What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-06-30 compared with 2024-07-01 · 321 added, 261 removed, 543 unchanged (52% of the section changed)

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

(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.

(the “Company”) as of March 31, 2025 and 2024, 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 consolidated financial position of the Company as of March 31, 2025 and 2024, and the consolidated results of its operations and its 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

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(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.

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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue recognition – determination of principal versus agent

As described in Note 2 to the financial statements, revenue recognition for licensing content requires management to determine whether the Company acts as a principal or an agent in each transaction, which impacts upon the characterization of amounts recorded under these arrangements and the amount of revenue recognized on a gross versus net basis.

This determination involves complex judgments, including assessing whether the Company is primarily responsible for determining how content is delivered to end consumers, and has discretion in setting the price for such content.

We identified the principal versus agent determination for licensing content as a critical audit matter due to the significant judgment involved in evaluating the terms of the arrangements with content providers.

The complexity arises from the need to evaluate factors, such as the nature and extent of the Company’s rights to use the intellectual property, its ability to set pricing, and the extent of its involvement in delivering the content.

These judgments have a material impact on the amount of revenue recorded on a gross versus net basis.

As such, there was a high degree of auditor judgement and subjectivity, and significant audit effort was required in performing procedures to evaluate management’s conclusions.

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

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.

These procedures included, among others, (i) obtaining an understanding of management’s process and controls over revenue recognition specifically focusing on principal versus agent;

(ii) evaluating the terms contained in a sample of arrangements and comparing our evaluation to the Company’s principal versus agent conclusions;

(iii) testing that the arrangements were entered completely and accurately within the Company’s accounting system;

and (iv) testing that the accounting system accurately calculated the amount of revenue to be recorded.

/s/ EisnerAmper LLP

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Iselin, New Jersey

June 30, 2025

Cineverse Corp.

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(In thousands, except for share and per share data)

As of March 31,

Current Assets

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Accounts receivable, net of allowance for credit losses of $ 307 and $ 269 , respectively

Unbilled revenue

Employee retention tax credit

Content advances

Content advances, net of allowance $ 4,818 and $ 6,260 respectively

Other current assets

Total current assets

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

Property and equipment, net

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Content advances, net of current portion

Other long-term assets

Other long-term assets, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Accounts payable and accrued expenses

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

Line of credit, net

Current portion of deferred consideration on purchase of business

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20 shares authorized;

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

Liquidation preference of $ 3,648 .

7 shares issued and 7 shares outstanding at March 31, 2025 and 2024

Common Stock, $ 0.001 par value;

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.

275,000,000 shares authorized as of March 31, 2025 and 2024;

16,487,947 and 15,985,620 shares issued, with 15,984,129 and 15,699,135 shares outstanding as of March 31, 2025 and 2024, respectively

Additional paid-in capital

Treasury stock, at cost;

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

503,819 and 288,554 shares as of March 31, 2025 and 2024, respectively

Accumulated deficit

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Total operating expenses

Operating loss

Operating income (loss)

Interest expense

Loss from equity investment in Metaverse, a related party

Employee retention tax credit

Gain (loss) from equity investment in Metaverse

Other expenses, net

Net loss before income taxes

Net income (loss) before income taxes

Income tax expense

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:

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Cineverse Corp.

CONSOLIDATED STATEMENTS OF COMPREH ENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREH ENSIVE INCOME

(In thousands)

For the Fiscal Year Ended

Other comprehensive loss:

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 Consolidated Financial Statements

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Cash flows from operating activities:

Adjustments to reconcile net loss to 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

Impairment of goodwill

Changes in fair value of equity investment in Metaverse

Amortization of debt issuance costs

Stock-based compensation

Change in estimated 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

Change in fair value of deferred consideration and earnouts

Changes in fair value of and realized (gains) losses from equity investment in Metaverse

Barter-related non-cash expenses

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Accounts receivable

Content advances

Unbilled revenue

Other current and long-term assets

Accounts payable and accrued expenses

Content advances

Accounts payable, accrued expenses and other liabilities

Capitalized content

Deferred revenue

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Purchases of property and equipment

Sale of investment securities

Expenditures for long-lived assets

Sale of equity investment securities

Net cash used in investing activities

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Payments on line of credit

Payment of business acquisition related liabilities

Payment of deferred consideration

At-the-market issuance fees

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

Repayment of term loan

Payment of earnout consideration

Cost to acquire treasury shares

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

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

See accompanying Notes to Consolidated Financial Statements

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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 intangible asset purchase

Right of use assets recognized underlying lease arrangements

Issuance of Class A common stock for payment of employee bonuses

Treasury shares acquired for withholding taxes

Deferred consideration settled in stock

Earnout liability settled in stock

Bonus liability settled in stock

Deferred consideration settled in stock

Accrued dividends on preferred stock

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

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Stock-based compensation

Preferred stock dividends paid with common stock

Preferred stock dividends paid in stock

Preferred stock dividends accrued

Issuance of common stock for Board of Director compensation

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 common stock for acquiree consideration

Common Stock Warrant Exercise

Fees incurred in connection with ATM offering

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)

Treasury stock acquired

Balances as of March 31, 2025

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Preferred Stock

Accumulated Other

Comprehensive

Stockholders'

Comprehensive Loss

Balances as of March 31, 2023

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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

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

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Cineverse Corp.

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

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

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

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.

The Company has a long legacy in using technology to transform the entertainment industry and played a pioneering role in transitioning movie screens from traditional analog film prints to digital distribution.

Over the past several years, Cineverse has transformed itself from being a digital cinema equipment and physical content distributor to a leading independent streaming company.

Financial Condition and Liquidity

As of March 31, 2025, the Company has an accumulated deficit of $ 500.9 million .

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

For the year ended March 31, 2025, the Company had a net income attributable to common shareholders of $ 3.2 million .

The Company had positive working capital of $ 3.6 million, n et cash generated from operations for the year ended March 31, 2025 was $ 17.4 million.

The Company has had a history of generating net losses and may continue to generate net losses for the foreseeable future.

The Company is party to a Loan, Guaranty, and Security Agreement, as amended on April 8, 2025 , with East West Bank ("EWB") providing for a $ 12.5 million Line of Credit Facility and expandable to $ 15.0 million, 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 1.25 % above the prime rate , equal to 8.75 % as of March 31, 2025.

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.

The Line of Credit Facility matures on April 8, 2028 .

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 and availability under our Line of Credit Facility as of March 31, 2025 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

The accompanying consolidated financial statements of Cineverse Corp.

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

The accompanying consolidated financial statements of Cineverse 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.

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

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.

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Actual results may differ from these estimates.

Reclassifications

Certain amounts have been reclassified to conform to the current presentation.

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.

Corporation’s insured limits.

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

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During the year ended March 31, 2023, the Company entered into a non-monetary transaction for the purchase and sale of content licenses with an unrelated third-party.

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.

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.

For the years ended March 31, 2025 and 2024, $ 341 thousand of related amortization expense had been recognized in Direct Operating expenses within the Consolidated Statements of Operations.

Accounts Receivable, Net

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During the year ended March 31, 2025, the Company had no write-offs of previously reserved accounts receivable and as of March 31, 2025, 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 .

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

Employee Retention Tax Credit

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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 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 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.

As of March 31, 2025 and 2024, the tax credit receivable of $ 79 thousand and $ 1.7 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").

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Content Advances

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

Content advances represent 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.

Amounts which are expected to be recovered within 12 months are classified as current, which were $ 6.7 million and $ 9.3 million as of March 31, 2025 and 2024, 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 $ 4.1 million and $ 2.6 million as of March 31, 2025 and 2024, respectively.

ended March 31, 2025 and 2024, the Company recorded recoveries in the provision for content advances of $ 0.9 million and $ 0.5 million, respectively.

Property and Equipment, Net

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Content Library

Trademarks and Tradenames

Tradenames, Trademarks and Patents

Customer Relationships

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Customer Relationships

Trademark and Tradenames

Tradenames, Trademarks and Patents

Capitalized Content

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Advertiser Relationships and Channel

Supplier Agreements

Customer Relationships

Trademark and Tradenames

Tradenames, Trademarks and Patents

Capitalized Content

Total Intangible Assets

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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 .

There were no impairment charges recorded for long-lived and finite-lived intangible assets during the twelve months ended March 31, 2025 and 2024 .

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

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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.

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.

For the year ended March 31, 2025 , the Company did no t recognize any goodwill impairment losses.

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

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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 for the twelve months ended March 31, 2023 .

Fair Value Measurements

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• 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):

The table below summarizes the levels of fair value measurements of the Company’s financial assets and liabilities as of March 31, 2025 and 2024:

As of March 31, 2025

Equity investment in Metaverse, at fair value

Earnout consideration on purchase of a business

Current portion of earnout consideration on purchase of a business

As of March 31, 2024

Equity investment in Metaverse, at fair value

Earnout consideration on purchase of a business

Current portion of earnout consideration on purchase of a business

Equity Investment in Metaverse

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.

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.

Our major shareholders also maintain a significant beneficial interest ownership in Metaverse.

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

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 then-major shareholder of the Company.

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.

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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.

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 follows the guidance for equity securities for which the equity method is no longer appropriate under ASC 321, Investments - Equity Securities, and accordingly, the Company measures its investment at fair value, with changes in the value of securities held recognized in earnings.

We have fully divested our remaining 142 million s hares in Metaverse as of March 31, 2025, resulting in a gain of $ 0.2 million in fiscal year 2025.

Earnout consideration on purchase of business

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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.

Our cash and cash equivalents, accounts receivable, unbilled revenue and accounts payable and accrued expenses are financial instruments and are recorded at cost in the consolidated balance sheets.

The estimated fair values of these financial instruments approximate their carrying amounts because of their short-term nature.

During the 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 year ended March 31, 2025 , the Company made its final earnout payments of $ 680 thousand, reducing the earnout liability to $ 0 .

The earnout payment was comprised of $ 590 in cash and $ 90 in equity ( 108 thousand shares of the Company's Common Stock).

Asset Acquisitions

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

As of March 31, 2024

Accounts payable

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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.

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

The Company initially recognized the liability at fair value at the time of acquisition and has since recognized 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.

The deferred consideration related to the acquisition of DMR was payable in either shares of Common Stock or cash, at the Company's discretion and subject to certain condit ions.

During the year ended March 31, 2024, 2,284 thousand shares of Common Stock were issued to settle the second deferred consideration payment in the amount of $ 3.0 million.

The final payment of $ 2.4 million was made on April 1, 2025 through the issuance of 677 thousand shares of Common Stock.

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 of $ 0.5 million is due in June 2025.

Disaggregation of Revenue

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Total Revenue

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

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.

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.

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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.

We determine whether revenue should be reported on a gross or net basis based on the terms of each agreement.

Key indicators that we use in evaluating gross versus net treatment include, but are not limited to, the following:

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Shipping and handling costs are incurred to move physical goods (e.g., DVDs and Blu-ray Discs) to customers.

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.

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 expected 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.

We recognize accounts receivable, net of an estimated allowance for product returns and customer chargebacks, at the time that we recognize revenue from a sale.

Reserves for product returns and other allowances are 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.

A summary of the movements of our allowances for credit losses as of March 31, 2025

and March 31, 2024 (in thousands) :

Allowance for credit losses at the beginning of the year

Increase in estimated provision

Allowance for credit losses as at March 31, 2025

Allowance for credit losses at the beginning of the year

Increase in estimated provision

Allowance for credit losses as at March 31, 2024

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

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

The ending deferred revenue balance, all current as of March 31, 2025 and 2024 was $ 0.2 million and $ 0.4 million, respectively.

There were no long term amounts at either date.

There were no long-term amounts as of March 31, 2025 and 2024.

Participations and Royalties Payable

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Concentrations

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

For the fiscal year ended March 31, 2025 , two customers represented 30.2 % and 22.9 % of consolidated revenue, respectively.

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

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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.

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The Company has no uncertain tax positions.

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 stock appreciation right outstanding during the period, and performance awards which are expected to be settled in shares and would be issuable at period end, 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 income (loss) per share are computed as follows (in thousands, except per share data):

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 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

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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.

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.

The Company adopted ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, as amended, on April 1, 2024, using the modified retrospective approach.

This amendment includes disclosure of significant segment expenses which are regularly provided to the Company’s Chief Operating Decision

Maker ("CODM") and included within each reported measure of segment profit or loss;

other segment items by reportable segment and a description of its composition;

reportable segment’s profit or loss and assets;

additional measures of segment profit or loss if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance, and the title and position of the entity’s CODM and how the CODM uses the reported measures of segment profit or loss in assessing segment performance and determining resource allocation.

Such disclosures apply to entities with a single reportable segment.

These amendments were effective for the Company in its consolidated financial statements for the year ended March 31, 2025 and apply retrospectively to all prior periods using the significant segment expense categories identified.

The impact of the amendments in this update was not material to the Company’s consolidated financial position and results of operations, as the requirements impact only segment reporting disclosures in the footnotes to the Company’s 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.

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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.

SEGMENT INFORMATION

The Company operates as a single reportable segment.

The Company’s CODM, its Chief Executive Officer ("CEO"), reviews financial information on a consolidated basis to make operating decisions, assess financial performance, and allocate resources.

In evaluating performance, the CODM primarily assesses operating income (loss) and net income (loss), as reported on the consolidated statement of operations and regularly reviews certain significant expense categories, including royalty expense;

license, participation and technology costs;

other direct operation costs;

payroll and related expenses;

professional services;

advertising and marketing;

amortization;

and other general and administrative.

These expense categories are considered key factors in managing the business and guiding resource allocation decisions.

This approach ensures that the Company’s financial reporting reflects the way management monitors expenses and overall financial performance.

The following table presents financial information with respect to the Company’s single operating segment for the years ended March 31, 2025, and 2024:

For the Fiscal Year Ended

Royalty expense

License, participation and technology costs

Other direct operating costs

Payroll and related

Professional services

Advertising and marketing

Amortization and depreciation

Other general and administrative

Impairment of goodwill

Total operating expenses

Operating income (loss)

Interest expense

Other income (expense)

Income (loss) before income taxes

Provision for income taxes

Net income (loss)

OTHER INTERESTS

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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, 2025 and 2024, respectively.

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

Total stockholders’ deficit of CDF2 Holdings as of March 31, 2025 and 2024 was $ 59.2 million 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, 2025 and 2024 is carried at $ 0 .

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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.

During the fiscal year ended March 31, 2025 , the Company issued 500 thousand shares of Common Stock, relating to preferred stock dividends, Board fees, deferred consideration and earnout commitments, and common stock warrant exercise.

During the fiscal year ended March 31, 2024, the Company issued 6.4 million shares of Common Stock, through a registered 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.

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.

In June 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.

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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.

All common warrants were issued as immediately exercisable and 2,654 thousand common warrants remain outstanding as of March 31, 2025.

ATM Sales Agreement

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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.

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”).

Any sales of shares made under the ATM Sales Agreement will be made pursuant to the Company's Registration Statement on Form S-3 (Registration No.

333-239710), for an aggregate offering price of up to $ 30 million.

The ATM Sales Agreement terminated on January 6, 2024 .

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

On May 3, 2024, 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.

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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 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

Cumulative dividends in arrears on preferred stock were $ 0.1 million as of March 31, 2024 and 2023.

For the years ended March 31, 2024 and 2023, we paid preferred stock dividends in the form of 196 thousand and 37 thousand shares of Common Stock, respectively.

Cumulative dividends in arrears on our outstanding Series A preferred stock were $ 0.1 m illion as of March 31, 2025 and 2024.

For the years ended March 31, 2025 and 2024 , we paid preferred stock dividends in the form of 276 thousand an d 196 tho usand shares of Common Stock, respectively.

TREASURY STOCK

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.

We have treasury stock, at cost, con sisting of 504 thousand shares and 289 thou sand shares of Common Stock as of March 31, 2025 and 2024, respectively.

During the year ended March 31, 2025 , the Company acquired 215 thousand shares of treasury stock, repurchased through Rule 10b5-1 and 10b-18 trading plans with B.

Riley Securities, Inc.

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;

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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).

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

The 2017 Plan provided for the issuance of shares of Common Stock through various awards, including stock options, stock appreciation rights, stock, restricted stock, restricted stock units, performance awards and cash awards.

Stock Options

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

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Options Outstanding

(In thousands)

Weighted Average Remaining Life in Years

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Aggregate Intrinsic Value

(In thousands)

As of March 31, 2024

Options Outstanding

(In thousands)

Weighted Average Remaining Life in Years

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Aggregate Intrinsic Value

(In thousands)

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 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.

During the year ended March 31, 2025 and 2024 , 642 options and 9 thousand options expired, respectively.

The remaining outstanding options expire in July 2025.

Stock Appreciation Rights ("SAR")

During the year ended March 31, 2024, the Company granted 207 thousand SARs, which were granted under the 2017 Plan.

No SARs were granted during the year ended March 31, 2025.

All SARs issued have an exercise price equal to the market price of the Company’s Common Stock on the date of grant with 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.

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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, along with the minimum and maximum strike price of each group, are as follows:

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(In thousands)

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.

As of March 31, 2025, the compensation cost not yet recognized related to nonvested SARS awards totaled $162 thousand, to be recognized over the weighted average remaining vesting period of 1.1 years.

SARs activity for the year ended March 31, 2025 is as follows (in thousands):

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Total SARs Outstanding March 31, 2025

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.

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.

Performance Stock Units ("PSU")

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.

There were no PSUs granted, or shares issued upon the settlement of PSUs for the years ended March 31, 2025 and 2024 .

PSUs totalling 20,250 were forfeited during the year ended March 31, 2025.

As of March 31, 2025, there are 25,000 unvested PSUs which will vest upon meeting certain performance goals for the year ended March 31, 2026.

Restricted Stock Awards ("RSA")and Restricted Stock Units ("RSU")

During the year ended March 31, 2025, the Company granted RSAs and RSUs to employees under the 2017 Plan.

These RSAs and RSUs have 3 -year vesting periods and are valued at the closing stock price on the date of grant.

Upon vesting, RSUs may be settled in shares or cash at the Company's discretion while RSAs are in shares awards.

As of March 31, 2025, there was $ 804 thousand of unrecognized stock-based compensation expense related to these awards that will be recognized over the remaining vesting period of 25 months.

As of March 31, 2025, there were 1,127,500 unvested RSUs and RSAs outstanding.

RSU and RSA activity for the year ended March 31, 2025 is as follows (in thousands):

March 31, 2025

Weighted Average Grant Date Fair Value

Aggregate Fair Value

Outstanding March 31, 2024

Outstanding March 31, 2025

Stock-based Compensation Expense

A total of $ 1.9 million and $ 1.4 million of stock based compensation was included within Selling, General and Administrative expenses for the years ended March 31, 2025 and 2024, respectively.

Of this stock based compensation expense, there was $ 0.3 million and $ 0.3 million of stock-based compensation expense for the year ended March 31, 2025 and 2024, respectively, related to Board of Director fees.

During the years ended March 31, 2025 and 2024 , the Company issued 74 thousand and 400 thousand restricted shares to non-employee directors, respectively.

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.

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 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 fiscal year ended March 31, 2025 and 2024

Twelve Months ended

(in thousands, except shares and per share data)

Net income (loss) attributable to common stockholders and participating common warrant holders

earnings attributable to participating common warrant holders

Net income (loss) attributable to common stockholders - 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:

Twelve Months ended

Options to purchase common stock

Stock appreciation rights

Warrants to purchase common stock

Line of Credit Facility

The Line of Credit Facility bears interest at a rate equal to 1.25 % above the prime rate , equal to 8.75 % as of March 31, 2025.

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.

The Line of Credit Facility matures on April 8, 2028 .

As of March 31, 2025 and 2024, $ 0.0 million and $ 6.4 million was outstanding on the Line of Credit Facility, respectively.

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

As of March 31, 2024, the Company was out of compliance with one of its covenants and received a waiver from EWB in June 2024.

The Company was in compliance with all covenants as of March 31, 2025.

For the year ended March 31, 2025 and 2024, the Company incurred interest expense of $ 0.6 million and $ 0.4 million to EWB related to the 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.

The T3 Loan Agreement provides for the T3 Loan with a principal amount not to exceed $ 3.7 million, 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.

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.

The 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 were 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, 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 ("Participation Interest").

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.

In April 2025, the Company paid the T3 Lender $ 700 thousand in Participation Interest which has been recorded as Interest Expense within the Consolidated Statement of Operations.

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").

The Guarantee is capped at $ 1.5 million.

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.

The T3 Loan was repaid during the fiscal year ended March 31, 2025 .

COMMITMENTS AND CONTINGENCIES

Operating Leases

Cineverse is a virtual company with one domestic operating lease, acquired through the acquisition of Digital Media Rights ("DMR") and subleased to a third party.

The Company has not been relieved of the its 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's term is January 2025 .

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

Cineverse is a virtual company that operates without domestic operating leases.

The Company previously maintained one domestic operating lease acquired through the acquisition of Digital Media Rights ("DMR"), which was subleased to a third-party.

The Company was not relieved of its original lease obligation and therefore recognized both a lease liability and right-of-use asset as part of the arrangement through the end of the lease term in January 2025 .

The Company recognized $ 0.2 million of sublease income related to this subleasing arrangement for the twelve months ended March 31, 2025.

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

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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):

Operating leases liabilities, net of current

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

Fiscal year ending March 31,

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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.

The average discount rate utilized was 3.34 %.

The weighted average discount rate utilized was 3.34 %.

The Company incurred $ 423 thousand and $ 441 thousand in rental expense associated with its operating leases during the years ended March 31, 2025 and 2024, respectively.

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Certain of these advances are eligible to be recouped through future revenue sharing arrangements.

Based on the stage of the Company's projects, the table presented below represents an estimate of the Company's gross project commitments over the next five fiscal years (in thousands).

stage of the Company's projects, the table presented below represents an estimate of the Company's gross project commitments over the next five fiscal years (in thousands):

Fiscal Year Ended March 31,

Total Project Commitments

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.

We recorded income tax expense of $ 0.1 million and $ 0.0 million from operations for the years ended March 31, 2025 and 2024, respectively.

For the year ended March 31, 2025, the income tax expense of $ 0.1 million was related to U.S.

state and foreign income taxes.

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

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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 $ 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.

The decrease in the valuation allowance of $ 10.5 million during the fiscal year ended March 31, 2025 was mainly due to a change in the blended state statutory tax rate.

The state statutory tax rate decreased due to the utilization of the census-method for purposes of apportioning revenue.

change caused the gross state deferred tax asset to decrease along with the corresponding valuation allowance.

The increase in the valuation allowance of $ 5.9 million during the fiscal year ended March 31, 2024, was 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, 2025, we had federal and state net operating loss carryforwards of approximately $ 68.6 million available in the United States of America (“U.S.”) to reduce future taxable income.

federal and state net operating loss carryforwards of approximately $ 20.0 and $ 68.6 million, respectively, generally begin to expire in 2027.

federal net operating loss carryforwards that were generated during the years ended March 31, 2020, 2021, 2022, 2023, and 2024 of approximately $ 48.6 million, do not expire.

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

The Act contains several new or changed income tax provisions, including but not limited to the following:

increased limitation threshold for determining deductible interest expense;

class life changes to qualified improvements (in general, from 39 years to 15 years);

and the ability to carry back net operating losses incurred from tax years 2018 through 2020 up to the five preceding tax years.

The Company has evaluated the new tax provisions of the CARES Act and determined the impact to be either immaterial or not applicable.

Under Section 382 of the Internal Revenue Code, if a corporation undergoes an ownership change (generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period), the corporation’s ability to use its pre-change net operating loss (“NOL”) carryforwards to offset its post-change income may be limited.

Similar rules may apply under state tax laws.

On November 1, 2017, we experienced an ownership change with respect to the Bison acquisition.

Accordingly, our ability to utilize our NOL carryforwards attributable to periods prior to November 1, 2017, is subject to substantial limitations.

These limitations could result in increased future tax payments, which could be material.

We experienced subsequent ownership changes under Section 382 on September 15, 2020 and November 1, 2022, which resulted in additional limitations in our ability to utilize our NOL carryforwards attributable to periods prior to September 15, 2020 and November 2022, respectively.

The limitations triggered by the September 15, 2020 and November 1, 2022 ownership changes were significantly less substantial than the limitation triggered by the November 1, 2017 ownership change, however.

The differences between the U.S.

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Non-deductible expenses

Executive officer compensation limitation – Section 162(m)

Deferred tax adjustments

Goodwill impairment

Losses from non-consolidated entities

Income tax expense

Income tax expense (benefit)

We file income tax returns in the U.S.

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For federal income tax purposes, our fiscal 2022 through 2025 tax years remain open for examination by the tax authorities under the normal three-year statute of limitations.

Fiscal 2007 will also remain open for examination as the Company used the fiscal 2007 NOL carryforward this year.

state tax purposes, our fiscal 2021 through 2025 tax years generally remain open for examination by most of the tax authorities under a four-year statute of limitations.

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SUBSEQUENT EVENTS

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.

EWB Line of Credit Expansion

On April 8, 2025, the Company entered into a Second Amended and Restated Loan, Guaranty and Security Agreement, by and between the Company, EWB and the Guarantors named therein, which are certain subsidiaries of the Company (the “Loan Agreement”).

The Loan Agreement amended and restated the prior amended and restated loan, guaranty and security agreement, which was entered into on September 15, 2022 (and amended from time to time, the “Prior Loan Agreement”).

The Loan Agreement provides for a credit facility (the “Credit Facility”)

consisting of a maximum of $ 12,500,000 in revolving loans at any one time outstanding, which principal amount may be increased to $ 15,000,000 at the Company’s request and at EWB’s discretion, and having a maturity date of April 8, 2028 .

Advances under the Credit Facility will bear interest on the outstanding daily balance at 125 basis points ( 1.25 %) above the Prime Rate (as defined in the Loan Agreement).

The proceeds from the Credit Facility will be used for the repayment at closing of expenses incurred in connection with the Prior Loan Agreement;

payment of interest, legal fees and bank fees;

investment, participation, acquisition and /or production of upcoming film/TV projects;

and working capital needs and general corporate purposes.

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

DMR Deferred Consideration Stock Settlement

On April 1, 2025, the $ 2.4 million deferred consideration payable to DMR was settled through stock issuance.

As a result, the Company issued 677 thousand shares.

RSA and RSU Vesting

On April 25, 2025, one-third of the RSAs and RSUs granted to certain employees in April 2024 have vested.

As a result, the Company issued 422 thousand shares, net of shares withheld for taxes due.

OTHER INFORMATION

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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