What changed in this filing

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Item 1. Financial Statements

2025-02-14 compared with 2024-11-14 · 188 added, 158 removed, 453 unchanged (43% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30,

Current Assets

14 unchanged sentences

Current portion of deferred consideration on purchase of business

Term loan, including unamortized debt issuance costs of $ 87 and $ 0 , respectively

Earnout consideration on purchase of business

11 unchanged sentences

20 shares authorized;

7 shares issued and 7 shares outstanding at September 30, 2024 and March 31, 2024

7 shares issued and 7 shares outstanding at December 31, 2024 and March 31, 2024

Common Stock, $ 0.001 par value;

Class A Stock:

275,000,000 shares authorized as of September 30, 2024, and March 31, 2024;

16,287,824 and 15,985,620 shares issued, with 15,786,074 and 15,699,135 shares outstanding as of September 30, 2024 and March 31, 2024, respectively

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

16,462,308 and 15,985,620 shares issued, with 15,958,489 and 15,699,135 shares outstanding as of December 31, 2024 and March 31, 2024, respectively

Additional paid-in capital

Treasury stock, at cost;

503,819 and 288,554 shares as of September 30, 2024 and March 31, 2024, respectively

503,819 and 288,554 shares as of December 31, 2024 and March 31, 2024, respectively

Accumulated deficit

7 unchanged sentences

(in thousands, except per share data)

Three Months Ended September 30,

Six Months Ended

September 30,

Three Months Ended December 31,

Nine Months Ended

Costs and expenses

3 unchanged sentences

Total operating expenses

Operating (loss) income

Operating income (loss)

Interest expense

Gain (loss) from equity investment in Metaverse, a related party

Other income (expense), net

Net loss before income taxes

Income tax expense

Other (expense) income, net

Net income (loss) before income taxes

Income tax (expense) benefit

Net income (loss)

Net income attributable to noncontrolling interest

Net loss attributable to controlling interests

Net income (loss) attributable to controlling interests

Preferred stock dividends

Net loss attributable to common stockholders

Net loss per share attributable to common stockholders:

Net income (loss) attributable to common stockholders

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

Weighted average shares of Common Stock outstanding:

1 unchanged sentence

Cineverse Corp.

CONDENSED CONSOLIDATED STATE MENTS OF COMPREHENSIVE (LOSS) INCOME

CONDENSED CONSOLIDATED STATE MENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Three Months Ended September 30,

Six Months Ended

September 30,

Other comprehensive (loss) income:

Three Months Ended December 31,

Nine Months Ended

Net income (loss)

Other comprehensive income (loss):

Foreign exchange translation

Net income attributable to noncontrolling interest

Comprehensive loss

Comprehensive income (loss)

See accompanying Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(in thousands)

Six Months Ended

September 30,

Nine Months Ended

Cash flows from operating activities:

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

Net income (loss)

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

Depreciation and amortization

Allowance for content advances

Amortization of debt issuance costs

Stock-based compensation

Interest expense

Non-cash interest expense

Changes in fair value of equity investment in Metaverse

1 unchanged sentence

Barter-related non-cash expenses

Changes in operating assets and liabilities, net of acquisitions:

Changes in operating assets and liabilities:

Accounts receivable

4 unchanged sentences

Deferred revenue

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

3 unchanged sentences

Cash flows from financing activities:

Proceeds from line of credit, net of debt issuance costs

Proceeds from line of credit

Payments on line of credit

2 unchanged sentences

Proceeds from the issuance of a term loan, net of debt issuance costs

Repayment of term loan

Payment of earnout consideration

1 unchanged sentence

Financing fees for line of credit

Proceeds from common stock warrant exercise

Issuance of Class A common stock, net of issuance costs

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Net change in cash and cash equivalents

5 unchanged sentences

(in thousands)

Six Months Ended

September 30,

Nine Months Ended

Cash interest paid

15 unchanged sentences

Stockholders'

Balances as of March 31, 2024

Balances as of March 31, 2024 (Audited)

Foreign exchange translation

5 unchanged sentences

Preferred stock dividends accrued

Net loss (income)

Balances as of June 30, 2024

5 unchanged sentences

Preferred stock dividends accrued

Net loss (income)

Balances as of September 30, 2024

Foreign exchange translation

Stock-based compensation

Issuance of common stock for Board of Director compensation

Preferred stock dividends paid in stock

Preferred stock dividends accrued

Exercise of common stock warrant

Balances as of December 31, 2024

See accompanying Notes to Condensed Consolidated Financial Statements

5 unchanged sentences

Stockholders'

Balances as of March 31, 2023

Balances as of March 31, 2023 (Audited)

Foreign exchange translation

15 unchanged sentences

Balances as of September 30, 2023

Foreign exchange translation

Stock-based compensation

Issuance of common stock for Board of Director compensation

Preferred stock dividends paid in stock

Preferred stock dividends accrued

Balances as of December 31, 2023

See accompanying Notes to Condensed Consolidated Financial Statements

17 unchanged sentences

We have a history of net losses and we may continue to generate net losses for the foreseeable future.

As of September 30, 2024, the Company has an accumulated deficit of $ 509 million and a working capital deficit of $ 1.2 million.

For the three and six months ended September 30, 2024, the Company had a net loss attributable to Common Stockholders of $ 1.4 million and $ 4.5 million , respectively.

Net cash used in operating activities for the six months ended September 30, 2024 was $ 2.4 million , which included $ 1.7 million of incremental investment in our content portfolio via advances or minimum guarantee payouts .

The Company is party to a Loan, Guaranty, and Security Agreement, as amended, with EWB providing for a $ 7.5 million Line of Credit Facility, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and our subsidiaries’ assets.

The Line of Credit Facility bears interest at a rate equal to 1.5 % above the prime rate, equal to 9.5 % as of September 30, 2024.

As of December 31, 2024, the Company has an accumulated deficit of $ 501.7 million and working capital surplus of $ 6.8 million.

For the three and nine months ended December 31, 2024, the Company had a net income attributable to Common Stock holders of $ 7.0 million and $ 2.5 million , respectively.

Net cash provided by operating activities for the nine months ended December 31, 2024 was $ 5.0 million, which i s net of $ 4.8 million of i ncremental investment in our content portfolio via advances or minimum guarantee payouts.

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

The Line of Credit Facility bears interest at a rate equal to 1.5 % above the prime rate, equal to 9.0 % as of December 31, 2024.

The Line of Credit Facility matures on September 15, 2025 .

As of September 30, 2024, $ 4.6 million was outstanding on the Line of Credit Facility, net of unamortized issuance costs of $ 180 thousand .

As of December 31, 2024, $ 3.8 million was outstanding on the Line of Credit Facility, net of unamortized issuance costs of $ 153 thousand .

Subsequent to the quarter ended December 31, 2024 , our Line of Credit balance was paid down to $ 0 .

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 a guarantor (the “T3 Loan Agreement”).

1 unchanged sentence

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

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

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

The T3 Loan, including interest o f $ 576 thousand, was repaid during the quarter ended December 31, 2024.

See Note 6 - Debt , for further information.

On May 3, 2024, the Company entered into a sales agreement (the “2024 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

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

extension interest.

The T3 Loan is presented as current within the Company's Condensed Consolidated Balance Sheets and has a balance of $ 3.1 million as of September 30, 2024.

See Note 5 - Debt , for further information.

sell, from time to time, through the Sales Agents, shares of Common Stock.

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

6 unchanged sentences

The Company will continue to invest in content development and acquisition, from which it believes it will obtain an appropriate return on its investment.

As of September 30, 2024 and March 31, 2024, short term content advances were $ 10.8 million and $ 9.3 million, respectively, and content advances, net of the current portion, were $ 1.5 million and $ 2.6 million, respectively.

As of December 31, 2024 and March 31, 2024, short term content advances were $ 8.8 million and $ 9.3 million, respectively, and content advances, net of the current portion, were $ 1.4 million and $ 2.6 million, respectively.

Our capital requirements will depend on many factors, and we may need to use existing capital resources and/or undertake equity or debt offerings, if necessary and opportunistically available, for further capital needs.

We believe our cash and cash equivalents as of September 30, 2024 and availability under our Line of Credit Facility will be sufficient to support our operations for at least twelve months from the filing of this report.

We believe our cash and cash equivalents and availability under our Line of Credit Facility as of December 31, 2024 will be sufficient to support our operations for at least twelve months from the filing of this report.

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

Basis of Presentation

The accompanying interim Condensed Consolidated Financial Statements of Cineverse Corp.

7 unchanged sentences

Interim results are not necessarily indicative of the results for a full year.

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.

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.

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes.

3 unchanged sentences

Actual results may differ from these estimates.

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accounting Policies

34 unchanged sentences

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

As of September 30, 2024

As of December 31, 2024

Content Library

8 unchanged sentences

Customer Relationships

Trademark and Tradenames

Tradenames, Trademarks and Patents

Capitalized Content

Total Intangible Assets

During the three and six months ended September 30, 2024, the Company had amortization expense of $ 0.8 million and $ 1.5 million , respectively.

During the three and six months ended September 30, 2023 , the Company had amortization expense of $ 0.8 million and $ 1.5 million, respectively.

During the three and nine months ended December 31, 2024, the Company had amortization expense of $ 0.8 million and $ 2.3 million , respectively.

During the three and nine months ended December 31, 2023 , the Company had amortization expense of $ 0.9 million and $ 2.4 million, respectively.

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2024, future amortization expense is expected to be as follows (in thousands) :

As of December 31, 2024, future amortization expense is expected to be as follows (in thousands) :

In-process intangible assets

11 unchanged sentences

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 three and six months ended September 30, 2024 and 2023 .

There were no impairment charges recorded for long-lived and finite-lived intangible assets during the three and nine months ended December 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.

5 unchanged sentences

For the year ended March 31, 2024, the Company recognized a goodwill impairment cha rge of $ 14 million.

No goodwill impairment charge was recorded in the three and six months ended September 30, 2024 and 2023 .

No goodwill impairment charge was recorded in the three and nine months ended December 31, 2024 and 2023 .

CINEVERSE CORP.

6 unchanged sentences

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

As of September 30, 2024

As of December 31, 2024

Equity investment in Metaverse, at fair value

Current portion of earnout consideration on purchase of a business

As of March 31, 2024

6 unchanged sentences

After a period of time when trading in Metaverse's ordinary shares had been halted, the resumption of active trading status in November 2023 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 is presented within Other long term assets and as of September 30, 2024 and March 31, 2024 was $ 0.2 million and $ 0.4 million, respectively.

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

The fair value of the shares held is presented within Other long-term assets and as of December 31, 2024 and March 31, 2024 was $ 0.1 million and $ 0.4 million, respectively.

CINEVERSE CORP.

1 unchanged sentence

Earnout Consideration on Purchase of Business

Prior to the completion of the earnout period at the end of fiscal year 2024, 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 .

Prior to the completion of an earnout period at the end of fiscal year 2024, 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.

During the quarter ended September 30, 2024, the Company made its final earnout payment reducing the earnout liability as of September 30, 2024 to $ 0 .

2 unchanged sentences

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 in more than 12 months are classified as long term and presented within content advances, net of current portion, which were $ 1.5 million and $ 2.6 million as of September 30, 2024, and March 31, 2024, respectively.

For the three and six months ended September 30, 2024, the Company recognized a reduction in our reserve for the recovery of advances in the amount of $ 27 thousand and $ 30 thousand , respectively.

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

For the three and nine months ended December 31, 2024 , the Company recognized a reduction in our reserve for the recovery of advances in the amount of $ 67 thousand and $ 37 thousand, respectively.

Accounts Payable and Accrued Expenses

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

September 30,

Accounts payable

11 unchanged sentences

The deferred consideration related to the acquisition of FTV is payable in cash and up to 25 % in shares of Common Stock, at the Company's discretion, and subject to certain conditions.

The final payment is due in June 2025.

The final payment of $1.1 million is due in June 2025.

As of December 31, 2024 and March 31, 2024 , the Company has outstanding liabilities of $ 3.4 million and $ 3.1 million, respectively, relating to deferred consideration arrangements.

CINEVERSE CORP.

4 unchanged sentences

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

Three Months Ended September 30,

Six Months Ended

September 30,

Three Months Ended December 31,

Nine Months Ended

Streaming and digital

4 unchanged sentences

The Company's Streaming and digital revenue pertains to its OTT business, including the licensing, service, advertising, and subscription revenue related to the Company's streaming business and partnerships.

Base distribution revenue relates to non-streaming revenue, including Theatrical revenue and the sale of DVD's.

Base distribution revenue relates to non-streaming revenue, including Theatrical revenue and the sale of DVDs.

Podcast and other revenue primarily relate to the Company's Bloody Disgusting Podcast Network.

19 unchanged sentences

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

During the three and six months ended September 30, 2024, the Company recognized a reduction in its provision for credit losses of $ 30 thousand and $ 185 thousand , respectively.

During the three and six months ended September 30, 2023 , we did no t recognize any credit losses as part of its ongoing operations or reversals of previously recorded provisions.

During the three and nine months ended December 31, 2024, the Company recognized an increase (reduction) in its provision for credit losses of $ 68 thousand and ($ 118 ) thousand , respectively.

During the three and nine months ended December 31, 2023 , we did no t recognize any credit losses as part of its ongoing operations or reversals of previously recorded provisions.

A summary of the movements of our allowances for credit losses follows (in thousands) :

1 unchanged sentence

Decrease in estimated provision

Allowance for credit losses as at September 30, 2024

Allowance for credit losses as at December 31, 2024

Contract Liabilities

1 unchanged sentence

Amounts recorded as contract liabilities are generally not long-term in nature.

The ending deferred revenue balance, including current and non-current balances as of September 30, 2024 and March 31, 2024, was $ 0.4 million and $ 0.4 million, respectively.

The ending deferred revenue balance, including current and non-current balances as of December 31, 2024 and March 31, 2024, was $ 0.3 million and $ 0.4 million, respectively.

In each period, the additions to our deferred revenue balance are due to cash payments received or due in advance of satisfying performance obligations, while the reductions are due to the recognition of revenue upon fulfillment of our performance obligations, both of which were in the ordinary course of business.

4 unchanged sentences

Concentrations

For the three and six months ended September 30, 2024, customers that individually account for greater than 10% collectively represented 45 % ( three customers) and 32 % ( two customers) of consolidated revenues.

For the three and six months ended September 30, 2023 , one customer represented 25 % and 24 % of consolidated revenues, respectively.

For the three and nine months ended December 31, 2024, customers that individually account for greater than 10% collectively represented 71 % ( two customers) and 56 % ( two customers) of consolidated revenues.

For the three and nine months ended December 31, 2023 , one customer represented 26 % and 23 % of consolidated revenues, respectively.

CINEVERSE CORP.

5 unchanged sentences

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 Condensed Consolidated Statements of Operations and Comprehensive Loss based on their fair values.

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

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.

11 unchanged sentences

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 had no uncertain tax positions as of September 30, 2024 and March 31, 2024.

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Earnings per Share

Basic net income (loss) per share is computed based on the weighted average number of shares of Common Stock outstanding during the period.

Diluted net income (loss) per share is computed by dividing the net income (loss) available to Common Stockholders by the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period.

Potentially dilutive common shares include stock options and warrants outstanding during the period, using the treasury stock method.

Potentially dilutive common shares are excluded from the computations of diluted income (loss) per share if their effect would be anti-dilutive.

A net loss available to Common Stockholders causes all potentially dilutive securities to be anti-dilutive and are not included.

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

Three Months Ended September 30,

Six Months Ended

September 30,

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 Loss Per Share

Shares used in diluted computation:

Weighted-average shares of Common Stock outstanding

Stock options and SARs

Weighted-average number of shares

Diluted Net Loss Per Share

The calculation of diluted net loss per share for the three and six months ended September 30, 2024 does not include the impact of 5,784 thousand and 5,474 thousand anti-dilutive shares, respectively.

The calculation of diluted net loss per share for the three and six months ended September 30, 2023 does not include the impact of 845 thousand and 793 thousand anti-dilutive shares, respectively.

The Company had no uncertain tax positions as of December 31, 2024 and March 31, 2024.

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 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.

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.

1 unchanged sentence

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 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

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

OTHER INTERESTS

4 unchanged sentences

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.

As of September 30, 2024 and March 31, 2024 , our maximum exposure to loss, as it relates to the non-consolidated CDF2 Holdings entity, represents accounts receivable for service fees under a master service agreement with CDF2 Holdings.

Such accounts receivable was $ 0 as of both September 30, 2024 and March 31, 2024.

Total Stockholders’ Deficit of CDF2 Holdings at both September 30, 2024 and March 31, 2024 was $ 59.2 million.

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 both September 30, 2024 and March 31, 2024 is carried at $ 0 .

As of December 31, 2024 and March 31, 2024 , our maximum exposure to loss, as it relates to the non-consolidated CDF2 Holdings entity, represents accounts receivable for service fees under a master service agreement with CDF2 Holdings.

Such accounts receivable was $ 0 as of both December 31, 2024 and March 31, 2024.

Total Stockholders’ Deficit of CDF2 Holdings at both December 31, 2024 and March 31, 2024 was $ 59.2 million .

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 both December 31, 2024 and March 31, 2024 is carried at $ 0 .

Investment in Roundtable

9 unchanged sentences

STOCKHOLDERS’ EQUITY

As of September 30, 2024 and 2023 , the number of shares of Common Stock authorized for issuance was 275,000,000 shares.

During the three months ended September 30, 2024, the Company issue d 208 thousand shares of Common Stock.

This was comprised of 100 thousand shares for preferred stock dividends and 108 thousan d shares for payment of compensation to former owners of an acquired entity.

In addition, the Company purchased 31 thousand shares as part of its share repurchase program.

During the six months ended September 30, 2024 and in addition to the activities cited above, the Company also purchased 184 thousand shares as part of the share repurchase program, paid preferred stock dividends through the issuance of 64 thousand common shares and issued 29 thousand shares for acquiree consideration.

During the three months ended September 30, 2023, the Company issued 1.3 million shares of Common Stock.

This was comprised of 517 thousand shares issued in conjunction with the exercise of pre-funded warrants issued, 725 thousand shares issued in connection with employee bonuses, 46 thousand shares for preferred stock dividends, and 41 thousand to satisfy earnout-related liabilities.

In addition, the Company withheld 223 thousand shares related to taxes on employee bonuses that will be reflected as treasury shares.

During the six months ended September 30, 2023, the Company issued 3.7 million shares of Common Stock.

In addition to the activities cited for three months ended September 30, 2023, this was comprised of 2,150 thousand shares issued through a June 16, 2023 direct offering, 177 thousand issued in connection with ATM sales during the first fiscal quarter, and 10 thousand issued in payment of preferred stock dividends.

As of December 31, 2024 and 2023 , the number of shares of Common Stock authorized for issuance was 275,000,000 shares.

During the three months ended December 31, 2024, the Company issued 173 thousand shares of Common Stock.

This was comprised of 89 thousand shares for preferred stock dividends and 74 thousand shares for payment of compensation to the Company's Board of Directors.

In addition, the Company issued 10 thousand shares in relation to the exercise of common stock warrants.

During the nine months ended December 31, 2024 and in addition to the activities cited abov e, the Company also purchased 215 thousand shares as part of the share repurchase program, paid preferred stock dividends through the issuance of 164 thousand common shares, issued 108 thousand shares for payment of compensation to former owners of an acquired entity and issued 29 thousand shares for acquiree consideration.

During the three months ended December 31, 2023, the Company issued 474 thousand shares of Common Stock.

This was comprised of 74 thousand shares for preferred stock dividends, and 400 thousand shares for Board of Director compensation.

During the nine months ended December 31, 2023, the Company issued 3,917 thousand shares of Common Stock.

In addition to the activity cited for three months ended December 31, 2023, this was comprised of 517 thousand shares issued in conjunction with the exercise of pre-funded warrants issued, 502 shares issued in connection with employee bonuses, 56 thousand shares for preferred stock dividends, 41 thousand to satisfy earnout-related liabilities, 2,150 thousand shares were issued through a June 16, 2023 direct offering, and 177 thousand issued in connection with ATM sales during the first fiscal quarter.

In addition, the Company issued common warrants to purchase up to 2,667 thousand shares of Common Stock in conjunction with its direct offering on June 16, 2023.

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

All common warrants remain outstanding as of September 30, 2023.

All common warrants were issued as immediately exercisable and 2,657 thousand common warrants remain outstanding as of December 31, 2024.

These common warrants are considered participating securities for purposes of the earnings per share calculation.

Refer to Note 5, Earnings (Loss) Per Share.

PREFERRED STOCK

Cumulative dividends in arrears on Series A Preferred Stock were $ 89 th ousand an d $ 87 th ousand as of September 30, 2024 and 2023, respectively.

During the three and six months ended September 30, 2024 , the Company paid preferred stock dividends in arrears of $ 89 thousand and $ 178 thousand in the form of shares of Common Stock, respectively.

Cumulative dividends in arrears on Series A Preferred Stock were $ 89 th ousand an d $ 87 th ousand as of December 31, 2024 and 2023, respectively.

During the three and nine months ended December 31, 2024 and 2023, the Company paid preferred stock dividends in arrears for the same amount in the form of shares of Common Stock.

The Company has the right to pay preferred stock dividends in cash or stock, at the Company's discretion.

TREASURY STOCK

We have treasury stock, at cost, consisting of 504 thousand and 289 thousand shares of Common Stock as of September 30, 2024 and March 31, 2024, respectively.

During the six months ended September 30, 2024, the Company acqui red 214 thousand shares of treasury stock, repurchased through a Rule 10b5-1 trading plan with B.

We have treasury stock , at cost, consisting of 504 thousand and 289 thousand shares of Common Stock as of December 31, 2024 and March 31, 2024, respectively.

During the nine months ended December 31, 2024 , the Company acquired 215 thousand shares of treasury stock, repurchased through a Rule 10b5-1 trading plan with B.

Riley Securities, Inc.

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

EQUITY INCENTIVE PLANS

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or (iv) performance awards.

The 2000 Plan provided for the granting of incentive stock

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

options (“ISOs”) with exercise prices not less than the fair market value of 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 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 Common Stock on the date of grant.

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The 2017 Plan provides for the issuance of up to 2,055 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.

For the three and six months ended September 30, 2024, the Company incurred stock-based compensation expense of $ 0.5 million and $ 1.0 million, respectively.

For the three and six months ended September 30, 2023, the Company incurred stock-based compensation expense of $ 0.5 million and $ 0.9 million, respectively.

Included within this expense, our Board of Directors stock-based compensation was $ 83 thousand and $ 165 thousand for the three and six months ended September 30, 2024, respectively, and $ 90 thousand and $ 180 thousand for the three and six months ended September 30, 2023, respectively.

In December 2024, an increase in the authorization under the 2017 Plan to 2,505 thousand shares was approved.

For the three and nine months ended December 31, 2024 , the Company incurred stock-based compensation expense of $ 0.5 million and $ 1.5 million, respectively.

For the three and nine months ended December 31, 2023 , the Company incurred stock-based compensation expense of $ 0.2 million and $ 1.1 million, respectively.

Included within this expense, our Board of Directors stock-based compensation was $ 83 thousand and $ 248 thousand for the three and nine months ended December 31, 2024 , respectively, and $ 85 thousand and $ 265 thousand for the three and nine months ended December 31, 2023, respectively.

Share-based compensation expense is reported within Selling, General and Administrative expenses in our Condensed Consolidated Statements of Operations.

For the three and nine months ended December 31, 2024, the Company's stock grants are primarily in the form of restricted stocks and restricted stock units.

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

EARNINGS (LOSS) PER SHARE

Basic net income (loss) per share is computed by dividing the net income (loss) attributable to Common Stockholders, adjusted for by the deemed earnings attributable to participating common warrant holders, by the weighted average number of shares of Common Stock outstanding during the period.

Potentially dilutive common shares include restricted stock units, stock options and warrants outstanding during the period, and are calculated using the treasury stock method.

Potentially dilutive common shares are excluded from the computations of diluted income (loss) per share if their effect would be anti-dilutive.

A net loss available to Common Stockholders causes all potentially dilutive securities to be anti-dilutive and are not included.

The following table sets forth the computation of basic and diluted earnings per share and a reconciliation of the weighted average number of common and common equivalent shares outstanding for the three and nine months ended December 31, 2024:

Three Months Ended December 31,

Nine Months Ended

(in thousands, except share & per share data)

Net income (loss) attributable to common stock holders

earnings attributable to participating common warrant holders

Net income (loss) attributable to common stock holders - basic and diluted

Weighted average shares of common stock - basic

Effect of dilutive common stock equivalents

Weighted average shares of common stock - diluted

Earnings per share:

Basic earnings (loss) per share

Effect of dilutive common stock equivalents

Diluted earnings (loss) per share

The following common equivalent shares outstanding at period-end have been excluded from the computation of earnings per share, as their inclusion would have been anti-dilutive:

Three Months Ended December 31,

Nine Months Ended

Options to purchase common stock

Stock appreciation rights

Warrants to purchase common stock

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

LINE OF CREDIT FACILITY

The Line of Credit Facility bears interest at a rate equal to 1.5 % above the prime rate , equal to 9.5 % as of September 30, 2024.

The Line of Credit Facility bears interest at a rate equal to 1.5 % above the prime rate, equal to 9.0 % as of December 31, 2024.

The Line of Credit Facility matures on September 15, 2025 .

The Company intends to renew when the Line of Credit matures.

Under the Line of Credit Facility, the Company is subject to certain financial and non-financial 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.

As of September 30, 2024, $ 4.6 million was outstanding on the Line of Credit Facility, net of unamortized issuance costs of $ 180 thousand .

During the three and six months ended September 30, 2024, the Company had interest expense, including cash interest and amortization, of $ 0.2 million and $ 0.3 million , related to its Line of Credit Facility, respectively.

During the three and six months ended September 30, 2023, the Company had interest expense, including cash interest and amortization, of $ 0.1 million and $ 0.2 million related to its Line of Credit Facility, respectively.

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2024, $ 3.8 million was outstanding on the Line of Credit Facility, net of unamortized issuance costs of $ 153 thousand .

Subsequent to December 31, 2024, our Line of Credit balance was paid down to $ 0 .

During the three and nine months ended December 31, 2024, the Company had interest expense, including cash interest and amortization, of $ 0.2 million and $ 0.5 million , related to its Line of Credit Facility, respectively.

During the three and nine months ended December 31, 2023 , the Company had interest expense, including cash interest and amortization, of $ 0.2 million and $ 0.4 million related to its Line of Credit Facility, respectively.

On April 5, 2024, T3 Borrower, a wholly-owned subsidiary of the Company, entered into the T3 Loan Agreement with the T3 Lender.

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The interest advance was recorded as a discount on the T3 Loan at inception and will be amortized to interest expense and increase the loan amount over its term.

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

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

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

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

The T3 Loan is presented as current within the Company's Condensed Consolidated Balance Sheets and has a balance of $ 3.1 million as of September 30, 2024.

After the principal of the T3 Loan is paid in full, the 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 the T3 Lender has received in total 1.75 times the full commitment amount of $ 3.7 million.

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

As of December 31, 2024, we have recorded interest expense of $ 1.5 million to the T3 Lender representing its 15 % share of royalties earned under the T3 Loan Agreement.

The Company entered into a Guaranty Agreement (the "T3 Guaranty Agreement") on April 25, 2024, pursuant to which it guarantees T3 Borrower's obligations under the T3 Loan Agreement (the "Guarantee").

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Under an Intercreditor Agreement, dated April 5, 2024, by and among EWB, T3 Lender, T3 Borrower and the Company, the Guarantee is subordinated in payment and performance to the Line of Credit Facility.

COMMITMENTS AND CONTINGENCIES

Cineverse is a virtual company with one domestic operating lease, acquired through the acquisition of DMR which property is subleased to a third party.

The Company has not been relieved of the original lease obligation and therefore recognizes both a lease liability and righ t-of-use asset as part of the arrangement.

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

In addition, the Company has two operating leases related to its Cinev erse India operations, with expiration dates in July 2027 .

Expenses related to these leases were $ 117 thousand and $ 233 thousand during the three and six months ended September 30, 2024 , respectively, and $ 121 thousand and $ 236 thousand during the three and six months ended September 30, 2023, respectively

The Company recognized $ 46 thousand and $ 92 thousand of income related to its subleasing arrangement during the three and six months ended September 30, 2024 , respectively, and $ 45 thousand and $ 90 thousand for the three and six months ended September 30, 2023, respectively

The T3 Loan, including interest of $ 576 thousand, was repaid during the quarter ended December 31, 2024 .

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES

Cineverse is a virtual company with one domestic operating lease, acquired through the acquisition of DMR which property is subleased to a third party.

The Company has not been relieved of the original lease obligation and therefore recognizes both a lease liability and right-of-use asset as part of the arrangement.

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

In addition, the Company has two operating leases related to its Cineverse India operations, with expiration dates in July 2027 .

Expenses related to these leases were $ 117 thousand and $ 351 thousand during the three and nine months ended December 31, 2024 , respectively, and $ 109 thousand and $ 337 thousand during the three and nine months ended December 31, 2023, respectively.

The Company recognized $ 46 thousand and $ 138 thousand of income related to its subleasing arrangement during the three and nine months ended December 31, 2024 , respectively, and $ 45 thousand and $ 135 thousand for the three and nine months ended December 31, 2023, respectively.

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

Classification on the Balance Sheet

September 30,

Other long-term assets

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Operating Lease Commitments

2025 (remainder of the fiscal year)

Total lease payments

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

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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We calculate income tax expense based upon an annual effective tax rate forecast, which includes estimates and assumptions.

We recognized income tax expense of $ 6 thousand and $ 13 thousand for the three and six months ended September 30, 2024, respectively.

We recognized income tax expense of $ 16 thousand and $ 36 thousand for the three and six months ended September 30, 2023, respectively.

We recognized income tax expense of $ 6 thousand and $ 19 thousand for the three and nine months ended December 31, 2024 , respectively.

We recognized income tax (benefit) expense of $( 24 ) thousand and $ 12 thousand for the three and nine months ended December 31, 2023, respectively.

Our income tax expense is attributable to taxable income earned in India relating to transfer pricing.

We have not recorded tax benefits on our loss before income taxes because we have provided for a full valuation allowance that offsets potential deferred tax assets resulting from net operating loss carry forwards, reflecting our inability to use such loss carry forwards.

Our effective tax rate was ( 0.5 )% and ( 0.3 )% for the three and six months ended September 30, 2024, respectively, and ( 5.3 )% and ( 1.0 )% for the three and six months ended September 30, 2023 , respectively.

We have not recorded tax expense in the U.S.

on our income because we anticipate utilizing net operating loss carry forwards.

We have not recorded tax benefits on our U.S.

deferred tax assets because we continue to provide a valuation allowance for all our U.S.

net deferred tax assets as of December 31, 2024, as it is more likely than not that the assets will not be recovered based on an insufficient history of earnings

Our effective tax rate was 0.1 % and 0.6 % for the three and nine months ended December 31, 2024, respectively, and 0.9 % and ( 0.2 )% for the three and nine months ended December 31, 2023 , respectively.

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-Q

Item 1. Financial Statements