What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-07-01 compared with 2023-06-29 · 372 added, 537 removed, 432 unchanged (68% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations for the fiscal years ended March 31, 2024 and 2023

Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended March 31, 2023 and 2022

Consolidated Statements of Equity (Deficit) for the fiscal years ended March 31, 2023 and 2022

Consolidated Statements of Comprehensive Loss for the fiscal years ended March 31, 2024 and 2023

Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2024 and 2023

Consolidated Statements of Equity for the fiscal years ended March 31, 2024 and 2023

Notes to Consolidated Financial Statements

4 unchanged sentences

We have audited the accompanying consolidated balance sheets of Cineverse Corp.

(the “Company”) as of March 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive income (loss), stockholders’

equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2023 and 2022, and the results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

(the “Company”) as of March 31, 2024 and 2023, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of March 31, 2024 and 2023, and the consolidated results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

2 unchanged sentences

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

3 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue recognition –

Content & Entertainment Business segment.

As disclosed in Note 2 to the consolidated financial statements, the Company’s Content & Entertainment business segment (“CEG”) earns fees for the distribution of content in the home entertainment markets via several distribution channels, including digital, video on demand (“VOD”) and physical goods.

Fees earned are recognized as revenue based on a percentage of the net amounts received from customers when the Company is an agent in the transaction, and revenue represents the entire amount received from the customer when the Company is considered the principal.

The Company’s performance obligations include the delivery of content for transactional, subscription and ad supported streaming on digital platforms, and shipment of physical product (DVDs and Blu-Ray disks).

Revenue is recognized when the content is available for subscription on the digital platform, at the time of shipment of physical goods, or point-of-sale for transactional and video on demand services as the control over the content or the physical

titles is transferred to the customer.

Physical product revenue is recognized after deducting the reserves for sales returns and revenue reductions, which are accounted for as variable consideration.

Total CEG revenues for the year ended March 31, 2023 were $56.0 million.

We identified revenue recognition for CEG as a critical audit matter due the level of judgement and estimation required by management in the recognition of fees earned from customers and estimation of revenues accrued at period end;

this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s determination of management’s revenue recognition for CEG.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment

As discussed in Note 2, the Company performs goodwill impairment testing on an annual basis on March 31 at the end of its fiscal year or when events occur or circumstances change that would indicate the carrying value exceeds the

An impairment loss is recognized when the carrying amount of a reporting unit’s net assets exceeds the estimated fair value of the reporting unit.

These estimates are subject to significant management judgment, including the determination of many factors such as, but not limited to, selection of the appropriate valuation model in estimating the fair value and selection of guideline peer public companies.

Changes in these estimates can have a significant impact on the determination of cash flows and the resulting fair values.

During the fourth quarter of the year ended March 31, 2024, the Company determined that the Company’s declining stock price was a triggering event which required a quantitative evaluation of goodwill at March 31, 2024.

As part of their quantitative assessment, the fair value was determined using a market approach.

Based on the impairment test performed, the Company recorded a $14.0 million impairment charge.

We identified the goodwill impairment assessment as a critical audit matter because of the significant management judgment and subjectivity in developing the fair value measurement of the reporting unit.

This required a high degree of auditor judgment and an increase in audit effort to perform procedures and evaluate audit evidence related to the consideration of the valuation model selected by management, the consideration of the reasonableness of the guideline peer public companies selected and consideration of the market capitalization of the Company in relation to the estimated fair value.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

We obtained an understanding and evaluated the design of the Company’s controls over the revenue recognition of CEG.

We gained an understanding of the Company’s role as either principal or agent in the revenue streams and management’s determination of revenue streams as either gross or net based on the transfer of control for the good and service.

Our audit procedures included, among others, comparing the revenue recognized to third party statements/reports, which can include sales, cash receipts, returns, revenue deductions, advance payments, advance recoupments, expenses, and other information, to reconcile to the revenue recognized or the net amounts in which fees are calculated on, as determined by the underlying contracts or third party statements for a sample of transactions.

We also tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements, as well as the Company’s estimation process, on a sample basis, for revenues accrued at period end.

These procedures included, among others, (i) obtaining an understanding of management’s process and evaluating the design of controls related to the goodwill impairment assessment;

(ii) testing management’s process for developing the fair value estimate;

(iii) evaluating the appropriateness of the valuation model used in management’s estimate;

(iv) testing the completeness, accuracy, and evaluating the reconciliation of estimated fair value to the Company’s stock price in relation to relevant transactions.

We involved valuation professionals with specialized skills and knowledge when performing audit procedures to evaluate the reasonableness of Management’s estimates and assumptions related to the selection the appropriate valuation model and reconciliation of fair value to the Company’s stock price.

/s/EISNERAMPER LLP

We have served as the Company’s auditor since 2004.

EISNERAMPER LLP

Iselin, New Jersey

June 29, 2023

Cineverse Corp.

3 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowance of $ 0 and $ 2,921 , respectively

Accounts receivable, net of allowance for credit losses of $ 269 and $ 0 , respectively

Unbilled revenue

Employee retention tax credit

Prepaid and other current assets

Content advances

Other current assets

Total current assets

Equity investment in A Metaverse Company, a related party, at fair value

Equity investment in Metaverse, a related party, at fair value

Property and equipment, net

Intangible assets, net

Content advances, net of current portion

Other long-term assets

LIABILITIES AND STOCKHOLDERS’

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities

Accounts payable and accrued expenses

Line of credit, including unamortized debt discount of $ 76 and $ 0 , respectively (see Note 5)

Line of credit, including unamortized debt issuance costs of $ 81 and $ 76 , respectively

Current portion of deferred consideration on purchase of business

Current portion of earnout consideration on purchase of business

Operating lease liabilities

Current portion of deferred revenue

Earnout consideration on purchase of business

Current portion of operating lease liabilities

Deferred revenue

Total current liabilities

Deferred consideration on purchase –

net of current portion

Earnout consideration on purchase –

net of current portion

Deferred consideration on purchase of business, net of current portion

Operating lease liabilities, net of current portion

2 unchanged sentences

Commitments and contingencies (see Note 6)

Stockholders’

Stockholders’ Equity

Preferred stock, 15,000,000 shares authorized;

1 unchanged sentence

20 shares authorized;

7 shares issued and outstanding, respectively.

7 shares issued and 7 shares outstanding at March 31, 2024 and March 31, 2023.

Liquidation preference of $ 3,648 .

Common Stock, $ 0.001 par value;

Class A stock 275,000,000 shares authorized at March 31, 2023 and 2022, 9,413,597 and 8,831,471 shares issued and 9,347,805 and 8,765,679 shares outstanding at March 31, 2023 and 2022, respectively.

Class A Stock:

275,000,000 shares authorized as of March 31, 2024, and March 31, 2023;

15,985,620 and 9,413,597 shares issued, with 15,699,135 and 9,347,805 shares outstanding as of March 31, 2024, and March 31, 2023, respectively.

Additional paid-in capital

Treasury stock, at cost;

65,792 shares

288,554 and 65,792 shares at March 31, 2024 and March 31, 2023, respectively.

Accumulated deficit

Accumulated other comprehensive loss

Total stockholders’

equity of Cineverse Corp.

Total stockholders’ equity of Cineverse Corp.

Deficit attributable to noncontrolling interest

5 unchanged sentences

For the Fiscal Year Ended

Operating expenses

Costs and expenses

Direct operating

1 unchanged sentence

Depreciation and amortization

Impairment of intangible assets

Goodwill impairment

Total operating expenses

1 unchanged sentence

Interest expense

(Decrease) increase in fair value of equity investment in Metaverse, a related party

Gain on forgiveness of PPP loan

Loss from equity investment in Metaverse, a related party

Employee retention tax credit

Other income (expense), net

Net (loss) income before income taxes

Income tax (expense) benefit

Net (loss) income

Net loss attributable to noncontrolling interest

Net (loss) income attributable to controlling interests

Other expenses, net

Net loss before income taxes

Income tax expense

Net income attributable to noncontrolling interest

Net loss attributable to controlling interests

Preferred stock dividends

Net (loss) income attributable to common stockholders

Net (loss) income per share attributable to common stockholders:

Net loss attributable to common stockholders

Net loss per share attributable to common stockholders:

Weighted average shares of Common Stock outstanding:

1 unchanged sentence

Cineverse Corp.

CONSOLIDATED STATEMENTS OF COMPREH ENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREH ENSIVE LOSS

(In thousands)

For the Fiscal Year Ended

Net (loss) income

Other comprehensive loss:

Foreign exchange translation

Comprehensive loss attributable to noncontrolling interest

Comprehensive (loss) income attributable to controlling interests

Net income attributable to noncontrolling interest

Comprehensive loss

See accompanying Notes to Consolidated Financial Statements

4 unchanged sentences

Cash flows from operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to cash (used in) provided by

operating activities:

Adjustments to reconcile net loss to cash used in operating activities:

Depreciation and amortization

Deferred income tax

Allowance for prepaid advances

Impairment of intangibles

Impairment of goodwill

Changes in fair value of equity investment in Metaverse

Amortization of debt issuance costs included in interest expense

Amortization of debt issuance costs

Stock-based compensation

Interest expense for deferred consideration

Change in estimated earnout consideration

Gain on extinguishment of note payable

Interest expense for earnout consideration

Interest expense for deferred consideration and earnouts

Capitalized content expenditures

Stock-based bonus to acquired company

Revenue recognized under nonmonetary purchase and exchange of content

Changes in operating assets and liabilities, net of acquisitions:

Barter-related non-cash expenses

Changes in operating assets and liabilities:

Accounts receivable

Content advances

Unbilled revenue

Prepaid and other current assets

Other current and long-term assets

Accounts payable and accrued expenses

Deferred revenue

Net cash provided (used in) by operating activities

Net cash used in operating activities

Cash flows from investing activities:

Purchases of property and equipment

Purchase of intangible assets

Purchase of businesses

Sale of equity investment securities

Sale of investment securities

Net cash used in investing activities

Cash flows from financing activities:

Payments of notes payable and deferred consideration

Proceeds from line of credit

Payments of line of credit

Debt issuance costs

Net proceeds from issuance of Class A common stock

Payments on line of credit

Payment of business acquisition related liabilities

Financing fees for line of credit

Issuance of Class A common stock, net of issuance costs

Net cash provided by financing activities

8 unchanged sentences

Cash interest paid

Income taxes paid

Lease liability related payments

Income taxes paid

Noncash investing and financing activities:

Issuance of Class A common stock for payment of accrued employee bonuses

Accrued dividends on preferred stock

Issuance of Class A common stock for payment of preferred stock dividends

Issuance of Class A common stock for intangible asset purchase

Deferred consideration in purchase of a business

Right of use assets recognized underlying lease arrangements

Earnout consideration in purchase of a business

Treasury shares acquired for withholding taxes

Deferred consideration settled in stock

Earnout liability settled in stock

Issuance of Class A common stock for payment of accrued preferred stock dividends

See accompanying Notes to Consolidated Financial Statements

Cineverse Corp.

2 unchanged sentences

Preferred Stock

Accumulated Other

Stockholders’

Comprehensive Loss

Comprehensive

Stockholders'

Balances as of March 31, 2023

3 unchanged sentences

Preferred stock dividends accrued

Issuance of common stock for with PSUs and incentives, net of payroll taxes

Issuance of common stock for earnout commitment

Issuance of common stock for Board of Director compensation

Issuance of common stock for acquisition

Net income (loss)

Issuance of Class A common stock in connection with ATM raises, net

Issuance of Class A common stock in connection with direct equity offering

Issuance of Class A common stock in connection employee bonuses

Issuance in connection with the exercise of warrants

Issuance of Class A common stock for earnout commitment

Treasury stock in connection with taxes withheld from employees

Issuance of common stock for deferred and earnout consideration

Net loss (income)

Balances as of March 31, 2024

5 unchanged sentences

Accumulated Other

Stockholders’

Comprehensive Loss

1 unchanged sentence

Foreign exchange translation

Stock compensation and expenses

Issuance of common stock in connection with business combinations

Preferred stock dividends paid in stock

Treasury stock in connection with taxes withheld from employees

Stock-based compensation

Preferred stock dividends paid with common stock

Preferred stock dividends accrued

Issuance of common stock for third party equity purchase commitment

Issuance of common stock in connection with performance stock units

Issuance of common stock in connection with ATM raises, net

Issuance of common stock for with PSUs and incentives, net of payroll taxes

Issuance of common stock for earnout commitment

Issuance of common stock for Board of Director compensation

Issuance of common stock for acquisition

Net loss (income)

Balances as of March 31, 2023

4 unchanged sentences

Cineverse Corp.

(“Cineverse”, “us”, “our”, and “Company”

refers to Cineverse Corp.

(“Cineverse”, “us”, "we", “our”, and “Company” refers to Cineverse Corp.

and its subsidiaries unless the context otherwise requires) was incorporated in Delaware on March 31, 2000.

On May 22, 2023, the Company changed its corporate name to Cineverse Corp.

Cineverse is (i) a distributor and aggregator of independent movie, television and other short form content managing a library of distribution rights to thousands of titles and episodes released across digital, physical, theatrical, home and mobile entertainment platforms and (ii) a servicer of digital cinema assets for movie screens in both North America and several international countries.

We report our consolidated financial results in two primary segments as follows:

(1) Cinema Equipment and (2) Content & Entertainment (“Content & Entertainment”).

The Cinema Equipment segment consists of the non-recourse, financing vehicles and administrators for our digital cinema equipment (the “Systems”) installed in movie theatres throughout North America and Australia.

It also provides fee-based support to music and movie screens as well as directly to exhibitors and other third-party customers in the form of monitoring, billing, collection and verification services.

This segment's contracts have substantially completed as of March 31, 2023 and the Company does not anticipate significant revenue, profit or loss from this segment in fiscal year 2024.

Our Content & Entertainment segment operates in:

(1) ancillary market aggregation and distribution of entertainment content and (2) branded and curated over-the-top (“OTT”) digital network business providing entertainment channels and applications.

Cineverse is a premier streaming technology and entertainment company with its core business operating as (i) a portfolio of owned and operated streaming channels with enthusiast fan bases;

(ii) a large-scale global aggregator and full-service distributor of feature films and television programs;

and (iii) a proprietary technology software-as-a-service platform for over-the-top (“OTT”) app development and content distribution through subscription video on demand ("SVOD"), dedicated ad-supported ("AVOD"), ad-supported streaming linear ("FAST") channels, social video streaming services, and audio podcasts.

Our streaming channels reach audiences in several distinct ways:

direct-to-consumer, through these major application platforms, and through third party distributors of content on platforms.

The Company’s streaming technology platform, known as MatchpointTM, is a software-based streaming operating platform which provides clients with AVOD, SVOD, transactional video on demand ("TVOD") and linear capabilities, automates the distribution of content, and features a robust data analytics platform.

Financial Condition and Liquidity

As of March 31, 2023, the Company has an accumulated deficit of $ 482.4 million and negative working capital of $ 7.8 million.

As of March 31, 2024, the Company has an accumulated deficit of $ 504.2 million .

For the year ended March 31, 2024, the Company had a net loss attributable to common shareholders of $ 21.8 million .

Net cash used in operating activities for the year ended March 31, 2023 was $ 8.8 million.

Though the Company had positive working capital of $ 1.5 million, net cash used in operating activities for the year ended March 31, 2024 was $ 10.6 million.

We may continue to generate net losses for the foreseeable future.

The Company is party to a Loan, Guaranty, and Security Agreement with East West Bank (“EWB”) providing for a revolving line of credit (the “Line of Credit Facility”) of $ 5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries’

The Line of Credit Facility bears interest at a rate equal to 1.5 % above the prime rate, and was 9.0 % as of March 31, 2023.

The Line of Credit Facility expires on September 15, 2023 with a one-year extension available at EWB’s discretion.

As of March 31, 2023, $ 5.0 million was outstanding on the Line of Credit Facility.

The Company was out of compliance during a portion of fiscal year 2023, but obtained waivers from EWB.

On June 28, 2023, the Company was notified in writing by EWB that it intends to extend the maturity date of the Line of Credit Facility to September 15, 2024 , subject to definitive documentation.

We believe our cash and cash equivalent balances as of March 31, 2023 and proceeds from the subsequent issuance of equity (See Note 9 - Subsequent Events ) will be sufficient to support our operations for at least twelve months from the filing of this report.

The Company is party to a Loan, Guaranty, and Security Agreement, as amended to date, with East West Bank (“EWB”) providing for a revolving line of credit (the “Line of Credit Facility”) of $ 7.5 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries’ assets.

The Line of Credit Facility bears interest at a rate equal to 1.5 % above the prime rate, equal to 10.00 % as of March 31, 2024 .

In June 2024, the Company was notified in writing by EWB that it intends to extend the maturity date of the Line of Credit Facility to September 15, 2025 , subject to definitive documentation.

For the year ended March 31, 2024, the Company was out of compliance with its covenants, and received a waiver in June 2024.

Our capital requirements will depend on many factors, and we may need to use capital resources and obtain additional capital.

We believe our cash and cash equivalent balances as of March 31, 2024 (See Note 8 - Subsequent Events) will be sufficient to support our operations for at least twelve months from the filing of this report.

The Company may also undertake equity or debt offerings, if necessary and opportunistically available, for further capital needs.

2 unchanged sentences

The accompanying consolidated financial statements of Cineverse Corp.

have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”).

These consolidated financial Statements have been prepared by the Company following the rules and regulations of the SEC.

All intercompany transactions and balances have been eliminated in consolidation.

We own an 85 % interest in CON TV, LLC ("CONtv"), a worldwide digital network that creates original content, and sells and distributes on-demand digital content on the internet and other consumer digital distribution platforms, such as gaming consoles, set-top boxes, handsets, and tablets.

Certain columns and rows may not add due to rounded numbers.

such as gaming consoles, set-top boxes, handsets, and tablets.

We evaluated the investment under the voting interest entity model and determined that the entity should be consolidated as we have a controlling financial interest in the entity through our ownership of outstanding voting shares, and that other equity holders do not have substantive voting, participating or liquidation rights.

We recorded net loss attributable to noncontrolling interest in our Consolidated Statements of Operations equal to 11 % of outstanding profit interest units retained by the noncontrolling interests.

We indirectly own 100 % of the common equity of CDF2 Holdings, LLC (“CDF2 Holdings”), which was created for the purpose of capitalizing on the conversion of the exhibition industry from film to digital technology.

We record net income or loss attributable to noncontrolling interest in our Consolidated Statements of Operations equal to the proportionate share of outstanding profit interest units retained by the noncontrolling interests.

CDF2 Holdings assists its customers in procuring the equipment necessary to convert their systems to digital technology by providing financing, equipment, installation and related ongoing services.

CDF2 Holdings is a Variable Interest Entity (“VIE”), as defined in ASC 810, Consolidation ("ASC 810") .

CDF2 Holdings is a Variable Interest Entity (“VIE”), as defined in Accounting Standards Codification ("ASC") 810, Consolidation ("ASC 810") .

ASC 810 requires the consolidation of VIEs by an entity that has a controlling financial interest in the VIE which entity is thereby defined as the primary beneficiary of the VIE.

To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, among other factors.

Although we indirectly, wholly own CDF2 Holdings, we, a third party that also has a variable interest in CDF2 Holdings, and an independent third party manager must mutually approve all business activities and transactions that significantly impact CDF2 Holdings’

economic performance.

To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, among other factors.

We have therefore assessed our variable interests in CDF2 Holdings and determined that we are not the primary beneficiary of CDF2 Holdings.

As a result, CDF2 Holdings’

financial position and results of operations are not consolidated in our financial position and results of operations.

As a result, CDF2 Holdings’ financial position and results of operations are not consolidated in our financial position and results of operations.

In completing our assessment, we identified the activities that we consider most significant to the economic performance of CDF2 Holdings and determined that we do not have the power to direct those activities, and therefore we account for our investment in CDF2 Holdings under the equity method of accounting.

1 unchanged sentence

The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes.

Significant items subject to such estimates and assumptions include revenue recognition, share-based compensation expense, valuation allowance for deferred income taxes, recovery of advances, fair value for asset acquisitions and business combinations, goodwill and intangible asset impairments, the fair value of our investment in Metaverse, and the assessment of amortization lives to intangible assets.

Significant items subject to such estimates and assumptions include revenue recognition, share-based compensation expense, valuation allowance for deferred income taxes, recovery of content advances, goodwill and intangible asset impairments, estimated royalties payable to content partners, and the assessment of amortization lives to intangible assets.

The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances.

4 unchanged sentences

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be “cash equivalents.”

We maintain bank accounts with major banks, which from time to time may exceed the Federal Deposit Insurance Corporation’s insured limits.

We consider all highly liquid investments with an original maturity of three months or less to be “cash equivalents.” We maintain bank accounts with major banks, which from time to time may exceed the Federal Deposit Insurance Corporation’s insured limits.

We periodically assess the financial condition of the institutions and believe that the risk of any loss is minimal.

2 unchanged sentences

The fair value of the content was based on a market approach and determined to be $ 1.0 million which is included in Revenues in our Consolidated Statements of Operations.

gain or loss was recognized, as the fair value of the content licenses purchased was determined to be $ 1.0 million and recognized within Intangible Assets, Net on our Consolidated Balance Sheets, and will be amortized over its three year estimated life.

For the year ended March 31, 2023, $ 85 thousand of related amortization expense had been recognized.

No gain or loss was recognized, as the fair value of the content licenses purchased was determined to be $ 1.0 million and recognized within Intangible Assets, Net on our Consolidated Balance Sheets, and will be amortized over its

three year estimated life.

For the years ended March 31, 2024 and March 31, 2023, $ 341 thousand and $ 85 thousand of related amortization expense had been recognized, respectively.

Accounts Receivable, Net

We maintain reserves for potential credit losses on accounts receivable.

We review the composition of accounts receivable and analyze historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.

Reserves are recorded primarily on a specific identification basis.

During the year ended March 31, 2023, the Company had written off $ 2.8 million of previously reserved accounts receivable balances.

We maintain reserves for expected credit losses on accounts receivable.

We review the composition of accounts receivable and analyze historical credit losses, customer concentrations, customer credit worthiness, current and forecasted economic trends and changes in customer payment patterns to evaluate the adequacy of this allowance.

During the year ended March 31, 2024, the Company had no write-offs of previously reserved accounts receivable and as of March 31, 2024, accrued an allowance for expected credit losses of $ 0.3 million.

During the year ended March 31, 2023, the Company had written off $ 2.8 million of previously reserved accounts receivable balances and as of March 31, 2023, carried an allowance for credit losses of $ 0 .

Employee Retention Tax Credit

2 unchanged sentences

The Appropriations Act amended the employee retention credit to be equal to 70 % of qualified wages paid to employees during the 2021 fiscal year.

The Company qualified for the employee retention credit beginning in June 2020 for qualified wages through September 2021 and filed a cash refund claim during the twelve months ended March 31, 2023 for $ 2.5 million.

Accordingly, the Company recorded an employee retention credit totaling $ 2.5 million, respectively, in the Employee retention tax credit line on the Company’s Consolidated Statements of Oper ations.

As of March 31, 2023, the tax credit receivable of $ 2.1 million has been included in the Employee retention tax credit line on the Company's Consolidated Balance Sheet.

Advances, which are recorded within prepaid and other current assets on the Consolidated Balance Sheets, represent amounts prepaid to studios or content producers for which we provide content distribution services for which we may have the right to recoup over the term of those services.

We evaluate advances regularly for recoverability and record an allowance o n a specific identification basis for amounts that we expect may not be recoverable as of the Consolidated Balance Sheet dates.

The provision for allowances related to advances were $ 1.3 million and $ 1.2 million , for the years ended March 31, 2023 and 2022 , respectively.

The Company qualified for the employee retention credit beginning in June 2020 for qualified wages through September 2021 and filed a cash refund claim during the fiscal year ended March 31, 2023 in the amount of $ 2.5 million in the Employee retention tax credit line on the Company’s Consolidated Statements of Operations.

As of March 31, 2024 and March 31, 2023, the tax credit receivable of $ 1.7 and $ 2.1 million, respectively, has been included in the Employee retention tax credit line ("ERTC") on the Company's Consolidated Balance Sheet.

The Company received notification during the second quarter of fiscal year 2024 that its ERTC claim was under examination with the Internal Revenue Service ("IRS").

In April 2024, the Company received a letter from the IRS indicating that its claim had been accepted and $ 1.7 million was received in June 2024.

Content Advances

Content advances represents amounts prepaid to studios or content producers for which we provide content distribution services.

We evaluate advances regularly for recoverability and record a provision for amounts that we expect may not be recoverable.

Amounts which are expected to be recovered within 12 months are classified as current, which were $ 9.3 million and $ 3.7 million as of March 31, 2024, and March 31, 2023, respectively.

Amounts estimated to be recoverable in more than 12 months are classified as long term and presented within content advances, net of current portion, which were $ 2.6 million and $ 1.4 million as of March 31, 2024, and March 31, 2023, respectively.

For the twelve months ended March 31, 2024 and March 31, 2023, the Company recorded a recovery and increase in the provision for advances of $ 0.5 million and $ 1.3 million, respectively.

Property and Equipment, Net

Property and equipment are stated at cost, less accumulated depreciation and amortization.

Depreciation expense is recorded using the straight-line method over the estimated useful lives of the respective assets, with useful life ranges by major asset class as follows:

Computer equipment and software

Internal use software

Machinery and equipment

Furniture and fixtures

We capitalize costs associated with software developed or obtained for internal use when the preliminary project stage is completed, and it is determined that the software will provide significantly enhanced capabilities and modifications.

These capitalized costs are included in property and equipment and include external direct cost of services procured in developing or obtaining internal-use software and personnel and related expenses for employees who are directly associated with, and who devote time to internal-use software projects.

Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended use.

Once the software is ready for its intended use, the costs are amortized over the useful life of the software on a straight-line basis.

Post-configuration training and maintenance costs are expensed as incurred.

Intangible Assets, Net

1 unchanged sentence

For intangible assets that have finite lives, the assets are amortized using the straight-line method over the estimated useful lives of the related assets.

We review the recoverability of our Intangible Assets when events or conditions occur that indicate a possible impairment exists.

An assessment for recoverability is based primarily on our ability to recover the carrying value of our long-lived and finite-lived assets from expected future undiscounted net cash flows.

If the total of expected future undiscounted net cash flows is less than the total carrying value of the asset, the asset is deemed not to be recoverable and possibly impaired.

We then estimate the fair value of the asset to determine whether an impairment loss should be recognized.

An impairment loss will be recognized if the asset’s fair value is determined to be less than its carrying value.

Fair value is determined by computing the expected future discounted cash flows.

During the years ended March 31, 2023 and 2022 , we recorded an impairment of $ 0 and $ 2.0 million for our customer relationships, respectively.

During both of the years ended March 31, 2024 and 2023 , we did no t record any impairment.

Amortization expense is recorded using the straight-line method over the estimated useful lives of the respective assets as follows:

2 unchanged sentences

Customer Relationships

Theatre Relationship

Intangible Assets

Advertiser Relationships and Channel

Capitalized Content

Supplier Agreements

The Company’s intangible assets include the following (in thousands):

As of March 31, 2024

1 unchanged sentence

Advertiser Relationships and Channel

Supplier Agreements

Customer Relationships

Trademarks and Tradenames

Trademark and Tradenames

Capitalized Content

Total Intangible Assets

2 unchanged sentences

Advertiser Relationships and Channel

Trademarks and Tradenames

Customer Relationships

Supplier Agreements

Intangible Assets

Customer Relationships

Trademark and Tradenames

Total Intangible Assets

As of March 31, 2024, amortization expense for each of the successive five years is expected to be (in thousands):

Property and Equipment, Net

Property and equipment are stated at cost, less accumulated depreciation and amortization.

Depreciation expense is recorded using the straight-line method over the estimated useful lives of the respective assets, with useful life ranges by major asset class as follows:

Computer equipment and software

Internal use software

Digital cinema projection systems

Machinery and equipment

Furniture and fixtures

Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended use.

Once the software is ready for its intended use, the costs are amortized over the useful life of the software on a straight-line basis.

Post-configuration training and maintenance costs are expensed as incurred.

Our Property and Equipment is considered for impairment if a triggering event occurs, following the same methodology described in the Intangible Assets, net section.

As of March 31, 2023, the Company's gross Property and Equipment of $ 68.1 million had $ 66.3 million of associated accumulated depreciation.

As of March 31, 2022, the Company's gross Property and Equipment of $ 111.7 million had $ 109.7 million of associated accumulated depreciation.

In-process intangible assets

Capitalized Content

The Company capitalizes direct costs incurred in the production of content from which it expects to generate a return over the anticipated useful life and the Company’s predominant monetization strategy informs the method of amortizing these deferred costs.

The determination of the predominant monetization strategy is made at commencement of the production or license period and the classification of the monetization strategy as individual or group only changes if there is a significant change to the title’s monetization strategy relative to its initial assessment.

The costs are capitalized to the Capitalized Content costs within Intangible Assets and are amortized as a group within Depreciation and Amortization within the Consolidated Statements of Operations.

Impairment of Long-lived and Finite-lived Intangible Assets

We review the recoverability of our long-lived assets and finite-lived intangible assets, when events or conditions occur that indicate a possible impairment exists.

The assessment for recoverability is based primarily on our ability to recover the carrying value of our long-lived and finite-lived assets from expected future undiscounted net cash flows.

If the total of expected future undiscounted net cash flows is less than the total carrying value of the asset, the asset is deemed not to be recoverable and possibly impaired.

We then estimate the fair value of the asset to determine whether an impairment loss should be recognized.

An impairment loss will be recognized if the asset’s fair value is determined to be less than its carrying value.

Fair value is determined by computing the expected future discounted cash flows.

There were no impairment charges recorded for long-lived and finite-lived intangible assets during the twelve months ende d March 31, 2024 and 2023 .

Goodwill is the excess of the purchase price paid over the fair value of the net assets of an acquired business.

Goodwill is tested for impairment on an annual basis or more often if warranted by events or changes in circumstances indicating that the carrying value may exceed fair value, also known as impairment indicators.

Inherent in the fair value determination for each reporting unit are certain judgments and estimates relating to future cash flows, including management’s interpretation of current economic indicators and market conditions, and assumptions about our strategic plans with regard to its operations.

To the extent additional information arises, market conditions change, or our strategies change, it is possible that the conclusion regarding whether our remaining goodwill is impaired could change and result in future goodwill impairment charges that will have a material effect on our consolidated financial position or results of operations.

The Company has the option to assess goodwill for possible impairment by performing a qualitative analysis to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount or to perform the quantitative impairment test.

The Company reassessed goodwill impairment on its annual measurement date of March 31, 2023 by performing a qualitative analysis and determined that it was not more likely than not that the fair value of its reporting unit is greater than its carrying amount.

For the twelve months ended March 31, 2024, the Company recognized a goodwill impairment loss of $ 14.0 million.

The Company considered the sustained decrease in its share price to be a goodwill impairment indicator and determined that it would be appropriate to proceed with a quantitative test.

Primarily utilizing a market-multiple approach, which took into account the sustained decrease in share price, the Company determined that goodwill impairment of $ 14.0 million would be recognized.

For the twelve months ended March 31, 2023, the Company assessed goodwill impairment on its annual measurement date of March 31, 2023 by performing a qualitative analysis and determined that it was not more likely than not that the fair value of its reporting unit was greater than its carrying amount.

During the year ended March 31, 2023, the Company recorded a purchase price adjustment to reduce Goodwill by $ 260 thousand.

No goodwill impairment charge was recorded in the years ended March 31, 2023 and 2022 .

No goodwill impairment charge was recorded for the twelve months ended March 31, 2023 .

Fair Value Measurements

1 unchanged sentence

Under the framework, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as of the measurement date.

The framework also establishes a three-tier hierarchy for inputs used in measuring fair value that maximizes the use of

observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

The framework also establishes a three-tier hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability and are developed based on the best information available in the circumstances.

The hierarchy consists of the following three levels:

Level 1 –

quoted prices in active markets for identical investments

Level 2 –

other significant observable inputs (including quoted prices for similar investments and market corroborated inputs)

Level 3 –

significant unobservable inputs (including our own assumptions in determining the fair value of investments)

• Level 1 – quoted prices in active markets for identical investments

• Level 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs)

• Level 3 – significant unobservable inputs (including our own assumptions in determining the fair value of investments)

The following tables summarize the levels of fair value measurements of our financial assets and liabilities (in thousands):

1 unchanged sentence

Equity investment in Metaverse, at fair value

Current portion of earnout consideration on purchase

of a business

Long term portion of earnout consideration on purchase

of a business

Earnout consideration on purchase of a business

As of March 31, 2023

Equity investment in Metaverse, at fair value

Current portion of earnout consideration on purchase

of a business

Long term portion of earnout consideration on purchase

of a business

On February 14, 2020, the Company acquired an approximate 11.5 % interest in A Metaverse Company (“Metaverse”), a publicly traded Chinese entertainment company, formerly Starrise Media Holdings Limited, whose ordinary shares are listed on the Stock Exchange of Hong Kong.

Earnout consideration on purchase of a business

Equity Investment in Metaverse

The Company acquired such interest as a strategic investment and in a private transaction from a shareholder of Metaverse that is related to our major shareholders.

1 unchanged sentence

On April 10, 2020, the Company purchased an additional 15 % interest in Metaverse in a private transaction from shareholders of Metaverse that are affiliated with the major shareholder of the Company.

The Company recorded an additional equity investment of approximately $ 28.2 million, which was the fair market value of the Metaverse shares on the transaction date on the Stock Exchange of Hong Kong, in exchange for the Company’s common stock of $ 11.0 million, valued at the date of the issuance of the Common Stock of the Company.

The difference in the

value of shares received in Metaverse and shares issued by the Company is deemed as contributed capital and recorded in additional paid-in capital.

The difference in the value of shares received in Metaverse and shares issued by the Company was deemed as contributed capital and recorded in additional paid-in capital.

This transaction was also recorded as an equity investment in Metaverse.

The Company has accounted for this investment under the equity method of accounting as the Company can exert significant influence over Metaverse with its direct ownership and affiliation with the Company’s majority shareholders.

The Company has made an irrevocable election to apply the fair value option under ASC 825-10, Financial Instruments , as it relates to its equity investment in Metaverse.

As of March 31, 2022, the value of our equity investment in Metaverse of $ 7.0 million, using the quoted trading price of the Stock Exchange of Hong Kong, resulting in an increase in fair value of $ 0.6 million for the year ended March 31, 2022.

The Company accounted for this investment under the equity method of accounting as the Company was deemed to be able to exert significant influence over Metaverse with its direct ownership and affiliation with the Company’s majority shareholders.

At the time, the Company made an irrevocable election to apply the fair value option under ASC 825-10, Financial Instruments , as it relates to its equity investment in Metaverse.

Following the halting of Metaverse stock trading on the Stock Exchange of Hong Kong in April 2022, the Company valued our equity investment in Metaverse using a market approach and is categorized as a Level 3 valuation based on unobservable inputs.

The Company estimated the fair value of Metaverse based on the last known enterprise value, adjusting for trends in enterprise valuations for comparable companies.

The Company estimated the fair value of Metaverse based on the last known enterprise value at the time and then adjusting for trends in enterprise valuations for comparable companies.

As of March 31, 2023, the fair value was $ 5.2 million, resulting in a decrease in fair value of $ 1.8 million for the year ended March 31, 2023.

On November 6, 2023, Metaverse's stock resumed trading on The Stock Exchange of Hong Kong Limited.

During the year ended March 31, 2024, the Company sold 221 million of its original 362 million shares held as of March 31, 2023, which resulted in a realized loss of $ 0.3 thousand during the twelve months ended March 31, 2024.

The resumption of active trading status represented renewed availability of quoted, unadjusted prices in active markets for identical assets, upon which the Company can execute a sale and readily access pricing information at the measurement date.

Accordingly, the Company has presented the fair value of its Metaverse shares held as of March 31, 2024 within the Level 1 grouping.

The fair value of the shares held as of March 31, 2024 was $ 0.4 million, with associated losses of $ 4.3 million recognized during the fiscal year ended March 31, 2024.

As a result of the decrease in ownership of its investment in Metaverse from its sale of shares, along with a corresponding decrease in influence, the Company no longer accounts for its investment in Metaverse under the equity method and instead will follow the guidance for equity securities for which the equity method is no longer appropriate under ASC 321, Investments - Equity Securities, and accordingly, the Company will continue to measure its investment at fair value, with changes in the value of securities held to be recognized in earnings.

Earnout consideration on purchase of business

The Company estimated the fair value of its earnout liability using contractual inputs from the related business combination, which established specific fiscal year revenue growth, profitability and EBITDA targets.

The Company utilizes the most up to date forecast to estimate the outcome against these targets to determine the ultimate estimated payout.

Prior to the completion of the earnout period at the end of fiscal year 2024, the Company utilized the most up to date forecast to estimate the outcome against these targets to determine the ultimate estimated payout.

The amounts recognized are not discounted.

During the fiscal year ended March 31, 2024, the final year of the earnout measurement period, the Company estimated a $ 612 thousand decrease in its earnout liability, issued $ 392 thousand worth of equity to settle its liability, made cash payments of $ 291 thousand, and incurred interest of $ 29 thousand.

During the fiscal year ended March 31, 2023, the Company increased the estimated earnout liability by $ 80 thousand and made payments of $ 238 thousand to reduce this liability, partially offset by $ 83 thousand of interest accrued.

4 unchanged sentences

Asset acquisitions are accounted for by using the cost accumulation model whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of relative fair values.

Prepaid and Other Current Assets

Prepaid and other current assets consisted of the following (in thousands):

As of March 31,

Advances and Due from Producers

Other receivables

Other prepaid expenses

Total prepaid and other current assets

Advances and amounts due from producers represent amounts prepaid to studios or content producers for which we provide content distribution services.

We evaluate advances and amounts due from producers regularly for recoverability and an allowance for amounts that we expect may not be recoverable.

The provision for allowances and accelerated amortization related to advances and amounts due from producers were $ 1.3 million and $ 1.2 million for the years ended March 31, 2023 and 2022 , respectively.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following (in thousands):

As of March 31,

Accounts payable

3 unchanged sentences

Total accounts payable and accrued expenses

As of March 31, 2024, the Company's accrued royalty estimate decreased by $ 2.3 million , which contributed to a decrease in Amounts due to producers relative to March 31, 2023.

Deferred Consideration

The Company has recognized liabilities related to deferred consideration arrangements related to the acquisition of FoundationTV ("FTV") and Digital Media Rights ("DMR").

These payments are fixed in nature and are due to the sellers of the respective companies.

The Company initially recognized the liability at fair value at the time of acquisition and has since recognizes interest expense related to accretion in advance of the ultimate settlement of these liabilities.

Amounts due within 12 months under the terms of the agreements are classified as current within the Consolidated Balance Sheets.

The deferred consideration related to the acquisition of DMR is payable in either Class A common shares of the Company stock or cash, at the Company's discretion and subject to certain condit ions.

Payments of $ 2.4 million are due in March 2025.

The deferred consideration related to the FTV acquisition is payable in the amount of $ 238 thousand in each of June 2024 and December 2024, and $ 464 thousand in June 2025.

There is $ 475 thousand presently due and payable.

The Company has the right to pay up to 25 % of post-close purchase price in equity.

Disaggregation of Revenue

The following table presents the Company’s revenue by source (in thousands):

Streaming and digital

Base distribution

Podcast and other

Other non-recurring

Total revenue

Streaming and digital revenue represents advertising and subscription fees earned through the operation of the Company's owned and managed channels.

Certain revenue recognition estimates may be required for this source at the end of a reporting period when we are not contractually entitled to receive final performance reporting from our partners for an extended period of time.

Base distribution revenue is generated by the Company's physical revenue streams such as DVD's and related supply chain revenue, as well as theatrical revenue.

Other non-recurring revenue represents remaining system sales and the release of previously constrained variable consideration, following the run-off of the Company's legacy digital cinema business at the conclusion of fiscal year 2023.

The Company also has contracts for the theatrical distribution of third party feature movies and alternative content.

Distribution fee revenue and participation in box office receipts are recognized at the time a feature movie and alternative content are viewed.

Podcast and other revenue represents advertising fees earned in support of the Company's podcast programming.

Other non-recurring revenue relates to the Company's legacy digital cinema operations, whose operations have run-off, still may generate non-recurring revenue from the sale of cinema assets or the recognition of variable consideration as the associated uncertainty associated with the revenue is resolved.

Revenue Recognition

Payment terms and conditions vary by customer and typically provide net 30 to 90 day terms.

We do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to our customer and payment for that product or service will be one year or less.

We have in the past entered into arrangements in connection with activation fees due from our System deployments that had extended payment terms.

The outstanding balances on these arrangements are insignificant and hence the impact of significant financing would be insignificant.

Cinema Equipment Segment

Our Cinema Equipment segment consists of financing vehicles and administrators for Systems installed nationwide in our first deployment phase (“Phase I Deployment”) to theatrical exhibitors and for Systems installed domestically and internationally in our second deployment phase (“Phase II Deployment”).

We retain ownership of our Systems and the residual cash flows related to the Systems in Phase I Deployment after the end of the 10-year deployment payment period.

For certain Phase II Deployment Systems, we do not retain ownership of the residual cash flows and digital cinema equipment in Phase II Deployment after the completion of cost recoupment and at the expiration of the exhibitor master license agreements.

The Cinema Equipment segment also provides monitoring, data collection, serial data verification and management services to this segment, as well as to exhibitors who purchase their own equipment, in order to collect virtual print fees (“VPFs”) from motion picture studios and distributors and Alternative Content Fees (“ACFs”) from alternative content providers, and to distribute those fees to theatrical exhibitors (collectively, “Services”).

VPFs are earned, net of administrative fees, pursuant to contracts with movie studios and distributors, whereby amounts are payable by a studio to Phase I Deployment and to Phase II Deployment when movies distributed by the studio are displayed on screens utilizing our Systems installed in movie theatres.

VPFs are earned and payable to Phase I Deployment based on a defined fee schedule until the end of the VPF term.

One VPF is payable for every digital title initially displayed per System.

The amount of VPF revenue is dependent on the number of movie titles released and displayed using the Systems in any given accounting period.

VPF revenue is recognized in the period the title first plays for general audience viewing in a digital projector equipped movie theatre.

The Phase 1 Deployment’s and Phase 2 Deployments performance obligations for revenue recognition are met at this time.

Phase II Deployment’s agreements with distributors require the payment of VPFs, according to a defined fee schedule, for ten years from the date each system is installed;

however, Phase II Deployment may no longer collect VPFs once “cost recoupment,”

as defined in the contracts with movie studios and distributors, is achieved.

Cost recoupment will occur once the cumulative VPFs and other cash receipts collected by Phase II Deployment have equaled the total of all cash outflows, including the purchase price of all Systems, all financing costs, all “overhead and ongoing costs”, as defined, and including service fees, subject to maximum

agreed upon amounts during the three-year rollout period and thereafter.

Further, if cost recoupment occurs before the end of the eighth contract year, the studios will pay us a one-time “cost recoupment bonus.”

Under the terms of our standard cinema equipment licensing agreements, exhibitors will continue to have the right to use our Systems through the end of the term of the licensing agreement, after which time, they have the option to:

(i) return the Systems to us;

(ii) renew their license agreement for successive one-year terms;

or (iii) purchase the Systems from us at fair market value.

As permitted by these agreements, we typically pursue the sale of the Systems to such exhibitors.

Cineverse recognizes revenue once the customer takes possession of the Systems and Cineverse received the sale proceeds.

Such sales were originally contemplated as the conclusion of the digital cinema deployment plan.

For the Fiscal Years ended March 31, 2023 and 2022, the Company recognized revenue of $ 2.6 million and $ 9.6 million from Digital Cinema System Sales, respectively.

The Cinema Equipment segment earns an administrative fee of approximately 5 % of VPFs collected and, in addition, earns an incentive service fee equal to 2.5 % of the VPFs earned by Phase 1 Deployment.

This administrative fee is related to the collection and remittance of the VPF’s and the performance obligation is satisfied at that time the related VPF fees are due which is at the time the movies are displayed on screens utilizing our Systems installed in movie theatres.

The service fees are recognized at a point in time revenue when the corresponding VPF fees are due from the movie studios and distributors.

A limited number of systems from our Phase I deployment remain eligible for VPF's from certain distributors where Phase I exhibitors have renewed their term on an annual basis.

We continue to pursue system sales for these remaining exhibitors.

For the year ended March 31, 2023 and 2022, $ 9.1 million and $ 4.8 million of revenue was recognized that was included in the accounts payable balance as constrained variable consideration at the beginning of the year.

Certain agreements with studios contain the right to audit VPF fees.

As a result, the Company recognized these amounts as constrained variable consideration until audit conclusion or the expiration of the associated audit rights.

The Company recognized the revenue once the uncertainty associated with the variable considerations was resolved.

As of March 31, 2023, approximatel y $ 1.0 million remains on our Consolidated Balance Sheet in accounts payable as constrained variable consideration.

Content & Entertainment Segment

Our Content & Entertainment segment earns fees for the distribution of content in the home entertainment markets via several distribution channels, including digital, video on demand (“VOD”

or “OTT Streaming and Digital”), and physical goods (e.g., DVDs and Blu-ray Discs) (“Base Distribution”).

Fees earned are typically a percentage based on the net amounts received from our customers.

Fees for the distribution of content in the home entertainment markets via several distribution channels, including digital, video on demand (“VOD” or "Streaming and Digital”), and physical goods (e.g., DVDs and Blu-ray Discs) (“Base Distribution”).

Fees earned are typically a percentage of the net amounts received from our customers.

Depending upon the nature of the agreements with the platform and content providers, the fee rate that we earn varies.

The Company’s performance obligations include the delivery of content for transactional, subscription and ad supported/free ad-supported streaming TV (“FAST”) on the digital platforms, and shipment of DVDs and Blu-ray Discs.

Revenue is recognized at the point in time when the content is available for subscription on the digital platform (the Company’s digital content is considered functional IP), at the time of shipment for physical goods, or point-of-sale for transactional and VOD services as the control over the content or the physical title is transferred to the customer.

The Company considers the delivery of content through various distribution channels to be a single performance obligation.

Base Distribution Revenue from the sale of physical goods is recognized after deducting the reserves for sales returns and other allowances, which are accounted for as variable consideration.

Base Distribution is recognized after deducting reserves for sales returns and other allowances.

Reserves for potential sales returns and other allowances are recorded based upon historical experience.

If actual future returns and allowances differ from past experience, adjustments to our allowances may be required.

The Content & Entertainment segment also has contracts for the theatrical distribution of third party feature movies and alternative content.

The Content & Entertainment segment's distribution fee revenue and participation in box office receipts are recognized at the time a feature movie and alternative content are viewed.

The Content & Entertainment segment has the right to receive or bill a portion of the theatrical

distribution fee in advance of the exhibition date, and therefore such amount is recorded as a receivable at the time of execution, and all related distribution revenue is deferred until the third party feature movies’

or alternative content’s theatrical release date.

We have the right to receive or bill a portion of the theatrical distribution fee in advance of the exhibition date, and therefore such amount is recorded as a receivable at the time of execution, and all related distribution revenue is deferred until the third party feature movies’ or alternative content’s theatrical release date.

Payment terms and conditions vary by customer and typically provide net 30 to 90 day terms.

As the Company satisfies its performance obligations, whether relating to the delivery of digital content, physical goods, or licensing, revenue is generally measured at a point in time.

The Company follows the five-step model established by ASC 606, Revenue from Contracts with Customers when preparing its assessment of revenue recognition.

Principal Agent Considerations

Revenue earned by our Content & Entertainment segment from the delivery of digital content and physical goods may be recognized gross or net depending on the terms of the arrangement.

Revenue earned from the delivery of digital content and physical goods may be recognized gross or net depending on the terms of the arrangement.

We determine whether revenue should be reported on a gross or net basis based on each revenue stream.

5 unchanged sentences

We recognize all shipping and handling costs as an expense in direct operating expenses because we are responsible for delivery of the product to our customers prior to transfer of control to the customer.

Credit Losses

We maintain reserves for potential credit losses on accounts receivable.

Reserves are recorded primarily on a specific identification basis.

Our Content & Entertainment segment recognizes accounts receivable, net of an estimated allowance for product returns and customer chargebacks, at the time that it recognizes revenue from a sale.

Reserves for product returns and other allowances is variable consideration as part of the transaction price.

If actual future returns and allowances differ from past experience, adjustments to our allowances may be required.

We record accounts receivable, long-term in connection with activation fees that we earn from Systems deployments that have extended payment terms.

Such accounts receivable are discounted to their present value at prevailing market rates.

Contract Liabilities

We generally record a receivable related to revenue when we have an unconditional right to invoice and receive payment, and we record deferred revenue (contract liability) when cash payments are received or due in advance of our performance, even if amounts are refundable.

Deferred revenue pertaining to our Content & Entertainment includes amounts related to the sale of DVDs with future release dates.

Deferred revenue relating to our Cinema Equipment segment pertains to revenues earned in connection with up front exhibitor contributions that are deferred and recognized over the expected cost recoupment period.

It also includes unamortized balances in connection with activation fees due from the Systems deployments that have extended payment terms.

The ending deferred revenue balance, including current as of March 31, 2023 and 2022 was $ 0.2 million .

For the year ended March 31, 2023, the additions to our deferred revenue balance were primarily due to cash payments received or due in advance of satisfying performance obligations, while the reductions to our deferred revenue balance were primarily due to the recognition of revenue upon fulfillment of our performance obligations, both of

which were in the ordinary course of business.

During the year ended March 31, 2023 , $ 0.2 million of revenue was recognized that was included in the deferred revenue balance at the beginning of the year.

Deferred revenue includes amounts related to advances, he sale of DVDs or theatrical releases with future release dates.

The ending deferred revenue balance, all current as of March 31, 2024 and 2023 was $ 0.4 million and $ 0.2 million, respectively.

There were no long term amounts at either date.

Participations and Royalties Payable

2 unchanged sentences

We identify and record as a reduction to the liability any expenses that are to be reimbursed to us by such studios or content producers.

Disaggregation of Revenue

The Company disaggregates revenue into different revenue categories for the Content & Entertainment and Cinema Equipment segments.

The Content & Entertainment segment revenue categories are:

Base Distribution and Streaming and Digital.

The Cinema Equipment segment revenue categories are:

Variable Consideration, System Sales, and Services and Deployment.

The following tables present the Company’s revenue by segment and source (in thousands):

Year Ended March 31,

Content & Entertainment segment:

Streaming and Digital

Base Distribution

Total Content & Entertainment revenue

Cinema Equipment segment:

Variable Consideration

Services and Deployment

Total Cinema Equipment revenue

Total Revenue

As of March 31, 2023, our Phase I Deployment and Phase II Deployment agreements with certain major studios have reached their conclusion and we do not expect any material revenues to be generated in the Cinema Equipment segment except for System Sales.

Concentrations

For the fiscal year ended March 31, 2023 , one customer represented 10 % of consolidated revenue, accounting for 18 % of Content & Entertainment revenue and 12 % of Cinema Equipment revenue.

For the fiscal year ended March 31, 2022, no customer accounted for more than 10 % of our consolidated revenue.

For the fiscal year ended March 31, 2024 , one customer represented 26 % of consolidated revenue.

For the fiscal year ended March 31, 2023, one customer represented 10 % of consolidated revenue.

Direct Operating Costs

Direct operating costs consist of operating costs such as cost of revenue, fulfillment expenses, shipping costs, property taxes and insurance on systems, royalty expenses, allowance against advances, a nd marketing and direct personnel costs.

Direct operating costs consist of operating costs such as cost of revenue, fulfillment expenses, shipping costs, property taxes and insurance on systems, royalty and participation expenses, allowance against advances, a nd marketing and direct personnel costs.

Stock-based Compensation

The Company issues stock-based awards to employees and non-employees, generally in the form of restricted stock, restricted stock units, stock appreciation rights and performance stock units.

The Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation (“ASC

718”).

ASC 718 requires all stock-based payments, including grants of stock options and restricted stock units and modifications to existing stock options, to be recognized in the Consolidated Statements of Operations and Comprehensive Loss based on their fair values.

The Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation (“ASC 718”).

The Company measures the compensation expense of employee and non-employee services received in exchange for an award of equity instruments based on the fair value of the award on the grant date.

That cost is recognized on a straight-line basis over the period during which the employee and non-employee is required to provide service in exchange for the award.

That cost is recognized on a straight-line basis over the period during which the employee and non-employee is required

to provide service in exchange for the award.

The fair values of options and stock appreciation rights are calculated as of the date of grant using the Black-Scholes option pricing model based on key assumptions such as stock price, expected volatility, risk-free rate and expected term.

The Company’s estimates of these assumptions are primarily based on the trading price of the Company’s stock, historical data, peer company data and judgment regarding future trends and factors.

The Company accounts for income taxes using the asset and liability method.

2 unchanged sentences

The Company is primarily subject to income taxes in the United States and India.

The Company accounts for uncertain tax positions in accordance with an amendment to ASC Topic 740-10, Income Taxes , which provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is “more-likely-than-not”

to be sustained were it to be challenged by a taxing authority.

The assessment of the tax position is based solely on the technical merits of the position, without regard to the likelihood that the tax position may be challenged.

If an uncertain tax position meets the “more-likely-than-not”

threshold, the largest amount of tax benefit that is more than 50 % likely to be recognized upon ultimate settlement with the taxing authority is recorded.

If an uncertain tax position meets the “more-likely-than-not” threshold, the largest amount of tax benefit that is more than 50 % likely to be recognized upon ultimate settlement with the taxing authority is recorded.

The Company has no uncertain tax positions.

6 unchanged sentences

Basic and diluted net income (loss) per share are computed as follows (in thousands, except per share data):

Year Ended March 31,

Basic net income (loss) per share:

Net income (loss) attributable to common stockholders

Basic net loss per share:

Net loss attributable to common stockholders

Shares used in basic computation:

Weighted-average shares of Common Stock outstanding

Basic net income (loss) per share

Basic net loss per share

Shares used in diluted computation:

2 unchanged sentences

Weighted-average number of shares

Diluted net income (loss) per share

The calculation of diluted net income (loss) per share for the year ended March 31, 2023 and 2022 does not include the impact of 700 thousand and 339 thousand potentially dilutive shares, respectively, relating to stock options, performance shares and stock appreciation rights, as their impact would have been anti-dilutive due to the respective period's income (loss) and an exercise price which exceeded period-end share price.

Diluted net loss per share

The calculation of diluted net income (loss) per share for the year ended March 31, 2024 and 2023 does not include the impact of 3,443 and 700 thousand potentially dilutive shares, respectively, relating to warrants, stock options, performance shares and stock appreciation rights, as their impact would have been anti-dilutive due to the respective period's income (loss) and an exercise price which exceeded period-end share price.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

1 unchanged sentence

ASU's not included in the Company's disclosures were assessed and determined to be not applicable and material to the Company's consolidated financial statements or disclosures.

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU 2021- 08”) 2021-08, " Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ," which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be applied prospectively.

The Company does not expect the adoption of the amendments to have a material impact on its consolidated financial statements.

In June 2022, the FASB issued ASU No.

2022-03, " Fair Value Measurements (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ," which clarifies and amends the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities.

The guidance will be effective for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years.

The Company does not expect the adoption to have a material impact on our consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures." The update requires disclosure of incremental segment information, including significant segment expenses, on an annual and interim basis, and would apply to single segment companies.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 with early adoption is permitted.

The Company is required to apply the updates retrospectively.

The Company is assessing the impact of ASU 2023-07 on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740)—Improvements to Income Tax Disclosures" On an annual basis, this update requires the disclosure of specific tax categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

The amendments are effective for annual periods beginning after December 15, 2024.

Prospective and retrospective adoption is permitted.

The Company is still evaluating its method of adoption and assessing the impact of ASU 2023-09 on the disclosures within its consolidated financial statements.

In March 2024, the FASB issued ASU 2024-01, "Compensation—Stock Compensation (Topic 718)—Scope Application of Profits Interest and Similar Awards." This update clarifies the scope of "Profit Interest" and similar awards and adds an illustrative example to the existing ASC 718 standard that includes four fact patterns to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether a profits interest award should be accounted for in accordance with Topic 718.

The amendments in this Update are effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods.

Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance.

The amendments in this Update should be applied either (1) retrospectively to all prior periods presented in the financial statements or (2) prospectively to profits interest and similar awards granted or modified on or after the date at which the entity first applies the amendments.

Based on the Company's population of awards, the Company does not anticipate a material impact on its financial results as a result of adoption.

OTHER INTERESTS

CDF2 Holdings

CDF2 Holdings assists its customers in procuring the equipment necessary to convert their systems to digital technology by providing financing, equipment, installation and related ongoing services.

CDF2 Holdings is a Variable Interest Entity (“VIE”), as defined in ASC 810, Consolidation.

ASC 810 requires the consolidation of VIEs by an entity that has a controlling financial interest in the VIE which entity is thereby defined as the primary beneficiary of the VIE.

To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, among other factors.

economic performance.

To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, among other factors.

We have therefore assessed our variable interests in CDF2 Holdings and determined that we are not the primary beneficiary of CDF2 Holdings.

As a result, CDF2 Holdings’

financial position and results of operations are not consolidated in our financial statements.

As a result, CDF2 Holdings’ financial position and results of operations are not consolidated in our financial statements.

2 unchanged sentences

The accompanying Consolidated Statements of Operation s include $ 0.0 million and $ 0.2 million of digital cinema servicing revenue from CDF2 Holdings for the year ended March 31, 2024 and 2023, respectively.

Total stockholders’

deficit of CDF2 Holdings at March 31, 2023 and 2022 was $ 59.2 and $ 55.6 million, respectively.

We have no obligation to fund the operating loss or the stockholders’

deficit beyond our initial investment of $ 2.0 million and, accordingly, our investment in CDF2 Holdings as of March 31, 2023 and 2022 is carried at $ 0 .

Total stockholders’ deficit of CDF2 Holdings at March 31, 2024 and 2023 was $ 59.2 and $ 59.2 million, respectively.

We have no obligation to fund the operating loss or the stockholders’ deficit beyond our initial investment of $ 2.0 million and, accordingly, our investment in CDF2 Holdings as of March 31, 2024 and 2023 is carried at $ 0 .

We own an 85 % interest in CON TV, LLC ("CONtv"), a worldwide digital network that creates original content, and sells and distributes on-demand digital content on the Internet and other consumer digital distribution platforms, such as gaming consoles, set-top boxes, handsets, and tablets.

1 unchanged sentence

On March 15, 2022, the Company entered into a stock purchase agreement with Roundtable Entertainment Holdings, Inc.

(“Roundtable”) pursuant to which the Company purchased 0.5 thousand shares of Roundtable Series A Preferred Stock and warrants to purchase 0.1 thousand shares of Roundtable Common Stock (together, the “Roundtable Securities”).

The Company paid the purchase price for the Roundtable Securities by issuing 16 thousand shares of Common Stock to Roundtable , after taking into account the June 2023 reverse stock split (further described in the Stockholders' Equity footnote) .

3 unchanged sentences

Our President and Chief Strategy Officer is on the Roundtable Board of Directors.

Christian Cinema LLC

On February 27, 2023, the Company, together with its subsidiary Dove Family Channel, entered into an asset purchase agreement with Christian Cinema LLC and Dove Movies LLC (together, “Christian Channel”), to buy substantially all of the assets of Christian Channel, for consideration of $ 1.5 million, of which $ 602 thousand was paid in cash and $ 898 thousand was paid with 83 thousand shares of the Company's Common Stock , after taking into account the June 2023 reverse stock split (further described in the Stockholders' Equity footnote) .

Cineverse allocated the $ 1.5 million purchase price to Intangibles assets, net on the Consolidated Balance Sheet as of March 31, 2023.

STOCKHOLDERS’

Authorized Common Stock

On June 7, 2023, the Company amended its Certificate of Incorporation to effect a 1:20 reverse stock split , which became effective on June 9, 2023 (the "Reverse Stock Split").

Proportionate adjustments were made to the exercise prices and the number of shares underlying the Company’s outstanding equity awards, as applicable, as well as to the number of shares issuable under the Company’s equity incentive plans.

The Reverse Stock Split did not affect the number of authorized shares of Common Stock or the par value of the Common Stock nor did it change the authorized shares of preferred stock or the relative voting power of such holders of our outstanding Common Stock and preferred stock.

No fractional shares were issued in connection with the Reverse Stock Split.

Stockholders who would have otherwise been entitled to receive fractional shares as a result of the Reverse Stock Split were entitled to a cash payment in lieu thereof after the sale on the open market of the aggregated fractional shares by the exchange agent for the Reverse Stock Split.

All shares and per share amounts discussed in these consolidated financial statements have been retrospectively adjusted for the Reverse Stock Split.

The effects of the Reverse Stock Split have been retrospectively effected throughout this document, including but not limited to earnings per share.

On October 11, 2021, the Company filed an Amended and Restated Certificate of Incorporation which authorized an increase in the n umber of shares of Common Stock for issuance to 275 million shares.

During the year ended March 31, 2023 , the Company issued 582 thousand shares of Common Stock in payment of preferred stock dividends, Board fees, payment of performance shares, pursuant to a business combinations, and the acqui sition of intangible assets, after taking into account the June 2023 Reverse Stock Split.

During the year ended March 31, 2022, the Company issued 455 thousand shares of Common Stock which consist of the sale of shares of our Common Stock, issuance of Common Stock for business combinations, the issuances of Common Stock in payment of preferred stock dividends and in payment of board retainer fees, and as payment pursuant to a Stock Purchase Agreement , after taking into account the Reverse Stock Split.

STOCKHOLDERS’ EQUITY

On October 11, 2021, the Company filed an Amended and Restated Certificate of Incorporation which authorized an increase in the n umber of shares of Common Stock for issuance to 275 million shares, the level at which it remains.

On June 9, 2023, the Company effected a 1-for-20 reverse stock split of the Company's Class A common sto ck.

All shares and price amounts in this report reflect the 1-for-20 reverse stock split effected on June 9, 2023.

During the fiscal year ended March 31, 2024, the Company issued 6.4 million shares of Common Stock, through a direct offering, ATM sales, preferred stock dividends, issuance for shares for employee bonuses net of shares withheld for taxes, exercise of pre-funded warrants, Board fees, deferred consideration and earnout commitments.

During the fiscal year ended March 31, 2023, the Company issued 582 thousand shares of Common Stock in payment of preferred stock dividends, Board fees, payment of performance shares, pursuant to a business combinations, and the acqui sition of intangible assets.

Direct Offering

On June 14, 2023, the Company sold in a public offering an aggregate of 2,150,000 shares of the Company’s Class A common stock, pre-funded warrants to purchase up to 516,667 shares of Common Stock, and common warrants to purchase up to 2,666,667 shares of Common Stock at an effective combined purchase price of $ 3.00 per share and related Common Warrant, for aggregate gross proceeds of approximately $ 8.0 million, before deducting placement agents fees and offering expenses payable by the Company.

The purchase price of each Pre-Funded Warrant and related Common Warrant was equal to the Purchase Price less the $ 0.001 per share exercise price of each Pre-Funded Warrant.

All pre-funded and common warrants were issued as immediately exercisable.

All pre-funded warrants were subsequently exercised in July 2023 for total proceeds of $ 0.5 thousand.

All common warrants remain outstanding as of March 31, 2024.

ATM Sales Agreement

In July 2020, we entered into an At-the-Market sales agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”) and B.

Riley FBR, Inc.

Riley”

and, together with A.G.P., the “Sales Agents”), pursuant to which the Company may offer and sell, from time to time, through the Sales Agents, shares of Common Stock at the market prices prevailing on Nasdaq at the time of the sale of such shares.

Riley” and, together with A.G.P., the “Sales Agents”), pursuant to which the Company may offer and sell, from time to time, through the Sales Agents, shares of Common Stock at the market prices prevailing on Nasdaq at the time of the sale of such shares.

The Company is not obligated to sell any shares under the ATM Sales Agreement.

Any sales of shares made under the ATM Sales Agreement will be made pursuant to the 2020 Shelf Registration Statement, for an aggregate offering price of up to $ 30 million.

During the year ended March 31, 2021, we sold 1.4 million shares of Common Stock under the ATM Sales Agreement, taking into account the Reverse Stock Split.

Net proceeds from such sales totaled $ 18.6 million.

No sales under the ATM Sales Agreement were made during the year ended March 31, 2023 or 2022.

Subsequent to March 31, 2023, the Company sold 177 thousand shares of Common Stock under the ATM Sales Agreement for net proceeds of $ 1.1 million.

Common Stock Offering

On June 14, 2023, the Company agreed to sell its shares in a public offering, as further described in Note 9 - Subsequent Events .

Common Stock Purchase Agreement

In October 2021, we entered into a Common Stock Purchase Agreement (the “Equity Line Purchase Agreement”) and a Registration Rights Agreement (the “Registration Rights Agreement”) with B.

Riley Principal Capital, LLC (“B.

Riley”).

Pursuant to the Equity Line Purchase Agreement, the Company has the right to sell to B.

Riley up to the lesser of (i) $ 50 million of newly issued shares of Common Stock and (ii) the Exchange Cap (as defined in the Equity Line Purchase Agreement), from time to time during the 24-month period from and after the October 21, 2021.

Sales of Common Stock pursuant to the Equity Line Purchase Agreement, and the timing of any sales, are solely at the option of the Company, and the Company is under no obligation to sell any securities to B.

Riley under the Equity Line Purchase Agreement.

As consideration for B.

Riley’s commitment to purchase shares of Common Stock at the Company’s direction upon the terms and subject to the conditions set forth in the Equity Line Purchase Agreement, upon execution of the Equity Line Purchase Agreement, the Company issued 10.5 thousand shares of Common Stock to B.

Riley (the “Commitment Shares”), taking into account the Reverse Stock Split.

The purchase price of the shares of Common Stock that we elect to sell to B.

Riley pursuant to the Equity Line Purchase Agreement will be determined by reference to the volume weighted average price of the Common Stock (“VWAP”) during the applicable purchase date, less a fixed 5 % discount to such VWAP.

Pursuant to the Registration Rights Agreement, the Company filed a Registration Statement on Form S-1 that was declared effective by the Securities and Exchange Commission on October 21, 2021 (File No.

333-260210) for the resale by B.

Riley of up to 1.3 million shares of Common Stock (including the Commitment Shares) acquired pursuant to the Equity Line Purchase Agreement, taking into account the Reverse Stock Split.

There were no sales under these agreements for the year ended March 31, 2023 .

As of March 31, 2023, there is still approximately $ 38.0 million available under the 2020 Shelf Registration Statement, and $ 37.6 million available under the Equity Line Purchase Agreement, to raise additional capital.

No sales under the ATM Sales Agreement were made during the year ended March 31, 2023.

For the twelve months ended March 31, 2024, the Company sold 177 thousand shares for $ 1.1 million in net proceeds, respectively, after deduction of commissions and fees.

The ATM Sales Agreement has expired in accordance with its terms.

On May 3, 2024, Cineverse Corp.

(the “Company”) entered into a Sales Agreement (the “Sales Agreement”) with A.G.P./Alliance Global Partners and The Benchmark Company, LLC (collectively, the “Sales Agents”), pursuant to which the Company may offer and sell, from time to time, through the Sales Agents, shares of its Class A common stock, par value $ 0.001 per share (the “Common Stock”).

Shares of Common Stock may be offered and sold for an aggregate offering price of up to $ 15 million.

The Sales Agents’ obligations to sell shares under the Sales Agreement are subject to satisfaction of certain conditions, including the continuing effectiveness of the Registration Statement on Form S-3 (Registration No.

333-273098) (the “Registration Statement”) filed by the Company with the U.S.

Securities and Exchange Commission (the “SEC”) on June 30, 2023 and declared effective by the SEC on January 25, 2024, and other customary closing conditions.

The Company will pay the Sales Agents a commission of 3.00 % of the aggregate gross proceeds from each sale of shares and has agreed to provide the Sales Agents with customary indemnification and contribution rights.

The Company has also agreed to reimburse the Sales Agents for

certain specified expenses.

The Company is not obligated to sell any shares under the Sales Agreement and has not sold any shares through the date of this report.

PREFERRED STOCK

2 unchanged sentences

TREASURY STOCK

We have treasury stock, at cost, consisting of 66 thousand shares of Common Stock as of March 31, 2023 and 2022.

We have treasury stock, at cost, consisting of 289 thousand shares and 66 thousand shares of Common Stock as of March 31, 2024 and 2023, respectively.

EQUITY INCENTIVE PLANS

Stock Based Compensation Awards

Awards issued under our 2000 Equity Incentive Plan (the “2000 Plan”) were in any of the following forms (or a combination thereof) (i) stock option awards;

(ii) stock appreciation rights;

1 unchanged sentence

or (iv) performance awards.

The 2000 Plan provides for the granting of incentive stock options (“ISOs”) with exercise prices not less than the fair market value of our Common Stock on the date of grant.

The 2000 Plan provided for the granting of incentive stock options (“ISOs”) with exercise prices not less than the fair market value of our Common Stock on the date of grant.

ISOs granted to shareholders having more than 10 % of the total combined voting power of the Company must have exercise prices of at least 110 % of the fair market value of our Common Stock on the date of grant.

1 unchanged sentence

The exercise prices and vesting periods (if any) for non-statutory options were set at the discretion of our Compensation Committee.

The Company does not estimate forfeitures, but recognizes forfeitures in the period in which they occur.

Options outstanding and exercisable under the 2000 Plan are as follows:

As of March 31, 2024

Range of Exercise Prices

Options Outstanding

4 unchanged sentences

(In thousands)

$ 280 - $ 488

As of March 31, 2023

Range of Exercise Prices

Options Outstanding

4 unchanged sentences

(In thousands)

$ 280 - $ 488

A total of 0.4 thousand options were forfeited during the year ended March 31, 2023.

The Company does not estimate forfeitures, but recognizes forfeitures in the period in which they occur.

In August 2017, the Company adopted the 2017 Equity Incentive Plan (the “2017 Plan).

A total of 9 thousand options expired during the year ended March 31, 2024.

In August 2017, the Company adopted the 2017 Equity Incentive Plan (the “2017 Plan).

The 2017 Plan replaced the 2000 Plan, and applies to employees and directors of, and consultants to, the Company.

The 2017 Plan provides for the issuance of up to 905 thousand shares of Common Stock, in the form of various awards, including stock options, stock appreciation rights, stock, restricted stock, restricted stock units, performance awards and cash awards.

During the year ended March 31, 2023 , the Company granted 155 thousand stock appreciation rights (“SARs”), which were granted under the 2017 Plan.

All SARs issued have an exercise price equal to the market price of the Company’s Common Stock on the date of grant and a maturity date of 10 years after grant date.

The 2017 Plan provides for the issuance of up to 2,055 thousand shares of Common Stock as of December 8, 2023, in the form of various awards, including stock options, stock appreciation rights, stock, restricted stock, restricted stock units, performance awards and cash awards.

During the year ended March 31, 2024, the Company granted 207 thousand stock appreciation rights (“SARs”), which were granted under the 2017 Plan.

All SARs issued have an exercise price equal to the market price of the

Company’s Common Stock on the date of grant and a maturity date of 10 years after grant date.

The Company has the option to settle the SARs through a cash payment, issuance of shares, or some combination of cash payment and shares.

Based on past practice and intent to settle these awards with shares of Class A common stock, the Company has determined that these awards should be classified in equity.

The following weighted average assumptions were used to estimate the fair value of SARs granted, as follows:

9 unchanged sentences

$ 5.80 - $ 10.43

The weighted average fair value of outstanding the grants made during the year ended March 31, 2023, was $ 8.52 per award.

The weighted average fair value of outstanding grants made during the year ended March 31, 2024, was $ 4.99 per award.

The weighted average fair value of outstanding the grants made during the year ended March 31, 2023, was $ 8.52 per award.

SARs outstanding under the 2017 Plan are as follows:

SARs outstanding under the 2017 Plan, along with the minimum and maximum strike price of each group, are as follows:

As of March 31, 2024

Range of Prices

SARs Outstanding

4 unchanged sentences

(In thousands)

$ 7.80 - $ 14.80

$ 23.20 - $ 29.40

$ 34.20 - $ 42.00

$ 44.60 - $ 51.20

As of March 31, 2023

Range of Prices

SARs Outstanding

4 unchanged sentences

(In thousands)

$ 10.80 - $ 14.80

$ 23.20 - $ 29.40

$ 34.20 - $ 42.00

$ 44.60 - $ 51.20

Exercisable SARs under the 2017 Plan as of March 31, 2024 are as follows:

8 unchanged sentences

As of March 31, 2024, the compensation cost not yet recognized related nonvested SARS awards totaled $ 703 thousand, to be recognized over the weighted average remaining vesting period of 0.8 years.

Total SARs outstanding are as follows (in thousands):

March 31, 2023

March 31, 2022

SARs activity for the year ended March 31, 2024 is as follows (in thousands):

March 31, 2024

In addition, the Company grants performance stock unit ("PSU") awards under the 2017 Plan to employees of the Company that vest upon certain performance goals being achieved over a two year period.

Upon vesting, the award may be settled in shares or cas h at the Company's discretion.

In fiscal year 2023, 31 thousand PSU shares were issued.

No PSU shares were issued during the year ended March 31, 2022.

During the year ended March 31, 2023, there were 6 thousand additional PSU awards granted, and the Company issued 24 thousand shares of Common Stock (net of 10 thousand shares withheld to pay taxes).

Based on performance for the year ended March 31, 2023, the Company has accrued for 16 thousand unvested PSU awards.

SARs Outstanding March 31, 2023

Total SARs Outstanding March 31, 2024

A total of $ 1.4 million and $ 4.8 million of stock based compensation was included within Selling, General and Administrative expenses for the years ended March 31, 2024 and 2023, respectively.

There was $ 0.4 million of stock-based compensation expense for the year ended March 31, 2023 and 2022, respectively, related to Board of Director fees.

In addition, the Company grants performance stock unit ("PSU") awards under the 2017 Plan to employees of the Company that vest upon certain performance goals being achieved.

Upon vesting, the award may be settled in shares or cash at the Company's discretion.

There were no shares granted or issued in fiscal year 2024.

Based on performance for the year ended March 31, 2023, the Company accrued for 16 thousand unvested.

Of this stock based compensation expense, there was $ 0.3 million and $ 0.4 million of stock-based compensation expense for the year ended March 31, 2024 and 2023, respectively, related to Board of Director fees.

During the years ended March 31, 2024 and 2023, the Company issued 400 thousand and 34 thousand restricted shares to non-employee directors, respectively.

OPTIONS GRANTED OUTSIDE CINEVERSE’S EQUITY INCENTIVE PLAN

In October 2013, we issued options outside of the 2000 Plan to 10 individuals who became employees as a result of a business combination.

The employees received options to purchase an aggregate of 3 thousand shares of our Common Stock at an exercise price of $ 350 per share.

The options were fully vested as of October 2017 and expire 10 years from the date of grant, if unexercised.

As of March 31, 2023 , 0.6 thousand of such options remained outstanding.

Line of Credit Facility

The Company is party to a Loan, Guaranty, and Security Agreement with East West Bank ("EWB") providing for a revolving line of credit (the "Line of Credit Facility") of $ 5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries' assets.

The Line of Credit bears an interest rate equal to 1.5 % above the prime rate, and was 9.0 % as of March 31, 2023.

The Line of Credit expires on September 15, 2023 with a one-year extension available at EWB's discretion.

As of March 31, 2023, a balance of $ 5.0 million was outstanding on the line of the Credit Facility.

Under the Line of Credit Facility, the Company is subject to certain financial and nonfinancial covenants which require the Company to maintain certain metrics and ratios, maintain certain minimum cash on hand, and to report financial information to our lender on a periodic basis.

For the year ended March 31, 2023, the Company had interest expense of $ 0.2 million related to the Line of Credit Facility.

On June 28, 2023, the Company was notified in writing by EWB that it intends to extend the maturity date of the Line of Credit Facility to September 15, 2024 , subject to definitive documentation.

On April 15, 2020, the Company received $ 2.2 million from EWB, the Company’s existing lender, pursuant to the Paycheck Protection Program (the “PPP Loan”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The Company used all proceeds from the PPP Loan to retain employees, maintain payroll and make lease and utility payments to support business continuity throughout the COVID-19 pandemic, which amounts were intended to be eligible for forgiveness, subject to the provisions of the CARES Act, and could be subject to repayment.

The PPP Loan would have matured on April 10, 2022 and accrued interest at 1 % per annum.

The interest accrued during the initial six-month period would have been due and payable, together with the principal, on the PPP maturity date.

On July 7, 2021, the Company received notification from EWB that the U.S.

Small Business Administration had approved the Company’s PPP Loan forgiveness application for the entire PPP Loan amount and accrued interest effective June 30, 2021.

For the year ended March 31, 2022, the Company recognized a gain on extinguishment of note payable of $ 2.2 million in the Consolidated Statement of Operations for the forgiveness of PPP loan principal and interest.

The Line of Credit Facility bears interest at a rate equal to 1.5 % above the prime rate, equal to 10.00 % as of March 31, 2024.

In June 2024, the Company was notified in writing by EWB that it intends to extend the maturity date of the Line of Credit Facility to September 15, 2025 , subject to definitive documentation.

As of March 31, 2024 and March 31, 2023, $ 6.4 million and $ 5.0 million was outstanding on the Line of Credit Facility, respectively.

Under the Line of Credit Facility, the Company is subject to certain financial and nonfinancial covenants including terms which require the Company to maintain certain metrics and ratios, maintain certain minimum cash on hand, and to report financial information to our lender on a periodic basis.

For the year ended March 31, 2024, the Company was out of compliance with its covenants, and received a waiver in June 2024.

For the year ended March 31, 2024 and March 31, 2023, the Company incurred interest expense of $ 0.4 million and $ 0.2 million to EWB related to the Line of Credit Facility, respectively.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

The end of both the original lease and sublease's term is January 2025 .

The Company has recognized $ 115 thousand of sublease income related to its subleasing arrangement.

In addition, during the year ended March 31, 2023, the Company entered into two operating leases for its India operations, with expiration dates in July 2027 .

The Company has recognized $ 0.2 million of sublease income related to its subleasing arrangement for the twelve months ended March 31, 2024.

The Company's two operating leases for its India operations expire in July 2027 .

The table below presents the lease-related assets and liabilities recorded on our Consolidated Balance Sheets (in thousands):

1 unchanged sentence

Other long-term assets

Operating leases –

current portion

Operating leases –

long-term portion

Operating leases liabilities

Operating leases liabilities, net of current portion

Total operating lease liabilities

The table below presents the annual gross undiscounted cash flows related to the Company's operating lease commitments and subleasing arrangements (in thousands):

Year ending March 31,

Fiscal year ending March 31,

Operating Lease Commitments

Sublease Payments

Total lease payments

Less imputed interest

For leases which have a term of twelve months or less and do not contain an option to extend which the Company is

reasonably certain to extend the term, the Company has elected to not apply the recognition provisions of ASC 842

and recognizes these expenses on a straight-line basis over the term of the agreement.

Since our operating leases do not provide a readily determinable implicit rate, the Company estimated its incremental borrowing rate to discount the lease payments based on information available at Cineverse's lease commencement date.

7 unchanged sentences

Total Project Commitments

SEGMENT INFORMATION

We operate in two reportable segments:

Cinema Equipment and Content & Entertainment.

Our segments were determined based on the economic characteristics of our products and services, our internal organizational structure, the manner in which our operations are managed and the criteria used by our Chief Operating Decision Maker ("CODM") to evaluate performance, which is generally the segment’s operating income (loss) before depreciation and amortization.

Operations of:

Products and services provided:

Cinema Equipment

Financing vehicles and administrators for Systems installed nationwide in our first deployment phase (“Phase I Deployment”) to theatrical exhibitors and for Systems installed domestically and internationally in our second deployment phase (“Phase II Deployment”).

We retain ownership of the Systems and the residual cash flows related to the Systems in Phase I Deployment after the repayment of all non-recourse debt at the expiration of exhibitor master license agreements.

For certain Phase II Deployment Systems, we do not retain ownership of the residual cash flows and digital cinema equipment after the completion of cost recoupment and at the expiration of the exhibitor master license agreements.

Provides monitoring, collection, verification, and management services to this segment, as well as to exhibitors who purchase their own equipment, and also collects and disburses VPFs from motion picture studios, distributors and ACFs from alternative content providers, movie exhibitors and theatrical exhibitors (collectively, “Services”).

Content & Entertainment

Leading independent streaming company of content and channels.

We collaborate with producers and other content owners to market, source, curate and distribute independent content to targeted and under-served audiences in theatres and homes, and via mobile and emerging platforms.

The following tables present certain financial information related to our reportable segments and Corporate (in thousands):

As of March 31, 2023

Line of Credit, Net

Cinema Equipment

Content & Entertainment

As of March 31, 2022

Line of Credit, Net

Cinema Equipment

Content & Entertainment

Statements of Operations

For the Year Ended March 31, 2023

Content & Entertainment

Direct operating

Selling, general and administrative

Allocation of corporate overhead

Depreciation and amortization

Total operating expenses

Operating income (loss)

Statements of Operations

For the Year Ended March 31, 2022

Content & Entertainment

Direct operating

Selling, general and administrative

Depreciation and amortization

Impairment of intangible assets

Allocation of corporate overhead

Total operating expenses

Operating income (loss)

For the year ended March 31, 2023, stock-based compensation cost of $ 4,470 was incurred by the Corporate segment.

For the year ended March 31, 2022, stock based compensation costs of $ 1,034 thousand was incurred by the Content & Entertainment segment and $ 4,453 thousand was incurred by Corporate.

We recorded income tax expense of $ 0.1 million from operations and an income tax (benefit) of $( 0.8 ) million for the years ended March 31, 2023 and 2022, respectively.

We recorded income tax expense of $ 0.0 million and $ 0.1 mill ion from operations for the years ended March 31, 2024 and 2023, respectively.

For the year ended March 31, 2023, the income tax expense of $ 0.1 million was mainly related to foreign income taxes.

The income tax (benefit) of $( 0.8 ) million for the year ended March 31, 2022 was related to a $( 0.9 ) million tax benefit release of the valuation allowance resulting from the acquisition of Foundation TV, offset by $ 0.1 million of state income taxes due to taxable income at the state level and timing differences related to fixed asset depreciation.

The following table presents the components of income tax expense (benefit) (in thousands):

3 unchanged sentences

Total foreign

Income tax expense (benefit)

Income tax expense

Net deferred taxes consisted of the following (in thousands):

4 unchanged sentences

Accrued liabilities

Allowance for doubtful accounts

Nondeductible interest expense

Capital loss carryforward

Non-deductible interest expense

Total deferred tax assets before valuation allowance

2 unchanged sentences

Deferred tax liabilities:

Right of use asset

Depreciation and amortization

1 unchanged sentence

Net deferred tax

We have provided a valuation allowance equal to our net deferred tax assets as of March 31, 2023 and 2022.

We have provided a valuation allowance to our net deferred tax assets as of March 31, 2024 and 2023.

We are required to recognize all or a portion of our deferred tax assets if we believe that it is more likely than not that such assets will be realized, given the weight of all available evidence.

1 unchanged sentence

In assessing the need for a valuation allowance, we considered both positive and negative evidence, including recent financial performance, projections of future taxable income and scheduled reversals of deferred tax liabilities.

The net changes in the valuation allowance of $ 2.5 million and $ 2.2 million during the fiscal years ended March 31, 2023 and 2022, respectively, were mainly due to increases in

the deferred tax asset related to the net operating loss carryforward and other temporary differences.

We will continue to assess the realizability of the deferred tax assets at each interim and annual balance sheet date based upon actual and forecasted operating results.

As of March 31, 2023, we had utilizable federal and state net operating loss carryforwards of approximately $ 63.7 million available in the United States of America (“U.S.”) to reduce future taxable income.

The net changes in the valuation allowance of $ 5.9 million and $ 2.5 million during the fiscal years ended March 31, 2024 and 2023, respectively, were mainly due to increases in the deferred tax asset related to the net operating loss carryforward and other temporary differences.

continue to assess the realizability of the deferred tax assets at each interim and annual balance sheet date based upon actual and forecasted operating results.

As of March 31, 2024, we had utilizable federal and state net operating loss carryforwards of approximately $ 70.3 million available in the United States of America (“U.S.”) to reduce future taxable income.

federal and state net operating loss carryforwards of approximately $ 22.5 and $ 70.3 million, respectively, generally begin to expire in 2026.

federal net operating loss carryforwards that were generated during the years ended March 31, 2020, 2021, 2022, 2023, and 2024 of approximately $ 47.9 million, do not expire.

Under the provisions of the Internal Revenue Code, certain substantial changes in our ownership may result in a limitation on the amount of net operating losses that may be utilized in future years.

During the year ended March 31, 2018, approximately $ 233.5 million of our net operating losses became subject to limitation under Internal Revenue Code Section 382 in connection with the consummation in November 2017 of the transactions under the Stock Purchase Agreement with Bison.

Approximately $ 209.0 million of our net operating losses became unusable because of the ownership change.

Future significant ownership changes could cause a portion or all of our remaining net operating losses to expire before utilization.

On March 27, 2020, the CARES Act was signed into law.

12 unchanged sentences

Non-deductible expenses

Executive officer compensation limitation –

Section 162(m)

PPP loan forgiveness

Executive officer compensation limitation – Section 162(m)

Goodwill impairment

Losses from non-consolidated entities

Income tax benefit (expense)

Income tax expense

We file income tax returns in the U.S.

3 unchanged sentences

state tax purposes, our fiscal 2020 through 2024 tax years generally remain open for examination by most of the tax authorities under a four-year statute of limitations.

For Indian income tax purposes, our fiscal 2022 and 2023 tax years remain open for examination by the tax authorities.

For Indian income tax purposes, our fiscal 2022 through 2024 tax years remain open for examination by the tax authorities.

SUBSEQUENT EVENTS

Series B Preferred Share Issuance

On April 4, 2023, Christopher McGurk, the Company’s Chief Executive Officer and Chairman of the Board, purchased 1 share of the Company’s Series B Preferred Stock ("Series B Preferred"), $ .001 par value, for $ 10,000 which entitled the holder to 1,800,000,000 votes (not adjusted for Reverse Stock Split) only on a reverse stock split proposal of the Company under certain conditions.

The Series B Preferred has no right to vote on any other matter except as may be required by the General Corporation Law of the State of Delaware.

The share of Series B Preferred is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company and may not be transferred at any time prior to stockholder approval of the reverse stock split matter without the prior written consent of the Company's Board of Directors.

On June 9, 2023, the single outstanding share of Series B Preferred was redeemed by the Company for $ 10,000 .

Sid & Marty Krofft Pictures

On May 5, 2023, the Company entered into a Channel Development, Management and Distribution Agreement with Sid & Marty Krofft Pictures, which provides the Company with content distribution and advertising rights in exchange for an initial $ 1.3 million advance commitment, which is recoupable against future revenue sharing provisions.

Reverse Stock Split

On May 30, 2023, a Special Meeting of Stockholders of Cineverse was held to approve an amendment to the Company's Certificate of Incorporation to effect a reverse stock split of the Company's Class A Common Stock, subject to the Board's discretion and to reduce the total number of Class A Common Stock authorized for issuance in connection with the reverse stock split.

On June 1, 2023, the Company's Board of Directors authorized a 1 -for-20 reverse stock split of its Class A Common Stock and all related outstanding awards.

The authorized shares remained unchanged from 275 million shares.

The par value of the Class A Common Stock was unchanged.

As a result, each shareholder’s percentage ownership interest in the Company and proportional voting power remained unchanged.

In accordance with ASC Topic 505, Equity, the Company has retroactively reflected this change within the share and per-share amounts disclosed throughout this document.

Refer to the Shareholders' Equity footnote within these financial statements for additional information.

On June 12, 2023, the Company announced that it had acquired the North American rights to Terrifier 3.

At contract signing, $ 1.5 million was owed and based on the success of the project, the Company's commitment can reach $ 5.2 million.

By the terms of the agreement, these commitments are recoupable based on the revenue generated by the project.

On June 14, 2023, under its Securities Purchase Agreement pursuant a prospectus supplement which was part of an effective registration statement, the Company agreed to sell in a public offering an aggregate of 2,150,000 shares Common Stock, pre-funded warrants to purchase up to 516,667 shares of Common Stock, and common warrants to purchase up to 2,666,667 shares of Common Stock at an effective combined purchase price of $ 3.00 per share and related common warrant, for aggregate gross proceeds of approximately $ 8.0 million, before deducting placement agents fees and offering expenses payable by the Company.

The shares or pre-funded warrants and related common warrants are immediately exercisable and separable.

Each pre-funded warrant is exercisable for one share of Common Stock.

The pre-funded warrants have a nominal exercise price of $ 0.001 per share, after the remainder of the full exercise cost was pre-funded to the Company at the closing of the offering and will expire when exercised in full.

The Common Warrants have an exercise price of $ 3.00 per share and expire on the five year anniversary of the date of issuance.

The closing of the offering occurred on June 16, 2023.

Line of Credit Extension

On June 28, 2023, the Company was notified in writing by EWB that it intends to extend the maturity date of the Line of Credit Facility to September 15, 2024 , subject to definitive documentation.

Terrifier 3 Financing

On April 5, 2024, Cineverse Terrifier LLC (“T3 Borrower”), a wholly-owned subsidiary of the Company entered into a Loan and Security Agreement with BondIt LLC (“T3 Lender”) and the Company, as guarantor (the “T3 Loan Agreement”).

The T3 Loan Agreement provides for a term loan with a principal amount not to exceed $ 3,666 thousand (the “T3 Loan”), and a maturity date of April 1, 2025 , with a permitted extension of the term for 120 days under certain conditions.

The T3 Loan bears no interest until the maturity date other than an interest advance equal to $ 576 thousand at the closing of the T3 Loan on April 5, 2024.

If the T3 Loan is extended as noted above, the T3 Loan will bear interest at a rate of 1.44 % per month.

T3 Borrower may prepay the obligations under the T3 Loan, in full or in part, without penalty or premium.

The proceeds under the T3 Loan Agreement will be used for the funding under the Company’s distribution arrangements for the film titled Terrifier 3 (the “Film”).

The T3 Loan Agreement contains customary covenants, representation and warranties and events of default.

After the principal of the T3 Loan is paid in full, T3 Lender will be entitled to receive 15 % of all royalties earned by the Company on the Film under its distribution agreements for the Film until T3 Lender has received 1.75 times the full commitment amount of $ 3,666 thousand, consisting of the principal amount plus interest and fees advanced to T3 Borrower, plus any extension interest.

The T3 Loan is secured by a first priority interest in all of T3 Borrower’s rights and interest in the Film and the distribution agreements, including the proceeds to T3 Borrower from the distribution of the Film.

The Company entered into a Guaranty Agreement pursuant to which it provided a guarantee of the T3 Loan which is capped at obligations not exceeding $ 1,500 thousand (the “Guaranty Agreement”).

The Guaranty is subordinated in payment and performance to the Line of Credit Facility pursuant to an intercreditor agreement between EWB and the T3 Lender, and acknowledged by the Company and the T3 Borrower.

In connection with the T3 Loan Agreement, the Company entered into Amendment No.

3 to the Amended and Restated Loan, Guaranty and Security Agreement dated as of September 15, 2022 with East West Bank and the Guarantors named therein, as amended to date (the “EWB Amendment”) to facilitate the T3 Loan and the Guarantee.

OTHER INFORMATION

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data