Cineverse Corp. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Cineverse Corp. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID# 274 ) F- 1 Consolidated Balance Sheets at March 31, 2025 and 2024 F- 3 Consolidated Statements of Operations for the fiscal years ended March 31, 2025 and 2024 F- 4 Consolidated Statements of Comprehensive Loss for the fiscal years ended March 31, 2025 and 2024 F- 5 Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2025 and 2024 F- 6 Consolidated Statements of Equity for the fiscal years ended March 31, 2025 and 2024 F- 9 Notes to Consolidated Financial Statements F- 10 29 REP ORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Cineverse Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Cineverse Corp. (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 These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit 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 F- 1 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 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 We have served as the Company’s auditor since 2004. EISNERAMPER LLP Iselin, New Jersey June 30, 2025 F- 2 Cineverse Corp. CONSOLIDATED BALANCE SHEETS (In thousands, except for share and per share data) As of March 31, 2025 2024 ASSETS Current Assets Cash and cash equivalents $ 13,941 $ 5,167 Accounts receivable, net of allowance for credit losses of $ 307 and $ 269 , respectively 15,752 15,106 Employee retention tax credit 79 1,671 Content advances, net of allowance $ 4,818 and $ 6,260 respectively 6,736 9,345 Other current assets 1,573 1,432 Total current assets 38,081 32,721 Property and equipment, net 2,876 2,276 Intangible assets, net 18,168 18,328 Goodwill 6,799 6,799 Content advances, net of current portion 4,053 2,551 Other long-term assets, net 2,539 1,703 Total Assets $ 72,516 $ 64,378 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable and accrued expenses $ 31,109 $ 20,817 Line of credit, net — 6,301 Current portion of deferred consideration on purchase of business 2,956 3,114 Earnout consideration on purchase of business — 180 Current portion of operating lease liabilities 187 401 Deferred revenue 183 436 Total current liabilities 34,435 31,249 Deferred consideration on purchase of business, net of current portion — 457 Operating lease liabilities, net of current portion 275 462 Other long-term liabilities 14 59 Total Liabilities $ 34,724 $ 32,227 Commitments and contingencies (see Note 8) Stockholders’ Equity Preferred stock, 15,000,000 shares authorized; Series A 10 % - $ 0.001 par value per share; 20 shares authorized; 7 shares issued and 7 shares outstanding at March 31, 2025 and 2024 3,559 3,559 Common Stock, $ 0.001 par value; Class A Stock: 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 194 194 Additional paid-in capital 548,405 545,996 Treasury stock, at cost; 503,819 and 288,554 shares as of March 31, 2025 and 2024, respectively ( 12,193 ) ( 11,978 ) Accumulated deficit ( 500,908 ) ( 504,153 ) Accumulated other comprehensive loss ( 305 ) ( 345 ) Total stockholders’ equity of Cineverse Corp. 38,752 33,273 Deficit attributable to noncontrolling interest ( 960 ) ( 1,122 ) Total equity 37,792 32,151 Total Liabilities and Equity $ 72,516 $ 64,378 See accompanying Notes to Consolidated Financial Statements F- 3 Cineverse Corp. CONSOLIDATED STATEMEN TS OF OPERATIONS (In thousands, except for per share data) For the Fiscal Year Ended March 31, 2025 2024 Revenues $ 78,181 $ 49,131 Costs and expenses Direct operating 38,776 19,131 Selling, general and administrative 27,684 27,904 Depreciation and amortization 3,797 3,771 Goodwill impairment — 14,025 Total operating expenses 70,257 64,831 Operating income (loss) 7,924 ( 15,700 ) Interest expense ( 4,365 ) ( 1,066 ) Gain (loss) from equity investment in Metaverse 176 ( 4,299 ) Other expenses, net 135 ( 190 ) Net income (loss) before income taxes 3,870 ( 21,255 ) Income tax expense ( 106 ) ( 10 ) Net income (loss) 3,764 ( 21,265 ) Net income attributable to noncontrolling interest ( 162 ) ( 142 ) Net income (loss) attributable to controlling interests 3,602 ( 21,407 ) Preferred stock dividends ( 356 ) ( 350 ) Net income (loss) attributable to common stockholders $ 3,246 $ ( 21,757 ) Net income (loss) per share attributable to common stockholders: Basic $ 0.18 $ ( 1.78 ) Diluted $ 0.16 $ ( 1.78 ) Weighted average shares of Common Stock outstanding: Basic 15,814 12,253 Diluted 17,818 12,253 See accompanying Notes to Consolidated Financial Statements F- 4 Cineverse Corp. CONSOLIDATED STATEMENTS OF COMPREH ENSIVE INCOME (In thousands) For the Fiscal Year Ended March 31, 2025 2024 Net income (loss) $ 3,764 $ ( 21,265 ) Other comprehensive income (loss): Foreign exchange translation 40 57 Net income attributable to noncontrolling interest ( 162 ) ( 142 ) Comprehensive income (loss) $ 3,642 $ ( 21,350 ) See accompanying Notes to Consolidated Financial Statements F- 5 Cineverse Corp. CONSOLIDATED STATEMENTS OF CAS H FLOWS (In thousands) For the Fiscal Year Ended March 31, 2025 2024 Cash flows from operating activities: Net income (loss) $ 3,764 $ ( 21,265 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 3,797 3,771 Impairment of goodwill — 14,025 Amortization of debt issuance costs 468 188 Stock-based compensation 1,925 1,439 Change in fair value of deferred consideration and earnouts 296 ( 109 ) Changes in fair value of and realized (gains) losses from equity investment in Metaverse ( 176 ) 4,299 Barter-related non-cash expenses 341 341 Other 10 84 Changes in operating assets and liabilities: Accounts receivable ( 619 ) 7,565 Other current and long-term assets ( 668 ) ( 942 ) Content advances 2,030 ( 5,621 ) Accounts payable, accrued expenses and other liabilities 9,903 ( 12,756 ) Capitalized content ( 3,407 ) ( 1,822 ) Deferred revenue ( 253 ) 210 Net cash provided by (used in) operating activities $ 17,411 $ ( 10,592 ) Cash flows from investing activities: Expenditures for long-lived assets ( 1,171 ) ( 1,069 ) Sale of equity investment securities 536 538 Net cash used in investing activities $ ( 635 ) $ ( 531 ) Cash flows from financing activities: Proceeds from line of credit 64,102 43,955 Payments on line of credit ( 70,485 ) ( 42,572 ) Payment of deferred consideration ( 428 ) ( 285 ) At-the-market issuance fees ( 42 ) — Proceeds from the issuance of a term loan, net of debt issuance costs 2,917 — Repayment of term loan ( 3,090 ) — Payment of earnout consideration ( 590 ) ( 291 ) Cost to acquire treasury shares ( 215 ) — Financing fees for line of credit ( 209 ) ( 193 ) Proceeds from common stock warrant exercise 38 — Issuance of Class A common stock, net of issuance costs — 8,524 Net cash (used in) provided by financing activities $ ( 8,002 ) $ 9,138 Net change in cash and cash equivalents 8,774 ( 1,985 ) Cash and cash equivalents at beginning of period 5,167 7,152 Cash and cash equivalents at end of period $ 13,941 $ 5,167 See accompanying Notes to Consolidated Financial Statements F- 6 Cineverse Corp. SUPPLEMENTAL CASH FLOW INFORMATION AND DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITY (In thousands) For the Fiscal Year Ended March 31, 2025 2024 Cash interest paid $ 995 $ 376 Lease liability related payments $ 423 $ 446 Income taxes paid $ 34 $ 55 Noncash investing and financing activities: Issuance of Class A common stock for payment of employee bonuses $ — $ 1,203 Treasury shares acquired for withholding taxes $ — $ 370 Earnout liability settled in stock $ 90 $ 392 Bonus liability settled in stock $ 42 $ — Deferred consideration settled in stock $ — $ 3,000 Accrued dividends on preferred stock $ 89 $ 89 Issuance of Class A common stock for payment of accrued preferred stock dividends $ 356 $ 350 See accompanying Notes to Consolidated Financial Statements F- 7 Cineverse Corp. CONSOLIDATED STATEMENTS OF EQUITY (In thousands) Preferred Stock Common Stock Treasury Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity Non Controlling Interest Total Shares Amount Shares Amount Shares Amount Balances as of March 31, 2024 1 $ 3,559 15,699 $ 194 289 $( 11,978 ) $ 545,996 $( 504,153 ) $( 345 ) $ 33,273 $( 1,122 ) $ 32,151 Foreign exchange translation — — — — — — — — 40 40 — 40 Stock-based compensation — — — — — — 1,595 — — 1,595 — 1,595 Preferred stock dividends paid in stock — — 276 — — — 356 — — 356 — 356 Preferred stock dividends accrued — — — — — — — ( 357 ) — ( 357 ) — ( 357 ) Issuance of common stock for Board of Director compensation — — 74 — — — 330 — — 330 — 330 Issuance of common stock for acquiree consideration — — 29 — — — 42 — — 42 — 42 Common Stock Warrant Exercise — — 13 — — — 38 — — 38 — 38 Fees incurred in connection with ATM offering — — — — — — ( 42 ) — — ( 42 ) — ( 42 ) Issuance of Class A common stock for earnout commitment — — 108 — — — 90 — — 90 — 90 Treasury stock acquired — — ( 215 ) — 215 ( 215 ) — — — ( 215 ) — ( 215 ) Net income — — — — — — — 3,602 — 3,602 162 3,764 Balances as of March 31, 2025 1 $ 3,559 15,984 $ 194 504 $( 12,193 ) $ 548,405 $( 500,908 ) $( 305 ) $ 38,752 $( 960 ) $ 37,792 See accompanying Notes to Consolidated Financial Statements F- 8 Cineverse Corp. CONSOLIDATED STATEM ENTS OF EQUITY (In thousands) Preferred Stock Common Stock Treasury Additional Paid-In Accumulated Accumulated Other Comprehensive Total Stockholders' Non Controlling Shares Amount Shares Amount Shares Amount Capital Deficit Loss Equity Interest Total Balances as of March 31, 2023 1 $ 3,559 9,348 $ 185 66 $ ( 11,608 ) $ 530,998 $ ( 482,395 ) $ ( 402 ) $ 40,337 $ ( 1,264 ) $ 39,073 Foreign exchange translation — — — — — — — — 57 57 — 57 Stock-based compensation — — — — — — 1,271 — — 1,271 — 1,271 Preferred stock dividends paid with common stock — — 196 — — — 350 — — 350 — 350 Preferred stock dividends accrued — — — — — — — ( 350 ) — ( 350 ) — ( 350 ) Issuance of common stock for Board of Director compensation — — 400 — — — 168 — — 168 — 168 Issuance of Class A common stock in connection with ATM raises, net — — 177 3 — — 1,080 — — 1,084 — 1,084 Issuance of Class A common stock in connection with direct equity offering — — 2,150 2 — — 7,437 — — 7,439 — 7,439 Issuance of Class A common stock in connection employee bonuses — — 725 1 — — 1,203 — — 1,203 — 1,203 Issuance in connection with the exercise of warrants — — 517 — — — — — — — — — Issuance of Class A common stock for earnout commitment — — 41 — — — 392 — — 392 — 392 Treasury stock in connection with taxes withheld from employees — — ( 223 ) — 223 ( 370 ) — — — ( 370 ) — ( 370 ) Issuance of common stock for deferred and earnout consideration — — 2,369 3 — — 3,097 — — 3,100 — 3,100 Net (loss) income — — — — — — — ( 21,407 ) — ( 21,407 ) 142 ( 21,265 ) Balances as of March 31, 2024 1 $ 3,559 15,699 $ 194 289 $ ( 11,978 ) $ 545,996 $ ( 504,153 ) $ ( 345 ) $ 33,273 $ ( 1,122 ) $ 32,151 See accompanying Notes to Consolidated Financial Statements F- 9 Cineverse Corp. NOTE S TO CONSOLIDATED FINANCIAL STATEMENTS 1. NATURE OF OPERATIONS AND LIQUIDITY 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. 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, 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. 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. F- 10 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation 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. All intercompany transactions and balances have been eliminated in consolidation. 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. We record net income or loss attributable to noncontrolling interest in our Consolidated Statements of Operations equal to the proportionate share of outstanding profit interest units retained by the noncontrolling interests. We indirectly own 100 % of the common equity of CDF2 Holdings, LLC (“CDF2 Holdings”), which was created for the purpose of capitalizing on the conversion of the exhibition industry from film to digital technology. CDF2 Holdings assists its customers in procuring the equipment necessary to convert their systems to digital technology by providing financing, equipment, installation and related ongoing services. CDF2 Holdings is a Variable Interest Entity (“VIE”), as defined in Accounting Standards Codification ("ASC") 810, Consolidation ("ASC 810") . ASC 810 requires the consolidation of VIEs by an entity that has a controlling financial interest in the VIE which entity is thereby defined as the primary beneficiary of the VIE. To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, among other factors. Although we indirectly wholly own CDF2 Holdings, we, a third-party that also has a variable interest in CDF2 Holdings, and an independent third-party manager must mutually approve all business activities and transactions that significantly impact CDF2 Holdings’ economic performance. We have therefore assessed our variable interests in CDF2 Holdings and determined that we are not the primary beneficiary of CDF2 Holdings. As a result, CDF2 Holdings’ financial position and results of operations are not consolidated in our financial position and results of operations. In completing our assessment, we identified the activities that we consider most significant to the economic performance of CDF2 Holdings and determined that we do not have the power to direct those activities, and therefore we account for our investment in CDF2 Holdings under the equity method of accounting. Use of Estimates The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include revenue recognition, share-based compensation expense, valuation allowance for deferred income taxes, recovery of content advances, goodwill and intangible asset impairments, estimated royalties payable to content partners, and the assessment of amortization lives to intangible assets. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. On a regular basis, the Company evaluates the assumptions, judgments and estimates. Actual results may differ from these estimates. 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 F- 11 Corporation’s insured limits. We periodically assess the financial condition of the institutions and believe that the risk of any loss is minimal. Non-monetary Transactions 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. 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, 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 We maintain reserves for expected credit losses on accounts receivable. We review the composition of accounts receivable and analyze historical credit losses, customer concentrations, customer credit worthiness, current and forecasted economic trends and changes in customer payment patterns to evaluate the adequacy of this allowance. During the year ended March 31, 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, 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 The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") provided an employee retention credit which was a refundable tax credit against certain employment taxes. The Consolidated Appropriations Act (the "Appropriations Act") extended and expanded the availability of the employee retention credit through December 31, 2021. 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. 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"). In April 2024, the Company received a letter from the IRS indicating that its claim had been accepted and $ 1.7 million was received in June 2024. Content Advances Content advances 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 $ 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. For the year F- 12 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 Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation expense is recorded using the straight-line method over the estimated useful lives of the respective assets, with useful life ranges by major asset class as follows: Computer equipment and software 3 - 5 years Internal use software 3 - 5 years Machinery and equipment 3 - 10 years Furniture and fixtures 2 - 7 years We capitalize costs associated with software developed or obtained for internal use when the preliminary project stage is completed, and it is determined that the software will provide significantly enhanced capabilities and modifications. These capitalized costs are included in property and equipment and include external direct cost of services procured in developing or obtaining internal-use software and personnel and related expenses for employees who are directly associated with, and who devote time to internal-use software projects. Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended use. Once the software is ready for its intended use, the costs are amortized over the useful life of the software on a straight-line basis. Post-configuration training and maintenance costs are expensed as incurred. Intangible Assets, Net Intangible assets are stated at cost less accumulated amortization. For intangible assets that have finite lives, the assets are amortized using the straight-line method over the estimated useful lives of the related assets. During both of the years ended March 31, 2025 and 2024 , we did no t record any impairment. Amortization expense is recorded using the straight-line method over the estimated useful lives of the respective assets as follows: Content Library 3 – 20 years Tradenames, Trademarks and Patents 2 – 15 years Customer Relationships ` 5 – 13 years Advertiser Relationships and Channel 2 – 13 years Software 10 years Capitalized Content 3 years Supplier Agreements 2 years The Company’s intangible assets include the following (in thousands): As of March 31, 2025 Cost Basis Accumulated Amortization Net Content Library $ 24,251 $ ( 21,724 ) $ 2,527 Advertiser Relationships and Channel 12,832 ( 4,211 ) 8,621 Customer Relationships 8,690 ( 8,145 ) 545 Software 3,200 ( 1,200 ) 2,000 Tradenames, Trademarks and Patents 3,961 ( 3,203 ) 758 Capitalized Content 4,816 ( 1,099 ) 3,717 Total Intangible Assets $ 57,750 $ ( 39,582 ) $ 18,168 F- 13 As of March 31, 2024 Cost Basis Accumulated Amortization Net Content Library $ 24,133 $ ( 21,492 ) $ 2,641 Advertiser Relationships and Channel 12,603 ( 2,541 ) 10,062 Customer Relationships 8,690 ( 7,872 ) 818 Software 3,200 ( 880 ) 2,320 Tradenames, Trademarks and Patents 3,914 ( 3,059 ) 855 Capitalized Content 1,822 ( 190 ) 1,632 Total Intangible Assets $ 54,362 $ ( 36,034 ) $ 18,328 As of March 31, 2025, amortization expense for each of the successive five years is expected to be (in thousands): Total In-process intangible assets 543 2026 3,637 2027 2,827 2028 1,783 2029 1,670 2030 1,670 Thereafter 6,038 Total $ 18,168 Capitalized Content The Company capitalizes direct costs incurred in the production of content from which it expects to generate a return over the anticipated useful life and the Company’s predominant monetization strategy informs the method of amortizing these deferred costs. The determination of the predominant monetization strategy is made at commencement of the production or license period and the classification of the monetization strategy as individual or group only changes if there is a significant change to the title’s monetization strategy relative to its initial assessment. The costs are capitalized to the Capitalized Content costs within Intangible Assets and are amortized as a group within Depreciation and Amortization within the Consolidated Statements of Operations. Impairment of Long-lived and Finite-lived Intangible Assets We review the recoverability of our long-lived assets and finite-lived intangible assets, when events or conditions occur that indicate a possible impairment exists. The assessment for recoverability is based primarily on our ability to recover the carrying value of our long-lived and finite-lived assets from expected future undiscounted net cash flows. If the total of expected future undiscounted net cash flows is less than the total carrying value of the asset, the asset is deemed not to be recoverable and possibly impaired. We then estimate the fair value of the asset to determine whether an impairment loss should be recognized. An impairment loss will be recognized if the asset’s fair value is determined to be less than its carrying value. Fair value is determined by computing the expected future discounted cash flows. There were no impairment charges recorded for long-lived and finite-lived intangible assets during the twelve months ended March 31, 2025 and 2024 . Goodwill Goodwill is the excess of the purchase price paid over the fair value of the net assets of an acquired business. Goodwill is tested for impairment on an annual basis or more often if warranted by events or changes in circumstances indicating that the carrying value may exceed fair value, also known as impairment indicators. Inherent in the fair value determination for each reporting unit are certain judgments and estimates relating to future cash flows, including management’s interpretation of current economic indicators and market conditions, and assumptions about our strategic plans with regard to its operations. To the extent additional information arises, F- 14 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. The Company considered the sustained decrease in its share price to be a goodwill impairment indicator and determined that it would be appropriate to proceed with a quantitative test. Primarily utilizing a market-multiple approach, which took into account the sustained decrease in share price, the Company determined that goodwill impairment of $ 14.0 million would be recognized. Fair Value Measurements The authoritative guidance on fair value measurements establishes a framework with respect to measuring assets and liabilities at fair value on a recurring basis and non-recurring basis, within ASC 820, Fair Value Measurement . Under the framework, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as of the measurement date. The framework also establishes a three-tier hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability and are developed based on the best information available in the circumstances. The hierarchy consists of the following three levels: • Level 1 – quoted prices in active markets for identical investments • Level 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs) • Level 3 – significant unobservable inputs (including our own assumptions in determining the fair value of investments) 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 Level 1 Level 2 Level 3 Total Assets: Equity investment in Metaverse, at fair value $ — $ — $ — $ — $ — $ — $ — $ — Liabilities: Current portion of earnout consideration on purchase of a business $ — $ — $ — $ — $ — $ — $ — $ — F- 15 As of March 31, 2024 Level 1 Level 2 Level 3 Total Assets: Equity investment in Metaverse, at fair value $ 362 $ — $ — $ 362 $ 362 $ — $ — $ 362 Liabilities: Current portion of earnout consideration on purchase of a business $ — $ — $ 180 $ 180 $ — $ — $ 180 $ 180 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 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. 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 year ended March 31, 2024. The resumption of active trading status represented renewed availability of quoted, unadjusted prices in active markets for identical assets, upon which the Company can execute a sale and readily access pricing information at the measurement date. Accordingly, the Company has presented the fair value of its Metaverse shares held as of March 31, 2024 within the Level 1 grouping. The fair value of the shares held as of March 31, 2024 was $ 0.4 million, with associated losses of $ 4.3 million recognized during the fiscal year ended March 31, 2024. As a result of the decrease in ownership of its investment in Metaverse from its sale of shares, along with a corresponding decrease in influence, the Company no longer accounts for its investment in Metaverse under the equity method and instead 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 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 the earnout period at the end of fiscal year 2024, the Company utilized the most up to date forecast to estimate the outcome against these targets to determine the ultimate estimated payout. The amounts recognized are not discounted. During the 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). F- 16 Asset Acquisitions An asset acquisition is an acquisition of an asset, or a group of assets, that does not meet the definition of a business. Asset acquisitions are accounted for by using the cost accumulation model whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of relative fair values. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following (in thousands): As of March 31, 2024 2025 2024 Accounts payable $ 7,298 $ 5,804 Amounts due to producers 16,488 9,889 Accrued compensation and benefits 1,398 1,119 Accrued other expenses 5,925 4,005 Total Accounts Payable and Accrued Expenses $ 31,109 $ 20,817 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 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 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 The following table presents the Company’s revenue by source (in thousands): Year Ended March 31, 2025 2024 Streaming and digital $ 44,408 $ 37,312 Base distribution 28,614 5,259 Podcast and other 4,893 2,718 Other non-recurring 266 3,842 Total Revenue $ 78,181 $ 49,131 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. F- 17 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. The Company also has contracts for the theatrical distribution of third-party feature movies and alternative content. Distribution fee revenue and participation in box office receipts are recognized at the time a feature movie and alternative content are viewed. Podcast and other revenue represents advertising fees earned in support of the Company's podcast programming. Other non-recurring revenue relates to the Company's legacy digital cinema operations, whose operations have run off, still may generate non-recurring revenue from the sale of cinema assets or the recognition of variable consideration as the associated uncertainty associated with the revenue is resolved. Revenue Recognition Fees for the distribution of content in the home entertainment markets via several distribution channels, including digital, video on demand (“VOD” or "Streaming and Digital”), and physical goods (e.g., DVDs and Blu-ray Discs) (“Base Distribution”). Fees earned are typically a percentage of the net amounts received from our customers. Depending upon the nature of the agreements with the platform and content providers, the fee rate that we earn varies. The Company’s performance obligations include the delivery of content for transactional, subscription and ad supported/free ad-supported streaming TV (“FAST”) on the digital platforms, and shipment of DVDs and Blu-ray Discs. Revenue is recognized at the point in time when the content is available for subscription on the digital platform (the Company’s digital content is considered functional IP), at the time of shipment for physical goods, or point-of-sale for transactional and VOD services as the control over the content or the physical title is transferred to the customer. The Company considers the delivery of content through various distribution channels to be a single performance obligation. Base Distribution Revenue from the sale of physical goods is recognized after deducting the reserves for sales returns and other allowances, which are accounted for as variable consideration. Reserves for potential sales returns and other allowances are recorded based upon historical experience. If actual future returns and allowances differ from past experience, adjustments to our allowances may be required. We have the right to receive or bill a portion of the theatrical distribution fee in advance of the exhibition date, and therefore such amount is recorded as a receivable at the time of execution, and all related distribution revenue is deferred until the third-party feature movies’ or alternative content’s theatrical release date. Payment terms and conditions vary by customer and typically provide net 30-to-90 day terms. We do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to our customer and payment for that product or service will be one year or less. As the Company satisfies its performance obligations, whether relating to the delivery of digital content, physical goods, or licensing, revenue is generally measured at a point in time. The Company follows the five-step model established by ASC 606, Revenue from Contracts with Customers when preparing its assessment of revenue recognition. Principal Agent Considerations Revenue earned 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 the terms of each agreement. Key indicators that we use in evaluating gross versus net treatment include, but are not limited to, the following: • which party is primarily responsible for fulfilling the promise to provide the specified good or service; and • which party has discretion in establishing the price for the specified good or service. Shipping and Handling 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 F- 18 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 $ 269 Increase in estimated provision 38 Allowance for credit losses as at March 31, 2025 $ 307 Allowance for credit losses at the beginning of the year $ 54 Increase in estimated provision 215 Allowance for credit losses as at March 31, 2024 $ 269 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, 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 as of March 31, 2025 and 2024. Participations and Royalties Payable When we use third-parties to distribute Company owned content, we record participations payable, which represent amounts owed to the distributor under revenue-sharing arrangements. When we provide content distribution services, we record accounts payable and accrued expenses to studios or content producers for royalties owed under licensing arrangements. We identify and record as a reduction to the liability any expenses that are to be reimbursed to us by such studios or content producers. Concentrations 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. Direct Operating Costs Direct operating costs consist of operating costs such as cost of revenue, fulfillment expenses, shipping costs, property taxes and insurance on systems, royalty and participation expenses, allowance against advances, a nd marketing and direct personnel costs. F- 19 Stock-based Compensation The Company issues stock-based awards to employees and non-employees, generally in the form of restricted stock, restricted stock units, stock appreciation rights and performance stock units. The Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments, including grants of stock options and restricted stock units and modifications to existing stock options, to be recognized in the Consolidated Statements of Operations 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. That cost is recognized on a straight-line basis over the period during which the employee and non-employee is required to provide service in exchange for the award. The fair values of options and stock appreciation rights are calculated as of the date of grant using the Black-Scholes option pricing model based on key assumptions such as stock price, expected volatility, risk-free rate and expected term. The Company’s estimates of these assumptions are primarily based on the trading price of the Company’s stock, historical data, peer company data and judgment regarding future trends and factors. Income Taxes The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to operating loss and tax credit carryforwards and for differences between the carrying amounts of existing assets and liabilities and their respective tax basis. Valuation allowances are established when management is unable to conclude that it is more likely than not that some portion, or all, of the deferred tax asset will ultimately be realized. The Company is primarily subject to income taxes in the United States and India. The Company accounts for uncertain tax positions in accordance with an amendment to ASC Topic 740-10, Income Taxes , which provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is “more-likely-than-not” to be sustained were it to be challenged by a taxing authority. The assessment of the tax position is based solely on the technical merits of the position, without regard to the likelihood that the tax position may be challenged. If an uncertain tax position meets the “more-likely-than-not” threshold, the largest amount of tax benefit that is more than 50 % likely to be recognized upon ultimate settlement with the taxing authority is recorded. The Company has no uncertain tax positions. F- 20 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS The Company evaluates all Accounting Standard Updates ("ASUs") issued but not yet effective by FASB for consideration of their applicability. 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. 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. 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. F- 21 3. 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 March 31 2025 2024 Revenues $ 78,181 $ 49,131 Less: Royalty expense 24,243 7,693 License, participation and technology costs 7,118 4,582 Other direct operating costs 6,182 6,837 Payroll and related 16,900 17,471 Professional services 3,112 3,460 Advertising and marketing 1,385 582 Amortization and depreciation 3,797 3,771 Other general and administrative 7,520 6,410 Impairment of goodwill — 14,025 Total operating expenses 70,257 64,831 Operating income (loss) 7,924 ( 15,700 ) Interest expense ( 4,365 ) ( 1,066 ) Other income (expense) 311 ( 4,489 ) Income (loss) before income taxes 3,870 ( 21,255 ) Provision for income taxes ( 106 ) ( 10 ) Net income (loss) $ 3,764 $ ( 21,265 ) F- 22 4. OTHER INTERESTS CDF2 Holdings We indirectly own 100 % of the common equity of CDF2 Holdings, LLC (“CDF2 Holdings”), which was created for the purpose of capitalizing on the conversion of the exhibition industry from film to digital technology. CDF2 Holdings assists its customers in procuring the equipment necessary to convert their systems to digital technology by providing financing, equipment, installation and related ongoing services. CDF2 Holdings is a Variable Interest Entity (“VIE”), as defined in ASC 810, Consolidation. ASC 810 requires the consolidation of VIEs by an entity that has a controlling financial interest in the VIE which entity is thereby defined as the primary beneficiary of the VIE. To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, among other factors. Although we indirectly wholly own CDF2 Holdings, we, a third-party that also has a variable interest in CDF2 Holdings, and an independent third-party manager must mutually approve all business activities and transactions that significantly impact CDF2 Holdings’ economic performance. We have therefore assessed our variable interests in CDF2 Holdings and determined that we are not the primary beneficiary of CDF2 Holdings. As a result, CDF2 Holdings’ financial position and results of operations are not consolidated in our financial statements. In completing our assessment, we identified the activities that we consider most significant to the economic performance of CDF2 Holdings and determined that we do not have the power to direct those activities, and therefore we account for our investment in CDF2 Holdings under the equity method of accounting. As of March 31, 2025 and 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 $ 0.0 million and $ 0.5 million as of March 31, 2025 and 2024, respectively, which are included in accounts receivable, net on the accompanying Consolidated Balance Sheets. 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 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 . CONtv 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. CONtv is consolidated in our consolidated financial statements with the 15 % minority interest presented as a non-controlling interest. Roundtable On March 15, 2022, the Company entered into a stock purchase agreement with Roundtable Entertainment Holdings, Inc. (“Roundtable”) pursuant to which the Company purchased 0.5 thousand shares of Roundtable Series A Preferred Stock and warrants to purchase 0.1 thousand shares of Roundtable Common Stock (together, the “Roundtable Securities”). The Company paid the purchase price for the Roundtable Securities by issuing 16 thousand shares of Common Stock to Roundtable , after taking into account the June 2023 reverse stock split (further described in the Stockholders' Equity footnote) . The Company recorded $ 0.2 million for the purchase of the Roundtable Securities which is included in other long-term assets on the accompanying Consolidated Balance Sheets. The investment in the Roundtable Securities was made in connection with a proposed collaboration with Roundtable regarding production and distribution of streaming content including the launch of high profile branded enthusiast streaming channels. The Roundtable investment was accounted for using the cost method of accounting as we own less than 20 % of Roundtable and do not exert a significant influence over their operations. Our President and Chief Strategy Officer is on the Roundtable Board of Directors. F- 23 5. STOCKHOLDERS’ EQUITY COMMON STOCK Common Stock 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 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. All pre-funded and common warrants were issued as immediately exercisable. All pre-funded warrants were subsequently exercised in July 2023 for total proceeds of $ 0.5 thousand. All common warrants were issued as immediately exercisable and 2,654 thousand common warrants remain outstanding as of March 31, 2025. ATM Sales Agreement In July 2020, we entered into an At-the-Market sales agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”) and B. Riley FBR, Inc. (“B. Riley” and, together with A.G.P., the “Sales Agents”), pursuant to which the Company may offer and sell, from time to time, through the Sales Agents, shares of Common Stock at the market prices prevailing on Nasdaq at the time of the sale of such shares. The Company is not obligated to sell any shares under the ATM Sales Agreement. Any sales of shares made under the ATM Sales Agreement will be made pursuant to the 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. The Sales Agents’ obligations to sell shares under the Sales Agreement are subject to satisfaction of certain conditions, including the continuing effectiveness of the Registration Statement on Form S-3 (Registration No. 333-273098) (the “Registration Statement”) filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) on June 30, 2023 and declared effective by the SEC on January 25, 2024, and other customary closing conditions. The Company will pay the Sales Agents a commission of 3.00 % of the aggregate gross proceeds from each sale of shares and has agreed to provide the Sales Agents with customary indemnification and contribution rights. The Company has also agreed to reimburse the Sales Agents for certain specified expenses. The Company is not obligated to sell any shares under the Sales Agreement and has not sold any shares through the date of this report. F- 24 PREFERRED STOCK 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, 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 Awards issued under our 2000 Equity Incentive Plan (the “2000 Plan”) were in any of the following forms (or a combination thereof) (i) stock option awards; (ii) stock appreciation rights; (iii) stock or restricted stock or restricted stock units; or (iv) performance awards. The 2000 Plan provided for the granting of incentive stock options (“ISOs”) with exercise prices not less than the fair market value of our Common Stock on the date of grant. ISOs granted to shareholders having more than 10 % of the total combined voting power of the Company must have exercise prices of at least 110 % of the fair market value of our Common Stock on the date of grant. ISOs and non-statutory stock options granted under the 2000 Plan are subject to vesting provisions, and exercise is subject to the continuous service of the participant. The exercise prices and vesting periods (if any) for non-statutory options were set at the discretion of our Compensation Committee. The Company does not estimate forfeitures but recognizes forfeitures in the period in which they occur. 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: As of March 31, 2025 Min Max Options Outstanding Weighted Average Remaining Life in Years Weighted Average Exercise Price Aggregate Intrinsic Value $ 148.0 $ 148.0 250 0.25 $ 148 $ — 250 0.25 $ 148 $ — As of March 31, 2024 Min Max Options Outstanding Weighted Average Remaining Life in Years Weighted Average Exercise Price Aggregate Intrinsic Value $ 148.0 $ 148.0 250 1.25 $ 148 $ — $ 280.0 $ 488.0 642 0.52 345 — 892 0.72 $ 290 $ — 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. F- 25 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. Based on past practice and intent to settle these awards with shares of Class A common stock, the Company has determined that these awards should be classified in equity. The following weighted average assumptions were used to estimate the fair value of SARs granted, as follows: For the Year Ended March 31, 2024 Expected dividend yield $ — Expected equity volatility 107 % Expected term (years) 6.50 Risk-free interest rate 4.51 % - 3.82 % Exercise price $ 5.80 -$ 10.43 Market price per share $ 5.80 -$ 10.43 The weighted average fair value of outstanding grants made during the year ended March 31, 2024, was $ 4.99 per award. SARs outstanding under the 2017 Plan, along with the minimum and maximum strike price of each group, are as follows: As of March 31, 2025 Min Max SARs Outstanding (In thousands) Weighted Average Remaining Life in Years Weighted Average Exercise Price Aggregate Intrinsic Value (In thousands) $ 5.80 $ 12.80 628 6.92 $ 9.44 $ — $ 23.20 $ 29.40 98 4.12 27.77 — $ 39.40 $ 46.40 41 5.85 39.18 — 766 6.51 $ 13.36 $ — As of March 31, 2024 Min Max SARs Outstanding (In thousands) Weighted Average Remaining Life in Years Weighted Average Exercise Price Aggregate Intrinsic Value (In thousands) $ 5.80 $ 12.80 632 7.92 $ 9.45 $ — $ 23.20 $ 29.40 98 5.12 27.77 — $ 39.40 $ 46.40 46 6.96 40.15 — 776 7.51 $ 13.58 $ — Exercisable SARs under the 2017 Plan as of March 31, 2025 are as follows: SARs Exercisable (In thousands) Weighted Average Remaining Life in Years Weighted Average Exercise Price Aggregate Intrinsic Value (In thousands) 623 8.0 $ 15.04 $ — 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): F- 26 Year Ended March 31, 2025 SARs Outstanding March 31, 2024 776 Issued — Forfeited 10 Total SARs Outstanding March 31, 2025 766 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 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): Year Ended March 31, 2025 Weighted Average Grant Date Fair Value Aggregate Fair Value Outstanding March 31, 2024 — $ — $ — Issued 2,425 0.83 2,013 Forfeited ( 170 ) 0.83 ( 141 ) Outstanding March 31, 2025 2,255 $ 0.83 $ 1,872 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. F- 27 6. 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 March 31, 2025 2024 (in thousands, except shares and per share data) Numerator: Net income (loss) attributable to common stockholders and participating common warrant holders $ 3,246 $ ( 21,757 ) Less: earnings attributable to participating common warrant holders 468 — Net income (loss) attributable to common stockholders - basic and diluted $ 2,778 $ ( 21,757 ) Denominator: Weighted average shares of common stock - basic 15,813,590 12,253,293 Effect of dilutive common stock equivalents 2,004,838 — Weighted average shares of common stock - diluted 17,818,428 12,253,293 Earnings per share: Basic earnings (loss) per share $ 0.18 $ ( 1.78 ) Effect of dilutive common stock equivalents ( 0.02 ) — Diluted earnings (loss) per share $ 0.16 $ ( 1.78 ) 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 March 31, 2025 2024 Options to purchase common stock 250 892 Stock appreciation rights 766,244 775,701 Warrants to purchase common stock 2,654,167 2,666,667 F- 28 7. DEBT Line of Credit Facility 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. 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. Term Loan 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 . F- 29 8. COMMITMENTS AND CONTINGENCIES Operating Leases 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 . The table below presents the lease-related assets and liabilities recorded on our Consolidated Balance Sheets (in thousands): Classification on the Balance Sheet 2025 2024 Assets Noncurrent Other long-term assets $ 435 $ 834 Liabilities Current Operating leases liabilities 187 401 Noncurrent Operating leases liabilities, net of current 275 462 $ 462 $ 863 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, Operating Lease Commitments 2026 200 2027 210 2028 72 Total lease payments $ 482 Less imputed interest ( 20 ) Total $ 462 For leases which have a term of twelve months or less and do not contain an option to extend which the Company is reasonably certain to extend the term, the Company has elected to not apply the recognition provisions of ASC 842 and recognizes these expenses on a straight-line basis over the term of the agreement. Since our operating leases do not provide a readily determinable implicit rate, the Company estimated its incremental borrowing rate to discount the lease payments based on information available at Cineverse's lease commencement date. 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. Commitments In the ordinary course of business, the Company enters into contractual arrangements, from time to time, under which it agrees to commitments with content providers for certain rights which are in production or have not yet been completed, delivered to, and accepted by the Company. Based on the nature of these agreements, which may be subject to delay or project abandonment, there is uncertainty with the amounts and timing of its commitments. Certain of these advances are eligible to be recouped through future revenue sharing arrangements. Based on the F- 30 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, 2026 2027 2028 2029 2030 Total Project Commitments $ 9,047 $ 2,341 $ 974 $ 288 $ — F- 31 9. 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): For the Fiscal Year Ended March 31, 2025 2024 Federal: Current $ — $ — Deferred — — Total federal $ — $ — State: Current $ 62 $ ( 11 ) Deferred — — Total state $ 62 $ ( 11 ) Foreign: Current $ 51 $ 35 Deferred ( 7 ) ( 14 ) Total foreign $ 44 $ 21 Income tax expense $ 106 $ 10 Net deferred taxes consisted of the following (in thousands) : As of March 31, 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 16,216 $ 20,945 Stock-based compensation 2,198 3,724 Intangibles 3,857 6,423 Accrued liabilities 441 535 Capital loss carryforward 4,637 3,924 Investments — 1,977 Non-deductible interest expense 3,741 4,213 Other 204 240 Total deferred tax assets before valuation allowance 31,294 41,981 Less: Valuation allowance ( 31,141 ) ( 41,668 ) Total deferred tax assets after valuation allowance $ 153 $ 312 Deferred tax liabilities: Right of use asset $ ( 102 ) $ ( 248 ) Depreciation and amortization ( 30 ) ( 50 ) Total deferred tax liabilities ( 132 ) ( 298 ) Net deferred tax $ 21 $ 14 We have provided a valuation allowance to our net deferred tax assets as of March 31, 2025 and 2024. We are required to recognize all or a portion of our deferred tax assets if we believe that it is more likely than not that such assets will be realized, given the weight of all available evidence. We assess the realizability of the deferred tax assets at each interim and annual balance sheet date. 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 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. This F- 32 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. U.S. federal and state net operating loss carryforwards of approximately $ 20.0 and $ 68.6 million, respectively, generally begin to expire in 2027. U.S. 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. 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. statutory federal tax rate and our effective tax rate are as follows: For the Year Ended March 31, 2025 2024 Provision at the U.S. statutory federal tax rate 21.0 % 21.0 % State income taxes, net of federal benefit 2.6 % 8.7 % Change in valuation allowance ( 44.3 )% ( 22.5 )% Non-deductible expenses 5.9 % ( 1.0 )% Deferred tax adjustments 17.3 % — % Goodwill impairment — % ( 6.3 )% Other 0.2 % — % Income tax expense (benefit) 2.7 % ( 0.1 )% We file income tax returns in the U.S. federal jurisdiction, various U.S. states, and India. 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. For U.S. 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. For Indian income tax purposes, our fiscal 2022 through 2025 tax years remain open for examination by the tax authorities. 10. SUBSEQUENT EVENTS 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”) F- 33 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. F- 34 PART II. OTHER INFORMATION ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.