassified were as follows:
 Three Months Ended
 September 30, 2020
Nine Months Ended
 September 30, 2020
 As ReportedAs ReclassifiedAs ReportedAs Reclassified
Software licenses and appliances$548 $887 $6,149 $6,736 
Service
Subscription, maintenance and support5,349 5,010 14,182 13,595 
Professional services and other733 733 1,860 1,860 
Total service6,082 5,743 16,042 15,455 
Total revenues$6,630 $6,630 $22,191 $22,191 
9

Table of Contents
Capitalized Development Costs
The Company capitalizes certain development costs related to our sales platform during the application development stage as long as it is probable the project will be completed and the software will be used to perform the function intended. Capitalized software development costs are recorded as part of property and equipment, net. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Capitalized software development costs are amortized on a straight-line basis over the software’s estimated useful life, which is generally three years, and amortization is recorded in operating expenses in the condensed consolidated statements of operations. The Company evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. The Company capitalized $139,000 of software development costs during the nine months ended September 30, 2021. No software development costs were capitalized during the nine months ended September 30, 2020.
Recently Adopted Accounting Standards
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing exceptions within the general principles of Topic 740 regarding the calculation of deferred tax liabilities, the incremental approach for intraperiod tax allocation, and calculating income taxes in an interim period. In addition, the ASU adds clarifications to the accounting for franchise tax (or similar tax) which is partially based on income, evaluating tax basis of goodwill recognized from a business combination, and reflecting the effect of any enacted changes in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The Company adopted this guidance effective January 1, 2021, prospectively, and the adoption of this standard did not have a material impact to the consolidated financial statements and related disclosures.
In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The purpose of the amendment is to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The Company adopted this guidance effective January 1, 2021, prospectively, and the adoption of this standard did not have a material impact to the consolidated financial statements and related disclosures.
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which supersedes current guidance requiring recognition of credit losses when it is probable that a loss has been incurred. The standard requires the establishment of an allowance for estimated credit losses on financial assets, including trade and other receivables, at each reporting date. The ASU will result in earlier recognition of allowances for losses on trade and other receivables and other contractual rights to receive cash. The Company adopted this guidance effective January 1, 2021, prospectively, and the adoption of this standard did not have a material impact to the consolidated financial statements and related disclosures.
Accounting Standards Not Yet Adopted
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021. Early adoption is permitted. The Company does not believe the impact of adopting this standard will be material to its consolidated financial statements and related disclosures.
10

Table of Contents
(2) Intangible Assets and Goodwill
Intangible Assets
The Company’s amortizable intangible assets consisted of the following (in thousands):
September 30, 2021
Customer RelationshipsDeveloped TechnologyTrademarks / Trade NamesTotal
Original cost$4,921 $8,213 $2,184 $15,318 
Accumulated amortization(4,222)(8,187)(1,335)(13,744)
Intangibles assets, net$699 $26 $849 $1,574 
December 31, 2020
Customer RelationshipsDeveloped TechnologyTrademarks / Trade NamesTotal
Original cost$4,945 $8,256 $2,184 $15,385 
Accumulated amortization(3,861)(8,151)(1,230)(13,242)
Intangibles assets, net$1,084 $105 $954 $2,143 
Changes to the carrying amount of net amortizable intangible assets consisted of the following (in thousands):
Nine Months Ended
 September 30, 2021
Balance, beginning of period$2,143 
Amortization expense(568)
Currency translation(1)
Balance, end of period$1,574 
Amortization expense of intangible assets consisted of the following (in thousands):
 Three Months Ended
 September 30,
Nine Months Ended
 September 30,
 2021202020212020
Amortization expense associated with the developed technology included in cost of revenues$26 $72 $80 $212 
Amortization expense associated with other acquired intangible assets included in operating expenses163 165 488 492 
Total amortization expense$189 $237 $568 $704 
Goodwill
The goodwill balance of $7.4 million at September 30, 2021 reflects the impact of foreign currency exchange rate fluctuations since the acquisition date.

(3) Commitments and Contingencies
Leases
The Company is obligated under finance leases covering certain IT equipment that expire at various dates over the next three years. The Company also has non-cancellable operating leases, primarily for office space, that expire at various dates over the next 16 months.
11

Table of Contents
The components of lease cost were as follows (in thousands):
Three Months Ended
 September 30,
Nine Months Ended
 September 30,
2021202020212020
Operating lease cost$47 $103 $138 $297 
Finance lease cost:
Amortization of right of use assets26 31 81 93 
Interest on lease liabilities3 2 8 6 
Total finance cost29 33 89 99 
Total lease cost$76 $136 $227 $396 
Future payments used in the measurement of lease liabilities on the condensed consolidated balance sheet as of September 30, 2021 are as follows (in thousands):
Operating
leases
Finance
leases
Remainder of 2021$192 $28 
2022626 63 
202321 58 
2024 58 
2025 3 
Total undiscounted lease payments839 210 
Less amount representing interest(48)(16)
Present value of lease liabilities$791 $194 
Wells Fargo Credit Facility
On January 15, 2021, the Company entered into and closed on the Loan and Security Agreement (the “line of credit”) with Wells Fargo Bank, National Association providing for a revolving line of credit. Pursuant to the line of credit, the Company granted a security interest in substantially all of its properties, right and assets (including certain equity interest of the Company's subsidiaries). As of September 30, 2021, there were no amounts outstanding on the line of credit. For the quarter ending September 30, 2021, the Company was in compliance with all covenants of the credit agreement.
On August 6, 2021, the Company entered into a First Amendment to the line of credit dated January 15, 2021. The following summarizes the Loan and Security Agreement as amended by the First Amendment.
The revolving line has a maximum availability for borrowing of the lesser of $10 million or a defined borrowing base, less any outstanding letters of credit and the outstanding principal balance of any advances. However, until the Company's financial statements due for the quarter ending September 30, 2021 are received and reviewed by the Lender, the availability amount will not exceed $7.5 million. The borrowing base is initially four times the prior quarter’s monthly average recurring revenue from eligible customer accounts, but the multiple will thereafter be adjusted on a quarterly basis from and after the calendar quarter ending September 30, 2021. Thereafter, the borrowing base multiple will be four times if monthly recurring revenue declined from the preceding calendar quarter, five times if monthly recurring revenue increased up to 5% over the preceding calendar quarter, and six times if monthly recurring revenue increased at least 5% over the preceding calendar quarter. The revolving line has a January 15, 2023 maturity date and amounts borrowed bear interest at a floating per annum rate equal to 1.25% above Wells Fargo's prime rate, currently 3.25%. The Company will also be obligated to pay Wells Fargo an unused revolving line facility fee quarterly in arrears of 0.25% per annum of the average unused portion of the revolving line of credit during such quarterly period.
The line of credit contains customary affirmative and negative covenants and requirements relating to the Company and its operations. The affirmative covenants also require the Company to maintain at all times minimum quarterly recurring revenue and minimum liquidity. The minimum quarterly recurring revenue for the third and fourth quarters of 2021 must be $4.5 million and $4.75 million, respectively. The minimum quarterly recurring revenue must be $5 million, $5.5 million, $6 million and $6.5 million for the first quarter through the fourth quarter of 2022, respectively. The Company is required to have minimum liquidity, tested as of the last day of each fiscal quarter. If the Company's trailing three month cash burn (calculated as provided in the First Amendment) is negative, then the Company must have liquidity of not less than $5 million or an amount equal to six months of remaining months minimum liquidity. If the Company's trailing three month cash burn is greater than or equal to zero dollars, then the Company must have liquidity of not less than $5 million. Liquidity is generally defined as including the aggregate amount of unrestricted and unencumbered cash and cash equivalents held at such time by the Company
12

Table of Contents
in accounts maintained with Wells Fargo or its affiliates in the United States, and the availability under the line of credit. Cash burn is Adjusted EBITDA, as defined in the First Amendment, less capital expenditures and cash interest paid.
Note Payable
On January 15, 2021, the Company repaid the secured promissory note dated May 1, 2020 to ESW Holdings, Inc. in the amount of $1.83 million, which represented the deferred purchase price of the Company’s purchase and termination of the warrant to ESW Holdings, Inc. ("ESW warrant") dated January 12, 2018 for 925,000 shares of the Company’s common stock. In connection with the repayment of the promissory note, the related security agreement dated May 1, 2020 between the Company and ESW Holdings, Inc. was terminated. As provided in the promissory note, the Company would have been obligated to pay ESW Holdings, Inc. an additional $150,000 if a Fundamental Transaction, as defined in the promissory note, occurred on or prior to April 1, 2021. The contingent payment obligation expired on April 1, 2021 as no such Fundamental Transaction occurred.
Contingencies
In connection with the termination of merger agreement with Synacor, Inc. on June 29, 2020, Qumu was contingently obligated to pay Synacor, Inc. $1.45 million upon the occurrence of certain events with respect to an Acquisition Transaction (as defined in the mutual termination agreement with Synacor, Inc.) during the 15 months following the termination, that is, by September 29, 2021. The Company has not accrued a liability related to this contingent obligation as the payment is not triggered unless and until an Acquisition Transaction occurs. The Company did not trigger an obligation as an Acquisition Transaction did not occur in the 15 months following the termination of the merger agreement. The contingent obligation expired on September 29, 2021 as no such event occurred.
The Company is exposed to asserted and unasserted claims encountered in the normal course of business. Legal costs related to loss contingencies are expensed as incurred. In the opinion of management, the resolution of these matters will not have a material adverse effect on the Company’s financial position or results of operations.
The Company’s standard arrangements include provisions indemnifying customers against liabilities if the Company's products infringe a third-party’s intellectual property rights. The Company has not incurred any costs in its continuing operations as a result of such indemnifications and has not accrued any liabilities related to such contingent obligations in the accompanying condensed consolidated financial statements.

(4) Fair Value Measurements
Assets and liabilities measured at fair value are classified into the following categories:
Level 1: Inputs are unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2: Inputs include data points that are observable such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) such as interest rates and yield curves that are observable for the asset or liability, either directly or indirectly.
Level 3: Inputs are generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect an entity’s own estimates of assumptions that market participants would use in pricing the asset or liability.
As of September 30, 2021, the following warrants for the purchase of Qumu's common stock were outstanding and exercisable:
DescriptionNumber of underlying warrant sharesWarrant exercise price
(per share)
Warrant expiration date
Warrant issued in conjunction with October 2016 debt financing ("Hale warrant")238,583 $2.80 October 21, 2026
Warrant issued to sales partner, iStudy Co., Ltd. ("iStudy warrant")100,000 $2.43 August 31, 2028
Total warrants outstanding338,583 
The warrant liability was recorded in the Company's consolidated balance sheets at its fair value on the respective dates of issuance and is revalued on each subsequent balance sheet date until such instrument is exercised or expires, with any changes in the fair value between reporting periods recorded in other income (expense) of the consolidated statement of operations as "Decrease (increase) in fair value of warrant liability." The Company recorded non-cash income of $94,000 and non-cash
13

Table of Contents
expense of $332,000 for the three months ended September 30, 2021 and 2020, respectively, and non-cash income of $1.5 million and non-cash expense of $730,000 for the nine months ended September 30, 2021 and 2020, respectively, resulting from the change in fair value of the warrant liability.
On May 1, 2020, the Company canceled the ESW warrant in exchange for a note payable (see Note 3–"Commitments and Contingencies") which contained an embedded derivative liability that is measured on a recurring basis at fair value. The Company recognized non-cash income of $37,000 for the nine months ended September 30, 2021 resulting from the change in fair value of the derivative liability. The derivative liability was derecognized on April 1, 2021 upon expiration of the contingent payment obligation without the contingency being triggered.
The Company’s liabilities measured at fair value on a recurring basis and the fair value hierarchy utilized to determine such fair values were as follows at September 30, 2021 and December 31, 2020 (in thousands):
  Fair Value Measurements Using
 Total Fair
Value at
September 30, 2021
Quoted Prices in
Active Markets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Liabilities:    
Warrant liability - Hale$729 $ $ $729 
Warrant liability - iStudy152   152 
Warrant liability$881 $ $ $881 
Derivative liability    
Total$881 $ $ $881 

  Fair Value Measurements Using
 Total Fair
Value at
December 31, 2020
Quoted Prices in
Active Markets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Liabilities:    
Warrant liability - Hale$2,245 $ $ $2,245 
Warrant liability - iStudy665   665 
Warrant liability$2,910 $ $ $2,910 
Derivative liability37   37 
Total$2,947 $ $ $2,947 
The Company's evaluation of the probability and timing of a change in control represents an unobservable input (Level 3) that shortens or lengthens the expected term input of the option pricing model for all warrants, and generally correspondingly increases or decreases, respectively, the discounted value of the minimum cash payment component of the Hale warrant. Consequently, as of September 30, 2021 and December 31, 2020, the liability related to each warrant was classified as a Level 3 warrant liability.
The Company's evaluation of the probability and timing of a change in control represents an unobservable input (Level 3) that increases or decreases the likelihood of triggering the note payable agreement's Fundamental Transaction contingency, resulting in Level 3 classification of the derivative liability.
The following table represents the significant unobservable input used in the fair value measurement of Level 3 warrant liability instruments:
 September 30, 2021
Probability-weighted timing of change in control4.8 years
The following table summarizes the changes in fair value measurements for the nine months ended September 30, 2021:
Warrant liabilityDerivative liabilityTotal
Balance at December 31, 2020$2,910 $37 $2,947 
Reduction in warrant liability for partial exercise of Hale warrant(560)— (560)
Change in fair value(1,469)(37)(1,506)
Balance at September 30, 2021$881 $ $881 

14

Table of Contents
(5)    Revenue
The Company generates revenue through the sale of enterprise video content management software, hardware, maintenance and support, and professional and other services. Software sales may take the form of a cloud-hosted software as a service (SaaS), term software license or perpetual software license. Software licenses and appliances revenue includes sales of perpetual software licenses, term software licenses and hardware. Service revenue includes SaaS, maintenance and support, and professional and other services.
Revenues by product category and geography
The Company combines its products and services into three product categories and three geographic regions, based on customer location, as follows (in thousands):
 Three Months Ended
 September 30,
Nine Months Ended
 September 30,
 2021202020212020
Software licenses and appliances$742 $887 $1,091 $6,736 
Service
Subscription, maintenance and support5,080 5,010 15,038 13,595 
Professional services and other603 733 1,983 1,860 
Total service5,683 5,743 17,021 15,455 
Total revenues$6,425 $6,630 $18,112 $22,191 

Three Months Ended
 September 30,
Nine Months Ended
 September 30,
 2021202020212020
North America$4,290 $4,238 $11,938 $15,801 
Europe1,850 2,106