{"url_path":"/sec/cnvs/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-26","source_url":"https://www.sec.gov/Archives/edgar/data/1173204/0001193125-26-284027-index.html","accession_number":"0001193125-26-284027","cik":"0001173204","ticker":"CNVS","issuer_name":"Cineverse Corp.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1173204/0001193125-26-284027-index.html","primary_entity_key":"0001173204","primary_entity_name":"Cineverse Corp."},"word_count":16822,"has_tables":true,"body_markdown":"ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA\n\nCineverse Corp.\n\nINDEX TO CONSOLIDATED FINANCIAL STATEMENTS\n\n[Report of Independent Registered Public Accounting Firm (PCAOB ID# 274)](#report_of_independet)\n\nF-1\n\n[Consolidated Balance Sheets at March 31, 2026 and 2025](#balance_sheets)\n\nF-4\n\n[Consolidated Statements of Operations for the fiscal years ended March 31, 2026 and 2025](#statements_of_operations)\n\nF-5\n\n[Consolidated Statements of Comprehensive (Loss) Income for the fiscal years ended March 31, 2026 and 2025](#comprehensive_income)\n\nF-6\n\n[Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2026 and 2025](#cash_flow)\n\nF-7\n\n[Consolidated Statements of Equity for the fiscal years ended March 31, 2026 and 2025](#statements_of_equity)\n\nF-10\n\n[Notes to Consolidated Financial Statements](#notes_to_consolidated)\n\nF-11\n\n30\n\n \n\nREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n\n \n\n \n\nTo the Board of Directors and Stockholders of\n\nCineverse Corp.\n\n \n\n \n\nOpinion on the Financial Statements\n\n \n\nWe have audited the accompanying consolidated balance sheets of Cineverse Corp. (the “Company”) as of March 31, 2026 and 2025, and the related consolidated statements of operations, comprehensive income, 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, 2026 and 2025, 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.\n\n \n\nBasis for Opinion\n\n \n\nThese 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.\n\n \n\nOur 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.\n\n \n\nCritical Audit Matters\n\n \n\nThe critical audit matters communicated below are matters 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) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matters do 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 a separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.\n\n \n\nRevenue recognition – determination of principal versus agent\n\n \n\nAs 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.\n\nF-1\n\n \n\n \n\nWe 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.\n\n \n\nAddressing 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.\n\n \n\nValuation of Intangible Assets Acquired in Business Combinations and the Related Bargain Purchase Gain\n\n \n\nAs disclosed in Note 10 to the financial statements, the Company completed two business combinations during the year ended March 31, 2026. The business combinations were accounted for in accordance with Financial Accounting Standards Board (\"FASB\") Accounting Standards Codification (\"ASC\") Topic 805, Business Combinations. Accordingly, the purchase consideration for each acquisition was allocated to the assets acquired and liabilities assumed based on their respective fair values, including acquired intangible assets aggregating to $26.0 million. For one of the acquisitions, the fair value of the net identifiable assets acquired exceeded the purchase consideration, resulting in the recognition of a bargain purchase gain of $4.25 million.\n\n \n\nThe Company valued the acquired intangible assets, comprised of trade names and trademarks, customer relationships, software, and the preferred partner medallions, which are preferred delivery partner relationships with major downstream streaming and digital distribution platforms, at fair value as of the respective acquisition dates using income approaches. The methods used to estimate fair value required management to make significant estimates and assumptions related to forecasts of future cash flows, revenue growth rates, discount rates, royalty rates, and customer attrition rates.\n\n \n\nWe identified the valuation of intangible assets acquired in business combinations, and the related bargain purchase gain, as a critical audit matter due to the complexity and significant estimation uncertainty in determining the fair values of the identified intangible assets. This estimation uncertainty was driven primarily by the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired businesses and by the limited historical data on which to base those assumptions. The bargain purchase gain also required a high degree of judgement, as the recognition and measurement of the gain was directly dependent on the fair values assigned to the intangible assets and other acquired assets and assumed liabilities, and required management to reassess whether all assets acquired and liabilities assumed had been identified and appropriately measured. 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.\n\n \n\nAddressing 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 the Company’s process and controls over accounting for business combinations, including process and controls over the development of the significant assumptions used to value the acquired intangible assets and controls over management's reassessment supporting recognition of the bargain purchase gain; (ii) with the assistance of professionals with specialized skill and knowledge, we evaluated the appropriateness of the valuation models and the reasonableness of the significant assumptions, including projected revenues, discount rates, royalty rates, and attrition rates, by comparing them to historical results and to industry and market data; and (iii) we tested the completeness, accuracy,\n\nF-2\n\n \n\nand relevance of the underlying data used in the models, and assessed whether the estimated future cash flows were consistent with evidence obtained in other areas of the audit.\n\n \n\n \n\n/s/ EisnerAmper LLP\n\n \n\nWe have served as the Company’s auditor since 2004.\n\n \n\nEISNERAMPER LLP\n\nIselin, New Jersey\n\nJune 26, 2026\n\nF-3\n\n \n\nCineverse Corp.\n\nCONSOLIDATED BALANCE SHEETS\n\n(In thousands, except for share and per share data)\n\n \n\n \n\n \n\nAs of March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nASSETS\n\n \n\nCurrent Assets\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n$\n\n3,387\n\n \n\n \n\n$\n\n13,941\n\n \n\nAccounts receivable, net of allowance for credit losses of $622 and $307, respectively\n\n \n\n \n\n38,604\n\n \n\n \n\n \n\n15,752\n\n \n\nContent advances, net allowance of $5,503 and $4,818, respectively\n\n \n\n \n\n7,507\n\n \n\n \n\n \n\n6,736\n\n \n\nOther current assets\n\n \n\n \n\n1,280\n\n \n\n \n\n \n\n1,652\n\n \n\nTotal current assets\n\n \n\n \n\n50,778\n\n \n\n \n\n \n\n38,081\n\n \n\nProperty and equipment, net\n\n \n\n \n\n3,906\n\n \n\n \n\n \n\n2,876\n\n \n\nIntangible assets, net\n\n \n\n \n\n44,114\n\n \n\n \n\n \n\n18,168\n\n \n\nGoodwill\n\n \n\n \n\n21,218\n\n \n\n \n\n \n\n6,799\n\n \n\nContent advances, net of current portion\n\n \n\n \n\n8,215\n\n \n\n \n\n \n\n4,053\n\n \n\nOther long-term assets, net\n\n \n\n \n\n2,050\n\n \n\n \n\n \n\n2,539\n\n \n\nTotal Assets\n\n \n\n$\n\n130,281\n\n \n\n \n\n$\n\n72,516\n\n \n\nLIABILITIES AND STOCKHOLDERS’ EQUITY\n\n \n\nCurrent Liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\nAccounts payable and accrued expenses\n\n \n\n$\n\n39,351\n\n \n\n \n\n$\n\n31,109\n\n \n\nLine of credit, net\n\n \n\n \n\n9,435\n\n \n\n \n\n \n\n—\n\n \n\nDeferred consideration\n\n \n\n \n\n13,800\n\n \n\n \n\n \n\n2,956\n\n \n\nCurrent portion of operating lease liabilities\n\n \n\n \n\n298\n\n \n\n \n\n \n\n187\n\n \n\nDeferred revenue\n\n \n\n \n\n125\n\n \n\n \n\n \n\n183\n\n \n\nTotal current liabilities\n\n \n\n \n\n63,009\n\n \n\n \n\n \n\n34,435\n\n \n\nOperating lease liabilities, net of current portion\n\n \n\n \n\n105\n\n \n\n \n\n \n\n275\n\n \n\nConvertible notes payable, net\n\n \n\n \n\n12,545\n\n \n\n \n\n \n\n—\n\n \n\nEarnout consideration\n\n \n\n \n\n11,250\n\n \n\n \n\n \n\n—\n\n \n\nOther long-term liabilities\n\n \n\n \n\n—\n\n \n\n \n\n \n\n14\n\n \n\nTotal Liabilities\n\n \n\n$\n\n86,909\n\n \n\n \n\n$\n\n34,724\n\n \n\nCommitments and contingencies (Note 8)\n\n \n\n \n\n \n\n \n\n \n\n \n\nStockholders’ Equity\n\n \n\n \n\n \n\n \n\n \n\n \n\nPreferred 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, 2026 and 2025, respectively\n\n \n\n \n\n3,559\n\n \n\n \n\n \n\n3,559\n\n \n\nCommon stock, $0.001 par value; Class A Stock: 275,000,000 shares authorized as of March 31, 2026 and 2025; 21,362,845 and 16,487,947 shares issued, with 20,532,531 and 15,984,129 shares outstanding as of March 31, 2026 and 2025, respectively\n\n \n\n \n\n199\n\n \n\n \n\n \n\n194\n\n \n\nAdditional paid-in capital\n\n \n\n \n\n564,105\n\n \n\n \n\n \n\n548,405\n\n \n\nTreasury stock, at cost; 830,314 and 503,819 shares as of March 31, 2026 and 2025, respectively\n\n \n\n \n\n(13,158\n\n)\n\n \n\n \n\n(12,193\n\n)\n\nAccumulated deficit\n\n \n\n \n\n(510,099\n\n)\n\n \n\n \n\n(500,908\n\n)\n\nAccumulated other comprehensive loss\n\n \n\n \n\n(282\n\n)\n\n \n\n \n\n(305\n\n)\n\nTotal stockholders’ equity of Cineverse Corp.\n\n \n\n \n\n44,324\n\n \n\n \n\n \n\n38,752\n\n \n\nDeficit attributable to noncontrolling interest\n\n \n\n \n\n(952\n\n)\n\n \n\n \n\n(960\n\n)\n\nTotal equity\n\n \n\n \n\n43,372\n\n \n\n \n\n \n\n37,792\n\n \n\nTotal Liabilities and Equity\n\n \n\n$\n\n130,281\n\n \n\n \n\n$\n\n72,516\n\n \n\n \n\nSee accompanying Notes to Consolidated Financial Statements\n\nF-4\n\n \n\nCineverse Corp.\n\nCONSOLIDATED STATEMENTS OF OPERATIONS\n\n(In thousands, except for per share data)\n\n \n\n \n\nFor the Fiscal Year Ended\nMarch 31,\n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nRevenues\n\n$\n\n65,733\n\n \n\n \n\n$\n\n78,181\n\n \n\nCosts and expenses\n\n \n\n \n\n \n\n \n\n \n\nDirect operating\n\n \n\n30,659\n\n \n\n \n\n \n\n38,776\n\n \n\nSelling, general and administrative\n\n \n\n43,308\n\n \n\n \n\n \n\n27,684\n\n \n\nChange in fair value of acquisition-related deferred consideration\n\n \n\n950\n\n \n\n \n\n \n\n—\n\n \n\nDepreciation and amortization\n\n \n\n5,972\n\n \n\n \n\n \n\n3,797\n\n \n\nTotal operating expenses\n\n \n\n80,889\n\n \n\n \n\n \n\n70,257\n\n \n\nOperating (loss) income\n\n \n\n(15,156\n\n)\n\n \n\n \n\n7,924\n\n \n\nInterest expense\n\n \n\n(457\n\n)\n\n \n\n \n\n(4,365\n\n)\n\nGain on bargain purchase\n\n \n\n4,250\n\n \n\n \n\n \n\n—\n\n \n\nOther (expense) income, net\n\n \n\n(137\n\n)\n\n \n\n \n\n311\n\n \n\nNet (loss) income before income taxes\n\n \n\n(11,500\n\n)\n\n \n\n \n\n3,870\n\n \n\nIncome tax benefit (expense)\n\n \n\n2,843\n\n \n\n \n\n \n\n(106\n\n)\n\nNet (loss) income\n\n \n\n(8,657\n\n)\n\n \n\n \n\n3,764\n\n \n\nNet income attributable to noncontrolling interest\n\n \n\n(178\n\n)\n\n \n\n \n\n(162\n\n)\n\nNet (loss) income attributable to controlling interests\n\n \n\n(8,835\n\n)\n\n \n\n \n\n3,602\n\n \n\nPreferred stock dividends\n\n \n\n(356\n\n)\n\n \n\n \n\n(356\n\n)\n\nNet (loss) income attributable to common stockholders\n\n$\n\n(9,191\n\n)\n\n \n\n$\n\n3,246\n\n \n\nNet (loss) income per share attributable to common stockholders:\n\n \n\n \n\n \n\n \n\n \n\nBasic\n\n$\n\n(0.49\n\n)\n\n \n\n$\n\n0.18\n\n \n\nDiluted\n\n$\n\n(0.49\n\n)\n\n \n\n$\n\n0.16\n\n \n\nWeighted average shares of Common Stock outstanding:\n\n \n\n \n\n \n\n \n\n \n\nBasic\n\n \n\n18,777\n\n \n\n \n\n \n\n15,814\n\n \n\nDiluted\n\n \n\n18,777\n\n \n\n \n\n \n\n17,818\n\n \n\n \n\nSee accompanying Notes to Consolidated Financial Statements\n\nF-5\n\n \n\nCineverse Corp.\n\nCONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME\n\n(In thousands)\n\n \n\nFor the Fiscal Year Ended\nMarch 31,\n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nNet (loss) income\n\n$\n\n(8,657\n\n)\n\n \n\n$\n\n3,764\n\n \n\nOther comprehensive (loss) income:\n\n \n\n \n\n \n\n \n\n \n\nForeign exchange translation\n\n \n\n23\n\n \n\n \n\n \n\n40\n\n \n\nNet income attributable to noncontrolling interest\n\n \n\n(178\n\n)\n\n \n\n \n\n(162\n\n)\n\nComprehensive (loss) income\n\n$\n\n(8,812\n\n)\n\n \n\n$\n\n3,642\n\n \n\n \n\nSee accompanying Notes to Consolidated Financial Statements\n\nF-6\n\n \n\nCineverse Corp.\n\nCONSOLIDATED STATEMENTS OF CASH FLOWS\n\n(In thousands)\n\n \n\n \n\nFor the Fiscal Year Ended\nMarch 31,\n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nCash flows from operating activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nNet (loss) income\n\n \n\n$\n\n(8,657\n\n)\n\n \n\n$\n\n3,764\n\n \n\nAdjustments to reconcile net loss to net cash provided by operating activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nDepreciation and amortization\n\n \n\n \n\n5,972\n\n \n\n \n\n \n\n3,797\n\n \n\nGain on bargain purchase\n\n \n\n \n\n(4,250\n\n)\n\n \n\n \n\n—\n\n \n\nStock-based compensation\n\n \n\n \n\n2,987\n\n \n\n \n\n \n\n1,925\n\n \n\nCapitalized content\n\n \n\n \n\n(2,625\n\n)\n\n \n\n \n\n(3,407\n\n)\n\nAcquisition-related income tax benefit\n\n \n\n \n\n(2,629\n\n)\n\n \n\n \n\n—\n\n \n\n Fair value adjustment of deferred consideration\n\n \n\n \n\n950\n\n \n\n \n\n \n\n—\n\n \n\nAmortization of debt issuance costs\n\n \n\n \n\n376\n\n \n\n \n\n \n\n468\n\n \n\nNon-cash interest (income) expense\n\n \n\n \n\n(375\n\n)\n\n \n\n \n\n296\n\n \n\nAllowance for content advances\n\n \n\n \n\n685\n\n \n\n \n\n \n\n923\n\n \n\nBarter transactions\n\n \n\n \n\n30\n\n \n\n \n\n \n\n341\n\n \n\nOther\n\n \n\n \n\n326\n\n \n\n \n\n \n\n(166\n\n)\n\nChanges in operating assets and liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nAccounts receivable\n\n \n\n \n\n(7,743\n\n)\n\n \n\n \n\n(619\n\n)\n\nContent advances\n\n \n\n \n\n(5,618\n\n)\n\n \n\n \n\n1,107\n\n \n\nOther current and long-term assets\n\n \n\n \n\n524\n\n \n\n \n\n \n\n(668\n\n)\n\nAccounts payable, accrued expenses, and other liabilities\n\n \n\n \n\n(6,392\n\n)\n\n \n\n \n\n9,863\n\n \n\nDeferred revenue\n\n \n\n \n\n(58\n\n)\n\n \n\n \n\n(253\n\n)\n\nNet cash (used in) provided by operating activities\n\n \n\n$\n\n(26,497\n\n)\n\n \n\n$\n\n17,370\n\n \n\nCash flows from investing activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nPurchase of business, net of cash acquired\n\n \n\n \n\n(9,967\n\n)\n\n \n\n \n\n—\n\n \n\nExpenditures for long-lived assets\n\n \n\n \n\n(3,948\n\n)\n\n \n\n \n\n(66\n\n)\n\nInternally developed software capitalization\n\n \n\n \n\n(405\n\n)\n\n \n\n \n\n(1,105\n\n)\n\nSale of equity investment securities\n\n \n\n \n\n—\n\n \n\n \n\n \n\n536\n\n \n\nNet cash used in investing activities\n\n \n\n$\n\n(14,320\n\n)\n\n \n\n$\n\n(635\n\n)\n\nCash flows from financing activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nProceeds from line of credit\n\n \n\n \n\n62,060\n\n \n\n \n\n \n\n64,102\n\n \n\nPayments on line of credit\n\n \n\n \n\n(52,625\n\n)\n\n \n\n \n\n(70,485\n\n)\n\nProceeds from issuance of convertible notes\n\n \n\n \n\n13,000\n\n \n\n \n\n \n\n—\n\n \n\nProceeds from common stock warrant exercises\n\n \n\n \n\n5,842\n\n \n\n \n\n \n\n38\n\n \n\nProceeds from Issuance of Common Stock for public offering\n\n \n\n \n\n3,450\n\n \n\n \n\n \n\n—\n\n \n\nProceeds from ATM equity issuance, net of fees\n\n \n\n \n\n1,018\n\n \n\n \n\n \n\n(42\n\n)\n\nWithholding taxes paid on restricted stock units\n\n \n\n \n\n(965\n\n)\n\n \n\n \n\n—\n\n \n\nDebt and equity financing fees\n\n \n\n \n\n(811\n\n)\n\n \n\n \n\n(209\n\n)\n\nPayment of deferred consideration\n\n \n\n \n\n(559\n\n)\n\n \n\n \n\n(428\n\n)\n\nPayment of earnout consideration\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(590\n\n)\n\nProceeds from the issuance of a term loan, net of debt issuance costs\n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,917\n\n \n\nRepayment of term loan\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3,090\n\n)\n\nCost to acquire treasury shares\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(215\n\n)\n\nDistribution paid on behalf of non-controlling interest\n\n \n\n \n\n(170\n\n)\n\n \n\n \n\n—\n\n \n\nNet cash provided by (used in) financing activities\n\n \n\n$\n\n30,240\n\n \n\n \n\n$\n\n(8,002\n\n)\n\nNet change in cash and cash equivalents\n\n \n\n \n\n(10,577\n\n)\n\n \n\n \n\n8,733\n\n \n\nEffect of exchange rate changes on cash and cash equivalents\n\n \n\n \n\n23\n\n \n\n \n\n \n\n40\n\n \n\nCash and cash equivalents at beginning of period\n\n \n\n \n\n13,941\n\n \n\n \n\n \n\n5,167\n\n \n\nCash and cash equivalents at end of period\n\n \n\n$\n\n3,387\n\n \n\n \n\n$\n\n13,941\n\n \n\nSee accompanying Notes to Consolidated Financial Statements\n\nF-7\n\n \n\nCineverse Corp.\n\nSUPPLEMENTAL CASH FLOW INFORMATION AND DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITY\n\n(In thousands)\n\n \n\n \n\nFor the Fiscal Year Ended\nMarch 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nCash interest paid\n\n \n\n$\n\n669\n\n \n\n \n\n$\n\n995\n\n \n\nIncome taxes paid\n\n \n\n$\n\n73\n\n \n\n \n\n$\n\n34\n\n \n\nNoncash investing and financing activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nEarnout liability settled in stock\n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n90\n\n \n\nBonus liability settled in stock\n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n42\n\n \n\nIssuance of Common Stock for settlement of deferred consideration\n\n \n\n$\n\n2,400\n\n \n\n \n\n$\n\n—\n\n \n\nAccrued dividends on preferred stock\n\n \n\n$\n\n356\n\n \n\n \n\n$\n\n357\n\n \n\nIssuance of Common Stock for payment of accrued preferred stock dividends\n\n \n\n$\n\n356\n\n \n\n \n\n$\n\n356\n\n \n\n \n\nSee accompanying Notes to Consolidated Financial Statements\n\nF-8\n\n \n\nCineverse Corp.\n\nCONSOLIDATED STATEMENTS OF EQUITY\n\n(In thousands)\n\n \n\n \n\n \n\nPreferred Stock\n\n \n\nCommon Stock\n\n \n\nTreasury\n\n \n\nAdditional\nPaid-In\nCapital\n\n \n\nAccumulated\nDeficit\n\n \n\nAccumulated\nOther\nComprehensive\nLoss\n\n \n\nTotal\nStockholders'\nEquity\n\n \n\nNon\nControlling\nInterest\n\n \n\nTotal\n\n \n\n \n\nShares\n\n \n\nAmount\n\n \n\nShares\n\n \n\nAmount\n\n \n\nShares\n\n \n\nAmount\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBalances as of March 31, 2025\n\n \n\n1\n\n \n\n$3,559\n\n \n\n15,984\n\n \n\n$194\n\n \n\n504\n\n \n\n$(12,193)\n\n \n\n$548,405\n\n \n\n$(500,908)\n\n \n\n$(305)\n\n \n\n$38,752\n\n \n\n$(960)\n\n \n\n$37,792\n\nForeign exchange translation\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n23\n\n \n\n23\n\n \n\n—\n\n \n\n23\n\nStock-based compensation\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n2,987\n\n \n\n—\n\n \n\n—\n\n \n\n2,987\n\n \n\n—\n\n \n\n2,987\n\nPreferred stock dividends paid in Common Stock\n\n \n\n—\n\n \n\n—\n\n \n\n114\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n356\n\n \n\n—\n\n \n\n—\n\n \n\n356\n\n \n\n—\n\n \n\n356\n\nPreferred stock dividends accrued\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n(356)\n\n \n\n—\n\n \n\n(356)\n\n \n\n—\n\n \n\n(356)\n\nIssuance of common stock for Board of Director compensation\n\n \n\n—\n\n \n\n—\n\n \n\n97\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\nIssuance of common stock for acquiree consideration\n\n \n\n—\n\n \n\n—\n\n \n\n677\n\n \n\n1\n\n \n\n—\n\n \n\n—\n\n \n\n2,399\n\n \n\n—\n\n \n\n—\n\n \n\n2,400\n\n \n\n—\n\n \n\n2,400\n\nCommon Stock Warrant Exercise\n\n \n\n—\n\n \n\n—\n\n \n\n1,947\n\n \n\n2\n\n \n\n—\n\n \n\n—\n\n \n\n5,840\n\n \n\n—\n\n \n\n—\n\n \n\n5,842\n\n \n\n—\n\n \n\n5,842\n\nIssuance of Common Stock in connection with employee equity awards\n\n \n\n—\n\n \n\n—\n\n \n\n748\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n8\n\n \n\n—\n\n \n\n—\n\n \n\n8\n\n \n\n—\n\n \n\n8\n\nTreasury shares withheld for employee taxes\n\n \n\n—\n\n \n\n—\n\n \n\n(326)\n\n \n\n—\n\n \n\n326\n\n \n\n(965)\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n(965)\n\n \n\n—\n\n \n\n(965)\n\nIssuance of Common Stock for ATM, net of fees\n\n \n\n—\n\n \n\n—\n\n \n\n397\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n1,018\n\n \n\n—\n\n \n\n—\n\n \n\n1,018\n\n \n\n—\n\n \n\n1,018\n\nIssuance of Common Stock for public offering\n\n \n\n—\n\n \n\n—\n\n \n\n1,725\n\n \n\n2\n\n \n\n—\n\n \n\n—\n\n \n\n3,092\n\n \n\n—\n\n \n\n—\n\n \n\n3,094\n\n \n\n—\n\n \n\n3,094\n\nDistribution paid on behalf of non-controlling interest\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n(170)\n\n \n\n(170)\n\nNet loss\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n—\n\n \n\n(8,835)\n\n \n\n—\n\n \n\n(8,835)\n\n \n\n178\n\n \n\n(8,657)\n\nBalances as of March 31, 2026\n\n \n\n1\n\n \n\n$3,559\n\n \n\n21,363\n\n \n\n$199\n\n \n\n830\n\n \n\n$(13,158)\n\n \n\n$564,105\n\n \n\n$(510,099)\n\n \n\n$(282)\n\n \n\n$44,324\n\n \n\n$(952)\n\n \n\n$43,372\n\n \n\nSee accompanying Notes to Consolidated Financial Statements\n\n \n\n \n\nF-9\n\n \n\n \n\nCineverse Corp.\n\nCONSOLIDATED STATEMENTS OF EQUITY\n\n(In thousands)\n\n \n\n \n\n \n\nPreferred Stock\n\n \n\n \n\nCommon Stock\n\n \n\n \n\nTreasury\n\n \n\n \n\nAdditional\nPaid-In\nCapital\n\n \n\n \n\nAccumulated\nDeficit\n\n \n\n \n\nAccumulated\nOther\nComprehensive\nLoss\n\n \n\n \n\nTotal\nStockholders'\nEquity\n\n \n\n \n\nNon\nControlling\nInterest\n\n \n\n \n\nTotal\n\n \n\n \n\nShares\n\n \n\n \n\nAmount\n\n \n\n \n\nShares\n\n \n\n \n\nAmount\n\n \n\n \n\nShares\n\n \n\n \n\nAmount\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBalances as of March 31, 2024\n\n \n\n \n\n1\n\n \n\n \n\n$\n\n3,559\n\n \n\n \n\n \n\n15,699\n\n \n\n \n\n$\n\n194\n\n \n\n \n\n \n\n289\n\n \n\n \n\n$\n\n(11,978\n\n)\n\n \n\n$\n\n545,996\n\n \n\n \n\n$\n\n(504,153\n\n)\n\n \n\n$\n\n(345\n\n)\n\n \n\n$\n\n33,273\n\n \n\n \n\n$\n\n(1,122\n\n)\n\n \n\n$\n\n32,151\n\n \n\nForeign exchange translation\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n40\n\n \n\n \n\n \n\n40\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n40\n\n \n\nStock-based compensation\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,595\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,595\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,595\n\n \n\nPreferred stock dividends paid in Common Stock\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n276\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n356\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n356\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n356\n\n \n\nPreferred stock dividends accrued\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(357\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(357\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(357\n\n)\n\nIssuance of common stock for Board of Director compensation\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n74\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n330\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n330\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n330\n\n \n\nIssuance of common stock for acquiree consideration\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n29\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n42\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n42\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n42\n\n \n\nCommon Stock Warrant Exercise\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n13\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n38\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n38\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n38\n\n \n\nFees incurred in connection with ATM offering\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(42\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(42\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(42\n\n)\n\nIssuance of Class A common stock for earnout commitment\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n108\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n90\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n90\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n90\n\n \n\nTreasury stock acquired\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(215\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n215\n\n \n\n \n\n \n\n(215\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(215\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(215\n\n)\n\nNet income\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,602\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,602\n\n \n\n \n\n \n\n162\n\n \n\n \n\n \n\n3,764\n\n \n\nBalances as of March 31, 2025\n\n \n\n \n\n1\n\n \n\n \n\n$\n\n3,559\n\n \n\n \n\n \n\n15,984\n\n \n\n \n\n$\n\n194\n\n \n\n \n\n \n\n504\n\n \n\n \n\n$\n\n(12,193\n\n)\n\n \n\n$\n\n548,405\n\n \n\n \n\n$\n\n(500,908\n\n)\n\n \n\n$\n\n(305\n\n)\n\n \n\n$\n\n38,752\n\n \n\n \n\n$\n\n(960\n\n)\n\n \n\n$\n\n37,792\n\n \n\n \n\nSee accompanying Notes to Consolidated Financial Statements\n\nF-10\n\n \n\nCineverse Corp.\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n1. NATURE OF OPERATIONS AND LIQUIDITY\n\nCineverse 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.\n\n \n\nThe 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. In recent years, Cineverse has transformed itself into a leading technology and independent streaming company.\n\n \n\nFinancial Condition and Liquidity\n\n \n\nAs of March 31, 2026, the Company has an accumulated deficit of $510.1 million. For the year ended March 31, 2026, the Company had a net loss attributable to common shareholders of $(9.2) million. The Company had negative working capital of $(12.2) million, net cash used in operations for the year ended March 31, 2026 was $26.5 million. The Company has had a history of generating net losses and may continue to generate net losses for the foreseeable future.\n\n \n\nThe 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.\n\n \n\nOur 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.\n\n2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES\n\nConsolidation\n\n \n\nThe 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.\n\n \n\nAs of March 31, 2026, we owned 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.\n\nF-11\n\n \n\nOn May 7, 2026, we acquired the remaining outstanding ownership interests in CONtv from the minority interest holders in exchange for shares of the Company’s Class A common stock and cash payments. As a result of these transactions, CONtv became a wholly-owned subsidiary of the Company. Refer to 11. SUBSEQUENT EVENTS for further information.\n\n \n\nWe 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.\n\n \n\nCDF2 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.\n\n \n\nUse of Estimates\n\n \n\nThe 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, business combination, 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.\n\n \n\nCash and Cash Equivalents\n\n \n\nWe consider all highly liquid investments with an original maturity of three months or less to be “cash equivalents.” We maintain bank accounts with major banks, which from time to time may exceed the Federal Deposit Insurance Corporation’s insured limits. We periodically assess the financial condition of the institutions and believe that the risk of any loss is minimal.\n\n \n\nNon-monetary Transactions\n\n \n\nFrom time to time, the Company entered into non-monetary transactions for the purchase and sale of content licenses with unrelated third-parties. The fair value of the content licenses purchased are recognized within Intangible Assets, Net on our Consolidated Balance Sheets and amortized over the estimated useful lives of the respective assets. As functional intellectual property, the Company recognizes the corresponding revenue at the time of delivery to the recipient. For the year ended March 31, 2026, $0.4 million of barter revenue was recognized. For the years ended March 31, 2026 and 2025, amortization expense related to such transactions were $383 and $341 thousand, respectively, recognized within Direct Operating expenses in the Consolidated Statements of Operations.\n\n \n\nF-12\n\n \n\nAccounts Receivable, Net\n\n \n\nWe maintain reserves for expected credit losses on accounts receivable. We review the composition of accounts receivable and analyze historical credit losses, customer concentrations, customer credit worthiness, current and forecasted economic trends and changes in customer payment patterns to evaluate the adequacy of this allowance.\n\n \n\nCredit Losses\n\nWe maintain reserves for expected credit losses on accounts receivable. We review the composition of accounts receivable and analyze historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.\n\n \n\nWe recognize accounts receivable, net of an estimated allowance for product returns and customer chargebacks, at the time that we recognize revenue from a sale. Reserves for product returns and other allowances are variable consideration as part of the transaction price. If actual future returns and allowances differ from past experience, adjustments to our allowances may be required.\n\nA summary of the movements of our allowances for credit losses as of March 31, 2026\n\nand March 31, 2025 (in thousands):\n\n \n\nAllowance for credit losses at the beginning of the year\n\n \n\n$\n\n307\n\n \n\nIncrease in estimated provision\n\n \n\n \n\n335\n\n \n\nWrite-off\n\n \n\n \n\n(20\n\n)\n\nAllowance for credit losses as at March 31, 2026\n\n \n\n$\n\n622\n\n \n\n \n\nAllowance for credit losses at the beginning of the year\n\n \n\n$\n\n269\n\n \n\nIncrease in estimated provision\n\n \n\n \n\n38\n\n \n\nAllowance for credit losses as at March 31, 2025\n\n \n\n$\n\n307\n\n \n\n \n\nContent Advances\n\n \n\nContent 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 $7.5 million and $6.7 million as of March 31, 2026 and 2025, 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 $8.2 million and $4.1 million as of March 31, 2026 and 2025, respectively. For the year ended March 31, 2026 and 2025, the Company recorded an increase to the provision for content advances of $0.7 million and $0.9 million, respectively.\n\n \n\nProperty and Equipment, Net\n\n \n\nProperty 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:\n\n \n\nComputer equipment and software\n\n \n\n3 - 5 years\n\nInternal use software\n\n \n\n3 - 5 years\n\nMachinery and equipment\n\n \n\n3 - 10 years\n\nFurniture and fixtures\n\n \n\n2 - 7 years\n\n \n\nWe 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\n\nF-13\n\n \n\nservices 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. Please see Recently Issued Accounting Pronouncements for further consideration of the Company’s assessment of ASU 2025-06 \"Intangibles: Goodwill and Other Internal-Use Software - Targeted Improvements to the Accounting for Internal-Use Software (Subtopic 350-40)\".\n\n \n\nIntangible Assets, Net\n\n \n\nIntangible 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.\n\nDuring the years ended March 31, 2026 and 2025, we did not record any impairment.\n\nAmortization expense is recorded using the straight-line method over the estimated useful lives of the respective assets as follows:\n\n \n\nContent Library\n\n \n\n3 – 20 years\n\nTradenames, Trademarks and Patents\n\n \n\n2 – 15 years\n\nCustomer Relationships\n\n`\n\n5 – 13 years\n\nAdvertiser Relationships and Channel\n\n \n\n2 – 13 years\n\nPreferred Partner Medallions\n\n \n\n10 – 12 years\n\nSoftware\n\n \n\n3 - 10 years\n\nCapitalized Content\n\n \n\n3 years\n\n \n\nThe Company’s intangible assets include the following (in thousands):\n\n \n\n \n\n \n\nAs of March 31, 2026\n\n \n\n \n\n \n\nCost Basis\n\n \n\n \n\nAccumulated\nAmortization\n\n \n\n \n\nNet\n\n \n\nContent Library\n\n \n\n$\n\n27,592\n\n \n\n \n\n$\n\n(22,512\n\n)\n\n \n\n$\n\n5,080\n\n \n\nAdvertiser Relationships and Channel\n\n \n\n \n\n12,844\n\n \n\n \n\n \n\n(5,839\n\n)\n\n \n\n \n\n7,005\n\n \n\nCustomer Relationships\n\n \n\n \n\n17,990\n\n \n\n \n\n \n\n(8,677\n\n)\n\n \n\n \n\n9,313\n\n \n\nSoftware\n\n \n\n \n\n12,700\n\n \n\n \n\n \n\n(1,837\n\n)\n\n \n\n \n\n10,863\n\n \n\nCapitalized Content\n\n \n\n \n\n7,405\n\n \n\n \n\n \n\n(3,101\n\n)\n\n \n\n \n\n4,304\n\n \n\nPreferred Partner Medallions\n\n \n\n \n\n4,100\n\n \n\n \n\n \n\n(103\n\n)\n\n \n\n \n\n3,997\n\n \n\nTradenames, Trademarks and Patents\n\n \n\n \n\n7,086\n\n \n\n \n\n \n\n(3,534\n\n)\n\n \n\n \n\n3,552\n\n \n\nTotal Intangible Assets\n\n \n\n$\n\n89,717\n\n \n\n \n\n$\n\n(45,603\n\n)\n\n \n\n$\n\n44,114\n\n \n\n \n\n \n\n \n\nAs of March 31, 2025\n\n \n\n \n\n \n\nCost Basis\n\n \n\n \n\nAccumulated\nAmortization\n\n \n\n \n\nNet\n\n \n\nContent Library\n\n \n\n$\n\n24,251\n\n \n\n \n\n$\n\n(21,724\n\n)\n\n \n\n$\n\n2,527\n\n \n\nAdvertiser Relationships and Channel\n\n \n\n \n\n12,832\n\n \n\n \n\n \n\n(4,211\n\n)\n\n \n\n \n\n8,621\n\n \n\nCustomer Relationships\n\n \n\n \n\n8,690\n\n \n\n \n\n \n\n(8,145\n\n)\n\n \n\n \n\n545\n\n \n\nSoftware\n\n \n\n \n\n3,200\n\n \n\n \n\n \n\n(1,200\n\n)\n\n \n\n \n\n2,000\n\n \n\nTradenames, Trademarks and Patents\n\n \n\n \n\n3,961\n\n \n\n \n\n \n\n(3,203\n\n)\n\n \n\n \n\n758\n\n \n\nCapitalized Content\n\n \n\n \n\n4,816\n\n \n\n \n\n \n\n(1,099\n\n)\n\n \n\n \n\n3,717\n\n \n\nTotal Intangible Assets\n\n \n\n$\n\n57,750\n\n \n\n \n\n$\n\n(39,582\n\n)\n\n \n\n$\n\n18,168\n\n \n\n \n\nF-14\n\n \n\nAs of March 31, 2026, amortization expense for each of the successive five years is expected to be (in thousands):\n\n \n\n \n\nTotal\n\n \n\nIn-process intangible assets\n\n \n\n$\n\n545\n\n \n\n2027\n\n \n\n \n\n5,321\n\n \n\n2028\n\n \n\n \n\n4,056\n\n \n\n2029\n\n \n\n \n\n2,361\n\n \n\n2030\n\n \n\n \n\n1,419\n\n \n\n2031\n\n \n\n \n\n1,372\n\n \n\nThereafter\n\n \n\n \n\n29,040\n\n \n\nTotal\n\n \n\n$\n\n44,114\n\n \n\n \n\nCapitalized Content\n\n \n\nThe 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.\n\n \n\nImpairment of Long-lived and Finite-lived Intangible Assets\n\n \n\nWe 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, 2026 and 2025.\n\n \n\nBusiness Combinations\n\n \n\nThe Company accounts for business combinations in accordance with ASC 805, Business Combinations, using the acquisition method of accounting. Under this method, the Company recognizes and measures the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree at their estimated fair values as of the acquisition date.\n\n \n\nThe total consideration transferred is allocated to the identifiable assets acquired and liabilities assumed based on their respective fair values. The excess of the purchase price over the fair value of net identifiable assets acquired is recorded as goodwill. Please see the Goodwill policy separately outlined below within this footnote.\n\n \n\nIn certain circumstances, such as a forced sale or bankruptcy of the acquiree, the fair value of the identifiable net assets acquired exceeds the total consideration transferred in a business combination, resulting in a bargain purchase gain. The Company recognizes bargain purchase gains in earnings as of the acquisition date.\n\n \n\nF-15\n\n \n\nGoodwill\n\n \n\nGoodwill 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.\n\nInherent in the fair value determination for each reporting unit are certain judgments and estimates relating to future cash flows, including management’s interpretation of current economic indicators and market conditions, and assumptions about our strategic plans with regard to its operations. To the extent additional information arises, market conditions change, or our strategies change, it is possible that the conclusion regarding whether our remaining goodwill is impaired could change and result in future goodwill impairment charges that will have a material effect on our consolidated financial position or results of operations.\n\nThe 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.\n\nFor the year ended March 31, 2026 and 2025, the Company did not recognize any goodwill impairment losses.\n\n \n\nGross amounts of goodwill and accumulated impairment charges that we have recorded are as follows:\n\n \n\n (In thousands)\n\n \n\n \n\n \n\nGoodwill at March 31, 2025\n\n \n\n$\n\n6,799\n\n \n\nGoodwill from business combinations (Note 10)\n\n \n\n \n\n14,419\n\n \n\nGoodwill at March 31, 2026\n\n \n\n$\n\n21,218\n\n \n\n \n\nFair Value Measurements\n\n \n\nThe 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:\n\n•\nLevel 1 – quoted prices in active markets for identical investments\n\n•\nLevel 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs)\n\n•\nLevel 3 – significant unobservable inputs (including our own assumptions in determining the fair value of investments)\n\n \n\nF-16\n\n \n\nThe table below summarizes the levels of fair value measurements of the Company’s financial assets and liabilities as of March 31, 2026 (in thousands):\n\n \n\n \n\nAs of March 31, 2026\n\n \n\n \n\n \n\nLevel 1\n\n \n\n \n\nLevel 2\n\n \n\n \n\nLevel 3\n\n \n\n \n\nTotal\n\n \n\nLiabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDeferred consideration\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n12,200\n\n \n\n \n\n \n\n12,200\n\n \n\nEarnout consideration\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n11,250\n\n \n\n \n\n \n\n11,250\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n23,450\n\n \n\n \n\n$\n\n23,450\n\n \n\n \n\nDeferred Consideration\n\n \n\nThe Company initially recognizes liabilities related to Deferred Consideration from business combinations at fair value at the time of acquisition and subsequently recognizes interest expense related to accretion in advance of the ultimate settlement of these liabilities. Amounts due within 12 months under the terms of the agreements are classified as current within the Consolidated Balance Sheets.\n\n \n\nIn connection with the acquisitions of FoundationTV (\"FTV\"), Digital Media Rights (\"DMR\"), Giant Worldwide and IndiCue, the Company recorded liabilities related to deferred consideration. These payments are fixed in nature and are due to the sellers of the respective businesses.\n\n \n\nThe 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 conditions. During the year ended March 31, 2026, the final payment of $2.4 million was made through the issuance of 677 thousand shares of Common Stock.\n\n \n\nThe deferred consideration related to the Giant Worldwide acquisition is payable in quarterly cash installments of $0.4 million which commenced on the 3-month anniversary of the Closing Date in April 2026. As of March 31, 2026, the fair value of this liability is $1.6 million dollars in the Consolidated Balance Sheet.\n\n \n\nThe deferred consideration associated with the IndiCue acquisition was determined based on a value of approximately $11.3 million at the time of closing and is due within one year of the acquisition date. Pursuant to the terms of the acquisition agreement, the Company may settle such obligations in cash or shares of the Company’s common stock, at its discretion. The Company has elected the fair value option under ASC 825, Financial Instruments. As of March 31, 2026, the fair value of this liability is $12.2 million dollars in the Consolidated Balance Sheet.\n\n \n\nEarnout Consideration\n\n \n\nThe Company estimated the fair value of its earnout liabilities using both contractual and Level 3 inputs from the related business combination. The specific financial targets required for payment are defined in from the IndiCue purchase agreement. The Company also utilizes Level 3 inputs, including the most up to date forecast at each reporting date to estimate the outcome against these targets to determine the ultimate estimated payout, discounted by a rate reflecting the Company’s estimate of a market borrowing rate and incremental spread for similar subordinated obligations.\n\n \n\nDuring the fiscal year ended March 31, 2026, the Company acquired IndiCue Inc (\"IndiCue\") and as a part of the purchase consideration, may be required to pay up to $18.0 million in earnout payments over the first three fiscal years following the acquisition, contingent upon the achievement of specified revenue and gross margin targets. The earnout payments will be payable in cash or shares of Common Stock under certain conditions.\n\n \n\nThere were no assets and liabilities carried at fair value as of March 31, 2025.\n\n \n\nF-17\n\n \n\nAsset Acquisitions\n\nAn asset acquisition is an acquisition of an asset, or a group of assets, that does not meet the definition of a business. Asset acquisitions are accounted for by using the cost accumulation model whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of relative fair values.\n\nAccounts Payable and Accrued Expenses\n\nAccounts payable and accrued expenses consisted of the following (in thousands):\n\n \n\n \n\nAs of March 31,\n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nAccrued acquisition related liabilities\n\n \n\n$\n\n14,912\n\n \n\n \n\n$\n\n—\n\n \n\nAccounts payable\n\n \n\n \n\n7,324\n\n \n\n \n\n \n\n7,298\n\n \n\nAmounts due to producers\n\n \n\n \n\n9,328\n\n \n\n \n\n \n\n16,488\n\n \n\nAccrued compensation and benefits\n\n \n\n \n\n1,781\n\n \n\n \n\n \n\n1,398\n\n \n\nAccrued other expenses\n\n \n\n \n\n6,006\n\n \n\n \n\n \n\n5,925\n\n \n\nTotal Accounts Payable and Accrued Expenses\n\n \n\n$\n\n39,351\n\n \n\n \n\n$\n\n31,109\n\n \n\n \n\nDisaggregation of Revenue\n\nThe following table presents the Company’s revenue by source (in thousands):\n\n \n\nYear Ended\nMarch 31,\n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nStreaming and digital\n\n$\n\n40,186\n\n \n\n \n\n$\n\n44,408\n\n \n\nBase distribution\n\n \n\n9,534\n\n \n\n \n\n \n\n28,614\n\n \n\nAdvertising technology and services\n\n \n\n7,922\n\n \n\n \n\n \n\n—\n\n \n\nPodcast and other\n\n \n\n4,388\n\n \n\n \n\n \n\n4,946\n\n \n\nMedia services\n\n \n\n3,685\n\n \n\n \n\n \n\n—\n\n \n\nOther non-recurring\n\n \n\n18\n\n \n\n \n\n \n\n213\n\n \n\nTotal Revenue\n\n$\n\n65,733\n\n \n\n \n\n$\n\n78,181\n\n \n\nStreaming 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.\n\nBase distribution revenue is generated by the Company's physical revenue streams 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.\n\n \n\nAdvertising technology revenue is derived from two principal revenue streams: Ad Network revenue and Ad Serving revenue. Ad Network revenue is earned through advertising campaigns. 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.\n\nMedia services revenue is derived from quality control, packaging, and localization work performed on behalf of studios for platform distribution.\n\nPodcast and other revenue represents advertising fees earned in support of the Company's podcast programming.\n\n \n\nF-18\n\n \n\nOther 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.\n\n \n\nRevenue Recognition\n\n \n\nFees 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.\n\nDepending upon the nature of the agreements with the platform and content providers, the fee rate that we earn varies. Fees from Ad-Network revenue are based on an agreed-to cost per mille (“CPM”) rate, and fees for Media Services are typically specified in purchase orders based on the services requested to be rendered.\n\n \n\nThe Company’s performance obligations include the shipment of physical goods and delivery of content for transactional, subscription and ad supported/free ad-supported streaming TV (“FAST”) on the digital platforms, delivery of advertising related impressions, and at the time of completion of media services.\n\n \n\nRevenue is recognized at the point in time across the Company’s revenue streams. Specifically, revenue is recognized 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. Ad Network transactions are recognized at the point in time when the billable impression is delivered. Media services are recognized at the point of delivery.\n\n \n\nBase 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.\n\n \n\nWe 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.\n\n \n\nPayment 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.\n\n \n\nThe Company follows the five-step model established by ASC 606, Revenue from Contracts with Customers when preparing its assessment of revenue recognition.\n\nPrincipal Agent Considerations\n\nRevenue 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:\n\n•\nwhich party is primarily responsible for fulfilling the promise to provide the specified good or service; and\n\n•\nwhich party has discretion in establishing the price for the specified good or service.\n\nF-19\n\n \n\nShipping and Handling\n\nShipping 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.\n\nContract Liabilities\n\nWe 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. Deferred revenue includes amounts related to advances, the sale of DVDs or theatrical releases with future release dates.\n\nThe ending deferred revenue balance, all current as of March 31, 2026 and 2025 was $0.1 million and $0.2 million, respectively. There were no long-term amounts as of March 31, 2026 and 2025.\n\nParticipations and Royalties Payable\n\nWhen 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.\n\n \n\nConcentrations\n\nFor the fiscal year ended March 31, 2026, the single largest customer represented 21% of consolidated revenue. For the fiscal year ended March 31, 2025, one customer represented 30% and another customer represented 23% of consolidated revenue, respectively.\n\nDirect Operating Costs\n\nDirect 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, ad-network revenue share, and marketing and direct personnel costs.\n\nStock-based Compensation\n\nThe 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.\n\n \n\nIncome Taxes\n\n \n\nThe 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\n\nF-20\n\n \n\ncarryforwards and for differences between the carrying amounts of existing assets and liabilities and their respective tax basis.\n\n \n\nValuation 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.\n\nThe 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 recorded unrecognized tax benefits of approximately $49,000 as of March 31, 2026, related to potential state income tax liabilities arising from non-filing positions. The Company recognizes interest and penalties on uncertain tax positions as a component of income tax expense.\n\n \n\nRecently Issued Accounting Pronouncements\n\n \n\nThe 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.\n\n \n\nIn November 2024, the FASB issued ASU 2024-03, \"Income Statement-Reporting Comprehensive Income - Expense Disaggregation Disclosures (Topic 220)\", requiring all public business entities to provide additional disclosure of the nature of expenses included in the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and for interim reporting periods beginning after December 15, 2027, on a prospective basis, with early adoption permitted. The Company is currently evaluating the impact on our financial statement disclosures.\n\n \n\nIn July 2025, the FASB issued ASU 2025-05, “Measurement of Credit Losses for Accounts Receivable and Contract Assets (Topic 326)\" aiming to simplify the estimation of credit losses on accounts receivable and contract assets arising from transactions accounted for under ASC 606, “Revenue from Contracts with Customers,” by providing companies an option to assume that the conditions as of the balance sheet date will remain unchanged for the remaining life of these assets while estimating expected credit losses. The standard is effective for all entities for annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements and related disclosures.\n\n \n\nIn September 2025, the FASB issued ASU 2025-06 \"Intangibles: Goodwill and Other Internal-Use Software - Targeted Improvements to the Accounting for Internal-Use Software (Subtopic 350-40)\" to modernize the accounting for software costs under, Intangible: Goodwill and Other Internal-Use Software (referred to as “internal-use software”). Upon adoption, we will be required to account for internal-use software under the updated capitalization criteria. The standard is effective for annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently assessing adoption timing and the method of adoption.\n\n \n\nEffective April 1, 2025, the Company adopted ASU 2023-09, \"Improvements to Income Tax Disclosures\", which expanded income tax disclosure requirements, including disaggregation of pretax income (loss) and income tax expense (benefit) by jurisdiction and disclosure of income taxes paid (net of refunds received). The Company adopted the standard on April 1, 2025 on a retrospective basis. Accordingly, the tax rate reconciliation disclosures for the year ended March 31, 2025 has been recast to conform to the current year’s presentation. The adoption affected disclosures only and did not impact the Company’s financial position, results of operations, or cash flows.\n\nF-21\n\n \n\n3. SEGMENT INFORMATION\n\n \n\nThe Company operates as a single reportable segment. The Company’s chief operating decision maker (\"CODM\"), its Chief Executive Officer, reviews financial information on a consolidated basis to make operating decisions, assess financial performance, and allocate resources.\n\n \n\nIn evaluating performance, the CODM primarily assesses operating (loss) income and net (loss) income, 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.\n\nThis approach ensures that the Company’s financial reporting reflects the way management monitors expenses and overall financial performance.\n\n \n\nThe following table presents financial information with respect to the Company’s single operating segment for the years ended March 31, 2026, and 2025:\n \n\n \n\n \n\nFor the Fiscal Year Ended\nMarch 31\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nRevenues\n\n \n\n$\n\n65,733\n\n \n\n \n\n$\n\n78,181\n\n \n\nLess:\n\n \n\n \n\n \n\n \n\n \n\n \n\nRoyalty expense\n\n \n\n \n\n9,025\n\n \n\n \n\n \n\n24,243\n\n \n\nLicense, participation and technology costs\n\n \n\n \n\n13,594\n\n \n\n \n\n \n\n7,118\n\n \n\nOther direct operating costs\n\n \n\n \n\n8,040\n\n \n\n \n\n \n\n6,182\n\n \n\nPayroll and related\n\n \n\n \n\n19,649\n\n \n\n \n\n \n\n16,900\n\n \n\nProfessional services\n\n \n\n \n\n6,074\n\n \n\n \n\n \n\n3,112\n\n \n\nAdvertising and marketing\n\n \n\n \n\n7,526\n\n \n\n \n\n \n\n1,385\n\n \n\nAmortization and depreciation\n\n \n\n \n\n5,972\n\n \n\n \n\n \n\n3,797\n\n \n\nOther general and administrative\n\n \n\n \n\n10,059\n\n \n\n \n\n \n\n7,520\n\n \n\nChange in fair value of acquisition-related deferred consideration\n\n \n\n \n\n950\n\n \n\n \n\n \n\n—\n\n \n\nTotal operating expenses\n\n \n\n \n\n80,889\n\n \n\n \n\n \n\n70,257\n\n \n\nOperating (loss) income\n\n \n\n \n\n(15,156\n\n)\n\n \n\n \n\n7,924\n\n \n\nInterest expense\n\n \n\n \n\n(457\n\n)\n\n \n\n \n\n(4,365\n\n)\n\nGain on bargain purchase\n\n \n\n \n\n4,250\n\n \n\n \n\n \n\n—\n\n \n\nOther income (expense)\n\n \n\n \n\n(137\n\n)\n\n \n\n \n\n311\n\n \n\nNet (loss) income before income taxes\n\n \n\n \n\n(11,500\n\n)\n\n \n\n \n\n3,870\n\n \n\nProvision for income taxes\n\n \n\n \n\n2,843\n\n \n\n \n\n \n\n(106\n\n)\n\nNet (loss) income\n\n \n\n$\n\n(8,657\n\n)\n\n \n\n$\n\n3,764\n\n \n\n \n\n4. OTHER INTERESTS\n\nCDF2 Holdings\n\nWe 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.\n\nF-22\n\n \n\nCDF2 Holdings is a 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.\n\nAs of March 31, 2026 and 2025, 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 $0.0 million as of March 31, 2026 and 2025, respectively, which are included in accounts receivable, net on the accompanying Consolidated Balance Sheets.\n\nThe accompanying Consolidated Statements of Operations include $0.0 million and $0.0 million of digital cinema servicing revenue from CDF2 Holdings for the year ended March 31, 2026 and 2025, respectively.\n\nTotal stockholders’ deficit of CDF2 Holdings as of March 31, 2026 and 2025 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, 2026 and 2025 is carried at $0.\n\nCONtv\n\nAs of March 31, 2026, we owned an 85% interest in 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.\n\n \n\nOn May 7, 2026, we acquired the remaining outstanding ownership interests in CONtv from the minority interest holders in exchange for shares of the Company’s Class A common stock and cash payments. As a result of these transactions, CONtv became a wholly-owned subsidiary of the Company.\n\nRoundtable\n\n \n\nOn 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.\n\n \n\nF-23\n\n \n\n5. DEBT\n\n \n\nLine of Credit Facility\n\n \n\nThe 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. Under the Line of Credit Facility, the Company is subject to certain financial and non-financial covenants which require the Company to maintain certain metrics and ratios, maintain certain minimum cash on hand and to report financial information to our lender on a periodic basis. In anticipation of the acquisitions the company received a covenant holiday from East West Bank through the fourth quarter effective January 1, 2026 through March 31, 2026.\n\n \n\nAs of March 31, 2026 and 2025, $9.4 and $0 million was outstanding on the Line of Credit Facility, respectively and there are unamortized issuance costs of $124 thousand and $98 thousand, respectively, included in other long-term assets on our Consolidated Balance Sheets.\n\n \n\nFor the year ended March 31, 2026 and 2025, the Company incurred interest expense of $0.5 million and $0.6 million respectively, related to the Line of Credit Facility, which bears interest at a rate equal to 1.25% above the prime rate (8.00% and 8.75% as of March 31, 2026 and 2025, respectively).\n\n \n\nTerm Loan\n\n \n\nOn April 5, 2024, T3 Borrower, a wholly-owned subsidiary of the Company, entered into the T3 Loan Agreement with the T3 Lender.\n\n \n\nThe T3 Loan Agreement provided 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 bore 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 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 Agreement contained customary covenants, representation and warranties and events of default.\n\n \n\nAfter 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 has received in total 1.75 times the full commitment amount of $3.7 million (\"Participation Interest\"). The T3 Loan was 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.\n\n \n\nThe 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.\n\n \n\nDuring 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.\n\nF-24\n\n \n\n \n\nConvertible Notes\n\n \n\nOn 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 proceeds from the convertible notes were primarily used to pay the cash purchase consideration for the IndiCue acquisition. 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.\n\n \n\nThe 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.\n\n \n\nFor the fiscal years ended March 31, 2026 and 2025, the Notes are presented net of unamortized debt issuance costs of $455 and $0, respectively.\n\n6. STOCKHOLDERS’ EQUITY\n\nCOMMON STOCK\n\nCommon Stock\n\n \n\nDuring the fiscal year ended March 31, 2026, the Company issued 5.7 million shares of Common Stock. The shares issued consisted of 1.9 million shares issued upon common stock warrant exercises, 1.7 million shares issued in an underwritten public offering, 677 thousand shares issued as deferred acquisition consideration, 422 thousand shares, net of treasury shares, related to employee equity awards, 397 thousand shares issued through the Company's ATM program, 114 thousand shares issued in connection with preferred stock dividends, and 97 thousand shares issued to members of the Board of Directors.\n\n \n\nDuring 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 stock warrant exercise.\n\n \n\nPublic Offering\n\n \n\nIn February 2026, the Company sold in a public offering an aggregate of 1,725,000 shares (the “Offered Shares”) of the Company’s Common Stock, at a purchase price of $2.00 per share, for aggregate gross proceeds of approximately $3.5 million, before deducting underwriting commissions and expenses payable by the Company. The net proceeds to the Company from the sale of the Shares, after deducting the fees of the underwriter but before paying the Company’s estimated Offering expenses, was $3.1 million.\n\n \n\nATM Sales Agreement\n\n \n\nOn May 3, 2024, the Company entered into a sales agreement (the “ATM 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 Common Stock. Shares of\n\nF-25\n\n \n\nCommon 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 ATM 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. Under the terms of the ATM Sales Agreement, the Sales Agents earn a commission of 3.0% of the aggregate gross proceeds from each sale of shares and has agreed to provide the Sales Agents with customary indemnification and contribution rights, and the Company also reimburses the Sales Agents for certain specified expenses. 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 effective shelf registration statement. On June 8, 2026, the aggregate authorized offering price under the ATM Sales Agreement was increased to $30 million.\n\n \n\nDuring 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, under the ATM Sales Agreement.\n\n \n\nNon-Controlling Interest Buyout\n\nSubsequent to March 31, 2026, the Company entered into a Stock Exchange Agreement with holders of CONtv pursuant to which the Company acquired the remaining outstanding ownership interests in CONtv in exchange for shares of the Company’s Class A common stock and cash payments. As a result of these transactions, CONtv became a wholly-owned subsidiary of the Company.\n\n \n\nCommon Stock Warrants\n\n \n\nA reconciliation of the beginning and ending balances of warrants outstanding is as follows:\n\n \n\n \n\n \n\nNumber of Shares\n\n \n\nWarrants outstanding as of March 31, 2024\n\n \n\n \n\n2,666,667\n\n \n\nWarrants exercised\n\n \n\n \n\n(12,500\n\n)\n\nWarrants outstanding as of March 31, 2025\n\n \n\n \n\n2,654,167\n\n \n\nWarrants exercised\n\n \n\n \n\n(1,947,500\n\n)\n\nWarrants outstanding as of March 31, 2026\n\n \n\n \n\n706,667\n\n \n\n \n\nAs of March 31, 2026, warrants outstanding have an exercise price of $3.0 and expire on June 16, 2028.\n \n\nPREFERRED STOCK\n\n \n\nThe holders of the Company’s Series A Preferred Stock are entitled to receive cumulative dividends from the date of issuance at an annual rate of 10% of the original issue price. Such dividends shall be payable in arrears in cash or, at the Company’s option, in shares of Class A common stock, quarterly on the last day of each calendar quarter, while such shares are outstanding. The Series A Preferred Stock does not have voting rights, conversion rights, or redemption rights, but has liquidation rights up to the original issue price.\n\nCumulative dividends in arrears on our outstanding Series A preferred stock were $0.1 million as of March 31, 2026 and 2025. For the years ended March 31, 2026 and 2025, we paid preferred stock dividends in the form of 114 thousand and 276 thousand shares of Common Stock, respectively.\n\nSubsequent to March 31, 2026, the Company entered into a Stock Exchange Agreement with a holder of Series A preferred stock, pursuant to which the Company agreed to issue shares of Common Stock in exchange for the holder’s 3.118 shares of Series A preferred stock. The exchange is being made in five (5) equal tranches, commencing May 1, 2026, and the number of shares of Common Stock issuable in each tranche will be calculated by dividing the value of the shares of shares of preferred stock being exchanged by the 5-day volume weighted average price of the Common Stock ending on the trading day preceding the exchange.\n\n \n\nF-26\n\n \n\nTREASURY STOCK\n\n \n\nWe have treasury stock, at cost, consisting of 830 thousand shares and 504 thousand shares of Common Stock as of March 31, 2026 and 2025, respectively. During the year ended March 31, 2026, the Company retained 326 thousand shares of common stock as treasury stock related to the payment of employee taxes for restricted stock awards issued to employees. 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.\n\nEQUITY INCENTIVE PLANS\n\nAwards 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.\n\n \n\nIn 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.\n\nStock Options\n\nAs of March 31, 2026, there were no options outstanding and exercisable under the 2000 Plan.\n\nAs of March 31, 2025, the options outstanding and exercisable under the 2000 Plan were as follows:\n\n \n\nAs of March 31, 2025\n\n \n\nMin\n\n \n\n \n\nMax\n\n \n\n \n\nOptions Outstanding\n\n \n\n \n\nWeighted Average Remaining Life in Years\n\n \n\n \n\nWeighted Average Exercise Price\n\n \n\n \n\nAggregate Intrinsic Value\n\n \n\n$\n\n148.0\n\n \n\n \n\n$\n\n148.0\n\n \n\n \n\n \n\n250\n\n \n\n \n\n \n\n0.25\n\n \n\n \n\n$\n\n148\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n \n\n \n\n \n\n \n\n250\n\n \n\n \n\n \n\n0.25\n\n \n\n \n\n$\n\n148\n\n \n\n \n\n$\n\n—\n\n \n\nDuring the year ended March 31, 2026 and 2025, 250 and 642 options expired, respectively.\n\n \n\nStock Appreciation Rights (\"SARs\")\n\nDuring the year ended March 31, 2026, the Company granted 85 thousand SARs, which were granted under the 2017 Plan. No SARs were granted during the year ended March 31, 2025.\n\nAll SARs issued have an exercise price equal to the market price of the Company’s Common Stock on the date of grant with a maturity date of 10 years after grant date. The Company has the option to settle the SARs through a cash payment, issuance of shares, or some combination of cash payment and shares. Based on past practice and intent to settle these awards with shares of Class A common stock, the Company has determined that these awards should be classified in equity.\n\nF-27\n\n \n\n \n\nThe following weighted average assumptions were used to estimate the fair value of SARs granted, as follows:\n\n \n\n \n\n \n\nFor the Year Ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\nExpected dividend yield\n\n \n\n$\n\n—\n\n \n\nExpected equity volatility\n\n \n\n \n\n100\n\n%\n\nExpected term (years)\n\n \n\n \n\n3.0\n\n \n\nRisk-free interest rate\n\n \n\n \n\n3.92\n\n%\n\nExercise price\n\n \n\n$\n\n3.16\n\n \n\nMarket price per share\n\n \n\n$\n\n3.16\n\n \n\nNo SARs were issued in the fiscal year ended March 31, 2025.\n\n \n\nSARs outstanding under the 2017 Plan, along with the minimum and maximum strike price of each group, are as follows:\n\n \n\nAs of March 31, 2026\n\n \n\nMin\n\n \n\n \n\nMax\n\n \n\n \n\nSARs Outstanding\n(In thousands)\n\n \n\n \n\nWeighted Average Remaining Life in Years\n\n \n\n \n\nWeighted Average Exercise Price\n\n \n\n \n\nAggregate Intrinsic Value\n(In thousands)\n\n \n\n$\n\n3.16\n\n \n\n \n\n$\n\n3.16\n\n \n\n \n\n \n\n85\n\n \n\n \n\n \n\n9.01\n\n \n\n \n\n$\n\n3.16\n\n \n\n \n\n$\n\n—\n\n \n\n$\n\n5.80\n\n \n\n \n\n$\n\n12.80\n\n \n\n \n\n \n\n625\n\n \n\n \n\n \n\n5.98\n\n \n\n \n\n$\n\n9.40\n\n \n\n \n\n \n\n—\n\n \n\n$\n\n23.20\n\n \n\n \n\n$\n\n29.40\n\n \n\n \n\n \n\n98\n\n \n\n \n\n \n\n3.12\n\n \n\n \n\n$\n\n27.77\n\n \n\n \n\n \n\n—\n\n \n\n$\n\n39.40\n\n \n\n \n\n$\n\n44.60\n\n \n\n \n\n \n\n38\n\n \n\n \n\n \n\n4.89\n\n \n\n \n\n$\n\n39.43\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n846\n\n \n\n \n\n \n\n5.91\n\n \n\n \n\n$\n\n12.24\n\n \n\n \n\n$\n\n—\n\n \n\n \n\nAs of March 31, 2025\n\n \n\nMin\n\n \n\n \n\nMax\n\n \n\n \n\nSARs Outstanding\n(In thousands)\n\n \n\n \n\nWeighted Average Remaining Life in Years\n\n \n\n \n\nWeighted Average Exercise Price\n\n \n\n \n\nAggregate Intrinsic Value\n(In thousands)\n\n \n\n$\n\n5.80\n\n \n\n \n\n$\n\n12.80\n\n \n\n \n\n \n\n628\n\n \n\n \n\n \n\n6.92\n\n \n\n \n\n$\n\n9.44\n\n \n\n \n\n$\n\n—\n\n \n\n$\n\n23.20\n\n \n\n \n\n$\n\n29.40\n\n \n\n \n\n \n\n98\n\n \n\n \n\n \n\n4.12\n\n \n\n \n\n$\n\n27.77\n\n \n\n \n\n \n\n—\n\n \n\n$\n\n39.40\n\n \n\n \n\n$\n\n46.40\n\n \n\n \n\n \n\n41\n\n \n\n \n\n \n\n5.85\n\n \n\n \n\n$\n\n39.18\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n766\n\n \n\n \n\n \n\n6.51\n\n \n\n \n\n$\n\n13.36\n\n \n\n \n\n$\n\n—\n\n \n\n \n\nExercisable SARs under the 2017 Plan as of March 31, 2026 are as follows:\n\n \n\nSARs Exercisable\n(In thousands)\n\n \n\n \n\nWeighted Average\nRemaining Life in Years\n\n \n\n \n\nWeighted Average\nExercise Price\n\n \n\n \n\nAggregate Intrinsic Value\n(In thousands)\n\n \n\n \n\n691\n\n \n\n \n\n \n\n6.1\n\n \n\n \n\n$\n\n14.05\n\n \n\n \n\n$\n\n—\n\n \n\n \n\nAs of March 31, 2026, the compensation cost not yet recognized related to nonvested SARS awards totaled 65 thousand, to be recognized over the weighted average remaining vesting period of 1.2 years.\n\n \n\nActivity for the year ended March 31, 2026 is as follows (in thousands):\n\n \n\n \n\n \n\nYear Ended\nMarch 31, 2026\n\n \n\n SARs Outstanding March 31, 2025\n\n \n\n \n\n766\n\n \n\n Issued\n\n \n\n \n\n85\n\n \n\n Forfeited\n\n \n\n \n\n(5\n\n)\n\n Total SARs Outstanding March 31, 2026\n\n \n\n \n\n846\n\n \n\n \n\nF-28\n\n \n\nPerformance Stock Units (\"PSUs\")\n\n \n\nThe Company has granted PSUs 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.\n\n \n\nThere were no PSUs granted, earned, vested, or settled during the years ended March 31, 2026 and 2025. During the year ended March 31, 2026, the 25,000 unvested PSUs outstanding as of March 31, 2025 were forfeited upon the expiration of the applicable performance period. As of March 31, 2026, there were no outstanding unearned or unvested PSUs.\n\nRestricted Stock Awards (\"RSAs\") and Restricted Stock Units (\"RSUs\")\n\n \n\nDuring the year ended March 31, 2026, 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 settled in shares.\n\n \n\nAs of March 31, 2026, there was $3.8 million of unrecognized stock-based compensation expense related to these awards that will be recognized over the remaining vesting period of 22 months. As of March 31, 2026, there were $3.1 million unvested RSUs and RSAs outstanding.\n\n \n\nRSU and RSA activity for the year ended March 31, 2026 is as follows (in thousands):\n\n \n\n \n\n \n\nYear Ended\nMarch 31, 2026\n\n \n\n \n\nWeighted Average Grant Date Fair Value\n\n \n\n \n\nAggregate Fair Value\n\n \n\n Outstanding March 31, 2025\n\n \n\n \n\n2,255\n\n \n\n \n\n$\n\n0.83\n\n \n\n \n\n$\n\n1,872\n\n \n\n Issued\n\n \n\n \n\n998\n\n \n\n \n\n \n\n3.21\n\n \n\n \n\n \n\n3,202\n\n \n\n Forfeited\n\n \n\n \n\n(170\n\n)\n\n \n\n \n\n0.83\n\n \n\n \n\n \n\n(141\n\n)\n\n Outstanding March 31, 2026\n\n \n\n \n\n3,083\n\n \n\n \n\n$\n\n1.60\n\n \n\n \n\n$\n\n4,933\n\n \n\n \n\nStock-based Compensation Expense\n\n \n\nA total of $3.0 million and $1.9 million of stock based compensation was included within Selling, General and Administrative expenses for the years ended March 31, 2026 and 2025, respectively.\n\n \n\nOf this stock based compensation expense, there was $0.3 million and $0.3 million of stock-based compensation expense for the year ended March 31, 2026 and 2025, respectively, related to Board of Director fees. During the years ended March 31, 2026 and 2025, the Company issued 97 thousand and 74 thousand restricted shares, respectively to non-employee directors as compensation for their services.\n\n \n\n7. EARNINGS (LOSS) PER SHARE\n\n \n\nBasic net (loss) income per share is computed by dividing the net (loss) income attributable to Common Stockholders, adjusted for by the deemed earnings attributable to participating common warrant holders, by the weighted average number of shares of Common Stock outstanding during the period.\n\n \n\nDiluted net (loss) income per share is computed by dividing the net (loss) income available to Common Stockholders by the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include restricted stock units, stock options and warrants outstanding during the period and are calculated using the treasury stock method. Potentially dilutive common shares are excluded from the computations of diluted (loss) income per share if their effect would be anti-dilutive. A net loss available to Common Stockholders causes all potentially dilutive securities to be anti-dilutive and are not included.\n\n \n\nF-29\n\n \n\nThe following table sets forth the computation of basic and diluted earnings per share and a reconciliation of the weighted average number of common and common equivalent shares outstanding for the fiscal year ended March 31, 2026 and 2025:\n\n \n\n \n\nTwelve Months ended\nMarch 31,\n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n \n\n(in thousands, except shares and per share data)\n\n \n\nNumerator:\n\n \n\n \n\n \n\n \n\n \n\nNet (loss) income attributable to common stockholders and participating common warrant holders\n\n$\n\n(9,191\n\n)\n\n \n\n$\n\n3,246\n\n \n\nLess: earnings attributable to participating common warrant holders\n\n \n\n—\n\n \n\n \n\n \n\n(468\n\n)\n\nNet (loss) income attributable to common stockholders - basic and diluted\n\n$\n\n(9,191\n\n)\n\n \n\n$\n\n2,778\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDenominator:\n\n \n\n \n\n \n\n \n\n \n\nWeighted average shares of common stock - basic\n\n \n\n18,777,332\n\n \n\n \n\n \n\n15,813,590\n\n \n\nEffect of dilutive common stock equivalents\n\n \n\n—\n\n \n\n \n\n \n\n2,004,838\n\n \n\nWeighted average shares of common stock - diluted\n\n \n\n18,777,332\n\n \n\n \n\n \n\n17,818,428\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nEarnings per share:\n\n \n\n \n\n \n\n \n\n \n\nBasic (loss) earnings per share\n\n$\n\n(0.49\n\n)\n\n \n\n$\n\n0.18\n\n \n\nEffect of dilutive common stock equivalents\n\n \n\n—\n\n \n\n \n\n \n\n(0.02\n\n)\n\nDiluted (loss) earnings per share\n\n$\n\n(0.49\n\n)\n\n \n\n$\n\n0.16\n\n \n\n \n\nThe 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:\n\n \n\n \n\nTwelve Months ended\nMarch 31,\n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nOptions to purchase common stock\n\n \n\n—\n\n \n\n \n\n \n\n250\n\n \n\nStock appreciation rights\n\n \n\n846,151\n\n \n\n \n\n \n\n766,244\n\n \n\nRestricted stock units and awards\n\n \n\n3,082,830\n\n \n\n \n\n \n\n—\n\n \n\nWarrants to purchase common stock\n\n \n\n706,667\n\n \n\n \n\n \n\n2,654,167\n\n \n\nConvertible notes\n\n \n\n6,500,000\n\n \n\n \n\n \n\n—\n\n \n\n \n\n8. COMMITMENTS AND CONTINGENCIES\n\n \n\nOperating Leases\n\n \n\n \n\nThe Company has three operating leases related to its Cineverse India operations, with expiration dates in July 2027. The Company incurred $272 thousand and $423 thousand in rental expense associated with its operating leases during the years ended March 31, 2026 and 2025, respectively.\n\n \n\nThe Company did not have any sublease arrangements during the twelve months ended March 31, 2026 and accordingly did not recognize any sublease income. The Company recognized $0.2 million sublease income related to its subleasing arrangement during the twelve months ended March 31, 2025.\n\nF-30\n\n \n\nThe table below presents the lease-related assets and liabilities recorded on our Consolidated Balance Sheets (in thousands):\n\n \n\n \n\n \n\nClassification on the Balance Sheet\n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nAssets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNoncurrent\n\n \n\n Other long-term assets\n\n \n\n$\n\n378\n\n \n\n \n\n$\n\n435\n\n \n\nLiabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent\n\n \n\n Operating leases liabilities\n\n \n\n \n\n298\n\n \n\n \n\n \n\n187\n\n \n\nNoncurrent\n\n \n\n Operating leases liabilities, net of current\n\n \n\n \n\n105\n\n \n\n \n\n \n\n275\n\n \n\n \n\n \n\n$\n\n403\n\n \n\n \n\n$\n\n462\n\n \n\n \n\nThe table below presents the annual gross undiscounted cash flows related to the Company's operating lease commitments (in thousands):\n\n \n\nFiscal year ending March 31,\n\nOperating Lease Commitments\n\n \n\n2027\n\n$\n\n310\n\n \n\n2028\n\n \n\n106\n\n \n\nThereafter\n\n \n\n—\n\n \n\nTotal lease payments\n\n$\n\n416\n\n \n\nLess imputed interest\n\n \n\n(13\n\n)\n\nTotal\n\n$\n\n403\n\n \n\n \n\nFor leases which have a term of twelve months or less and do not contain an option to extend which the Company is\n\nreasonably certain to implement, the Company has elected to not apply the recognition provisions of ASC 842\n\nand recognizes these expenses on a straight-line basis over the term of the agreement.\n\n \n\nBecause 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 our lease commencement date. The weighted average discount rate utilized was 4.61%.\n\n \n\nCommitments\n\n \n\n \n\nIn 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 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):\n\n \n\n \n\n \n\nFiscal Year Ended March 31,\n\n \n\n \n\n \n\n2027\n\n \n\n \n\n2028\n\n \n\n \n\n2029\n\n \n\n \n\n2030\n\n \n\n \n\n2031\n\n \n\nTotal Project Commitments\n\n \n\n$\n\n4,339\n\n \n\n \n\n$\n\n204\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n—\n\n \n\n \n\nF-31\n\n \n\n9. INCOME TAXES\n\nWe recorded income tax expense (benefit) of ($2.8) million and $106 thousand from operations for the years ended March 31, 2026 and 2025, respectively. For the year ended March 31, 2026, we recorded an income tax (benefit) of ($2.8) million, which represented a ($2.8) million release of our 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.\n\n \n\nIn connection with the acquisition of IndiCue, during the year ended March 31, 2026, we recorded identifiable intangible assets for financial reporting purposes for which there was no corresponding step-up in tax basis because the transaction was treated as a stock acquisition for income tax purposes. As a result, we recognized an acquisition-date deferred tax liability of approximately $2.8 million related to the book-over-tax basis differences in the acquired intangible assets. The deferred tax liability represented a source of future taxable income and supported the realizability of an equivalent amount of our existing deferred tax assets. Accordingly, we reduced our valuation allowance by approximately $2.8 million and recognized a corresponding deferred income tax benefit in the consolidated statement of operations for the year ended March 31, 2026. We continue to maintain a valuation allowance against deferred tax assets that are not supported by sufficient positive evidence of realizability.\n\n \n\nIn July 2025, the One Big Beautiful Bill Act (Public Law 119-21) was enacted. We recognized the income tax effects of the legislation in the period of enactment in accordance with ASC 740. The legislation did not have a material impact on our consolidated financial statements for the year ended March 31, 2026. We will continue to evaluate the impact of the legislation on future periods.\n\n \n\nThe following table presents the components of (loss) income before income taxes and the related income tax (benefit) expense (in thousands):\n\n \n\n \n\n \n\nFor the Fiscal Year\nEnded March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nNet (loss) income before income taxes\n\n \n\n \n\n \n\n \n\n \n\n \n\n    U.S. operation\n\n \n\n$\n\n(11,394\n\n)\n\n \n\n$\n\n3,677\n\n \n\n    India operations\n\n \n\n \n\n(106\n\n)\n\n \n\n \n\n193\n\n \n\nTotal (loss) income before income taxes\n\n \n\n$\n\n(11,500\n\n)\n\n \n\n$\n\n3,870\n\n \n\nIncome tax expense:\n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent\n\n \n\n \n\n \n\n \n\n \n\n \n\nU.S. federal\n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n—\n\n \n\nU.S. state and local (a)\n\n \n\n \n\n25\n\n \n\n \n\n \n\n62\n\n \n\nIndia\n\n \n\n \n\n43\n\n \n\n \n\n \n\n51\n\n \n\nTotal current income tax expense\n\n \n\n$\n\n68\n\n \n\n \n\n$\n\n113\n\n \n\nDeferred:\n\n \n\n \n\n \n\n \n\n \n\n \n\nU.S. federal\n\n \n\n \n\n(2,498\n\n)\n\n \n\n \n\n—\n\n \n\nU.S. state and local (b)\n\n \n\n \n\n(338\n\n)\n\n \n\n \n\n—\n\n \n\nIndia\n\n \n\n \n\n(75\n\n)\n\n \n\n \n\n(7\n\n)\n\nTotal deferred income tax (benefit) expense\n\n \n\n \n\n(2,911\n\n)\n\n \n\n \n\n(7\n\n)\n\nTotal income tax (benefit) expense\n\n \n\n$\n\n(2,843\n\n)\n\n \n\n$\n\n106\n\n \n\n \n\n(a)\nTaxes in Texas make up the majority of the current U.S. state and local income tax (benefit) expense.\n\n(b)\nTaxes in Illinois, California, New York State, Colorado, New Jersey and New York City make up the majority of the deferred U.S. state and local income tax (benefit) expense.\n\n \n\nF-32\n\n \n\nIncome taxes paid (net of refunds received) related to continuing operations are presented on a cash basis and reconcile to cash paid for income taxes in the consolidated statement of cash flows. Income taxes paid (net of refunds received) were as follows (in thousands):\n\n \n\n \n\n \n\nFor the Fiscal Year\nEnded March 31,\n\n \n\n.\n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nJurisdiction:\n\n \n\n \n\n \n\n \n\n \n\n \n\n    U.S. federal\n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n—\n\n \n\n    U.S. state and local:\n\n \n\n \n\n \n\n \n\n \n\n \n\nTexas\n\n \n\n \n\n17\n\n \n\n \n\n \n\n3\n\n \n\nIndia\n\n \n\n \n\n56\n\n \n\n \n\n \n\n31\n\n \n\nTotal income tax paid\n\n \n\n$\n\n73\n\n \n\n \n\n$\n\n34\n\n \n\n \n\nThe expected tax expense (benefit) based on the United States statutory federal tax rate is reconciled with actual tax expense (benefit) as follows (in thousands):\n\n \n\n \n\n \n\nFor the Year Ended March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nExpected U.S. federal statutory income tax\n\n \n\n$\n\n(2,415\n\n)\n\n \n\n \n\n21.0\n\n%\n\n \n\n$\n\n813\n\n \n\n \n\n \n\n21.0\n\n%\n\nU.S. state and local income taxes, net of federal benefit (c)\n\n \n\n \n\n(318\n\n)\n\n \n\n \n\n2.7\n\n%\n\n \n\n \n\n49\n\n \n\n \n\n \n\n1.3\n\n%\n\nIndia vs. U.S. federal statutory tax rate difference\n\n \n\n \n\n(9\n\n)\n\n \n\n \n\n0.1\n\n%\n\n \n\n \n\n4\n\n \n\n \n\n \n\n0.1\n\n%\n\nChange in U.S. federal valuation allowance\n\n \n\n \n\n(113\n\n)\n\n \n\n \n\n1.0\n\n%\n\n \n\n \n\n(1,663\n\n)\n\n \n\n \n\n(43.0\n\n)%\n\nNontaxable or nondeductible items:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNondeductible acquisition-related costs\n\n \n\n \n\n210\n\n \n\n \n\n \n\n(1.8\n\n)%\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n%\n\nChange in fair value of contingent consideration\n\n \n\n \n\n199\n\n \n\n \n\n \n\n(1.7\n\n)%\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n%\n\nNondeductible meals and entertainment\n\n \n\n \n\n14\n\n \n\n \n\n \n\n(0.1\n\n)%\n\n \n\n \n\n8\n\n \n\n \n\n \n\n0.2\n\n%\n\nAdjustments to deferred tax assets\n\n \n\n \n\n(411\n\n)\n\n \n\n \n\n3.5\n\n%\n\n \n\n \n\n895\n\n \n\n \n\n \n\n23.1\n\n%\n\nIncome tax (benefit) expense\n\n \n\n$\n\n(2,843\n\n)\n\n \n\n \n\n24.7\n\n%\n\n \n\n$\n\n106\n\n \n\n \n\n \n\n2.7\n\n%\n\n \n\n(c)\nTaxes in Texas, Illinois, California, New York State, Colorado, New Jersey and New York City make up the majority of the effect of the U.S. state and local tax category.\n\n \n\nF-33\n\n \n\nDeferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows (in thousands):\n\n \n\n \n\n \n\nFor the Fiscal Year\nEnded March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nDeferred tax assets:\n\n \n\n \n\n \n\n \n\n \n\n \n\n    Net operating loss carryforwards\n\n \n\n$\n\n19,221\n\n \n\n \n\n$\n\n16,216\n\n \n\nStock-based compensation\n\n \n\n \n\n2,321\n\n \n\n \n\n \n\n2,198\n\n \n\nIntangible assets\n\n \n\n \n\n370\n\n \n\n \n\n \n\n3,857\n\n \n\nAccrued liabilities\n\n \n\n \n\n461\n\n \n\n \n\n \n\n442\n\n \n\nCapital loss carryforwards\n\n \n\n \n\n4,689\n\n \n\n \n\n \n\n4,637\n\n \n\nNon-deductible interest expense\n\n \n\n \n\n4,175\n\n \n\n \n\n \n\n3,741\n\n \n\nRight of use liability\n\n \n\n \n\n96\n\n \n\n \n\n \n\n109\n\n \n\nBad debt reserve\n\n \n\n \n\n352\n\n \n\n \n\n \n\n73\n\n \n\nCharitable contribution carryforwards\n\n \n\n \n\n19\n\n \n\n \n\n \n\n21\n\n \n\nTotal deferred tax assets before valuation allowance\n\n \n\n \n\n31,704\n\n \n\n \n\n \n\n31,294\n\n \n\nLess: Valuation allowance\n\n \n\n$\n\n(31,355\n\n)\n\n \n\n$\n\n(31,141\n\n)\n\nTotal deferred tax assets after valuation allowance\n\n \n\n \n\n349\n\n \n\n \n\n \n\n153\n\n \n\nDeferred tax liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nRight of use asset\n\n \n\n \n\n(90\n\n)\n\n \n\n \n\n(102\n\n)\n\nFixed assets\n\n \n\n \n\n(164\n\n)\n\n \n\n \n\n(30\n\n)\n\nTotal deferred tax liabilities\n\n \n\n \n\n(254\n\n)\n\n \n\n \n\n(132\n\n)\n\nNet deferred tax asset\n\n \n\n$\n\n95\n\n \n\n \n\n$\n\n21\n\n \n\n \n\nWe have provided a valuation allowance to our net deferred tax assets as of March 31, 2026 and 2025. 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.\n\n \n\nFor the year ended March 31, 2026, our valuation allowance increased by $214 thousand, related to the U.S. federal and state jurisdictions in the amounts of ($113) thousand and $327 thousand, respectively. For the year ended March 31, 2025, our valuation allowance (decreased) by ($10.5) million, related to the U.S. federal and state jurisdictions in the amounts of ($1.7) million and ($8.9) million, respectively. The increase in our valuation allowance during the fiscal year ended March 31, 2026 was mainly due to an increase to our net operating loss carryforward and other deferred tax assets, net of a decrease related to the recording of a deferred tax liability related to the IndiCue acquisition. The decrease in our valuation allowance during the fiscal year ended March 31, 2025 was mainly due to a change in our 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 change caused our gross state deferred tax asset to decrease along with the corresponding valuation allowance.\n\nAs of March 31, 2026, we had federal and state net operating loss carryforwards of approximately $80.5 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 $19.2 and $81.7 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, 2024, and 2026 of approximately $61.3 million, do not expire.\n\nUnder 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\n\nF-34\n\n \n\nrespect 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.\n\n \n\nWe file income tax returns in the U.S. federal jurisdiction, various U.S. states, and India. For federal income tax purposes, our fiscal 2023 through 2026 tax years remain open for examination by the tax authorities under the normal three-year statute of limitations. Fiscal 2007 is also open for examination as we used the fiscal 2007 NOL carryforward to offset taxable income generated in fiscal 2025. For U.S. state tax purposes, our fiscal 2022 through 2026 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 2023 through 2026 tax years remain open for examination by the tax authorities.\n\n \n\nWe evaluated the provisions of ASC 740-10 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740-10 prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions that a company has taken or expects to take in its tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized (or amount of net operating loss carry forward or amount of tax refundable is reduced) for unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740-10.\n\n \n\nWe recorded an unrecognized tax benefit liability of approximately $49 thousand as of March 31, 2026, related to potential state income tax liabilities arising from non-filing positions in connection with our acquisition of IndiCue. We recognize interest and penalties on uncertain tax positions as a component of income tax expense. As of March 31, 2025, no liability for unrecognized tax benefits was required to be reported.\n\n \n\nA reconciliation of our unrecognized tax positions is as follows (in thousands):\n\n \n\n \n\n \n\nFor the Fiscal Year\nEnded March 31,\n\n \n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\n    Balance at beginning of year\n\n \n\n$\n\n—\n\n \n\n \n\n$\n\n—\n\n \n\nAdditions based on tax positions related to the current year\n\n \n\n \n\n \n\n \n\n \n\n \n\nAdditions for tax positions of prior years\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nReductions for tax positions of prior years\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nSettlements\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nState tax positions acquired in business combinations\n\n \n\n \n\n49\n\n \n\n \n\n \n\n—\n\n \n\nReductions due to lapse of statute of limitations\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nBalance at end of year\n\n \n\n$\n\n49\n\n \n\n \n\n$\n\n—\n\n \n\n \n\nF-35\n\n \n\n10. BUSINESS COMBINATIONS\n\n \n\nA business combination is an acquisition of business. Business combinations are accounted by allocating the fair value of the purchase price of the assets acquired and liabilities assumed.\n\n \n\nFor the year ended March 31, 2026, the acquired business contributed revenue of and net income of $11.6 million and $3.9 million, respectively which are included in the Consolidated Statements of Operations from the acquisition date through March 31, 2026.\n\n \n\nIndiCue Acquisition\n\n \n\nOn February 12, 2026, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) to acquire all of the issued and outstanding equity interests of IndiCue, a CTV monetization and engagement platform. The acquisition is intended to expand the Company’s technology capabilities and strengthen its advertising and audience engagement offerings within the streaming and connected television ecosystem.\n\n \n\nPursuant to the terms of the Purchase Agreement, the aggregate purchase price, further detailed below was subject to working capital and other customary adjustments, consisting of (i) $12.8 million payable in cash at closing and (ii) deferred consideration, payable over 6 to 12 months, in cash or shares of the Company’s Class A common stock, subject to stockholder approval, and earnout payments, in amounts totaling up to $18.0 million if certain revenue and gross profit earnout targets are achieved during the first three fiscal years following the Acquisition. The Purchase Agreement also includes certain restrictive covenants of the Sellers, including noncompetition provisions.\n\n \n\nThe Company agreed to pay deferred stock consideration one year after Closing (or earlier at the Company's discretion, or after six months upon the seller's request). Subject to certain conditions, settlement shall be in common stock, with a mechanism requiring additional compensation (\"Shortfall Amount\") if the Company's share price falls below a designated amount at the time of settlement. The Shortfall Amount may also be settled in cash or shares at the Company's discretion, subject to certain conditions. The Company elected the fair value option (\"FVO\") under ASC 825 to account for the deferred consideration liability. With this election, the Company remeasures the deferred consideration obligation at fair value at the end of each reporting period. All changes in fair value are recognized in earnings each reporting period until settlement. For the year ended March 31, 2026, the Company recognized a $1.0 million increase in the fair value of the deferred consideration liability, which is presented as Change in fair value of acquisition-related deferred consideration in the Consolidated Statements of Operations.\n\n \n\nThe aggregate purchase consideration consisted of the following (in thousands):\n\n \n\n \n\n \n\nIndiCue\n\n \n\nPurchase price allocation:\n\n \n\n \n\n \n\nCash paid to seller\n\n \n\n \n\n12,800\n\n \n\nDeferred consideration\n\n \n\n \n\n11,250\n\n \n\nContingent consideration\n\n \n\n \n\n11,250\n\n \n\nTotal purchase price\n\n \n\n$\n\n35,300\n\n \n\nAllocated to:\n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n \n\n3,183\n\n \n\nAccounts receivables\n\n \n\n \n\n15,424\n\n \n\nOther current assets\n\n \n\n \n\n39\n\n \n\nGoodwill\n\n \n\n \n\n14,419\n\n \n\nIntangible assets:\n\n \n\n \n\n \n\nTradenames, Trademarks and Patents\n\n \n\n \n\n2,500\n\n \n\nSoftware\n\n \n\n \n\n9,500\n\n \n\nCustomer Relationships\n\n \n\n \n\n7,800\n\n \n\nAccounts payable and accrued expenses\n\n \n\n \n\n(14,729\n\n)\n\nDeferred tax liability\n\n \n\n \n\n(2,836\n\n)\n\n \n\n \n\n$\n\n35,300\n\n \n\n \n\nF-36\n\n \n\nGiant Worldwide Acquisition\n\n \n\nOn January 7, 2026, the Company acquired Giant Worldwide (\"Giant\"), a provider of audience development, customer acquisition, direct-to-consumer marketing, and media services for leading entertainment brands and studios. The acquisition brings deep studio relationships, audience development expertise, and performance-driven marketing capabilities to the Matchpoint™ platform, further enhancing the Company's ability to provide end-to-end technology and media solutions to content owners, distributors, and streaming services.\n\n \n\nPursuant to the terms of the asset purchase agreement, the Company acquired the assets and liabilities of Giant for an aggregate purchase price of $1.95 million, payable as (a) $ 0.35 million at closing (the \"Closing Date Payment\") and (b) $1.65 million in four equal installments of $ 0.41 million due at the 3, 6, 9, and 12-month anniversaries of the Closing Date.\n\n \n\nThe Company acquired Giant as a result of a forced sale through an assignment for the benefit of creditors process.\n\nFollowing the Company's reassessment of the assets and liabilities acquired, the Company recognized identifiable intangibles of $6.2 million for consideration of $2.0 million resulting in a bargain purchase gain of $4.3 million.\n\n \n\nThe aggregate purchase consideration consisted of the following (in thousands):\n\n \n\n \n\n \n\nGiant Worldwide\n\n \n\nPurchase price allocation:\n\n \n\n \n\n \n\nCash paid to seller\n\n \n\n \n\n350\n\n \n\nDeferred consideration\n\n \n\n \n\n1,600\n\n \n\nTotal purchase price\n\n \n\n$\n\n1,950\n\n \n\nAllocated to:\n\n \n\n \n\n \n\nGain on bargain purchase\n\n \n\n \n\n(4,250\n\n)\n\nIntangible assets :\n\n \n\n \n\n \n\nTradenames, Trademarks and Patents\n\n \n\n \n\n600\n\n \n\nPreferred partner medallions\n\n \n\n \n\n4,100\n\n \n\nCustomer Relationships\n\n \n\n \n\n1,500\n\n \n\n \n\n \n\n$\n\n1,950\n\n \n\n \n\nThe following unaudited pro forma financial information presents the combined results of operations of the Company, IndiCue as if the acquisitions had occurred on April 1, 2024 (in thousands):\n\n \n\n \n\nMarch 31,\n\n \n\n \n\n2026\n\n \n\n \n\n2025\n\n \n\nRevenue\n\n \n\n101,479\n\n \n\n \n\n \n\n92,606\n\n \n\nNet (loss) income\n\n$\n\n(8,097\n\n)\n\n \n\n$\n\n2,911\n\n \n\n \n\nGiant Worldwide is excluded from the table above due to impracticality reasons, as the Company was unable to obtain the requisite financial records for results pre-acquisition.\n\nF-37\n\n \n\n11. SUBSEQUENT EVENTS\n\n \n\nOn April 27, 2026, the Company agreed to issue shares of Common Stock in exchange for an aggregate of the holder’s 3.118 shares of Series A Preferred Stock. The exchange will be made in five (5) equal tranches, and commenced on May 1, 2026. The number of shares of Common Stock issuable in each tranche is to be calculated by dividing the value of the shares of Series A Preferred Stock being exchanged by the 5-day volume weighted average price ending on the trading day preceding the exchange. The Company is authorized to issue up to 1,500,000 shares of Common Stock under the Exchange Agreement. Upon the exchange of each tranche, the shares of Series A Preferred Stock so exchanged will be immediately retired and restored to the status of authorized but unissued preferred stock.\n\n \n\nOn May 7, 2026, we acquired the remaining outstanding ownership interests in CONtv from the minority interest holders in exchange for a total of 380,238 shares of the Common Stock and $89 thousand of cash payments. As a result of these transactions, CONtv became a wholly-owned subsidiary of the Company.\n\n \n\nEffective May 1, 2026, the Company entered into a lease for New York, NY office location. The lease term ends on May 31, 2029. The lease contained standard and customary terms which included a security deposit of $96 thousand among other amounts due at lease execution date. The monthly base rent installment escalates over the term of the lease from $19 thousand to $20 thousand per month at the end of the lease term.\n\n \n\nEffective May 1, 2026, the Company entered into a lease for its Burbank, CA office location. The lease term ends on June 30, 2029. The lease contained standard and customary terms which included a security deposit of $38 thousand among other amounts due at lease execution date.The monthly rent installment of base rent escalates over the term of the lease from $35 thousand, after an initial four month introductory rate, to $38 thousand per month at the end of the lease term.\n\n \n\nF-38"}