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Item 7. Management’s Discussion and Analysis

2026-06-26 compared with 2025-06-30 · 115 added, 105 removed, 153 unchanged (59% of the section changed)

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These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our control that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

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;

Cineverse is a premier technology and entertainment company with its core streaming business operating (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;

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The Company’s streaming technology platform, known as Matchpoint, 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.

Through the integration of Giant Worldwide, Matchpoint has expanded its automated media services ecosystem by adding audience development, customer acquisition, and direct-to-consumer marketing capabilities supported by longstanding studio relationships and performance marketing expertise.

The Company’s Connected TV (“CTV”) monetization platform, IndiCue, provides proprietary location-based digital advertising technology solutions that offer advertisers a targetable, measurable, and accountable way to utilize CTV media and data solutions at scale.

The Company also provides solutions for media owners, including an advertising platform for DOOH ("Digital Out-of-Home") networks that enables users to manage advertising inventory, optimize sales, and monetize unsold inventory.

Risks and Uncertainties

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We have incurred net losses historically.

For the year ended March 31, 2025, we have net income attributable to common stockholders of $3.2 million.

As of March 31, 2025, we had an accumulated deficit of $500.9 million and net cash provided by operations for the fiscal year ended March 31, 2025 was $17.4 million.

Although we have positive working capital of $3.6 million as of March 31, 2025, we 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.

As of March 31, 2025, $0 was outstanding on the Line of Credit Facility.

For the year ended March 31, 2026, we have net loss attributable to common stockholders of $(9.2) million.

As of March 31, 2026, we had an accumulated deficit of $510.1 million and net cash used in operations for the fiscal year ended March 31, 2026 was $26.5 million.

We have negative working capital of $(12.2) million as of March 31, 2026, we 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 (the "Line of Credit Facility") currently provides for borrowings of up to $12.5 million guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and our subsidiaries’ assets.

The facility includes provisions that allow for an increase in total borrowing capacity up to $15.0 million, subject to lender approval.

As of March 31, 2026, $9.4 million was outstanding on the Line of Credit Facility.

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, to maintain certain minimum cash on hand, and to report financial information to our lender on a periodic basis.

Please see Note 5 - Debt for further information regarding the Company's Line of Credit Facility.

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

Loan Agreement”).

The T3 Loan Agreement provides for a term loan with a principal amount not to exceed $3,666,000 (the “T3 Loan”), and a maturity date of April 1, 2025, unless extended for 120 days under certain conditions.

The T3 Loan bears no interest until the maturity date other than an interest advance equal to $576,000 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.

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

After the principal of the T3 Loan is paid in full, the T3 Lender will be entitled to receive 15% of all royalties earned by the Company on the Film under its distribution agreements for the Film until the T3 Lender has received 1.75 times the full commitment amount of $3,666,000, consisting of the principal amount plus interest and fees advanced to T3 Borrower ("Participation Interest"), plus any extension interest, if applicable.

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 the T3 Borrower from the distribution of the Film.

In April 2025, the Company paid the T3 Lender $700,000 in Participation Interest.

On May 3, 2024, 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”).

On February 17, 2026, the Company sold in a public offering an aggregate of 1,725,000 shares of Common Stock (the “Offered Shares”) at a price of $2.00 per share, for aggregate gross proceeds of approximately $3.45 million, before deducting underwriting commissions and expenses payable by the Company The Offered Shares were sold pursuant to an Underwriting Agreement with The Benchmark Company, LLC and pursuant a prospectus and prospectus supplement which are part of the Company’s shelf registration statement on Form S-3 (File No.

333-273098) filed with the SEC.

On February 12, 2026, the Company issued and sold convertible notes in the aggregate principal amount of $13,000,000 (each, a “Note”) to certain lenders (individually, an “Investor” and collectively, the “Investors”) pursuant to those certain note purchase agreements (each, a “Purchase Agreement”), dated February 12, 2026, between the Company and each Investor.

The Notes mature on the earlier to occur of (i) the four-year anniversary of issuance and (ii) an event of default (such date, the “Maturity Date”).

The Notes bear interest at a rate of 9% per annum payable in cash or, as to a portion, in shares of Common Stock in the holder’s discretion.

At any time after issuance of the Notes, the Investors may convert their Notes, in whole or in part, into shares of Common Stock, in accordance with the terms of the Notes at a conversion price per share of $2.00 (the “Conversion Price”), subject to customary adjustments upon any stock split, stock dividend, stock combination, recapitalization or similar events.

The Company can require conversion in tranches of up to approximately 15% of the original principal amount of the Notes during each of the six-month periods beginning July 1, 2026 and ending December 31, 2028, with any unconverted tranches available on a cumulative basis in future tranches.

The Notes may be prepaid by paying 100% of the outstanding principal amount, interest on the outstanding principal amount through the earlier of the Maturity Date or the date that is 24 months from the date of prepayment, and warrants (the “Warrants”) to purchase the number of shares of Common Stock into which the principal amount then outstanding would be convertible at the Conversion Price, with such warrants having an exercise price equal to such Conversion Price and a term that ends on the Maturity Date.

The Notes rank junior to secured debt of the Company, including the Line of Credit Facility.

On May 3, 2024, the Company entered into an at-the-market, or ATM, 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 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.

In June, 2023, the Company issued and sold 2,150,000 shares of Common Stock, 516,667 prefunded warrants, and warrants to purchase up to 2,666,667 shares of Common Stock at a combined public offering price of $3.00 per share and accompanying warrant for aggregate gross proceeds of approximately $7.4 million, after deducting placement agent fees and other offering expenses in the amount of $0.6 million.

The warrants have an exercise price of $3.00 per share, were exercisable immediately and will expire five years from issuance.

The Company received $2.999 per share for the pre-funded warrants, with the remaining $0.001 due at the time of exercise.

All 516,667 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.

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

Riley FBR, Inc.

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

For the year ended March 31, 2024, the Company sold 176,751 shares for $1.1 million in net proceeds, after deduction of commissions and fees.

The ATM Sales Agreement terminated on January 6, 2024.

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

During the year ended March 31, 2026, the Company sold 397 thousand shares for net proceeds of $1.0 million, after deduction of commissions and fees.

The T3 Loan Agreement provides for a term loan with a principal amount not to exceed $3,666,000 (the “T3 Loan”), and a maturity date of April 1, 2025.

The T3 Loan incurred no interest until the maturity date other than an interest advance equal to $576,000 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 was amortized to interest expense and increase the loan amount over its term.

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, including interest of $576 thousand, was repaid in advance during the year ended March 31, 2025.

After the principal of the T3 Loan was paid in full, the T3 Lender was 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 received 1.75 times the full commitment amount of $3,666,000, consisting of the principal amount plus interest and fees advanced to T3 Borrower ("Participation Interest"), plus any extension interest.

The T3 Loan was 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 the T3 Borrower from the distribution of the Film.

During the fiscal year ended March 31, 2026, the Company paid the T3 Lender $700,000 in Participation Interest

During the year ended March 31, 2026, the Company negotiated a reduction to the accrued Participation Interest of $375 thousand and made a final payment of $944 thousand to the T3 Lender.

The $375 thousand reduction to Participation Interest was recorded as a reduction to interest expense in our Consolidated Statement of Operations for the year ended March 31, 2026.

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

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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.

Management's plans with respect to the Company's recurring net losses and net operating cash outflows also include but are not limited to our effort in increasing revenue from existing services as well as offering new services, which may result in additional income from operations.

Should management be unsuccessful in executing these plans, additional capital resources will be necessary.

There can be no assurance that resources under our Line of Credit Facility or from additional debt or equity resources will be available on acceptable terms, if at all.

We believe our cash and cash equivalents and availability under our Line of Credit Facility as of March 31, 2026 will be sufficient to support our operations for at least twelve months from the filing of this report.

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In the years ended March 31, 2026 and 2025, no impairment charges were recorded to intangible assets.

Business Combinations

We record tangible and intangible assets acquired and liabilities assumed in business combinations under the purchase method of accounting.

Amounts paid for each acquisition are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition.

We then allocate the purchase price in excess of net tangible assets acquired to identifiable intangible assets based on detailed valuations that use information and assumptions provided by management.

We allocate any excess purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed to goodwill.

If the fair value of the assets acquired exceeds the purchase price, the excess is recognized as a gain.

Significant management judgments and assumptions are required in determining the fair value of acquired assets and liabilities, particularly acquired intangible assets.

The valuation of purchased intangible assets is based upon estimates of the future performance and cash flows from the acquired business.

Each asset is measured at fair value from the perspective of a market participant.

Critical estimates in valuing purchased technology and customer lists include future cash flows that we expect to generate from the acquired assets.

If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could experience impairment charges which could be material.

In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense.

If our estimates of the economic lives change, depreciation or amortization expenses could be accelerated or slowed.

If different assumptions are used, it could materially impact the purchase price allocation and adversely affect our results of operations, financial condition and cash flows.

REVENUE RECOGNITION

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• recognizing revenue when, or as, we satisfy performance obligations by transferring the promised goods or services.

We recognize revenue in the amount that reflects the consideration we expect to receive in exchange for the services provided, sales of physical products (DVD’s and Blu-ray Discs) or when the content is available for subscription on the digital platform or available on the point-of-sale for transactional and video on demand services which is when the control of the promised products and services is transferred to our customers and our performance obligations under the contract have been satisfied.

We recognize revenue in the amount that reflects the consideration we expect to receive in exchange for the services provided, sales of physical products or when the content is available for subscription on the digital platform or available on the point-of-sale for transactional and video on demand services which is when the control of the promised products and services is transferred to our customers and our performance obligations under the contract have been satisfied.

Revenues that might be subject to various taxes are recorded net of transaction taxes assessed by governmental authorities, such as sales value-added taxes and other similar taxes.

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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 performance obligation is satisfied, which is when the content is available for subscription on the digital platform, 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.

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The Company may 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.

Advertising technology revenue is derived from two principal revenue streams:

Ad Network revenue and Ad Serving revenue.

• For Ad Network revenue, at the beginning of each advertising campaign, the client signs a contract and or insertion order which stipulates the (i) length of the campaign, (ii) number of impressions purchased, and (iii) targeted locations/demographics.

Impressions are counted each time a client’s advertising tag is rendered on a procured advertising platform.

The transaction price for these impressions is determined upfront as a contracted cost per mille (“CPM”) rate.

Revenue is recognized at a point in time when the billable impression is delivered, meaning the ad has been successfully served in line with the contract and measurement standards based on the agreed CPM.

• Ad serving software represents instances where clients use the Company’s system as a technology platform for managing and delivering their advertising content across designated media channels.

customer signs a contract that grants them access to the “marketplace” and stipulates (i) length of contract and (ii) fees associated with their purchase of impressions.

Terms are based on a fixed monthly fee and a usage-based pricing model that includes charges based on queries per second (QPS), as well as contractually specified CPM rates tied to agreed-upon impression volumes.

The Company recognizes fixed monthly fee revenue over time as access is provided to the customer and at a point in time for usage-base revenue for amounts delivered in a given month.

Media services revenue is derived from quality control, packaging, and localization work performed on behalf of studios for platform distribution, as specified work and prices are set forth in purchase orders.

The Company recognizes revenue from these services as the services are completed.

Principal Agent Considerations

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Shipping and Handling

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

Shipping and handling costs are incurred to move physical goods 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.

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We record deferred revenue (contract liability) when cash payments are received or due in advance of our performance, even if the amounts are refundable.

Deferred revenue includes payments related to the sale of DVDs with future release dates or subscription dues paid in advance.

Deferred revenue includes payments related to the sale physical goods with future release dates or subscription dues paid in advance.

Deferred revenue that is short term in nature, carried a balance as of March 31, 2026 and 2025 of $0.1 million and $0.2 million, respectively.

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Base distribution

Advertising technology and services

Podcast and other

Media services

Other non-recurring

Total Revenue

For the year ended March 31, 2025, the Company's revenue increased by $29.1 million.

Streaming and digital revenue improved by $7.1 million, primarily due to:

(i) $3.3 million license fee revenue recorded during the period related to the licensing of the Dog Whisperer and Terrifier 3 contents, and (ii) net favorable impact of other content releases' timing relative to the same period in the prior year.

Further, the Company continued to see the benefits from recent years' acquisitions, such as DMR, Fandor and Bloody Disgusting, which have contributed value-accretive libraries, distribution platforms and technologies.

Base distribution revenue increased by $23.4 million mainly due to Terrifier 3 theatrical release in October 2024.

Podcast and other revenue grew by $2.2 million primarily due to revenue increases from direct advertising.

The decrease in other and non-recurring revenue related to the run-off of the Company's legacy digital cinema business.

The Company does not anticipate material future revenue related to this business.

For the year ended March 31, 2026, the Company's revenue declined by $12.4 million.

Streaming and digital revenue declined by $4.2 million, primarily due to the strong digital release of Terrifier 3, which generated $5.9 million in the prior period, partially offset by current year release of Return to Silent Hill, which generated $1.0 million in revenue.

Base distribution revenue decreased by $19.1 million, primarily due to the successful theatrical performance of Terrifier 3 , which generated $23.1 million in revenue in the prior year, as well as $2.6 million from related physical media sales in the prior period.

This decline was partially offset by current year theatrical revenue of $4.0 million from releases such as Toxic Avenger , Silent Night , Deadly Night and Return to Silent Hill .

The Company also added new revenue streams of Advertising technology and services, as well as Media Services through the acquisitions of IndiCue and Giant Worldwide during the fiscal year ended March 31, 2026.

These acquisitions contributed $11.6 million in revenue, representing 18% of total revenue.

Direct Operating Expenses

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Direct operating expenses

The increase of $19.6 million in Direct Operating Expenses for the year ended March 31, 2025, compared to the same period of 2024 primarily relates to the impact of Terrifier 3.

Specifically, the increase is due to the net effect of the following changes:

(i) $16.9 million higher royalty expense, (ii) $0.9 million increase in marketing costs, (iii) $1.0 million theatrical distribution fees to our service provider, (iv) $1.8 million higher license participations and advertising pool impression costs, offset by (v) $1.5 million lower SaaS subscription fees.

Direct operating margin % declined from 61% for the year ended March 31, 2024 to 50% for the year ended March 31, 2025 primarily due to $3.8 million of non-recurring revenue in the prior year related to run-off of the Company's legacy digital cinema business which had a 100% direct operating margin and theatrical revenues related to Terrifier 3 that had direct operating margins lower than 50%.

The decrease of $8.1 million in Direct Operating Expenses for the year ended March 31, 2026, primarily relates to lower royalty costs compared to the same period of 2025, which included $17 million royalty expenses for Terrifier 3 .

This was partially offset by increased payments due to supply partners of $6.4 million, as well as theatrical distribution fees related to current year releases, higher licensor costs, and the allowance applied against certain content advances.

Selling, General and Administrative Expenses

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Share-based compensation

Marketing expenses

Other operating expenses

Selling, General and Administrative

Selling, general and administrative expenses for the year ended March 31, 2025 decreased by $0.2 million relative to the year ended March 31, 2024, primarily due to:

(i) lower compensation expense due to change in the Company's employment mix as a result of a greater investment in Cineverse Services India, and (ii) lower severance costs, offset by higher share-based compensation.

Corporate expenses declined by $0.4 million primarily decreased due to a corporate focus on reducing third-party costs due to the Company's cost-saving initiatives, including consulting and service providers and legal costs.

Selling, general and administrative expenses for the year ended March 31, 2026 increased by $15.6 million compared to the year ended March 31, 2025, primarily due to $7.1 million of higher marketing expenses associated with our increased number of theatrical offerings in fiscal year 2026.

Additionally, $1.2 million of marketing expenses were included within Direct operating expenses during the prior year.

Corporate expenses increased by $2.8 million reflecting higher professional services and legal expenses associated with strategic business and content acquisitions.

Compensation expenses increased by $2.8 million due to higher employee headcount.

Other operating expenses increased by $1.9 million primarily due to higher administrative costs.

Depreciation and Amortization

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Depreciation of property and equipment

Depreciation and Amortization

Amortization and depreciation expense have remained relatively consistent for the year ended March 31, 2025, compared to the year ended March 31, 2024, as the Company's intangible focused investment mix has remained consistent over the past year.

Goodwill impairment

No impairment was recognized for the year ended March 31, 2025.

For the year ended March 31, 2024, the Company recognized an impairment on its carrying value of goodwill in the amount of $14.0 million following a sustained depressed share price for the Company's fiscal year 2024, which was deemed a triggering event.

In accordance with the process outlined in ASC 350, the Company first determined that its finite long-lived assets were recoverable.

The impairment was quantified using a market multiple approach which utilized information from comparable businesses.

Total Depreciation and Amortization

Amortization increased by $2.4 million for the year ended March 31, 2026, compared to the year ended March 31, 2025, primarily due to increased capitalized content costs and internally developed software assets being placed into service.

Bargain purchase gain

For the year ended March 31, 2026, a bargain purchase gain was recognized related to the acquisition of Giant Worldwide, in the amount of $4.3 million.

The bargain purchase was recognized as a result of the fair value of the assets acquired exceeding the consideration transferred, as a result of the seller's forced sale of Giant Worldwide, stemming from a bankruptcy-related proceeding.

Interest Expense

Interest expense increased by $3.3 million to $4.4 million for the year ended March 31, 2025 primarily due to:

(i) $2.7 million interest participation relating to the T3 Loan (which was obtained and repaid during the fiscal year), (ii) higher drawings on our line of credit and (ii) increased interest rates in 2024.

Gain (loss) from equity investment in Metaverse

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 220,550,005 of its original 362,307,397 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.

During the year ended March 31, 2025, we sold our remaining 141,757,392 Metaverse shares, resulting in a gain of $0.2 million.

Employee Retention Tax Credit

The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") provided an employee retention credit that 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, in the amount of $2.5 million.

As of March 31, 2025 and 2024, the tax credit receivable of $0.1 and $1.7 million, respectively, has been included in the Employee retention tax credit line 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.

Income Tax Expense

Interest expense decreased by $3.9 million to $0.5 million for the year ended March 31, 2026 primarily due to higher participation interest in the prior year related to the T3 Loan, which was obtained and repaid during the prior fiscal year, along with lower interest rates in the current fiscal year.

Income Tax (Benefit) Expense

For the year ended March 31, 2026, the Company had an income tax (benefit) of ($2.8) million, which represented a ($2.8) million release of the valuation allowance related to the IndiCue acquisition, a ($75) thousand deferred tax (benefit) related to changes in the Indian deferred tax asset, net of $25 thousand of current U.S.

state income taxes and $43 thousand of current Indian income taxes.

For the year ended March 31, 2025, the Company had income tax expense of $106 thousand consisting of $62 thousand of current U.S.

state income taxes, $51 thousand of current foreign income taxes, offset by the recognition of a $7 thousand deferred foreign tax benefit

state income taxes, $51 thousand of current Indian income taxes, offset by the recognition of a $7 thousand deferred Indian tax benefit.

Adjusted EBITDA

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Adjusted EBITDA is not a measurement of financial performance under GAAP and may not be comparable to other similarly titled measures of other companies.

We use Adjusted EBITDA as a financial metric to measure the financial performance of the business because management believes it provides additional information with respect to the performance of its fundamental business activities.

We use Adjusted EBITDA as a financial metric to measure the financial performance of the business because management believes it provides additional information with respect

to the performance of its fundamental business activities.

For this reason, we believe Adjusted EBITDA will also be useful to others, including its stockholders, as a valuable financial metric.

We present Adjusted EBITDA because we believe that Adjusted EBITDA is a useful supplement to net income (loss) from continuing operations as an indicator of operating performance.

We present Adjusted EBITDA because we believe that Adjusted EBITDA is a useful supplement to net (loss) income from continuing operations as an indicator of operating performance.

We also believe that Adjusted EBITDA is a financial measure that is useful both to management and investors when evaluating our performance and comparing our performance with that of our competitors.

We also use Adjusted EBITDA for planning purposes and to evaluate our financial performance because Adjusted EBITDA excludes certain incremental expenses or non-cash items, such as stock-based compensation charges, that we believe are not indicative of our ongoing operating performance.

We believe that Adjusted EBITDA is a performance measure and not a liquidity measure, and therefore a reconciliation between net income from continuing operations and Adjusted EBITDA has been provided in the financial results.

Adjusted EBITDA should not be considered as an alternative to income from operations or net income from continuing operations as an indicator of performance or as an alternative to cash flows from operating

activities as an indicator of cash flows, in each case as determined in accordance with GAAP, or as a measure of liquidity.

We believe that Adjusted EBITDA is a performance measure and not a liquidity measure, and therefore a reconciliation between net loss from continuing operations and Adjusted EBITDA has been provided in the financial results.

Adjusted EBITDA should not be considered as an alternative to loss from operations or net loss from continuing operations as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of cash flows, in each case as determined in accordance with GAAP, or as a measure of liquidity.

In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows.

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These non-GAAP measures should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

Following is the reconciliation of our consolidated net income (loss) to Adjusted EBITDA (in thousands):

Following is the reconciliation of our consolidated net (loss) income to Adjusted EBITDA (in thousands):

For the Fiscal Year Ended

Net income (loss)

Income tax expense

Net (loss) income

Income tax (expense) benefit

Depreciation and amortization (1)

Interest expense

(Gain) loss from equity investment in Metaverse

Gain on bargain purchase

Change in fair value of acquisition-related deferred consideration

Stock-based compensation

Other expense (income), net

Net income attributable to noncontrolling interest

Goodwill impairment

Transition-related costs (2)

Net loss attributable to noncontrolling interest

Acquisition-related costs

Employee severance costs

Adjusted EBITDA

(1) - Includes $341 of amortization included in direct operating expenses on our Consolidated Statements of Operations for the year ended March 31, 2025.

(2) - Primarily employee severance costs and expenses associated with the wind-down of our legacy Digital Cinema operations.

(1) - Includes $383 thousand and $341 thousand of amortization included in direct operating expenses on our Consolidated Statements of Operations for the years ended March 31, 2026 and 2025, respectively.

Recent Accounting Pronouncements

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For the Fiscal Year Ended

Net cash provided by (used in) operating activities

Net cash (used in) provided by operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

Net Change in Cash and Cash Equivalents

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Cashflows for the current fiscal year

For the year ended March 31, 2026, the change in net cash used in operating activities was $26.5 million, primarily driven by a net loss of $8.7 million, increases in working capital, and investments in content advances, partially offset by non-cash charges including depreciation and amortization and stock-based compensation.

Cash used in investing activities was $14.3 million, was primarily driven by business acquisitions and expenditures for long-lived assets.

Net cash provided by financing activities of $30.2 million was primarily attributable to borrowings under the Company's line of credit facility, proceeds from the issuance of convertible notes, warrant exercises and common stock issuances, partially offset by repayments under the line of credit facility, tax withholdings related to restricted stock units, debt financing fees and deferred acquisition consideration payments.

Cashflows for the previous fiscal year

For the year ended March 31, 2025, the change in net cash provided by operating activities was primarily driven by a net income of $3.8 million, increases from the Company's operating assets and liabilities ($7.0 million), and add-backs relating to non-cash items, particularly:

(i) depreciation and amortization of $3.8 million, and (ii) stock-based compensation of $1.9 million.

Cash used in investing activities of $0.6 million were driven by the acquisition of long-lived assets, partially offset by cash received from the sale of Company shares in Metaverse.

Cash used in financing activities of $8.0 million was primarily due to the net $6.4 million repayments of the Line of Credit Facility, repayment of our $3.1 million T3 Loan (which was obtained during the 2025 fiscal year), $0.4 million net payment of deferred acquisition consideration, $0.6 million final earnout payment and $0.2 million used to repurchase outstanding shares.

Cashflows for the previous fiscal year

For the year ended March 31, 2024, the change in net cash used in operating activities was primarily driven by a net loss of $21.3 million and decreases from the Company's operating assets and liabilities ($11.5 million), offset by the non-cash goodwill impairment charge of $14.0 million, depreciation and amortization of $3.8 million, and the non-cash change in the valuation of the Company's investment in Metaverse which is recognized in earnings ($4.3 million).

Cash flows used in investing activities of $0.5 million were driven by the acquisition of long-lived assets, partially offset by cash received from the sale of Company shares in Metaverse.

Cash flows provided by financing activities were driven by issuance of the Company's Class A common stock in the first quarter of fiscal year 2024 ($8.5 million) and a net increase of $1.4 million funds, following the Company's expansion of its revolving line of credit from $5.0 million to $7.5 million in February 2024.

Contractual Obligations

The following table summarizes our significant recognized contractual obligations as of March 31, 2025 ( in thousands ):

Cash used in investing activities of $0.6 million were driven by the acquisition of long-lived assets, partially offset by cash received from the sale of equity investment securities in Metaverse, an investment formerly held by the Company.

Cash used in financing activities of $8.0 million was primarily due to the net $6.4 million repayments of the Line of Credit Facility, repayment of our $3.1 million T3 Loan (which had been obtained during the 2025 fiscal year), $0.4 million net payment of deferred acquisition consideration, $0.6 million final earnout payment and $0.2 million used to repurchase outstanding shares.

Contractual Obligations

Operating lease obligations

In addition, the Company presents its unrecognized commitments to content partners in the notes to the Financial Statements, Note 8 - Commitments and Contingencies .

The Company presents its recognized and unrecognized commitments in the notes to the Financial Statements, Note 8 - Commitments and Contingencies .

The timing of movie and streaming content releases can have a significant effect on our results of operations, and the results of one quarter are not necessarily indicative of results for the next quarter or any other quarter.

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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 7. Management’s Discussion and Analysis