Financial Analysis

"10. BUSINESS COMBINATIONS A 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. For 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. IndiCue Acquisition On 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 Companys technology capabilities and strengthen its advertising and audience engagement offerings within the streaming and connected television ecosystem. Pursuant 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 Companys 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 …

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8. COMMITMENTS AND CONTINGENCIES Operating Leases The 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. The Company did not have any sublease arrangements during the twelve months ended March 31, 2026 and accordingly did no t 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. The table below presents the lease-related assets and liabilities recorded on our Consolidated Balance Sheets (in thousands): Classification on the Balance Sheet 2026 2025 Assets Noncurrent Other long-term assets $ 378 $ 435 Liabilities Current Operating leases liabilities 298 187 Noncurrent Operating leases liabilities, net of current 105 275 $ 403 $ 462 The table below presents the annual gross undiscounted cash flows related to the Company's operating lease commitments (in thousands): Fiscal year ending March 31, Operating Lease Commitments 2027 $ 310 2028 106 Thereafter Total lease payments $ 416 Less imputed interest ( 13 ) Total $ 403 For leases which have a term of twelve months or less and do not contain an option to extend which the Company is reasonably certain to implement, the Company has elected to not apply the recognition provisions of ASC 8 …

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"5. DEBT Line of Credit Facility The Company is party to a Loan, Guaranty, and Security Agreement, as amended on April 8, 2025 , with East West Bank (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. As 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. For 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 % …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following table presents the Companys revenue by source (in thousands): Year Ended March 31, 2026 2025 Streaming and digital $ 40,186 $ 44,408 Base distribution 9,534 28,614 Advertising technology and services 7,922 Podcast and other 4,388 4,946 Media services 3,685 Other non-recurring 18 213 Total Revenue $ 65,733 $ 78,181 …

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9. INCOME TAXES We 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. In 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 defer …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

"Recently Issued Accounting Pronouncements The Company evaluates all Accounting Standard Updates (""ASUs"") issued but not yet effective by FASB for consideration of their applicability. ASU's not included in the Company's disclosures were assessed and determined to be not applicable and material to the Company's consolidated financial statements or disclosures. In 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. In 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 r …

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"3. SEGMENT INFORMATION The Company operates as a single reportable segment. The Companys 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. In 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. This approach ensures that the Companys financial reporting reflects the way management monitors expenses and overall financial performance. The following table presents financial information with respect to the Companys single operating segment for the years ended March 31, 2026, and 2025: For the Fiscal Year Ended March 31 2026 2025 Revenues $ 65,733 $ 78,181 Less: Royalty expense 9,025 24,243 License, participation and technology costs 13,594 7,118 Other direct operating costs 8,040 6,182 Payroll and related 19,649 16,900 Professional services 6,074 3,112 Advertising and marketing 7,526 1,385 Amortization and deprec …

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"6. STOCKHOLDERS EQUITY COMMON STOCK Common Stock During 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. During the fiscal year ended March 31, 2025, the Company issued 500 thousand shares of Common Stock, relating to preferred stock dividends, Board fees, deferred consideration and earnout commitments, and stock warrant exercise. Public Offering In February 2026, the Company sold in a public offering an aggregate of 1,725,000 shares (the Offered Shares) of the Companys 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 Companys estimated Offering expenses, was $ 3.1 million . ATM Sales Agreement On May 3, 2024, the Company entered into a sales agreement (the ATM Sales A …

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11. SUBSEQUENT EVENTS On April 27, 2026, the Company agreed to issue shares of Common Stock in exchange for an aggregate of the holders 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. On May 7, 2026, we acquired the remaining outstanding ownership interests in CONtv from the minority interest holders in exchange fo r 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. Effective 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 pe …

SubsequentEventsTextBlock · excerpt; the full note is in the filing