10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal period ended: December 31, 2023

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 001-31810

Cineverse Corp.

(Exact name of registrant as specified in its charter)

Delaware	22-3720962
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
224 W. 35th St., Suite 500 #947, New York, NY 10001	10001
(Address of principal executive offices)	(Zip Code)

(212) 206-8600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
CLASS A COMMON STOCK, PAR VALUE $0.001 PER SHARE	CNVS	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging Growth Company ☐

☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of February 7, 2024, 13,327,960 shares of Class A Common Stock, $0.001 par value, were outstanding.

Cineverse Corp.

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets at December 31, 2023 and March 31, 2023	1
	Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months ended December 31, 2023 and 2022	2
	Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Nine Months ended December 31, 2023 and 2022	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months ended December 31, 2023 and 2022	4
	Unaudited Condensed Consolidated Statements of Equity for the Three and Nine Months ended December 31, 2023 and 2022	6
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 4.	Controls and Procedures	31
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
Exhibit Index		33
Signatures		34

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

Cineverse Corp.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	As of
	December 31, 2023			March 31, 2023
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	5,539		$	7,152
Accounts receivable		16,416			20,846
Unbilled revenue		2,454			2,036
Employee retention tax credit		1,672			2,085
Content advances		8,477			3,724
Other current assets		1,678			1,734
Total current assets		36,236			37,577
Equity investment in Metaverse, a related party, at fair value		1,276			5,200
Property and equipment, net		2,065			1,833
Intangible assets, net		18,727			19,868
Goodwill		20,824			20,824
Content advances, net of current portion		3,153			1,421
Other long-term assets		943			1,265
Total Assets	$	83,224		$	87,988
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	26,987		$	34,531
Line of credit, including unamortized debt issuance costs of $69 and $76, respectively		4,931			4,924
Current portion of deferred consideration on purchase of business		3,954			3,788
Current portion of earnout consideration on purchase of business		110			1,444
Operating lease liabilities		440			418
Current portion of deferred revenue		246			226
Total current liabilities		36,668			45,331
Deferred consideration on purchase of business, net of current portion		2,639			2,647
Operating lease liabilities, net of current portion		531			863
Other long-term liabilities		59			74
Total Liabilities		39,897			48,915
Commitments and contingencies (see Note 6)
Stockholders’ Equity
Preferred stock, 15,000,000 shares authorized; Series A 10% - $0.001 par value per share; 20 shares authorized; 7 shares issued and 7 shares outstanding at December 31, 2023 and March 31, 2023.		3,559			3,559
Common Stock, $0.001 par value; Class A Stock: 275,000,000 shares authorized as of December 31, 2023, and March 31, 2023; 13,553,767 and 9,413,597 shares issued, with 13,265,214 and 9,347,805 shares outstanding as of December 31, 2023, and March 31, 2023, respectively.		192			185
Additional paid-in capital		542,482			530,998
Treasury stock, at cost; 288,554 and 65,792 shares at December 31, 2023 and March 31, 2023, respectively.		(11,978	)		(11,608	)
Accumulated deficit		(489,341	)		(482,395	)
Accumulated other comprehensive loss		(417	)		(402	)
Total stockholders’ equity of Cineverse Corp.		44,497			40,337
Deficit attributable to noncontrolling interest		(1,170	)		(1,264	)
Total equity		43,327			39,073
Total Liabilities and Equity	$	83,224		$	87,988

See accompanying Notes to Condensed Consolidated Financial Statements

1

Cineverse Corp.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	Three Months Ended December 31,						Nine Months Ended December 31,
	2023			2022			2023			2022
Revenues	$	13,276		$	27,882		$	39,268		$	55,478
Costs and expenses
Direct operating		5,464			14,411			17,097			29,859
Selling, general and administrative		6,373			9,107			21,088			29,016
Depreciation and amortization		1,012			924			2,787			2,908
Total operating expenses		12,849			24,442			40,972			61,783
Operating income (loss)		427			3,440			(1,704	)		(6,305	)
Interest expense		(291	)		(367	)		(781	)		(880	)
Loss from equity investment in Metaverse, a related party		(3,043	)		—			(3,761	)		(1,828	)
Employee retention tax credit		—			2,025			—			2,475
Other income (expenses), net		147			(76	)		(331	)		(82	)
Net (loss) income before income taxes		(2,760	)		5,022			(6,577	)		(6,620	)
Income tax benefit (expense)		24			—			(12	)		—
Net (loss) income		(2,736	)		5,022			(6,589	)		(6,620	)
Net income attributable to noncontrolling interest		(41	)		(8	)		(94	)		(35	)
Net (loss) income attributable to controlling interests		(2,777	)		5,014			(6,683	)		(6,655	)
Preferred stock dividends		(87	)		(88	)		(263	)		(264	)
Net (loss) income attributable to common stockholders	$	(2,864	)	$	4,926		$	(6,946	)	$	(6,919	)
Net (loss) income per share attributable to common stockholders:
Basic	$	(0.22	)	$	0.55		$	(0.59	)	$	(0.78	)
Diluted	$	(0.22	)	$	0.55		$	(0.59	)	$	(0.78	)
Weighted average shares of Common Stock outstanding:
Basic		12,828			8,945			11,678			8,854
Diluted		12,828			8,945			11,678			8,854

See accompanying Notes to Condensed Consolidated Financial Statements

2

Cineverse Corp.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

(In thousands)

	Three Months Ended December 31,						Nine Months Ended December 31,
	2023			2022			2023			2022
Net (loss) income	$	(2,736	)	$	5,022		$	(6,589	)	$	(6,620	)
Other comprehensive (loss) income:
Foreign exchange translation		(3	)		88			(15	)		(226	)
Net income attributable to noncontrolling interest		(41	)		(8	)		(94	)		(35	)
Comprehensive (loss) income	$	(2,780	)	$	5,102		$	(6,698	)	$	(6,881	)

See accompanying Notes to Condensed Consolidated Financial Statements

3

Cineverse Corp.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Nine Months Ended December 31,
	2023			2022
Cash flows from operating activities:
Net loss	$	(6,589	)	$	(6,620	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,787			2,908
Provision for doubtful accounts		—			54
Changes in fair value of equity investment in Metaverse		3,761			1,828
Amortization of debt issuance costs		103			138
Stock-based compensation		1,092			3,855
Interest expense for deferred consideration and earnouts		381			743
Capitalized content		(1,371	)		—
Change in estimated earnout consideration		(682	)		—
Non-monetary sale of content licenses		—			(1,022	)
Barter-related non-cash expenses		256			—
Other		395			102
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		3,815			5,795
Other current and long-term assets		449			(2,215	)
Content advances		(6,485	)		1,104
Employee retention tax credit		—			(2,475	)
Accounts payable, accrued expenses, and other liabilities		(6,802	)		(11,972	)
Unbilled revenue		(418	)		(332	)
Deferred revenue		20			208
Net cash used in operating activities	$	(9,287	)	$	(7,901	)
Cash flows from investing activities:
Expenditures for long-lived assets		(641	)		(429	)
Sale of equity investment securities		159			—
Net cash used in investing activities	$	(482	)	$	(429	)
Cash flows from financing activities:
Proceeds from line of credit, net of debt issuance costs		28,565			19,469
Payments on line of credit		(28,565	)		(14,469	)
Payment of earnout consideration		(291	)		(665	)
Financing fees for line of credit		(96	)		(271	)
Issuance of Class A common stock, net of issuance costs		8,542			—
Net cash provided by financing activities	$	8,156		$	4,064
Net change in cash and cash equivalents		(1,613	)		(4,266	)
Cash and cash equivalents at beginning of period		7,152			13,062
Cash and cash equivalents at end of period	$	5,539		$	8,796

See accompanying Notes to Condensed Consolidated Financial Statements

4

Cineverse Corp.

SUPPLEMENTAL CASH FLOW INFORMATION AND DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITY

(Unaudited)

(In thousands)

	Nine Months Ended December 31,
	2023		2022
Cash interest paid	$	233	$	58
Lease liability related payments	$	333	$	-
Income taxes paid	$	49	$	-
Noncash investing and financing activities:
Issuance of Class A common stock for payment of accrued employee bonuses	$	1,203	$	-
Treasury shares acquired for withholding taxes	$	370	$	-
Earnout liability settled in stock	$	392	$	238
Accrued dividends on preferred stock	$	263	$	88
Issuance of Class A common stock for payment of accrued preferred stock dividends	$	263	$	264
Earnout consideration adjustment	$	-	$	80
Issuance of common stock for Board of Director compensation	$	-	$	3

See accompanying Notes to Condensed Consolidated Financial Statements

5

Cineverse Corp.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands)

	Preferred Stock				Common Stock					Treasury					Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Stockholders'			Non Controlling
	Shares		Amount		Shares			Amount		Shares		Amount			Capital		Deficit			Loss			Equity			Interest			Total
Balances as of March 31, 2023 (Audited)		1	$	3,559		9,348		$	185		66	$	(11,608	)	$	530,998	$	(482,395	)	$	(402	)	$	40,337		$	(1,264	)	$	39,073
Foreign exchange translation		—		—		—			—		—		—			—		—			(78	)		(78	)		—			(78	)
Stock-based compensation		—		—		—			—		—		—			409		—			—			409			—			409
Issuance of Class A common stock in connection with ATM raises, net		—		—		177			4		—		—			1,065		—			—			1,069			—			1,069
Issuance of Class A common stock in connection with direct equity offering		—		—		2,150			2		—		—			7,437		—			—			7,439			—			7,439
Preferred stock dividends paid in stock		—		—		10			—		—		—			88		—			—			88			—			88
Preferred stock dividends accrued		—		—		—			—		—		—			—		(88	)		—			(88	)		—			(88	)
Net loss		—		—		—			—		—		—			—		(3,550	)		—			(3,550	)		14			(3,536	)
Balances as of June 30, 2023		1	$	3,559		11,685		$	191		66	$	(11,608	)	$	539,997	$	(486,033	)	$	(480	)	$	45,626		$	(1,250	)	$	44,376
Foreign exchange translation		—		—		—			—		—		—			—		—			66			66			—			66
Stock-based compensation		—		—		—			—		—		—			499		—			—			499			—			499
Issuance of Class A common stock in connection employee bonuses		—		—		725			1		—		—			1,203		—			—			1,203			—			1,203
Estimated fee decrease associated with equity issuance		—		—		—			—		—		—			33		—			—			33			—			33
Issuance in connection with the exercise of warrants		—		—		517			—		—		—			—		—			—			—			—			—
Issuance of Class A common stock for earnout commitment		—		—		41			—		—		—			392		—			—			392			—			392
Treasury stock in connection with taxes withheld from employees		—		—		(223	)		—	223			(370	)		—		—			—			(370	)		—			(370	)
Preferred stock dividends paid in stock		—		—		46			—		—		—			88		—			—			88			—			88
Preferred stock dividends accrued		—		—		—			—		—		—			—		(87	)		—			(87	)		—			(87	)
Net loss		—		—		—			—		—		—			—		(357	)		—			(357	)		40			(317	)
Balances as of September 30, 2023		1	$	3,559		12,791		$	192		289	$	(11,978	)	$	542,212	$	(486,477	)	$	(414	)	$	47,093		$	(1,210	)	$	45,883
Foreign exchange translation		—		—		—			—		—		—			—		—			(3	)		(3	)		—			(3	)
Stock-based compensation		—		—		—			—		—		—			98		—			—			98			—			98
Issuance of common stock for Board of Director compensation		—		—		400			—		—		—			85		—			—			85			—			85
Preferred stock dividends paid in stock		—		—		74			—		—		—			87		—			—			87			—			87
Preferred stock dividends accrued		—		—		—			—		—		—			—		(87	)		—			(87	)		—			(87	)
Net loss		—		—		—			—		—		—			—		(2,777	)		—			(2,777	)		41			(2,736	)
Balances as of December 31, 2023		1	$	3,559		13,265		$	192		289	$	(11,978	)	$	542,482	$	(489,341	)	$	(417	)	$	44,497		$	(1,170	)	$	43,327

See accompanying Notes to Condensed Consolidated Financial Statements

6

Cineverse Corp.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands)

	Preferred Stock				Common Stock				Treasury					Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Stockholders'			Non Controlling
	Shares		Amount		Shares		Amount		Shares		Amount			Capital		Deficit			Loss			Equity			Interest			Total
Balances as of March 31, 2022 (Audited)		1	$	3,559		8,766	$	174		66	$	(11,608	)	$	522,601	$	(472,310	)	$	(163	)	$	42,253		$	(1,303	)	$	40,950
Foreign exchange translation		—		—		—		—		—		—			—		—			48			48			—			48
Stock-based compensation		—		—		—		—		—		—			980		—			—			980			—			980
Preferred stock dividends paid in stock		—		—		5		—		—		—			88		—			—			88			—			88
Preferred stock dividends accrued		—		—		—		—		—		—			—		(88	)		—			(88	)		—			(88	)
Net loss		—		—		—		—		—		—			—		(6,005	)		—			(6,005	)		18			(5,987	)
Balances as of June 30, 2022		1	$	3,559		8,771	$	174		66	$	(11,608	)	$	523,669	$	(478,403	)	$	(115	)	$	37,276		$	(1,285	)	$	35,991
Foreign exchange translation		—		—		—		—		—		—			—		—			(362	)		(362	)		—			(362	)
Stock-based compensation		—		—		—		—		—		—			791		—			—			791			—			791
Preferred stock dividends paid in stock		—		—		9		—		—		—			88		—			—			88			—			88
Issuance of Class A common stock in connection employee bonuses		—		—		103		2		—		—			871		—			—			873			—			873
Issuance of Class A common stock for earnout commitment		—		—		17		—		—		—			238		—			—			238			—			238
Preferred stock dividends accrued		—		—		—		—		—		—			—		(88	)		—			(88	)		—			(88	)
Net loss		—		—		—		—		—		—			—		(5,664	)		—			(5,664	)		9			(5,655	)
Balances as of September 30, 2022		1	$	3,559		8,900	$	176	$	66	$	(11,608	)	$	525,657	$	(484,155	)	$	(477	)	$	33,152		$	(1,276	)	$	31,876
Foreign exchange translation		—		—		—		—		—		—			—		—			88			88			—			88
Stock-based compensation		—		—		—		—		—		—			657		—			—			657			—			657
Preferred stock dividends paid in stock		—		—		11		—		—		—			88		—			—			88			—			88
Issuance of common stock for Board of Director compensation		—		—		34		1		—		—			—		—			—			1			—			1
Preferred stock dividends accrued		—		—		—		—		—		—			—		(88	)		—			(88	)		—			(88	)
Net income		—		—		—		—		—		—			—		5,014			—			5,014			8			5,022
Balances as of December 31, 2022		1	$	3,559		8,945	$	177		66	$	(11,608	)	$	526,402	$	(479,229	)	$	(389	)	$	38,912		$	(1,268	)	$	37,644

See accompanying Notes to Condensed Consolidated Financial Statements

7

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. NATURE OF OPERATIONS AND LIQUIDITY

Cineverse Corp. (“Cineverse”, “us”, “our”, and “Company” refers to Cineverse Corp. and its subsidiaries unless the context otherwise requires) was incorporated in Delaware on March 31, 2000. Since our inception, we have played a significant role in the digital distribution revolution that continues to transform the media and entertainment landscape.

Cineverse is a premier streaming technology and entertainment company with its core business operating as (i) a portfolio of owned and operated enthusiast streaming channels with enthusiast fan bases; (ii) a large-scale global aggregator and full-service distributor of feature films and television programs; and (iii) a proprietary technology software-as-a-service platform for over-the-top (“OTT”) app development and content distribution through subscription video on demand ("SVOD"), dedicated ad-supported ("AVOD"), ad-supported streaming linear ("FAST") channels, social video streaming services, and audio podcasts. We distribute products for major brands such as Hallmark, ITV, Nelvana, ZDF, Konami, NFL and Highlander, as well as leading international and domestic content creators, movie producers, television producers and other short-form digital content producers. We collaborate with producers, major brands and other content owners to market, source, curate and distribute quality content to targeted audiences through (i) existing and emerging digital home entertainment platforms, including but not limited to Apple iTunes, Amazon Prime, Netflix, Hulu, Xbox, Pluto, and Tubi, as well as (ii) physical goods, including DVD and Blu-ray Discs.

We played a pioneering role in transitioning approximately 12,000 movie screens from traditional analog film prints to digital distribution, and at the end of our fiscal year 2023, the Company's cinema equipment business concluded its active operations, as its contracts reached maturity. The Company no longer manages cinema equipment separately, and with the run-off of its operations, no longer presents this part of the business as a separate segment. All prior period reporting within this report reflect this change.

Our Class A common stock, par value $0.001 per share (the "Common Stock") is listed on The Nasdaq Capital Market (“Nasdaq”) under the symbol “CNVS.” The Company has maintained its compliance with the $1.00 bid price requirement for continued listing on The Nasdaq Capital Market and remains subject to a one-year “Panel Monitor” as that term is defined by Nasdaq Listing Rule 5815(d)(4)(A) through June 30, 2024.

Financial Condition and Liquidity

We have a history of net losses, and for the nine months ended December 31, 2023, we had a net loss attributable to common stockholders in the amount of $6.9 million. We may continue to generate net losses for the foreseeable future. As of December 31, 2023, the Company has an accumulated deficit of $489.3 million and negative working capital of $0.4 million. Net cash used in operating activities for the nine months ended December 31, 2023 was $9.3 million which included $6.5 million of incremental investment in our content portfolio via advances or minimum guarantee payouts.

The Company is party to a Loan, Guaranty, and Security Agreement with East West Bank (“EWB”) providing for a revolving line of credit (the “Line of Credit Facility”) of $5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries’ assets. The line of credit expires on September 15, 2024. The Line of Credit Facility bears interest at a rate equal to 1.5% above the prime rate, 10.00% as of December 31, 2023. As of December 31, 2023, $5.0 million was outstanding on the Line of Credit Facility, net of unamortized issuance costs of $69 thousand. On February 9, 2024, the Company expanded the Line of Credit Facility to $7.5 million at the same interest rate and with the same maturity date.

In July 2020, we entered into an At-the-Market sales agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”) and B. Riley FBR, Inc. (“B. Riley” and, together with A.G.P., the “Sales Agents”), pursuant to which the Company may offer and sell, from time to time, through the Sales Agents, shares of Common Stock at the market prices prevailing on Nasdaq at the time of the sale of such shares. The Company is not obligated to sell any shares under the ATM Sales Agreement. Any sales of shares made under the ATM Sales Agreement will be made pursuant to an effective shelf registration statement, for an aggregate offering price of up to $30 million. For the three months ended December 31, 2023, the Company did not sell any shares under this agreement. For the

8

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

nine months ended December 31, 2023, the Company sold 177 thousand shares for $1.1 million in net proceeds, respectively, after deduction of commissions and fees. The ATM Sales Agreement has expired in accordance with its terms.

On June 16, 2023, the Company closed on the sale of 2,150 thousand shares of Common Stock, 517 thousand pre-funded warrants, and warrants to purchase up to 2,667 thousand shares of Common Stock at a combined public offering price of $3.00 per share and accompanying warrant for aggregate gross proceeds of approximately $7.4 million, after deducting placement agent fees and other offering expenses in the amount of $0.6 million. The warrants had an exercise price of $3.00 per share, were exercisable immediately and will expire five years from the issuance. The Company received $2.999 per share for the pre-funded warrants, with the remaining $0.001 due at the time of exercise. All 516,667 pre-funded warrants were subsequently exercised in July 2023 for total proceeds of $0.5 thousand.

In addition, the Company remains authorized to purchase up to an aggregate of 500 thousand shares of its outstanding Common Stock, following the announcement of a stock repurchase program on March 1, 2023.

The Company will continue to invest in content development and acquisition, from which it believes it will obtain an appropriate return on its investment. As of December 31, 2023 and March 31, 2023, short term content advances were $8.5 million and $3.7 million, respectively, and content advances, net of current portion were, $3.2 million and $1.4 million, respectively.

We believe our cash and cash equivalents and our credit facility, as of December 31, 2023, will be sufficient to support our operations for at least twelve months from the filing of this report. The Company may also undertake equity or debt offerings, if necessary and opportunistically available, for further capital needs.

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

The accompanying interim Condensed Consolidated Financial Statements of Cineverse Corp. have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended March 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on June 29, 2023. These Condensed Consolidated Financial Statements are unaudited and have been prepared by the Company following the rules and regulations of the SEC.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, the Company believes the disclosures are adequate to make the information presented not misleading. Certain columns and rows may not add due to the use of rounded numbers.

The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2023. Interim results are not necessarily indicative of the results for a full year.

The preparation of the Condensed 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, allowance for credit losses, returns and recovery reserves, goodwill and intangible asset impairments, share-based compensation expense, valuation allowance for deferred income taxes and amortization of 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.

9

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We own an 85% interest in CON TV, LLC ("CONtv"), a worldwide digital network that creates original content, and sells and distributes on-demand digital content on the internet and other consumer digital distribution platforms, such as gaming consoles, set-top boxes, handsets, and tablets. We evaluated the investment under the voting interest entity model and determined that the entity should be consolidated as we have a controlling financial interest in the entity through our ownership of outstanding voting shares, and that other equity holders do not have substantive voting, participating or liquidation rights.

Accounting Policies

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended March 31, 2023.

Segment Reporting

Beginning in fiscal year 2024, following the run-off of the Company's digital cinema operations, the Company now manages its operations and manages its business in one reporting segment. Earlier periods presented herein have been presented to conform to this reportable segment composition.

Reclassifications

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

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be “cash equivalents.” We maintain bank accounts with major banks, which from time to time may exceed the Federal Deposit Insurance Corporation’s insured limits. We periodically assess the financial condition of the institutions and believe that the risk of any loss is minimal.

Employee Retention Tax Credit

The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") provided an employee retention tax credit ("ERTC") which was a refundable tax credit against certain employment taxes. The Consolidated Appropriations Act (the "Appropriations Act") extended and expanded the availability of the employee retention credit through December 31, 2021. The Appropriations Act amended the employee retention credit to be equal to 70% of qualified wages paid to employees during the 2021 fiscal year.

The Company qualified for the employee retention credit beginning in June 2020 for qualified wages through September 2021 and filed a cash refund claim during the fiscal year ended March 31, 2023 in the amount of $2.5 million in the Employee retention tax credit line on the Company’s Condensed Consolidated Statements of Operations, of which $2.0 million was recognized during the three months ended December 31, 2022. As of December 31, 2023 and March 31, 2023, the tax credit receivable of $1.7 and $2.1 million, respectively, has been included in the Employee retention tax credit line on the Company's Condensed Consolidated Balance Sheet.

The Company has received notification during the second quarter of fiscal year 2024 that its ERTC claim is under examination with the Internal Revenue Service ("IRS"). As of the date of this report, the examination is ongoing, and the Company is responding to audit requests as they arise.

10

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Property and Equipment, Net

Property and equipment, net 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 as follows:

Computer equipment and software	3 - 5 years
Internal use software	3 - 5 years
Machinery and equipment	3 - 10 years
Furniture and fixtures	2 - 7 years

We capitalize costs associated with software developed or obtained for internal use when the preliminary project stage is completed, and it is determined that the software will provide significantly enhanced capabilities and modifications. These capitalized costs are included in property and equipment, net and include external direct cost of services procured in developing or obtaining internal-use software and personnel and related expenses for employees who are directly associated with, and who devote time to internal-use software projects. Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended use. Once the software is ready for its intended use, the costs are amortized over the useful life of the software. Post-configuration training and maintenance costs are expensed as incurred. We amortize internal-use software over its estimated useful life on a straight-line basis.

Intangible Assets, Net

Intangible assets are stated at cost less accumulated amortization. For intangible assets that have finite lives, the assets are amortized using the straight-line method over the estimated useful lives of the related assets. For intangible assets with indefinite lives, the assets are tested annually for impairment or sooner if a triggering event occurs.

Amortization lives of intangible assets are as follows:

Content Library	3 – 20 years
Trademarks and Tradenames	2 – 15 years
Customer Relationships	5 – 13 years
Advertiser Relationships and Channel	2 – 13 years
Software	10 years
Capitalized Content	3 years
Supplier Agreements	2 years

The Company’s intangible assets included the following (in thousands):

	As of December 31, 2023
	Cost Basis		Accumulated Amortization			Net
Content Library	$	24,096	$	(21,378	)	$	2,718
Advertiser Relationships and Channel		12,604		(2,132	)		10,472
Customer Relationships		8,690		(7,804	)		886
Software		3,200		(800	)		2,400
Trademark and Tradenames		4,026		(3,056	)		970
Capitalized Content		1,371		(90	)		1,281
Total Intangible Assets	$	53,987	$	(35,260	)	$	18,727

11

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	As of March 31, 2023
	Cost Basis		Accumulated Amortization			Net
Content Library	$	23,970	$	(21,126	)	$	2,844
Advertiser Relationships and Channel		12,604		(1,062	)		11,542
Customer Relationships		8,690		(7,600	)		1,090
Trademark and Tradenames		4,026		(2,274	)		1,752
Software		3,200		(560	)		2,640
Total Intangible Assets	$	52,490	$	(32,622	)	$	19,868

During the three and nine months ended December 31, 2023, the Company had amortization expense of $879 thousand and $2,381 thousand, respectively. During the three and nine months ended December 31, 2022, the Company had amortization expense of $712 thousand and $2,193 thousand, respectively.

As of December 31, 2023, amortization expense is expected to be (in thousands):

	Total
In-process intangible assets	$	411
Remainder of fiscal year 2024		1,254
2025		3,264
2026		3,001
2027		1,772
2028		1,246
Thereafter		7,779
	$	18,727

Capitalized Content

The Company capitalizes direct costs incurred in the production of content from which it expects to generate a return over the anticipated useful life and the Company’s predominant monetization strategy informs the method of amortizing these deferred costs. The determination of the predominant monetization strategy is made at commencement of the production or license period and the classification of the monetization strategy as individual or group only changes if there is a significant change to the title’s monetization strategy relative to its initial assessment. The costs are capitalized to the Capitalized Content costs within Intangible Assets and are amortized as a group within Depreciation and Amortization within the Condensed Consolidated Statements of Operations.

Impairment of Long-lived and Finite-lived Intangible Assets

We review the recoverability of our long-lived assets and finite-lived intangible assets, when events or conditions occur that indicate a possible impairment exists. The assessment for recoverability is based primarily on our ability to recover the carrying value of our long-lived and finite-lived assets from expected future undiscounted net cash flows. If the total of expected future undiscounted net cash flows is less than the total carrying value of the asset, the asset is deemed not to be recoverable and possibly impaired. We then estimate the fair value of the asset to determine whether an impairment loss should be recognized. An impairment loss will be recognized if the asset’s fair value is determined to be less than its carrying value. Fair value is determined by computing the expected future discounted cash flows. There were no impairment charges recorded for long-lived and finite-lived intangible assets during the three and nine months ended December 31, 2023 and 2022.

Goodwill

Goodwill is the excess of the purchase price paid over the fair value of the net assets of an acquired business. Goodwill is tested for impairment on an annual basis or more often if warranted by events or changes in circumstances indicating that the carrying value may exceed fair value, also known as impairment indicators.

12

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Inherent in the fair value determination for each reporting unit are certain judgments and estimates relating to future cash flows, including management’s interpretation of current economic indicators and market conditions, and assumptions about our strategic plans with regard to its operations. To the extent additional information arises, market conditions change, or our strategies change, it is possible that the conclusion regarding whether our remaining goodwill is impaired could change and result in future goodwill impairment charges that will have a material effect on our consolidated financial position or results of operations.

The Company has the option to assess goodwill for possible impairment by performing a qualitative analysis to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount or to perform the quantitative impairment test. The Company annually assesses goodwill for potential impairment during its fourth fiscal quarter, or sooner if event occurs or circumstances would indicate it would be more likely than not that fair value would be reduced below its carrying amount. No goodwill impairment charge was recorded in the three and nine months ended December 31, 2023 and 2022.

Fair Value Measurements

The fair value measurement disclosures are grouped into three levels based on valuation factors:

•Level 1 – quoted prices in active markets for identical investments

•Level 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs)

•Level 3 – significant unobservable inputs (including our own assumptions in determining the fair value of investments)

The following tables summarize the levels of fair value measurements of our financial assets and liabilities (in thousands):

	As of December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Equity investment in Metaverse, at fair value	$	1,276	$	—	$	—	$	1,276
	$	1,276	$	—	$	—	$	1,276
Liabilities:
Current portion of earnout consideration on purchase of a business	$	—	$	—	$	110	$	110
	$	—	$	—	$	110	$	110

	As of March 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Equity investment in Metaverse, at fair value			$	—	$	5,200	$	5,200
	$	—	$	—	$	5,200	$	5,200
Liabilities:
Current portion of earnout consideration on purchase of a business	$	—	$	—	$	1,444	$	1,444
	$	—	$	—	$	1,444	$	1,444

The Company has an investment in A Metaverse Company ("Metaverse") (SEHK: 1616) accounted for under the equity method of accounting as the Company can exert significant influence over Metaverse with its direct

13

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

ownership of approximately 15% and affiliation with the Company’s largest shareholder. The Company has also made an irrevocable election to apply the fair value option under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 825-10, Financial Instruments, as it relates to its equity investment in Metaverse. Changes in the investment's fair value are recognized within the "Loss from equity investment in Metaverse, a related party" line item within the Condensed Consolidated Statements of Operations.

Following the halting of Metaverse stock trading on The Stock Exchange of Hong Kong Limited on April 1, 2022, the Company valued our equity investment in Metaverse using a market approach and the investment was categorized as a Level 3 valuation based on unobservable inputs. As such, as of March 31, 2023, the Company estimated the fair value of Metaverse based the last known enterprise value, adjusting for trends in enterprise valuations and market capitalization for comparable companies with a resulting fair value was $5.2 million.

On November 6, 2023, Metaverse's stock resumed trading on The Stock Exchange of Hong Kong Limited. During the quarter ended December 31, 2023, the Company sold 30 million of the 362 million shares held as of September 30, 2023, which resulted in a realized loss of $131 thousand during the three months ended December 31, 2023. The resumption of active trading status represented renewed availability of quoted, unadjusted prices in active markets for identical assets, upon which the Company can execute a sale and readily access pricing information at the measurement date. Accordingly, the Company has presented the fair value of its Metaverse shares held as of December 31, 2023 within the Level 1 grouping. The fair value of the shares held as of December 31, 2023 was $1.3 million, with associated unrealized losses of $3.6 million.

The Company estimated the fair value of its earnout consideration using contractual inputs from the related business combination, which established specific fiscal year revenue growth, profitability and EBITDA targets. The Company utilizes the most up to date forecast to estimate the outcome against these targets to determine the ultimate estimated payout. During the nine months ended December 31, 2023, the Company estimated a $682 thousand decrease in the estimated ultimate earnout payments based on Bloody Disgusting's performance, made cash payments of $291 thousand, and issued equity to settle earnout liability of $392 thousand, and accrued interest of $29 thousand.

Our cash and cash equivalents, accounts receivable, unbilled revenue, accounts payable and accrued expenses are financial instruments and are recorded at cost in the Condensed Consolidated Balance Sheets. The estimated fair values of these financial instruments approximate their carrying amounts because of their short-term nature.

Content Advances

Content advances represents 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 in more than 12 months are classified as long term and presented within content advances, net of current portion, which were $3.2 million and $1.4 million as of December 31, 2023, and March 31, 2023, respectively. For the nine months ended December 31, 2023, the Company recorded a recovery in the provision for advances of $0.5 million.

14

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Accounts Payable and Accrued Expenses

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

	As of
	December 31, 2023		March 31, 2023
Accounts payable	$	6,568	$	15,042
Amounts due to producers		15,553		13,114
Accrued compensation and benefits		1,209		2,532
Accrued other expenses		3,657		3,843
Total accounts payable and accrued expenses	$	26,987	$	34,531

Compared to March 31, 2023, the decrease in accounts payable was primarily attributable to an $8.3 million decrease from the run-off of the Company's digital cinema operations, and the decrease in accrued compensation and benefits was driven by a decrease of $1.2 million due to a reduced bonus accrual.

Deferred Consideration

The Company has recognized liabilities related to deferred consideration arrangements related to the acquisition of FoundationTV ("FTV") and Digital Media Rights ("DMR"). These payments are fixed in nature and are due to the sellers of the respective companies. The Company initially recognized the liability at fair value at the time of acquisition and has since recognizes interest expense related to accretion in advance of the ultimate settlement of these liabilities. Amounts due within 12 months under the terms of the agreements are classified as current within the Condensed Consolidated Balance Sheets.

The deferred consideration related to the acquisition of DMR is payable in either Class A common shares of the Company stock or cash, at the Company's discretion and subject to certain conditions. Payments of $3.0 million and $2.4 million are due in March 2024 and March 2025, respectively.

The deferred consideration related to the FTV acquisition is payable in the amount of $238 thousand in each of June 2024 and December 2024, and $464 thousand in June 2025. There is $617 thousand presently due and payable. The Company has the right to pay up to 25% of post-close purchase price in equity.

Revenue Recognition

Payment terms and conditions vary by customer and typically provide net 30 to 90 day terms. We do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to our customer and payment for that product or service will be one year or less.

The following tables present the Company’s disaggregated revenue by source (in thousands):

	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Streaming and digital	$	9,537	$	11,598	$	29,006	$	31,375
Base distribution		2,811		8,121		4,529		11,145
Podcast and other		864		977		1,953		1,740
Other non-recurring		64		7,186		3,780		11,218
Total revenue	$	13,276	$	27,882	$	39,268	$	55,478

The Company's Streaming and digital revenue pertains to its OTT business, including the licensing, service, advertising, and subscription revenue related to the Company's streaming business and partnerships. Base

15

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

distribution revenue relates to non-streaming revenue, including Theatrical revenue and the sale of DVD's. Podcast and other revenue primarily relates to the Company's Bloody Disgusting Podcast Network. As the Company satisfies its performance obligations from these revenue sources, whether relating to the delivery of digital content, physical goods, or licensing, revenue is generally measured at a point in time.

Other non-recurring revenue relates to the Company's legacy digital cinema operations, whose operations have run-off, still may generate non-recurring revenue from the sale of cinema assets or the recognition of variable consideration as the associated uncertainty associated with the revenue is resolved.

The Company follows the five-step model established by ASC 606, Revenue from contracts with customers ("ASC 606") when preparing its assessment of revenue recognition.

Principal Agent Considerations

Revenue earned from the delivery of digital content and physical goods may be recognized gross or net depending on the terms of the arrangement. We determine whether revenue should be reported on a gross or net basis based on each revenue stream. Key indicators that we use in evaluating gross versus net treatment include, but are not limited to, the following:

•which party is primarily responsible for fulfilling the promise to provide the specified good or service; and

•which party has discretion in establishing the price for the specified good or service.

Shipping and Handling

Shipping and handling costs are incurred to move physical goods (e.g., DVDs and Blu-ray Discs) to customers. We recognize all shipping and handling costs as an expense in direct operating expenses because we are responsible for delivery of the product to our customers prior to transfer of control to the customer.

Credit Losses

We maintain reserves for expected credit losses on accounts receivable primarily on a specific identification basis. We review the composition of accounts receivable and analyze historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.

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

During the three and nine months ended December 31, 2023, we did not recognize any credit losses as part of our ongoing operations or reversals of previously recorded provisions. During the three and nine months ended December 31, 2022, we recognized credit losses of $7 thousand and $54 thousand, respectively.

Contract Liabilities

We generally record a receivable related to revenue when we have an unconditional right to invoice and receive payment, and we record deferred revenue (contract liability) when cash payments are received or due in advance of our performance, such as the sale of DVDs with future release dates, even if amounts are refundable. Amounts recorded as contract liabilities are generally not long-term in nature.

The ending deferred revenue balance, including current and non-current balances as of December 31, 2023 and March 31, 2023, was and $0.2 million and $0.2 million, respectively. In each period, the additions to our deferred revenue balance are due to cash payments received or due in advance of satisfying performance

16

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

obligations, while the reductions are due to the recognition of revenue upon fulfillment of our performance obligations, both of which were in the ordinary course of business.

Participations and royalties payable

When we use third-parties to distribute company owned content, we record participations payable, which represent amounts owed to the distributor under revenue-sharing arrangements. When we provide content distribution services, we record accounts payable and accrued expenses to studios or content producers for royalties owed under licensing arrangements. We identify and record as a reduction to the liability any expenses that are to be reimbursed to us by such studios or content producers.

Concentrations

For the three and nine months ended December 31, 2023, one customer represented 26% and 23% of consolidated revenues, respectively. For the three months ended December 31, 2022, one customer represented approximately 16% of consolidated revenues and another customer represented 14% of consolidated revenues, respectively. For the nine months ended December 31, 2022, one customer represented 11% of consolidated revenues.

Direct Operating Expenses

Direct operating expenses consist of cost of revenue, fulfillment expenses, shipping costs, property taxes and insurance on systems, royalty expenses, reserves against advances and marketing and direct personnel costs.

Stock-based Compensation

The Company issues stock-based awards to employees and non-employees, generally in the form of restricted stock, restricted stock units, stock appreciation rights ("SARs") and performance stock units ("PSUs"). 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 Condensed Consolidated Statements of Operations and Comprehensive Loss based on their fair values. The Company measures the compensation expense of employee and nonemployee 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 or nonemployee is required to provide service in exchange for the award. The fair values of options and SARs 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. Forfeitures are recognized as they occur.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to operating loss and tax credit carryforwards and for differences between the carrying amounts of existing assets and liabilities and their respective tax bases.

Valuation allowances are established when management is unable to conclude that it is more likely than not that some portion, or all, of the deferred tax asset will ultimately be realized. The Company is primarily subject to income taxes in the United States and India.

The Company accounts for uncertain tax positions in accordance with an amendment to ASC Topic 740-10, Income Taxes (Accounting for Uncertainty in Income Taxes), which clarified the accounting for uncertainty in tax positions. This amendment provides that the tax effects from an uncertain tax position can be recognized in the financial

17

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 had no uncertain tax positions as of December 31, 2023 and March 31, 2023.

Earnings per Share

Basic net income (loss) per share is computed based on the weighted average number of shares of Common Stock outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include stock options and warrants outstanding during the period, using the treasury stock method. Potentially dilutive common shares are excluded from the computations of diluted income (loss) per share if their effect would be anti-dilutive. A net loss available to common stockholders causes all potentially dilutive securities to be anti-dilutive and are not included.

Basic and diluted net loss per share are computed as follows (in thousands, except share and per share data):

	Three Months Ended December 31,					Nine Months Ended December 31,
	2023			2022		2023			2022
Basic net income (loss) per share:
Net income (loss) attributable to common stockholders	$	(2,864	)		4,926	$	(6,946	)	$	(6,919	)
Shares used in basic computation:
Weighted-average shares of Common Stock outstanding		12,828			8,945		11,678			8,854
Basic net income (loss) per share	$	(0.22	)	$	0.55	$	(0.59	)	$	(0.78	)
Shares used in diluted computation:
Weighted-average shares of Common Stock outstanding		12,828			8,945		11,678			8,854
Stock options and SARs		—			—		—			—
Weighted-average number of shares		12,828			8,945		11,678			8,854
Diluted net income (loss) per share	$	(0.22	)	$	0.55	$	(0.59	)	$	(0.78	)

The calculation of diluted net loss per share for the three and nine months ended December 31, 2023 does not include the impact of 798 thousand and 763 thousand anti-dilutive shares, respectively. The calculation of diluted net loss per share for the three and nine months ended December 31, 2022 does not include the impact of 674 thousand and 640 thousand potentially anti-dilutive shares, respectively.

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 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures." The update requires disclosure of incremental segment information, including significant segment expenses, on an annual and interim basis, and would apply to single segment companies. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 with early adoption is permitted. The Company is required to apply the updates retrospectively. The Company is assessing the impact of ASU 2023-07 on its consolidated financial statements.

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CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740)—Improvements to Income Tax Disclosures" On an annual basis, this update requires the disclosure of specific tax categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The amendments are effective for annual periods beginning after December 15, 2024. Prospective and retrospective adoption is permitted. The Company is still evaluating its method of adoption and assessing the impact of ASU 2023-09 on the disclosures within its consolidated financial statements.

3. OTHER INTERESTS

Investment in CDF2 Holdings

We indirectly own 100% of the common equity of CDF2 Holdings, LLC (“CDF2 Holdings”), which was created for the purpose of capitalizing on the conversion of the exhibition industry from film to digital technology. CDF2 Holdings assists its customers in procuring the equipment necessary to convert their systems to digital technology by providing financing, equipment, installation and related ongoing services.

CDF2 Holdings is a Variable Interest Entity (“VIE”), as defined in ASC Topic 810 (“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.

As of December 31, 2023 and March 31, 2023, our maximum exposure to loss, as it relates to the non-consolidated CDF2 Holdings entity, represents accounts receivable for service fees under a master service agreement with CDF2 Holdings. Such accounts receivable was $0.0 million and $0.5 million as of December 31, 2023 and March 31, 2023, respectively, which are included in accounts receivable, net on the accompanying Condensed Consolidated Balance Sheets.

The accompanying Condensed Consolidated Statements of Operations includes digital cinema servicing revenue from CDF2 Holdings in the amount of $0.0 for the three and nine months ended December 31, 2023, respectively, and $0.1 and $0.2 million for the three and nine months ended December 31, 2022, respectively.

Total Stockholders’ Deficit of CDF2 Holdings at December 31, 2023 and March 31, 2023 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 December 31, 2023 and March 31, 2023 is carried at $0.

Investment in Roundtable

On March 15, 2022, the Company entered into a stock purchase agreement with Roundtable Entertainment Holdings, Inc. (“Roundtable”) pursuant to which the Company purchased 0.5 thousand shares of Roundtable Series A Preferred Stock and warrants to purchase 0.1 thousand shares of Roundtable Common Stock (together, the “Roundtable Securities”). The Company paid the purchase price for the Roundtable Securities by issuing 16 thousand shares of Common Stock to Roundtable. 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.

19

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

4. STOCKHOLDERS’ EQUITY

COMMON STOCK

As of December 31, 2023 and 2022, the number of shares of Common Stock authorized for issuance was 275,000,000 shares.

During the three months ended December 31, 2023, the Company issued 0.5 million shares of Common Stock. This was comprised of 74 thousand shares for preferred stock dividends, and 400 thousand shares for Board of Director compensation.

During the nine months ended December 31, 2023, the Company issued 3.9 million shares of Common Stock. In addition to the activity cited for three months ended December 31, 2023, this was comprised of 517 thousand shares issued in conjunction with the exercise of pre-funded warrants issued, 502 shares issued in connection with employee bonuses, 56 thousand shares for preferred stock dividends, 41 thousand to satisfy earnout-related liabilities, 2,150 thousand shares were issued through a June 16, 2023 direct offering, and 177 thousand issued in connection with ATM sales during the first fiscal quarter. In addition, the Company issued common warrants to purchase up to 2,667 thousand shares of Common Stock in conjunction with its direct offering on June 16, 2023. All pre-funded and common warrants were issued as immediately exercisable. All common warrants remain outstanding as of December 31, 2023.

During the three months ended December 31, 2022, the Company issued 45 thousand shares. This was comprised of 11 thousand shares for preferred stock dividends and 34 thousand shares for Board of Director compensation.

During the nine months ended December 31, 2022, the Company issued 179 thousand shares. In addition to the activity cited during the three months ended December 31, 2022, this was comprised of 14 thousand shares for preferred stock dividends, 103 thousand shares for employee bonuses, and 17 thousand shares to satisfy earnout-related liabilities.

PREFERRED STOCK

Cumulative dividends in arrears on Series A Preferred Stock were $87 thousand and $88 thousand as of December 31, 2023 and 2022, respectively. During the three and nine months ended December 31, 2023 and 2022, the Company paid preferred stock dividends in arrears for the same amount in the form of shares of Common Stock. The Company has the right to pay preferred stock dividends in cash or stock, at the Company's discretion.

TREASURY STOCK

We have treasury stock, at cost, consisting of 289 thousand and 66 thousand shares of Common Stock at December 31, 2023 and March 31, 2023, respectively. During the nine months ended December 31, 2023, the Company acquired 223 thousand shares of Common Stock withheld in connection with employee bonuses that the Company elected to settle in shares of Common Stock.

20

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

EQUITY INCENTIVE PLANS

Stock Based Compensation Awards

The Company has issued awards under two plans, the 2000 Equity Incentive Plan (the “2000 Plan”) and the 2017 Equity Incentive Plan (the “2017 Plan").

Awards issued under our 2000 Plan were permitted to be issued to employees, outside directors or consultants in any of the following forms (or a combination thereof) (i) stock option awards; (ii) SARs; (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 were 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. On November 1, 2017, upon the consummation of the initial equity investment in Cineverse by Bison Entertainment Investment Limited, as a result of which there was a change of control of the Company, all stock options (incentive and non-statutory) and shares of restricted stock were vested immediately and the options became fully exercisable.

In August 2017, the Company adopted 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 up to 905 thousand shares of Common Stock, in the form of various awards, including stock options, SARs, restricted stock, restricted stock units, PSUs and cash awards.

For the three and nine months ended December 31, 2023, the Company incurred stock-based compensation expenses of $0.2 million and $1.1 million, respectively. Of these amounts, $0.1 million and $0.3 million related to Board of Director compensation, respectively.

For the three and nine months ended December 31, 2022, the Company incurred stock-based compensation expenses of $0.7 million and $3.9 million, respectively. Of these amounts, $0.1 million and $0.3 million related to Board of Director compensation, respectively.

Share-based compensation expense is reported within Selling, General and Administrative expenses.

5. LINE OF CREDIT FACILITY

The Company is party to a Loan, Guaranty, and Security Agreement with East West Bank ("EWB") providing for a revolving line of credit (the "Line of Credit Facility") of $5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries' assets. The Line of Credit bears an interest rate equal to 1.5% above the prime rate, and was 10.00% as of December 31, 2023. As of December 31, 2023 and March 31, 2023, a balance of $5.0 million was outstanding on the line of the Credit Facility, gross of unamortized issuance costs of $69 thousand and $76 thousand, respectively. Under the Line of Credit Facility, the Company is subject to certain financial and nonfinancial 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. The Line of Credit Facility matures on September 15, 2024. On February 9, 2024, the Company expanded the Line of Credit Facility to $7.5 million at the same interest rate and with the same maturity date.

During the three and nine months ended December 31, 2023, the Company had interest expense, including cash interest and amortization, of $0.2 million and $0.4 million related to its Line of Credit Facility, respectively.

21

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6. COMMITMENTS AND CONTINGENCIES

LEASES

Cineverse is a virtual company with one domestic operating lease, acquired through the acquisition of DMR which is subleased to a third party. The Company has not been relieved of the original lease obligation and therefore recognizes both a lease liability and right-of-use asset as part of the arrangement. The end of both the original lease and sublease's term is January 2025. In addition, the Company has two operating leases related to its Cineverse India operations, with expiration dates in July 2027. Expenses related to these leases were $109 thousand and $337 thousand during the three and nine months ended December 31, 2023 and $94 thousand and $242 thousand three and nine months ended December 31, 2022, respectively.

The Company has recognized $45 thousand and $135 thousand of income related to its subleasing arrangement during three and nine months ended December 31, 2023, respectively. The Company recognized $44 thousand and $71 thousand of income related to its subleasing arrangement for the three and nine months ended December 31, 2022, respectively.

The table below presents the lease-related assets and liabilities recorded on our Consolidated Balance Sheets (in thousands):

Classification on the Balance Sheet		December 31, 2023		March 31, 2023
Assets
Noncurrent	Other long-term assets	$	943	$	1,265
Liabilities
Current	Operating leases liabilities		440		418
Noncurrent	Operating leases liabilities, net of current portion		531		863
Total operating lease liabilities		$	971	$	1,281

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
2024	$	115
2025		376
2026		247
2027		210
2028		72
Thereafter		—
Total lease payments	$	1,020
Less imputed interest		(49	)
Total	$	971

For leases which have a term of twelve months or less and do not contain an option to extend which the Company is reasonably certain to extend the term, the Company has elected to not apply the recognition provisions of ASC 842 and recognizes these expenses on a straight-line basis over the term of the agreement.

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

22

CINEVERSE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Fiscal year ending March 31,	Sublease Payments
2024	$	45
2025		154
2026		—
2027		—
2028		—
Thereafter		—
Total	$	199

7. INCOME TAXES

We calculate income tax expense based upon an annual effective tax rate forecast, which includes estimates and assumptions. We recognized income tax (benefit) expense of approximately $(24) thousand and $12 thousand for the three and nine months ended December 31, 2023, respectively. We recognized $0 for both the three and nine months ended December 31, 2022. The Company's annual income tax expense is attributable to taxable income earned in India relating to transfer pricing.

We have not recorded tax benefits on our loss before income taxes because we have provided for a full valuation allowance that offsets potential deferred tax assets resulting from net operating loss carry forwards, reflecting our inability to use such loss carry forwards.

Our effective tax rate was (0.9%) and 0.2% for the three and nine months ended December 31, 2023, respectively, and 0% and 0% for the three and nine months ended December 31, 2022.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our historical Condensed Consolidated Financial Statements and the related notes included elsewhere in this report.

This report contains forward-looking statements within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies for the future, which are indicated by words or phrases such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “will,” “estimates,” and similar words. Forward-looking statements represent, as of the date of this report, our judgment relating to, among other things, future results of operations, growth plans, sales, capital requirements and general industry and business conditions applicable to us. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our control that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

Business Overview

Cineverse is a premier streaming technology and entertainment company with its core business (i) across a portfolio of owned and operated enthusiast streaming channels with enthusiast fan bases; (ii) as a large-scale global aggregator and full-service distributor of feature films and television programs; and (iii) as a proprietary technology software-as-a-service platform for over-the-top (“OTT”) app development and content distribution through subscription video on demand ("SVOD"), dedicated ad-supported ("AVOD"), ad-supported streaming linear ("FAST") channels, social video streaming services, and audio podcasts. We distribute products for major brands such as Hallmark, ITV, Nelvana, ZDF, Konami, NFL and Highlander, as well as leading international and domestic content creators, movie producers, television producers and other short-form digital content producers. We collaborate with producers, major brands and other content owners to market, source, curate and distribute quality content to targeted audiences through (i) existing and emerging digital home entertainment platforms, including but not limited to Apple iTunes, Amazon Prime, Netflix, Hulu, Xbox, Pluto, and Tubi, as well as (ii) physical goods, including DVD and Blu-ray Discs.

We played a significant role in the digital distribution revolution that continues to transform the media landscape, playing a pioneering role in transitioning approximately 12,000 movie screens from traditional analog film prints to digital distribution, and at the end of our fiscal year 2023, the Company's cinema equipment business concluded its active operations, as its contracts reached maturity. The Company no longer manages cinema equipment separately, and with the run-off of its operations, no longer presents this part of the business as a separate segment. All prior period reporting within this report reflects this change.

Financial Condition and Liquidity

As of December 31, 2023, the Company has an accumulated deficit of $489.3 million and negative working capital of $0.4 million. For the three and nine months ended December 31, 2023, the Company had a net loss attributable to common stockholders of $(2,864) thousand and $(6.9) million, respectively. Net cash used in operating activities for the nine months ended December 31, 2023 was $9.3 million, which included $6.5 million of incremental investment in our content portfolio via advances or minimum guarantee payouts. We may continue to generate net losses for the foreseeable future.

The Company is party to a Loan, Guaranty, and Security Agreement with East West Bank (“EWB”) providing for a revolving line of credit (the “Line of Credit Facility”) of $5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries’ assets. The line of credit expires on September 15, 2024. The Line of Credit Facility bears interest at a rate equal to 1.5% above the prime rate, 10.00% as of December 31, 2023. As of December 31, 2023, $5.0 million was outstanding on the Line of Credit Facility, gross of issuance costs of $(69) thousand. On February 9, 2024, the Company expanded the Line of Credit Facility to $7.5 million at the same interest rate and with the same maturity date.

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

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pursuant to which the Company may offer and sell, from time to time, through the Sales Agents, shares of Common Stock at the market prices prevailing on Nasdaq at the time of the sale of such shares. The Company is not obligated to sell any shares under the ATM Sales Agreement. Any sales of shares made under the ATM Sales Agreement will be made pursuant to an effective shelf registration statement, for an aggregate offering price of up to $30 million. During the first quarter of the fiscal year, the Company sold 177 thousand shares under the ATM Sales Agreement for $1.1 million in net proceeds, after deduction of commissions and fees. The ATM Sales Agreement has expired in accordance with its terms.

On June 16, 2023, the Company closed on the sale of 2,150 thousand shares of Common Stock, 517 thousand pre-funded warrants, and warrants to purchase up to 2,667 thousand shares of Common Stock at a combined public offering price of $3.00 per share and accompanying warrant for aggregate gross proceeds of approximately $7.4 million, after deducting placement agent fees and other offering expenses in the amount of $0.6 million. The warrants had an exercise price of $3.00 per share, were exercisable immediately and will expire five years from the issuance. The Company received $2.999 per share for the pre-funded warrants, with the remaining $0.001 due at the time of exercise. All 516,667 pre-funded warrants were subsequently exercised in July 2023 for total proceeds of $0.5 thousand.

In addition, the Company remains authorized to purchase up to an aggregate of 500 thousand shares of its outstanding Common Stock, following the announcement of a stock repurchase program on March 1, 2023.

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

We believe our cash and cash equivalents and our credit facility, as of December 31, 2023, will be sufficient to support our operations for at least twelve months from the filing of this report. The Company may also undertake equity or debt offerings, if necessary and opportunistically available, for further capital needs.

Critical Accounting Estimates

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our Condensed Consolidated Financial Statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Our significant accounting policies are discussed in Note 2 – Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to the Condensed Consolidated Financial Statements, included in Item 1, Condensed Consolidated Financial Statements (Unaudited), of this Quarterly Report on Form 10-Q. Management believes that these policies are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors.

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Results of Operations for the Three Months Ended December 31, 2023, and 2022 (in thousands):

Revenues

	For the Three Months Ended December 31,
	2023		2022		$ Change			% Change
Streaming and digital	$	9,537	$	11,598	$	(2,061	)		(18	)%
Base distribution		2,811		8,121		(5,310	)		(65	)%
Podcast and other		864		977		(113	)		(12	)%
Other non-recurring		64		7,186		(7,122	)		(99	)%
Total Revenue	$	13,276	$	27,882	$	(14,606	)		(52	)%

For the three months ended December 31, 2023, total revenue declined by $14.6 million, or 52% as compared to three months ended December 31, 2022. During this time, Streaming and Digital revenue for three months ended December 31, 2023, decreased by $2.1 million, driven by a decline in the Company's AVOD revenue of $1.7 million due to continued headwinds in the broader advertising market. This decrease was partially offset by a $0.5 million increase in SVOD revenue as the Company continues to see the benefits from its acquisitions which have contributed value-accretive libraries, distribution platforms and technologies, such as Screambox.

The Company's $5.3 million decline in Base Distribution revenue for the three months ended December 31, 2023 as compared to the three months ended December 31, 2022 was primarily driven by a $3.8 million decline in theatrical revenue, in part due to the Terrifier 2 success in fiscal year 2023, a decline of $1.1 million in barter-related licensing deal in the third quarter of fiscal 2023, as well as a $0.8 million decline in DVD-related sales and related physical distribution revenue, as the Company's focus shifts away from physical sales.

Other non-recurring revenue related to the Company's legacy cinema equipment as its operations run-off. Following the completion of cost recoupment, the expiration of the exhibitor master license agreements applicable to this line of revenue, and the recognition of all remaining constrained variable consideration, revenue decreased $7.1 million. In the third quarter of fiscal 2024, $0.1 million of remaining systems sales were recognized.

Direct Operating Expenses

	For the Three Months Ended December 31,
	2023		2022		$ Change			% Change
Direct operating expenses	$	5,464	$	14,411	$	(8,947	)		(62	)%

The $8.9 million decrease in Direct Operating Expenses for the three months ended December 31, 2023 is primarily driven by the variable costs associated with a 52% decrease in quarterly revenue, including reduced licensing, royalty and participation expenses of $3.6 million; reduced manufacturing, freight, and fulfillment charges of $3.4 million. In addition, the Company's reserve against advances provided to partners decreased by $1.1 million relative to the three months ended December 31, 2022 and a $0.5 million increase in acquired content-related preparation costs capitalized as a result of the Company's content investment initiative.

Selling, General and Administrative Expenses

	For the Three Months Ended December 31,
	2023		2022		$ Change			% Change
Compensation expense	$	4,336	$	5,217	$	(881	)		(17	)%
Corporate expenses		796		1,780		(984	)		(55	)%
Share-based compensation		183		658		(475	)		(72	)%
Other operating expenses		1,058		1,452		(394	)		(27	)%
Selling, General and Administrative	$	6,373	$	9,107	$	(2,733	)		(30	)%

Selling, general and administrative expenses for the three months ended December 31, 2023 decreased by $2.7 million. In comparison to the three months ended December 31, 2022, compensation expenses decreased by $0.9

26

million due to a $0.7 million reduction in bonus accrual attributable to fiscal year 2024 performance, a decrease in recurring salaries and associated taxes of $0.7 million, partially offset by a $0.2 million increase in severance expense.

Corporate expenses decreased by $1.0 million primarily related a reduction of $0.6 million in legal fees and $0.4 million in other consulting and service providers, as a result of the Company's savings initiatives.

Share-based compensation has decreased by $0.5 million, as a result of forfeitures associated with US-based workforce reduction, a decline in stock price, and a relatively higher number of award tranches fully vesting.

Other operating expenses decreased by $0.4 million, primarily driven by reductions in marketing related costs of $0.3 million as a result of spending controls put into place.

Depreciation and Amortization Expense

	For the Three Months Ended December 31,
	2023		2022		$ Change			% Change
Amortization of intangible assets	$	879	$	712	$	167			23	%
Depreciation of property and equipment		133		211		(78	)		(37	)%
Depreciation and Amortization	$	1,012	$	924	$	88			10	%

Amortization expense has continued to increase and depreciation expense has continued to decrease as a result of the Company's shift away from the physical business to its focus on content-related spend during the three months ended December 31, 2023.

Interest expense, net

For the three months ended December 31, 2023, interest expense decreased by $76 thousand from $367 thousand to $291, primarily as a result of a $69 thousand decrease in deferred consideration amortization.

Results of Operations for the nine months ended December 31, 2023 and 2022 (in thousands):

Revenues

	For the Nine Months Ended December 31,
	2023		2022		$ Change			% Change
Streaming and digital	$	29,006	$	31,375	$	(2,369	)		(8	)%
Base distribution		4,529		11,145		(6,616	)		(59	)%
Podcast and other		1,953		1,740		213			12	%
Other non-recurring		3,780		11,218		(7,438	)		(66	)%
Total Revenue	$	39,268	$	55,478	$	(16,210	)		(29	)%

For the nine months ended December 31, 2023, the Company's revenue declined by $16.2 million. The decrease was driven by a $6.6 million decline in the Company's base distribution, driven by a $3.7 million decline in theatrical revenue following fiscal year 2023's theatrical success with films such as Terrifier 2, and a $2.4 million decrease in DVD and related supply chain costs, as the Company has shifted its focus away from the physical business.

Streaming and digital revenue decreased by $2.4 million, driven by a $6.2 million decrease in AVOD from the headwinds faced in the advertising market, partially offset by a $2.6 million increase in SVOD and a $0.9 million increase from digital revenue as the Company continued to see the benefits from recent years' acquisitions, such as DMR, Fandor and Bloody Disgusting, which have contributed value-accretive libraries, distribution platforms and technologies.

The decrease in Other non-recurring revenue decline was related to the run-off of the Company's legacy digital cinema business, whose active operations ran-off at the end of fiscal year 2023. For the nine months ended

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December 31, 2023, variable consideration from these operations had decreased by $5.8 million and system sales decreased by$1.5 million.

Direct Operating Expenses

	For the Nine Months Ended December 31,
	2023		2022		$ Change			% Change
Direct operating expenses	$	17,097	$	29,859	$	(12,762	)		(43	)%

For the nine months ended December 31, 2023, the Company's direct operation expense decreased $12.8 million. The decrease was primarily driven by $4.3 million in fulfillment and manufacturing costs associated with the decline in the Company's physical distribution business, a $2.5 million decrease in licenses, royalties, and participation expenses, a $2.2 million decrease in the Company's costs associated with the Company's reserves against advances to partners, a $1.6 million reduction in SaaS related costs as a result of internalizing services previously performed by third parties and cost savings synergies, and $0.7 million related to a decrease in an estimated Bloody Disgusting earnout liability based on fiscal year 2024 performance to-date.

Selling, General and Administrative Expenses

	For the Nine Months Ended December 31,
	2023		2022		$ Change			% Change
Compensation expense	$	13,369	$	16,361	$	(2,992	)		(18	)%
Corporate expenses		3,092		5,193		(2,101	)		(40	)%
Share-based compensation		1,092		3,855		(2,763	)		(72	)%
Other operating expenses		3,535		3,607		(72	)		(2	)%
Selling, General and Administrative	$	21,088	$	29,016	$	(7,928	)		(27	)%

During the nine months ended December 31, 2023, the Company's SG&A decreased by $7.9 million. Relative to nine months ended December 31, 2022, compensation related costs primarily decreased due to a reduction in the Company's bonus expense of $2.2 million and an increase in capitalized labor of $0.5 million from the development of the Company's Matchpoint software.

Corporate expenses declined by $2.1 million primarily decreased due to a corporate focus on reducing third-party legal costs in the amount of $1.5 million and a decline of $0.6 million in other consulting and service providers due to the Company's cost-saving initiatives.

Share-based compensation also decreased by $2.8 million, as a result of the US-based workforce reduction, a decline in stock price, and a relatively higher number of awards tranches fully vesting.

Depreciation and Amortization Expense

	For the Nine Months Ended December 31,
	2023		2022		$ Change			% Change
Amortization of intangible assets	$	2,381	$	2,193		188			9	%
Depreciation of property and equipment		406		715		(309	)		(43	)%
Depreciation and Amortization	$	2,787	$	2,908		(121	)		(4	)%

Depreciation expense decreased primarily due to the remainder of our digital cinema assets reaching the conclusion of their ten-year useful lives during the fiscal year ended March 31, 2023. Amortization expense has continued to increase as a result of the Company's shift away from the physical business to its focus on content related spend.

Interest expense, net

For the nine months ended December 31, 2023 relative to the nine months ended December 31, 2022, interest expense decreased by $99 thousand from $880 thousand to $781, primarily as a result of a $233 thousand decrease

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in deferred consideration amortization, partially offset by a $182 thousand increase in line of credit related interest costs, which was entered into in September 2022.

Adjusted EBITDA

We define Adjusted EBITDA to be earnings before interest, taxes, depreciation and amortization, stock-based compensation expense, merger and acquisition costs, restructuring, transition and acquisitions expense, net, goodwill impairment and certain other items.

Adjusted EBITDA is not a measurement of financial performance under GAAP and may not be comparable to other similarly titled measures of other companies. We use Adjusted EBITDA as a financial metric to measure the financial performance of the business because management believes it provides additional information with respect to the performance of its fundamental business activities. For this reason, we believe Adjusted EBITDA will also be useful to others, including our stockholders, as a valuable financial metric.

We present Adjusted EBITDA because we believe that Adjusted EBITDA is a useful supplement to net income (loss) from continuing operations as an indicator of operating performance. We also believe that Adjusted EBITDA is a financial measure that is useful both to management and investors when evaluating our performance and comparing our performance with that of our competitors. We also use Adjusted EBITDA for planning purposes and to evaluate our financial performance because Adjusted EBITDA excludes certain incremental expenses or non-cash items, such as stock-based compensation charges, that we believe are not indicative of our ongoing operating performance.

We believe that Adjusted EBITDA is a performance measure and not a liquidity measure, and therefore a reconciliation between net income (loss) from continuing operations and Adjusted EBITDA has been provided in the financial results. Adjusted EBITDA should not be considered as an alternative to net income (loss) from operations as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of cash flows, in each case as determined in accordance with GAAP, or as a measure of liquidity. In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows. We do not intend the presentation of these non-GAAP measures to be considered in isolation or as a substitute for results prepared in accordance with GAAP. These non-GAAP measures should be read only in conjunction with our Condensed Consolidated Financial Statements prepared in accordance with GAAP.

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

	For the Three Months Ended December 31,						For the Nine Months Ended December 31,
	2023			2022			2023			2022
Net income (loss)	$	(2,736	)	$	5,022		$	(6,589	)	$	(6,620	)
Add Back:
Income tax (benefit) expense		(24	)		—			12			—
Depreciation and amortization		1,012			924			2,787			2,908
Interest expense		291			367			781			880
Loss from equity investment in Metaverse		3,043			—			3,761			1,828
Provision for doubtful accounts		—			7			—			54
Stock-based compensation		183			658			1,092			3,855
Employee retention tax credit		—			(2,025	)					(2,475	)
Other (income) expense, net		(147	)		76			2			82
Net income attributable to noncontrolling interest		(41	)		(8	)		(94	)		(35	)
Transition-related costs		259			15			1,094			371
Mergers and acquisition costs		—			—			—			207
Adjusted EBITDA	$	1,840		$	5,036		$	2,846		$	1,056

Cash Flow

Changes in our cash flows were as follows (in thousands):

	For the Nine Months Ended December 31,
	2023			2022
Net used in operating activities		(9,287	)	$	(7,901	)
Net cash used in investing activities		(482	)		(429	)
Net cash provided by financing activities		8,156			4,064
Net change in cash and cash equivalents	$	(1,613	)	$	(4,266	)

For the nine months ended December 31, 2023, net cash used in operating activities is primarily driven by loss from operations, excluding non-cash expenses such as depreciation, amortization and stock-based compensation, and other changes in working capital. Specifically, the adjustments are primarily driven by net cash outflows related to content advances made to partners for which initial expenditures are generally recovered within six to twelve months and increases in accounts payable, accrued expenses, and other liabilities, partially offset by a decrease in accounts receivable and the unrealized loss from the Company's investment in Metaverse's stock. Operating cash flows are typically seasonally lower during the first two fiscal quarters and higher during our fiscal third and fourth quarters, resulting from revenues earned during the holiday season.

Cash used in investing activities was used in the expenditures towards long-lived intangible assets and fixed assets, as well as the receipt from the return of investment from the sale of equity securities.

Cash provided by financing activities pertained to the draw and repayment of the Company's line of credit, payment of earnout consideration, and issuance of company equity, net of financing fees.

For the nine months ended December 31, 2022, net cash used in operating activities was primarily driven by loss from operations, excluding non-cash expenses such as depreciation, amortization, recovery for doubtful accounts and stock-based compensation, including other changes in working capital. Additionally, during the nine months ended December 31, 2022, the Company decreased accounts payable by $11.8 million to vendors. Cash received from virtual print fees ("VPFs"), from our legacy digital cinema business, decreased from the previous period in alignment with the decrease in eligible VPF systems. Prepaid and other current assets increased by $2.7 million. In addition, we made $1.1 million in advances for the nine months ended December 31, 2022.

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Cash used in financing was used for the purchase of long-lived fixed assets.

Net cash provided by financing activities was driven by the net receipt of $5 million from the Company's line of credit, partially offset by the Company's deferred consideration and debt issuance costs.

Off-balance sheet arrangements

We are not a party to any off-balance sheet arrangements other than as discussed in Note 2 – Basis of Presentation and Summary of Significant Accounting Policies, Basis of Presentation and Consolidation and Note 3 - Other Interests to the Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q, we hold a 100% equity interest in CDF2 Holdings, which is an unconsolidated variable interest entity (“VIE”), which wholly owns Cinedigm Digital Funding 2, LLC; however, we are not the primary beneficiary of the VIE.

Item 4. CONTROLS AND PROCEDURES

Definition and Limitations of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

Evaluation of Disclosure Controls and Procedures

The management of the Company, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in the Exchange Act), as of December 31, 2023. Based on such evaluation, our principal executive officer and principal financial and accounting officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, on a timely basis, and (ii) accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures as of December 31, 2023.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the three months ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

There have been no material changes to the Risk Factors disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 and each Item 1A of our Quarterly Reports on Form 10-Q for quarters ended June 30, 2023 and September 30, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The exhibits are listed in the Exhibit Index beginning on the following page herein.

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EXHIBIT INDEX

Exhibit Number	Description of Document
10.1	Amendment no. 2 to Amended and Restated Loan Guaranty and Security Agreement dated as of February 9, 2024 by and between Cineverse Corp., East West Bank and the Guarantors named therein.
31.1	Officer’s Certificate Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Officer’s Certificate Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document.
101.SCH	Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CINEVERSE CORP.
Date: February 14, 2024	By:	/s/ Christopher J. McGurk
		Christopher J. McGurk Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)
Date: February 14, 2024	By:	/s/ Mark Lindsey
		Mark Lindsey Chief Financial Officer (Principal Financial Officer)

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EX-10.1

Exhibit 10.1

**Portions of this exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

AMENDMENT NO. 2 TO AMENDED AND RESTATED LOAN, GUARANTY AND SECURITY AGREEMENT

This Amendment No. 2 to Amended and Restated Loan, Guaranty and Security Agreement (“Amendment”) is made and entered into as of February 9, 2024, by and between East West Bank (“Bank”), Cineverse Corp., a Delaware corporation (f/k/a Cinedigm Corp.) (“Borrower”), Vistachiara Productions Inc., d/b/a The Bigger Picture, a Delaware corporation (“Vistachiara Productions”), Cineverse Entertainment Corp., a New York corporation (f/k/a Cinedigm Entertainment Corp.) (“Cineverse Entertainment”), Cineverse Entertainment Holdings, LLC, a Delaware limited liability company (f/k/a Cinedigm Entertainment Holdings, LLC) (“Cineverse Entertainment Holdings”), Cineverse Home Entertainment, LLC, a Delaware limited liability company (f/k/a Cinedigm Home Entertainment, LLC) (“Cineverse Home Entertainment”), Docurama, LLC, a Delaware limited liability company (“Docurama”), Dove Family Channel, LLC, a Delaware limited liability company (“Dove”), Cineverse OTT Holdings, LLC, a Delaware limited liability company (f/k/a Cinedigm OTT Holdings, LLC) (“Cineverse OTT”), and Cinedigm Productions, LLC, a Delaware limited liability company (“Cinedigm Productions”), Cinedigm DC Holdings, LLC, a Delaware limited liability company (“Cinedigm DC Holdings”), Access Digital Media, Inc., a Delaware corporation (“Access Digital Media”), Christie/AIX, Inc., a Delaware corporation (“Christie/AIX”), Cinedigm Digital Funding I, LLC, a Delaware limited liability company (“Cinedigm Digital Funding I”), FoundationTV, Inc., a Delaware corporation (“FoundationTV”), Asian Media Rights LLC, d/b/a Digital Media Rights, a New York limited liability company (“Asian Media Rights”), Con TV, LLC, a Delaware limited liability company (“Con TV”), Fandor Acquisition LLC, a Delaware limited liability company (“Fandor”), TFD Acquisition LLC, a Delaware limited liability company (“TFD Acquisition”), Screambox Acquisition LLC, a Delaware limited liability company (“Screambox Acquisition”), Bloody Disgusting Acquisition LLC, a Delaware limited liability company (“Bloody Disgusting Acquisition”), Comic Blitz II LLC, a Delaware limited liability company (“Comic Blitz II”), Viewster, LLC, a Delaware limited liability company (“Viewster”), and Cinedigm India Private Limited, an Indian limited company (“Cinedigm India”, and, together with Vistachiara Productions, Cineverse Entertainment, Cineverse Entertainment Holdings, Cineverse Home Entertainment, Docurama, Dove, and Cineverse OTT, Cinedigm Productions, Cinedigm DC Holdings, Access Digital Media, Christie/AIX, Cinedigm Digital Funding I, FoundationTV, Asian Media Rights, Con TV, Fandor, TFD Acquisition, Screambox Acquisition, Bloody Disgusting Acquisition, Comic Blitz II and Viewster, individually and collectively, the “Guarantor’’ and, together with the Borrower, collectively, the “Loan Parties”).

RECITALS

This Amendment is entered into in reference to the following facts:

A. Bank, Borrower and Guarantor entered into an Amended and Restated Loan, Guaranty and Security Agreement, dated as of September 15, 2022 (as amended by that certain Amendment No. 1 to Amended and Restated Loan, Guaranty and Security Agreement dated as of August 8, 2023, and as further amended, amended and restated, supplemented or otherwise modified, renewed, restated or replaced from time to time, the “Agreement”). All initially capitalized terms used, but not defined herein, have the meaning ascribed thereto in the Agreement.

B. Borrower has requested that Bank make certain amendments to the Agreement, and Bank is willing to do so subject to the terms and conditions of this Amendment.

NOW, THEREFORE, in consideration of the continued performance by each of the parties hereto of their respective promises and obligations under the Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows.

ARTICLE 1 – AMENDMENTS

1.1Amendments to the Agreement.

(a)Exhibit A of the Agreement is hereby amended by adding the following definitions:

““Amendment No. 2 Effective Date” means the “Amendment No. 2 Effective Date” under and as defined in the Amendment No. 2 to Agreement.”

““Amendment No. 2 to Agreement” means that certain Amendment No. 2 to Amended and Restated Loan, Guaranty and Security Agreement dated as of February 9, 2024, by and among Borrower, Guarantor and Bank.”

““Unused Line Fee” has the meaning set forth in Section 2.8.”

(b)Exhibit A of the Agreement is hereby amended by amending and restating the following definitions in their entirety:

““Adjusted EBITDA” means, without duplication of any revenue or expense, (i) EBITDA plus (ii) all stock-based compensation incurred during the applicable measurement period, plus (iii) any non-cash unrealized losses incurred during the applicable measurement period, minus (iv) any non-cash unrealized gains earned during the applicable measurement period.”

““Commitment Amount” means the maximum principal sum of Seven Million Five Hundred Thousand Dollars (US$7,500,000).”

2

““Revolving Line” means revolving Credit Extensions of up to Seven Million Five Hundred Thousand Dollars (US$7,500,000) in aggregate principal amount at any time outstanding.”

(c)Article 2 of the Agreement is hereby amended by adding the following new Section 2.8 thereto:

“2.8 Unused Line Fee. Borrower shall pay to Bank an unused line fee equal to 1.0% perannum (calculated on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) multipliedby the actual daily unused portion of the Commitment Amount (the “Unused Line Fee”). The Unused Line Fee shall accrue at all times during the period from the Amendment No. 2 Effective Date through the Revolving Maturity Date, including at any time during which one or more of the conditions in Article 3 is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Amendment No. 2 Effective Date and on the Revolving Maturity Date. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.”

(d)Section 9.5 of the Agreement is hereby amended and restated in its entirety as follows:

“9.5 Minimum Liquidity. Borrower shall at all times maintain a balance of Cash (including the Collection Account) in one or more accounts at Bank, Bank’s Affiliates or other financial institutions in the United States (so long as such accounts are covered by a reasonably satisfactory control agreement) plus undrawn amounts that are available under the Revolving Line in an aggregate amount of not less than Two Million Five Hundred Thousand Dollars ($2,500,000.00).”

(e)Section 9.1(c) of the Agreement is hereby amended and restated in its entirety as follows:

“(c) Concurrently with the delivery of the financial statements referred to in clauses (i) and (ii) of Section 9.1(a), Borrower shall deliver to Bank a Compliance Certificate certified as of the last day of the applicable month and signed by a Responsible Officer in substantially the form of Exhibit E hereto.”

(f)Section 9.6 of the Agreement is hereby amended and restated in its entirety as follows:

“9.6 Minimum Adjusted EBITDA. Borrower shall at all times after the Amendment Effective Date maintain an Adjusted EBITDA no less than the applicable amount as set forth in the following table, for each applicable period:

Applicable Period	Minimum Adjusted EBITDA
For the twelve month period ending June 30, 2023	**

3

For the twelve month period ending July 31, 2023	**
For the twelve month period ending August 31, 2023	**
For the twelve month period ending September 30, 2023	**
For the twelve month period ending October 31, 2023	**
For the twelve month period ending November 30, 2023	**
For the twelve month period ending December 31, 2023	**
For the twelve month period ending January 31, 2024	**
For the twelve month period ending February 29, 2024	**
For the twelve month period ending March 31, 2024	**

For the twelve month periods ending April 30, 2024, May 31, 2024, June 30, 2024, July 31, 2024 and August 31, 2024, the minimum Adjusted EBITDA the Borrower is required to maintain for each such period pursuant to this Section 9.6 shall be determined by Bank, in a manner comparable to the determination of the minimum Adjusted EBITDA levels for the prior periods, and notified to Borrower in writing.

(g)Exhibit D of the Agreement is hereby amended by replacing all references to $5,000,000 therein with $7,500,000.

ARTICLE 2 – REPRESENTATIONS AND WARRANTIES

Borrower hereby represents and warrants that the representations and warranties contained in the Agreement were true and correct in all material respects when made and, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they were true and correct in all material respects as of such earlier date, are true and correct in all material respects as of the date hereof. Each Loan Party hereby further represents and warrants that (a) the execution, delivery and performance by it of this Amendment are within its organizational powers and have been duly authorized by all necessary organizational action and, if required, shareholder, partner or member action, (b) this Amendment has been duly executed and delivered by such Person and constitutes a valid and binding obligation of such Person,

4

enforceable against such Person in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity, and (c) the execution, delivery and performance by such Person of this Amendment (i) does not require any Amendment or approval of, registration or filing with, or any action by, any Governmental Authority, except those as have been obtained or made and are in full force and effect, (ii) will not violate any applicable law applicable to such Person or any of its Subsidiaries or any judgment, order or ruling of any Governmental Authority, (iii) will not violate or result in a default under any contractual obligation of such Person or any of its Subsidiaries or any of its assets or give rise to a right thereunder to require any payment to be made by such Person or any of its Subsidiaries, (iv) will not result in the creation or imposition of any Lien on any asset of such Person or any of its Subsidiaries, except Liens (if any) created under the Loan Documents.

ARTICLE 3 – CONDITIONS

3.1 Conditions Precedent. The effectiveness of this Amendment is subject to satisfaction of each of the following conditions precedent (the “Amendment No. 2 Effective Date”):

(a) receipt by Bank of duly executed and delivered counterparts of this Amendment by each of the parties hereto;

(b) receipt by Bank in cash of an upfront fee in an amount equal to $25,000;

(c) after giving effect to this Amendment, no Event of Default or Default shall have occurred and be continuing; and

(d) the representations and warranties contained in Article 2 hereof being true and correct.

ARTICLE 4 –GENERAL PROVISIONS

4.1 Ratification and Incorporation of Agreement and other Loan Documents. Except as expressly modified under this Amendment, (i) each Loan Party hereby acknowledges, confirms and ratifies all of the terms and conditions set forth in, and all of its obligations under, the Agreement and the other Loan Documents to which it is a party, and (ii) all of the terms and conditions set forth in the Agreement and the other Loan Documents are incorporated herein by this reference as if set forth in full herein.

4.2 Entire Agreement. This Amendment, together with the Agreement and the other Loan Documents, is the entire agreement between the parties hereto with respect to the subject matter hereof. This Amendment supersedes all prior and contemporaneous oral and written agreements and discussions with respect to the subject matter hereof. Except as otherwise expressly modified herein, the Agreement and the other Loan Documents shall remain in full force and effect.

5

4.3 Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same instrument, respectively. Delivery of any executed counterpart of this Amendment by facsimile or transmitted electronically in either a Tagged Image Format File (“TIFF”) or Portable Document Format (“PDF”) shall be equally effective as delivery of a manually executed counterpart of this Amendment. Any party delivering an executed counterpart by facsimile, TIFF or PDF shall also deliver a manually executed counterpart of this Amendment, but failure to do so shall not affect the validity, enforceability or binding effect of this Amendment.

4.4 Governing Law. This Amendment and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Amendment and the transactions contemplated hereby shall be construed in accordance with and be governed by the laws (without giving effect to the conflict of law principles thereof) of the State of California.

4.5 Effect. Upon the effectiveness of this Amendment, from and after the date hereof, each reference in the Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import shall mean and be a reference to the Agreement as amended hereby and each reference in the other Loan Documents to the Agreement, “thereunder,” “thereof,” or words of like import shall mean and be a reference to the Agreement as amended hereby.

4.6 No Waiver or Representation as to Additional Accommodations. In agreeing to make the amendments set forth herein, Bank does not make any representation whatsoever that it will make any further or additional accommodations to or for the benefit of any Loan Party. Except as expressly provided in Article 1 of this Amendment, the execution, delivery, and effectiveness of this Amendment shall not (i) limit, impair, constitute a waiver of, or otherwise affect any right, power, or remedy of Bank under the Agreement or any other Loan Document, (ii) impose any obligation on Bank to defer the enforcement of its powers, rights and privileges under the Agreement or any other Loan Document, (iii) constitute a waiver of any provision in the Agreement or any other Loan Document, or (iv) alter, modify, amend, or in any way affect any of the terms, conditions, obligations, covenants, or agreements contained in the Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect.

4.7 Conflict of Terms. In the event of any inconsistency between the provisions of this Amendment and any provision of the Agreement, the terms and provisions of this Amendment shall govern and control.

4.8 Loan Document. This Amendment shall constitute a Loan Document.

6

IN WITNESS WHEREOF, each of the parties have executed this Amendment by and through its duly authorized officer as of the date and year first-above written.

“BORROWER” CINEVERSE CORP. By /s/ Gary S. Loffredo Name: Gary S. Loffredo Position: Chief Legal Officer and Secretary “BANK” East West Bank By /s/ Yang Song_____________________ Name: Yang Song____________________ Position: FVP_______________________

“GUARANTOR”

VISTACHIARA PRODUCTIONS INC.

d/b/a THE BIGGER PICTURE

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Secretary

CINEVERSE ENTERTAINMENT CORP.

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Senior Vice President & Secretary

CINEVERSE ENTERTAINMENT HOLDINGS, LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Secretary

CINEVERSE HOME ENTERTAINMENT, LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Secretary

DOCUDRAMA, LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Senior Vice President & Secretary

DOVE FAMILY CHANNEL, LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Senior Vice President & Secretary

CINEVERSE OTT HOLDINGS, LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Senior Vice President & Secretary

CINEDIGM PRODUCTIONS, LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Senior Vice President & Secretary

CINEDIGM DC HOLDINGS, LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: President

ACCESS DIGITAL MEDIA, INC.

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: President

CHRISTIE/AIX, INC.

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: President

CINEDIGM DIGITAL FUNDING I, LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: President

FOUNDATIONTV, INC.

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: President

ASIAN MEDIA RIGHTS, LLC,

d/b/a DIGITAL MEDIA RIGHTS

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Chief Operating Officer, General Counsel and Secretary

CON TV, LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Secretary

FANDOR ACQUISITION LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: President

TFD ACQUISITION LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Chief Operating Officer & Secretary

SCREAMBOX ACQUISITION LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Chief Operating Officer & Secretary

BLOODY DISGUSTING ACQUISITION LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Chief Operating Officer & Secretary

COMIC BLITZ II LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Senior Vice President & Secretary

VIEWSTER, LLC

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Chief Operating Officer

CINEDIGM INDIA PRIVATE LIMITED

By /s/ Gary S. Loffredo

Name: Gary S. Loffredo

Position: Authorized Person

EX-31.1

EXHIBIT 31.1

CINEVERSE CORP.

CERTIFICATION

I, Christopher J. McGurk, certify that:

1. I have reviewed this Form 10-Q of Cineverse Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 14, 2024	By:	/s/ Christopher J. McGurk
		Christopher J. McGurk Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CINEVERSE CORP.

CERTIFICATION

I, Mark Lindsey, certify that:

1. I have reviewed this Form 10-Q of Cineverse Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 14, 2024	By:	/s/ Mark Lindsey
			Mark Lindsey
			Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with Form 10-Q of Cineverse Corp. (the “Company”) for the period ended December 31, 2023 as filed with the SEC (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date:	February 14, 2024	By:	/s/ Christopher J. McGurk
			Christopher J. McGurk
			Chief Executive Officer and
			Chairman of the Board of Directors
			(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with Form 10-Q of Cineverse Corp. (the “Company”) for the period ended December 31, 2023 as filed with the SEC (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date:	February 14, 2024	By:	/s/ Mark Lindsey
			Mark Lindsey
			Chief Financial Officer (Principal Financial Officer)

XML

Document And Entity Information - shares	9 Months Ended
	Dec. 31, 2023	Feb. 07, 2024
Document Information [Line Items]
Entity Registrant Name	Cineverse Corp.
Trading Symbol	CNVS
Document Type	10-Q
Current Fiscal Year End Date	--03-31
Entity Common Stock, Shares Outstanding		13,327,960
Amendment Flag	false
Entity Central Index Key	0001173204
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Dec. 31, 2023
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-31810
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	22-3720962
Entity Address, Address Line One	224 W. 35th St.,
Entity Address, Address Line Two	Suite 500 #947,
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10001
City Area Code	(212)
Local Phone Number	206-8600
Title of 12(b) Security	CLASS A COMMON STOCK, PAR VALUE $0.001 PER SHARE
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2023	Mar. 31, 2023
Current Assets
Cash and cash equivalents	$ 5,539	$ 7,152
Accounts receivable	16,416	20,846
Unbilled revenue	2,454	2,036
Employee retention tax credit	1,672	2,085
Content advances	8,477	3,724
Other current assets	1,678	1,734
Total current assets	36,236	37,577
Equity investment in Metaverse, a related party, at fair value	1,276	5,200
Property and equipment, net	2,065	1,833
Intangible assets, net	18,727	19,868
Goodwill	20,824	20,824
Content advances, net of current portion	3,153	1,421
Other long-term assets	943	1,265
Total Assets	83,224	87,988
Current Liabilities
Accounts payable and accrued expenses	26,987	34,531
Line of credit, including unamortized debt issuance costs of $69 and $76, respectively	4,931	4,924
Current portion of deferred consideration on purchase of business	3,954	3,788
Current portion of earnout consideration on purchase of business	110	1,444
Operating lease liabilities	440	418
Current portion of deferred revenue	246	226
Total current liabilities	36,668	45,331
Deferred consideration on purchase of business - net of current portion	2,639	2,647
Operating lease liabilities - net of current portion	531	863
Other long-term liabilities	59	74
Total Liabilities	39,897	48,915
Commitments and contingencies (see Note 6)
Stockholders’ Equity
Preferred stock, 15,000,000 shares authorized; Series A 10% - $0.001 par value per share; 20 shares authorized; 7 shares issued and 7 shares outstanding at December 31, 2023 and March 31, 2023.	3,559	3,559
Common Stock, $0.001 par value; Class A Stock: 275,000,000 shares authorized as of December 31, 2023, and March 31, 2023; 13,553,767 and 9,413,597 shares issued, with 13,265,214 and 9,347,805 shares outstanding as of December 31, 2023, and March 31, 2023, respectively.	192	185
Additional paid-in capital	542,482	530,998
Treasury stock, at cost; 288,554 and 65,792 shares at December 31, 2023 and March 31, 2023, respectively.	(11,978)	(11,608)
Accumulated deficit	(489,341)	(482,395)
Accumulated other comprehensive loss	(417)	(402)
Total stockholders' equity of Cineverse Corp.	44,497	40,337
Deficit attributable to noncontrolling interest	(1,170)	(1,264)
Total equity	43,327	39,073
Total Liabilities and Equity	$ 83,224	$ 87,988

XML

Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2023	Mar. 31, 2023
Unamortized debt issuance costs (in Dollars)	$ 69	$ 76
Preferred stock, shares authorized	15,000,000	15,000,000
Treasury stock shares	288,554	65,792
Series A preferred stock
Preferred stock, shares authorized	20	20
Preferred stock, dividend rate	10.00%	10.00%
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares issued	7	7
Preferred stock, shares outstanding	7	7
Class A Common Stock
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	275,000,000	275,000,000
Common stock, shares issued	13,553,767	9,413,597
Common stock, shares outstanding	13,265,214	9,347,805

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Income Statement [Abstract]
Revenues	$ 13,276	$ 27,882	$ 39,268	$ 55,478
Costs and expenses:
Direct operating	5,464	14,411	17,097	29,859
Selling, general and administrative	6,373	9,107	21,088	29,016
Depreciation and amortization	1,012	924	2,787	2,908
Total operating expenses	12,849	24,442	40,972	61,783
Operating income (loss)	427	3,440	(1,704)	(6,305)
Interest expense	(291)	(367)	(781)	(880)
Loss from equity investment in Metaverse, a related party	(3,043)		(3,761)	(1,828)
Employee retention tax credit		2,025		2,475
Other income (expenses), net	147	(76)	(331)	(82)
Net (loss) income before income taxes	(2,760)	5,022	(6,577)	(6,620)
Income tax benefit (expense)	24		(12)
Net (loss)income	(2,736)	5,022	(6,589)	(6,620)
Net income attributable to noncontrolling interest	(41)	(8)	(94)	(35)
Net (loss) income attributable to controlling interests	(2,777)	5,014	(6,683)	(6,655)
Preferred stock dividends	(87)	(88)	(263)	(264)
Net (loss) income attributable to common stockholders	$ (2,864)	$ 4,926	$ (6,946)	$ (6,919)
Net (loss) income per share attributable to common stockholders: - basic: (in Dollars per share)	$ (0.22)	$ 0.55	$ (0.59)	$ (0.78)
Weighted average shares of Common Stock outstanding: basic	12,828	8,945	11,678	8,854
Net (loss) income per share attributable to common stockholders: - diluted: (in Dollars per share)	$ (0.22)	$ 0.55	$ (0.59)	$ (0.78)
Weighted average shares of Common Stock outstanding: diluted	12,828	8,945	11,678	8,854

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Condensed Consolidated Statements of Comprehensive (Loss) (Income) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (2,736)	$ 5,022	$ (6,589)	$ (6,620)
Other comprehensive loss:
Foreign exchange translation	(3)	88	(15)	(226)
Net income attributable to noncontrolling interest	(41)	(8)	(94)	(35)
Comprehensive (loss) income	$ (2,780)	$ 5,102	$ (6,698)	$ (6,881)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Cash flows from operating activities:
Net loss	$ (6,589)	$ (6,620)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,787	2,908
Provision for doubtful accounts	0	54
Changes in fair value of equity investment in Metaverse	3,761	1,828
Amortization of debt issuance costs	103	138
Stock-based compensation	1,092	3,855
Interest expense for deferred consideration and earnouts	381	743
Capitalized content	(1,371)
Change in estimated earnout consideration	(682)
Nonmonetary sale of content license		(1,022)
Barter-related non-cash expenses	256
Other	395	102
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	3,815	5,795
Other current and long-term assets	449	(2,215)
Content advances	(6,485)	1,104
Employee retention tax credit		(2,475)
Accounts payable, accrued expenses, and other liabilities	(6,802)	(11,972)
Unbilled revenue	(418)	(332)
Deferred revenue	20	208
Net cash used in operating activities	(9,287)	(7,901)
Cash flows from investing activities:
Expenditures for long-lived assets	(641)	(429)
Sale of equity investment securities	159
Net cash used in investing activities	(482)	(429)
Cash flows from financing activities:
Proceeds from line of credit, net of debt issuance costs	28,565	19,469
Payments on line of credit	(28,565)	(14,469)
Payment of earnout consideration	(291)	(665)
Financing fees for line of credit	(96)	(271)
Issuance of Class A common stock, net of issuance costs	8,542
Net cash provided by financing activities	8,156	4,064
Net change in cash and cash equivalents	(1,613)	(4,266)
Cash and cash equivalents at beginning of period	7,152	13,062
Cash and cash equivalents at end of period	5,539	8,796
Supplemental Cash Flow Elements [Abstract]
Cash interest paid	233	58
Lease liability related payments	333
Income taxes paid	49
Noncash investing and financing activities:
Issuance of Class A common stock for payment of accrued employee bonuses	1,203
Treasury shares acquired for withholding taxes	370
Earnout liability settled in stock	392	(238)
Accrued dividends on preferred stock	263	88
Issuance of Class A common stock for payment of accrued preferred stock dividends	$ 263	264
Earnout consideration adjustment		80
Issuance of common stock for Board of Director compensation		$ 3

XML

Condensed Consolidated Statements Of Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Preferred Stock	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Non-Controlling Interest	Total Stockholders' Equity
Balance at Mar. 31, 2022	$ 40,950	$ 3,559	$ 174	$ (11,608)	$ 522,601	$ (472,310)	$ (163)	$ (1,303)	$ 42,253
Balance (in Shares) at Mar. 31, 2022		1	8,766	66
Foreign exchange translation	48						48		48
Stock-based compensation	980				980				980
Preferred stock dividends paid in stock	88				88				88
Preferred stock dividends paid in stock (in Shares)			5
Preferred stock dividends accrued	(88)					(88)			(88)
Net income (loss)	(5,987)					(6,005)		18	(6,005)
Balance at Jun. 30, 2022	35,991	$ 3,559	$ 174	$ (11,608)	523,669	(478,403)	(115)	(1,285)	37,276
Balance (in Shares) at Jun. 30, 2022		1	8,771	66
Foreign exchange translation	(362)						(362)		(362)
Stock-based compensation	791				791				791
Issuance of Class A common stock in connection employee bonuses	873		$ 2		871				873
Issuance of Class A common stock in connection employee bonuses (in Shares)			103
Issuance of Class A common stock for earnout commitment	238				238				238
Issuance of Class A common stock for earnout commitment (in Shares)			17
Preferred stock dividends paid in stock	88				88				88
Preferred stock dividends paid in stock (in Shares)			9
Preferred stock dividends accrued	(88)					(88)			(88)
Net income (loss)	(5,655)					(5,664)		9	(5,664)
Balance at Sep. 30, 2022	31,876	$ 3,559	$ 176	$ (11,608)	525,657	(484,155)	(477)	(1,276)	33,152
Balance (in Shares) at Sep. 30, 2022		1	8,900	66
Foreign exchange translation	88						88		88
Stock-based compensation	657				657				657
Issuance of common stock for Board of Director compensation	1		$ 1						1
Issuance of common stock for Board of Director compensation, Shares			34
Preferred stock dividends paid in stock	88				88				88
Preferred stock dividends paid in stock (in Shares)			11
Preferred stock dividends accrued	(88)					(88)			(88)
Net income (loss)	5,022					5,014		8	5,014
Balance at Dec. 31, 2022	37,644	$ 3,559	$ 177	$ (11,608)	526,402	(479,229)	(389)	(1,268)	38,912
Balance (in Shares) at Dec. 31, 2022		1	8,945	66
Balance at Mar. 31, 2023	39,073	$ 3,559	$ 185	$ (11,608)	530,998	(482,395)	(402)	(1,264)	40,337
Balance (in Shares) at Mar. 31, 2023		1	9,348	66
Foreign exchange translation	(78)						(78)		(78)
Stock-based compensation	409				409				409
Issuance of Class A common stock in connection with ATM raises, net	1,069		$ 4		1,065				1,069
Issuance of Class A common stock in connection with ATM raises, net (in Shares)			177
Issuance of Class A common stock in connection with direct equity offering	7,439		$ 2		7,437				7,439
Issuance of Class A common stock in connection with direct equity offering (in Shares)			2,150
Preferred stock dividends paid in stock	88				88				88
Preferred stock dividends paid in stock (in Shares)			10
Preferred stock dividends accrued	(88)					(88)			(88)
Net income (loss)	(3,536)					(3,550)		14	(3,550)
Balance at Jun. 30, 2023	44,376	$ 3,559	$ 191	$ (11,608)	539,997	(486,033)	(480)	(1,250)	45,626
Balance (in Shares) at Jun. 30, 2023		1	11,685	66
Foreign exchange translation	66						66		66
Stock-based compensation	499				499				499
Issuance of Class A common stock in connection employee bonuses	1,203		$ 1		1,203				1,203
Issuance of Class A common stock in connection employee bonuses (in Shares)			725
Estimated fee decrease associated with equity issuance	33				33				33
Issuance in connection with the exercise of warrants (in Shares)			517
Issuance of Class A common stock for earnout commitment	392				392				392
Issuance of Class A common stock for earnout commitment (in Shares)			41
Treasury stock in connection with taxes withheld from employees	(370)			$ (370)					(370)
Treasury stock in connection with taxes withheld from employees (in Shares)			(223)	223
Preferred stock dividends paid in stock	88				88				88
Preferred stock dividends paid in stock (in Shares)			46
Preferred stock dividends accrued	(87)					(87)			(87)
Net income (loss)	(317)					(357)		40	(357)
Balance at Sep. 30, 2023	45,883	$ 3,559	$ 192	$ (11,978)	542,212	(486,477)	(414)	(1,210)	47,093
Balance (in Shares) at Sep. 30, 2023		1	12,791	289
Foreign exchange translation	(3)						(3)		(3)
Stock-based compensation	98				98				98
Issuance of common stock for Board of Director compensation	85				85				85
Issuance of common stock for Board of Director compensation, Shares			400
Preferred stock dividends paid in stock	87				87				87
Preferred stock dividends paid in stock (in Shares)			74
Preferred stock dividends accrued	(87)					(87)			(87)
Net income (loss)	(2,736)					(2,777)		41	(2,777)
Balance at Dec. 31, 2023	$ 43,327	$ 3,559	$ 192	$ (11,978)	$ 542,482	$ (489,341)	$ (417)	$ (1,170)	$ 44,497
Balance (in Shares) at Dec. 31, 2023		1	13,265	289

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Nature of Operations and Liquidity

9 Months Ended

Dec. 31, 2023

Disclosure of Nature of Operations and Liquidity [Abstract]

NATURE OF OPERATIONS AND LIQUIDITY

1. NATURE OF OPERATIONS AND LIQUIDITY

Cineverse Corp. (“Cineverse”, “us”, “our”, and “Company” refers to Cineverse Corp. and its subsidiaries unless the context otherwise requires) was incorporated in Delaware on March 31, 2000. Since our inception, we have played a significant role in the digital distribution revolution that continues to transform the media and entertainment landscape.

Cineverse is a premier streaming technology and entertainment company with its core business operating as (i) a portfolio of owned and operated enthusiast streaming channels with enthusiast fan bases; (ii) a large-scale global aggregator and full-service distributor of feature films and television programs; and (iii) a proprietary technology software-as-a-service platform for over-the-top (“OTT”) app development and content distribution through subscription video on demand ("SVOD"), dedicated ad-supported ("AVOD"), ad-supported streaming linear ("FAST") channels, social video streaming services, and audio podcasts. We distribute products for major brands such as Hallmark, ITV, Nelvana, ZDF, Konami, NFL and Highlander, as well as leading international and domestic content creators, movie producers, television producers and other short-form digital content producers. We collaborate with producers, major brands and other content owners to market, source, curate and distribute quality content to targeted audiences through (i) existing and emerging digital home entertainment platforms, including but not limited to Apple iTunes, Amazon Prime, Netflix, Hulu, Xbox, Pluto, and Tubi, as well as (ii) physical goods, including DVD and Blu-ray Discs.

We played a pioneering role in transitioning approximately 12,000 movie screens from traditional analog film prints to digital distribution, and at the end of our fiscal year 2023, the Company's cinema equipment business concluded its active operations, as its contracts reached maturity. The Company no longer manages cinema equipment separately, and with the run-off of its operations, no longer presents this part of the business as a separate segment. All prior period reporting within this report reflect this change.

Our Class A common stock, par value $0.001 per share (the "Common Stock") is listed on The Nasdaq Capital Market (“Nasdaq”) under the symbol “CNVS.” The Company has maintained its compliance with the $1.00 bid price requirement for continued listing on The Nasdaq Capital Market and remains subject to a one-year “Panel Monitor” as that term is defined by Nasdaq Listing Rule 5815(d)(4)(A) through June 30, 2024.

Financial Condition and Liquidity

We have a history of net losses, and for the nine months ended December 31, 2023, we had a net loss attributable to common stockholders in the amount of $6.9 million. We may continue to generate net losses for the foreseeable future. As of December 31, 2023, the Company has an accumulated deficit of $489.3 million and negative working capital of $0.4 million. Net cash used in operating activities for the nine months ended December 31, 2023 was $9.3 million which included $6.5 million of incremental investment in our content portfolio via advances or minimum guarantee payouts.

The Company is party to a Loan, Guaranty, and Security Agreement with East West Bank (“EWB”) providing for a revolving line of credit (the “Line of Credit Facility”) of $5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries’ assets. The line of credit expires on September 15, 2024. The Line of Credit Facility bears interest at a rate equal to 1.5% above the prime rate, 10.00% as of December 31, 2023. As of December 31, 2023, $5.0 million was outstanding on the Line of Credit Facility, net of unamortized issuance costs of $69 thousand. On February 9, 2024, the Company expanded the Line of Credit Facility to $7.5 million at the same interest rate and with the same maturity date.

In July 2020, we entered into an At-the-Market sales agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”) and B. Riley FBR, Inc. (“B. Riley” and, together with A.G.P., the “Sales Agents”), pursuant to which the Company may offer and sell, from time to time, through the Sales Agents, shares of Common Stock at the market prices prevailing on Nasdaq at the time of the sale of such shares. The Company is not obligated to sell any shares under the ATM Sales Agreement. Any sales of shares made under the ATM Sales Agreement will be made pursuant to an effective shelf registration statement, for an aggregate offering price of up to $30 million. For the three months ended December 31, 2023, the Company did not sell any shares under this agreement. For the

nine months ended December 31, 2023, the Company sold 177 thousand shares for $1.1 million in net proceeds, respectively, after deduction of commissions and fees. The ATM Sales Agreement has expired in accordance with its terms.

On June 16, 2023, the Company closed on the sale of 2,150 thousand shares of Common Stock, 517 thousand pre-funded warrants, and warrants to purchase up to 2,667 thousand shares of Common Stock at a combined public offering price of $3.00 per share and accompanying warrant for aggregate gross proceeds of approximately $7.4 million, after deducting placement agent fees and other offering expenses in the amount of $0.6 million. The warrants had an exercise price of $3.00 per share, were exercisable immediately and will expire five years from the issuance. The Company received $2.999 per share for the pre-funded warrants, with the remaining $0.001 due at the time of exercise. All 516,667 pre-funded warrants were subsequently exercised in July 2023 for total proceeds of $0.5 thousand.

In addition, the Company remains authorized to purchase up to an aggregate of 500 thousand shares of its outstanding Common Stock, following the announcement of a stock repurchase program on March 1, 2023.

The Company will continue to invest in content development and acquisition, from which it believes it will obtain an appropriate return on its investment. As of December 31, 2023 and March 31, 2023, short term content advances were $8.5 million and $3.7 million, respectively, and content advances, net of current portion were, $3.2 million and $1.4 million, respectively.

We believe our cash and cash equivalents and our credit facility, as of December 31, 2023, will be sufficient to support our operations for at least twelve months from the filing of this report. The Company may also undertake equity or debt offerings, if necessary and opportunistically available, for further capital needs.

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Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

The accompanying interim Condensed Consolidated Financial Statements of Cineverse Corp. have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended March 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on June 29, 2023. These Condensed Consolidated Financial Statements are unaudited and have been prepared by the Company following the rules and regulations of the SEC.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, the Company believes the disclosures are adequate to make the information presented not misleading. Certain columns and rows may not add due to the use of rounded numbers.

The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2023. Interim results are not necessarily indicative of the results for a full year.

The preparation of the Condensed 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, allowance for credit losses, returns and recovery reserves, goodwill and intangible asset impairments, share-based compensation expense, valuation allowance for deferred income taxes and amortization of 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.

We own an 85% interest in CON TV, LLC ("CONtv"), a worldwide digital network that creates original content, and sells and distributes on-demand digital content on the internet and other consumer digital distribution platforms, such as gaming consoles, set-top boxes, handsets, and tablets. We evaluated the investment under the voting interest entity model and determined that the entity should be consolidated as we have a controlling financial interest in the entity through our ownership of outstanding voting shares, and that other equity holders do not have substantive voting, participating or liquidation rights.

Accounting Policies

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended March 31, 2023.

Segment Reporting

Beginning in fiscal year 2024, following the run-off of the Company's digital cinema operations, the Company now manages its operations and manages its business in one reporting segment. Earlier periods presented herein have been presented to conform to this reportable segment composition.

Reclassifications

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

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be “cash equivalents.” We maintain bank accounts with major banks, which from time to time may exceed the Federal Deposit Insurance Corporation’s insured limits. We periodically assess the financial condition of the institutions and believe that the risk of any loss is minimal.

Employee Retention Tax Credit

The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") provided an employee retention tax credit ("ERTC") which was a refundable tax credit against certain employment taxes. The Consolidated Appropriations Act (the "Appropriations Act") extended and expanded the availability of the employee retention credit through December 31, 2021. The Appropriations Act amended the employee retention credit to be equal to 70% of qualified wages paid to employees during the 2021 fiscal year.

The Company qualified for the employee retention credit beginning in June 2020 for qualified wages through September 2021 and filed a cash refund claim during the fiscal year ended March 31, 2023 in the amount of $2.5 million in the Employee retention tax credit line on the Company’s Condensed Consolidated Statements of Operations, of which $2.0 million was recognized during the three months ended December 31, 2022. As of December 31, 2023 and March 31, 2023, the tax credit receivable of $1.7 and $2.1 million, respectively, has been included in the Employee retention tax credit line on the Company's Condensed Consolidated Balance Sheet.

The Company has received notification during the second quarter of fiscal year 2024 that its ERTC claim is under examination with the Internal Revenue Service ("IRS"). As of the date of this report, the examination is ongoing, and the Company is responding to audit requests as they arise.

Property and Equipment, Net

Property and equipment, net 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 as follows:

Computer equipment and software	3 - 5 years
Internal use software	3 - 5 years
Machinery and equipment	3 - 10 years
Furniture and fixtures	2 - 7 years

We capitalize costs associated with software developed or obtained for internal use when the preliminary project stage is completed, and it is determined that the software will provide significantly enhanced capabilities and modifications. These capitalized costs are included in property and equipment, net and include external direct cost of services procured in developing or obtaining internal-use software and personnel and related expenses for employees who are directly associated with, and who devote time to internal-use software projects. Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended use. Once the software is ready for its intended use, the costs are amortized over the useful life of the software. Post-configuration training and maintenance costs are expensed as incurred. We amortize internal-use software over its estimated useful life on a straight-line basis.

Intangible Assets, Net

Intangible assets are stated at cost less accumulated amortization. For intangible assets that have finite lives, the assets are amortized using the straight-line method over the estimated useful lives of the related assets. For intangible assets with indefinite lives, the assets are tested annually for impairment or sooner if a triggering event occurs.

Amortization lives of intangible assets are as follows:

Content Library	3 – 20 years
Trademarks and Tradenames	2 – 15 years
Customer Relationships	5 – 13 years
Advertiser Relationships and Channel	2 – 13 years
Software	10 years
Capitalized Content	3 years
Supplier Agreements	2 years

The Company’s intangible assets included the following (in thousands):

	As of December 31, 2023
	Cost Basis		Accumulated Amortization			Net
Content Library	$	24,096	$	(21,378	)	$	2,718
Advertiser Relationships and Channel		12,604		(2,132	)		10,472
Customer Relationships		8,690		(7,804	)		886
Software		3,200		(800	)		2,400
Trademark and Tradenames		4,026		(3,056	)		970
Capitalized Content		1,371		(90	)		1,281
Total Intangible Assets	$	53,987	$	(35,260	)	$	18,727

	As of March 31, 2023
	Cost Basis		Accumulated Amortization			Net
Content Library	$	23,970	$	(21,126	)	$	2,844
Advertiser Relationships and Channel		12,604		(1,062	)		11,542
Customer Relationships		8,690		(7,600	)		1,090
Trademark and Tradenames		4,026		(2,274	)		1,752
Software		3,200		(560	)		2,640
Total Intangible Assets	$	52,490	$	(32,622	)	$	19,868

During the three and nine months ended December 31, 2023, the Company had amortization expense of $879 thousand and $2,381 thousand, respectively. During the three and nine months ended December 31, 2022, the Company had amortization expense of $712 thousand and $2,193 thousand, respectively.

As of December 31, 2023, amortization expense is expected to be (in thousands):

	Total
In-process intangible assets	$	411
Remainder of fiscal year 2024		1,254
2025		3,264
2026		3,001
2027		1,772
2028		1,246
Thereafter		7,779
	$	18,727

Capitalized Content

The Company capitalizes direct costs incurred in the production of content from which it expects to generate a return over the anticipated useful life and the Company’s predominant monetization strategy informs the method of amortizing these deferred costs. The determination of the predominant monetization strategy is made at commencement of the production or license period and the classification of the monetization strategy as individual or group only changes if there is a significant change to the title’s monetization strategy relative to its initial assessment. The costs are capitalized to the Capitalized Content costs within Intangible Assets and are amortized as a group within Depreciation and Amortization within the Condensed Consolidated Statements of Operations.

Impairment of Long-lived and Finite-lived Intangible Assets

We review the recoverability of our long-lived assets and finite-lived intangible assets, when events or conditions occur that indicate a possible impairment exists. The assessment for recoverability is based primarily on our ability to recover the carrying value of our long-lived and finite-lived assets from expected future undiscounted net cash flows. If the total of expected future undiscounted net cash flows is less than the total carrying value of the asset, the asset is deemed not to be recoverable and possibly impaired. We then estimate the fair value of the asset to determine whether an impairment loss should be recognized. An impairment loss will be recognized if the asset’s fair value is determined to be less than its carrying value. Fair value is determined by computing the expected future discounted cash flows. There were no impairment charges recorded for long-lived and finite-lived intangible assets during the three and nine months ended December 31, 2023 and 2022.

Goodwill

Goodwill is the excess of the purchase price paid over the fair value of the net assets of an acquired business. Goodwill is tested for impairment on an annual basis or more often if warranted by events or changes in circumstances indicating that the carrying value may exceed fair value, also known as impairment indicators.

Inherent in the fair value determination for each reporting unit are certain judgments and estimates relating to future cash flows, including management’s interpretation of current economic indicators and market conditions, and assumptions about our strategic plans with regard to its operations. To the extent additional information arises, market conditions change, or our strategies change, it is possible that the conclusion regarding whether our remaining goodwill is impaired could change and result in future goodwill impairment charges that will have a material effect on our consolidated financial position or results of operations.

The Company has the option to assess goodwill for possible impairment by performing a qualitative analysis to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount or to perform the quantitative impairment test. The Company annually assesses goodwill for potential impairment during its fourth fiscal quarter, or sooner if event occurs or circumstances would indicate it would be more likely than not that fair value would be reduced below its carrying amount. No goodwill impairment charge was recorded in the three and nine months ended December 31, 2023 and 2022.

Fair Value Measurements

The fair value measurement disclosures are grouped into three levels based on valuation factors:

•Level 1 – quoted prices in active markets for identical investments

•Level 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs)

•Level 3 – significant unobservable inputs (including our own assumptions in determining the fair value of investments)

The following tables summarize the levels of fair value measurements of our financial assets and liabilities (in thousands):

	As of December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Equity investment in Metaverse, at fair value	$	1,276	$	—	$	—	$	1,276
	$	1,276	$	—	$	—	$	1,276
Liabilities:
Current portion of earnout consideration on purchase of a business	$	—	$	—	$	110	$	110
	$	—	$	—	$	110	$	110

	As of March 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Equity investment in Metaverse, at fair value			$	—	$	5,200	$	5,200
	$	—	$	—	$	5,200	$	5,200
Liabilities:
Current portion of earnout consideration on purchase of a business	$	—	$	—	$	1,444	$	1,444
	$	—	$	—	$	1,444	$	1,444

The Company has an investment in A Metaverse Company ("Metaverse") (SEHK: 1616) accounted for under the equity method of accounting as the Company can exert significant influence over Metaverse with its direct

ownership of approximately 15% and affiliation with the Company’s largest shareholder. The Company has also made an irrevocable election to apply the fair value option under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 825-10, Financial Instruments, as it relates to its equity investment in Metaverse. Changes in the investment's fair value are recognized within the "Loss from equity investment in Metaverse, a related party" line item within the Condensed Consolidated Statements of Operations.

Following the halting of Metaverse stock trading on The Stock Exchange of Hong Kong Limited on April 1, 2022, the Company valued our equity investment in Metaverse using a market approach and the investment was categorized as a Level 3 valuation based on unobservable inputs. As such, as of March 31, 2023, the Company estimated the fair value of Metaverse based the last known enterprise value, adjusting for trends in enterprise valuations and market capitalization for comparable companies with a resulting fair value was $5.2 million.

On November 6, 2023, Metaverse's stock resumed trading on The Stock Exchange of Hong Kong Limited. During the quarter ended December 31, 2023, the Company sold 30 million of the 362 million shares held as of September 30, 2023, which resulted in a realized loss of $131 thousand during the three months ended December 31, 2023. The resumption of active trading status represented renewed availability of quoted, unadjusted prices in active markets for identical assets, upon which the Company can execute a sale and readily access pricing information at the measurement date. Accordingly, the Company has presented the fair value of its Metaverse shares held as of December 31, 2023 within the Level 1 grouping. The fair value of the shares held as of December 31, 2023 was $1.3 million, with associated unrealized losses of $3.6 million.

The Company estimated the fair value of its earnout consideration using contractual inputs from the related business combination, which established specific fiscal year revenue growth, profitability and EBITDA targets. The Company utilizes the most up to date forecast to estimate the outcome against these targets to determine the ultimate estimated payout. During the nine months ended December 31, 2023, the Company estimated a $682 thousand decrease in the estimated ultimate earnout payments based on Bloody Disgusting's performance, made cash payments of $291 thousand, and issued equity to settle earnout liability of $392 thousand, and accrued interest of $29 thousand.

Our cash and cash equivalents, accounts receivable, unbilled revenue, accounts payable and accrued expenses are financial instruments and are recorded at cost in the Condensed Consolidated Balance Sheets. The estimated fair values of these financial instruments approximate their carrying amounts because of their short-term nature.

Content Advances

Content advances represents 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 in more than 12 months are classified as long term and presented within content advances, net of current portion, which were $3.2 million and $1.4 million as of December 31, 2023, and March 31, 2023, respectively. For the nine months ended December 31, 2023, the Company recorded a recovery in the provision for advances of $0.5 million.

Accounts Payable and Accrued Expenses

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

	As of
	December 31, 2023		March 31, 2023
Accounts payable	$	6,568	$	15,042
Amounts due to producers		15,553		13,114
Accrued compensation and benefits		1,209		2,532
Accrued other expenses		3,657		3,843
Total accounts payable and accrued expenses	$	26,987	$	34,531

Compared to March 31, 2023, the decrease in accounts payable was primarily attributable to an $8.3 million decrease from the run-off of the Company's digital cinema operations, and the decrease in accrued compensation and benefits was driven by a decrease of $1.2 million due to a reduced bonus accrual.

Deferred Consideration

The Company has recognized liabilities related to deferred consideration arrangements related to the acquisition of FoundationTV ("FTV") and Digital Media Rights ("DMR"). These payments are fixed in nature and are due to the sellers of the respective companies. The Company initially recognized the liability at fair value at the time of acquisition and has since recognizes interest expense related to accretion in advance of the ultimate settlement of these liabilities. Amounts due within 12 months under the terms of the agreements are classified as current within the Condensed Consolidated Balance Sheets.

The deferred consideration related to the acquisition of DMR is payable in either Class A common shares of the Company stock or cash, at the Company's discretion and subject to certain conditions. Payments of $3.0 million and $2.4 million are due in March 2024 and March 2025, respectively.

The deferred consideration related to the FTV acquisition is payable in the amount of $238 thousand in each of June 2024 and December 2024, and $464 thousand in June 2025. There is $617 thousand presently due and payable. The Company has the right to pay up to 25% of post-close purchase price in equity.

Revenue Recognition

Payment terms and conditions vary by customer and typically provide net 30 to 90 day terms. We do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to our customer and payment for that product or service will be one year or less.

The following tables present the Company’s disaggregated revenue by source (in thousands):

	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Streaming and digital	$	9,537	$	11,598	$	29,006	$	31,375
Base distribution		2,811		8,121		4,529		11,145
Podcast and other		864		977		1,953		1,740
Other non-recurring		64		7,186		3,780		11,218
Total revenue	$	13,276	$	27,882	$	39,268	$	55,478

The Company's Streaming and digital revenue pertains to its OTT business, including the licensing, service, advertising, and subscription revenue related to the Company's streaming business and partnerships. Base

distribution revenue relates to non-streaming revenue, including Theatrical revenue and the sale of DVD's. Podcast and other revenue primarily relates to the Company's Bloody Disgusting Podcast Network. As the Company satisfies its performance obligations from these revenue sources, whether relating to the delivery of digital content, physical goods, or licensing, revenue is generally measured at a point in time.

Other non-recurring revenue relates to the Company's legacy digital cinema operations, whose operations have run-off, still may generate non-recurring revenue from the sale of cinema assets or the recognition of variable consideration as the associated uncertainty associated with the revenue is resolved.

The Company follows the five-step model established by ASC 606, Revenue from contracts with customers ("ASC 606") when preparing its assessment of revenue recognition.

Principal Agent Considerations

Revenue earned from the delivery of digital content and physical goods may be recognized gross or net depending on the terms of the arrangement. We determine whether revenue should be reported on a gross or net basis based on each revenue stream. Key indicators that we use in evaluating gross versus net treatment include, but are not limited to, the following:

•which party is primarily responsible for fulfilling the promise to provide the specified good or service; and

•which party has discretion in establishing the price for the specified good or service.

Shipping and Handling

Shipping and handling costs are incurred to move physical goods (e.g., DVDs and Blu-ray Discs) to customers. We recognize all shipping and handling costs as an expense in direct operating expenses because we are responsible for delivery of the product to our customers prior to transfer of control to the customer.

Credit Losses

We maintain reserves for expected credit losses on accounts receivable primarily on a specific identification basis. We review the composition of accounts receivable and analyze historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.

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

During the three and nine months ended December 31, 2023, we did not recognize any credit losses as part of our ongoing operations or reversals of previously recorded provisions. During the three and nine months ended December 31, 2022, we recognized credit losses of $7 thousand and $54 thousand, respectively.

Contract Liabilities

We generally record a receivable related to revenue when we have an unconditional right to invoice and receive payment, and we record deferred revenue (contract liability) when cash payments are received or due in advance of our performance, such as the sale of DVDs with future release dates, even if amounts are refundable. Amounts recorded as contract liabilities are generally not long-term in nature.

The ending deferred revenue balance, including current and non-current balances as of December 31, 2023 and March 31, 2023, was and $0.2 million and $0.2 million, respectively. In each period, the additions to our deferred revenue balance are due to cash payments received or due in advance of satisfying performance

obligations, while the reductions are due to the recognition of revenue upon fulfillment of our performance obligations, both of which were in the ordinary course of business.

Participations and royalties payable

When we use third-parties to distribute company owned content, we record participations payable, which represent amounts owed to the distributor under revenue-sharing arrangements. When we provide content distribution services, we record accounts payable and accrued expenses to studios or content producers for royalties owed under licensing arrangements. We identify and record as a reduction to the liability any expenses that are to be reimbursed to us by such studios or content producers.

Concentrations

For the three and nine months ended December 31, 2023, one customer represented 26% and 23% of consolidated revenues, respectively. For the three months ended December 31, 2022, one customer represented approximately 16% of consolidated revenues and another customer represented 14% of consolidated revenues, respectively. For the nine months ended December 31, 2022, one customer represented 11% of consolidated revenues.

Direct Operating Expenses

Direct operating expenses consist of cost of revenue, fulfillment expenses, shipping costs, property taxes and insurance on systems, royalty expenses, reserves against advances and marketing and direct personnel costs.

Stock-based Compensation

The Company issues stock-based awards to employees and non-employees, generally in the form of restricted stock, restricted stock units, stock appreciation rights ("SARs") and performance stock units ("PSUs"). 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 Condensed Consolidated Statements of Operations and Comprehensive Loss based on their fair values. The Company measures the compensation expense of employee and nonemployee 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 or nonemployee is required to provide service in exchange for the award. The fair values of options and SARs 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. Forfeitures are recognized as they occur.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to operating loss and tax credit carryforwards and for differences between the carrying amounts of existing assets and liabilities and their respective tax bases.

Valuation allowances are established when management is unable to conclude that it is more likely than not that some portion, or all, of the deferred tax asset will ultimately be realized. The Company is primarily subject to income taxes in the United States and India.

The Company accounts for uncertain tax positions in accordance with an amendment to ASC Topic 740-10, Income Taxes (Accounting for Uncertainty in Income Taxes), which clarified the accounting for uncertainty in tax positions. This amendment 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 had no uncertain tax positions as of December 31, 2023 and March 31, 2023.

Earnings per Share

Basic net income (loss) per share is computed based on the weighted average number of shares of Common Stock outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include stock options and warrants outstanding during the period, using the treasury stock method. Potentially dilutive common shares are excluded from the computations of diluted income (loss) per share if their effect would be anti-dilutive. A net loss available to common stockholders causes all potentially dilutive securities to be anti-dilutive and are not included.

Basic and diluted net loss per share are computed as follows (in thousands, except share and per share data):

	Three Months Ended December 31,					Nine Months Ended December 31,
	2023			2022		2023			2022
Basic net income (loss) per share:
Net income (loss) attributable to common stockholders	$	(2,864	)		4,926	$	(6,946	)	$	(6,919	)
Shares used in basic computation:
Weighted-average shares of Common Stock outstanding		12,828			8,945		11,678			8,854
Basic net income (loss) per share	$	(0.22	)	$	0.55	$	(0.59	)	$	(0.78	)
Shares used in diluted computation:
Weighted-average shares of Common Stock outstanding		12,828			8,945		11,678			8,854
Stock options and SARs		—			—		—			—
Weighted-average number of shares		12,828			8,945		11,678			8,854
Diluted net income (loss) per share	$	(0.22	)	$	0.55	$	(0.59	)	$	(0.78	)

The calculation of diluted net loss per share for the three and nine months ended December 31, 2023 does not include the impact of 798 thousand and 763 thousand anti-dilutive shares, respectively. The calculation of diluted net loss per share for the three and nine months ended December 31, 2022 does not include the impact of 674 thousand and 640 thousand potentially anti-dilutive shares, respectively.

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 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures." The update requires disclosure of incremental segment information, including significant segment expenses, on an annual and interim basis, and would apply to single segment companies. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 with early adoption is permitted. The Company is required to apply the updates retrospectively. The Company is assessing the impact of ASU 2023-07 on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740)—Improvements to Income Tax Disclosures" On an annual basis, this update requires the disclosure of specific tax categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The amendments are effective for annual periods beginning after December 15, 2024. Prospective and retrospective adoption is permitted. The Company is still evaluating its method of adoption and assessing the impact of ASU 2023-09 on the disclosures within its consolidated financial statements.

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Other Interests

9 Months Ended

Dec. 31, 2023

Disclosure of Other Interests [Abstract]

OTHER INTERESTS

3. OTHER INTERESTS

Investment in CDF2 Holdings

We indirectly own 100% of the common equity of CDF2 Holdings, LLC (“CDF2 Holdings”), which was created for the purpose of capitalizing on the conversion of the exhibition industry from film to digital technology. CDF2 Holdings assists its customers in procuring the equipment necessary to convert their systems to digital technology by providing financing, equipment, installation and related ongoing services.

CDF2 Holdings is a Variable Interest Entity (“VIE”), as defined in ASC Topic 810 (“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.

As of December 31, 2023 and March 31, 2023, our maximum exposure to loss, as it relates to the non-consolidated CDF2 Holdings entity, represents accounts receivable for service fees under a master service agreement with CDF2 Holdings. Such accounts receivable was $0.0 million and $0.5 million as of December 31, 2023 and March 31, 2023, respectively, which are included in accounts receivable, net on the accompanying Condensed Consolidated Balance Sheets.

The accompanying Condensed Consolidated Statements of Operations includes digital cinema servicing revenue from CDF2 Holdings in the amount of $0.0 for the three and nine months ended December 31, 2023, respectively, and $0.1 and $0.2 million for the three and nine months ended December 31, 2022, respectively.

Total Stockholders’ Deficit of CDF2 Holdings at December 31, 2023 and March 31, 2023 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 December 31, 2023 and March 31, 2023 is carried at $0.

Investment in Roundtable

On March 15, 2022, the Company entered into a stock purchase agreement with Roundtable Entertainment Holdings, Inc. (“Roundtable”) pursuant to which the Company purchased 0.5 thousand shares of Roundtable Series A Preferred Stock and warrants to purchase 0.1 thousand shares of Roundtable Common Stock (together, the “Roundtable Securities”). The Company paid the purchase price for the Roundtable Securities by issuing 16 thousand shares of Common Stock to Roundtable. 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.

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Stockholders’ Equity

9 Months Ended

Dec. 31, 2023

Stockholders' Equity Note [Abstract]

STOCKHOLDERS’ EQUITY

4. STOCKHOLDERS’ EQUITY

COMMON STOCK

As of December 31, 2023 and 2022, the number of shares of Common Stock authorized for issuance was 275,000,000 shares.

During the three months ended December 31, 2023, the Company issued 0.5 million shares of Common Stock. This was comprised of 74 thousand shares for preferred stock dividends, and 400 thousand shares for Board of Director compensation.

During the nine months ended December 31, 2023, the Company issued 3.9 million shares of Common Stock. In addition to the activity cited for three months ended December 31, 2023, this was comprised of 517 thousand shares issued in conjunction with the exercise of pre-funded warrants issued, 502 shares issued in connection with employee bonuses, 56 thousand shares for preferred stock dividends, 41 thousand to satisfy earnout-related liabilities, 2,150 thousand shares were issued through a June 16, 2023 direct offering, and 177 thousand issued in connection with ATM sales during the first fiscal quarter. In addition, the Company issued common warrants to purchase up to 2,667 thousand shares of Common Stock in conjunction with its direct offering on June 16, 2023. All pre-funded and common warrants were issued as immediately exercisable. All common warrants remain outstanding as of December 31, 2023.

During the three months ended December 31, 2022, the Company issued 45 thousand shares. This was comprised of 11 thousand shares for preferred stock dividends and 34 thousand shares for Board of Director compensation.

During the nine months ended December 31, 2022, the Company issued 179 thousand shares. In addition to the activity cited during the three months ended December 31, 2022, this was comprised of 14 thousand shares for preferred stock dividends, 103 thousand shares for employee bonuses, and 17 thousand shares to satisfy earnout-related liabilities.

PREFERRED STOCK

Cumulative dividends in arrears on Series A Preferred Stock were $87 thousand and $88 thousand as of December 31, 2023 and 2022, respectively. During the three and nine months ended December 31, 2023 and 2022, the Company paid preferred stock dividends in arrears for the same amount in the form of shares of Common Stock. The Company has the right to pay preferred stock dividends in cash or stock, at the Company's discretion.

TREASURY STOCK

We have treasury stock, at cost, consisting of 289 thousand and 66 thousand shares of Common Stock at December 31, 2023 and March 31, 2023, respectively. During the nine months ended December 31, 2023, the Company acquired 223 thousand shares of Common Stock withheld in connection with employee bonuses that the Company elected to settle in shares of Common Stock.

EQUITY INCENTIVE PLANS

Stock Based Compensation Awards

The Company has issued awards under two plans, the 2000 Equity Incentive Plan (the “2000 Plan”) and the 2017 Equity Incentive Plan (the “2017 Plan").

Awards issued under our 2000 Plan were permitted to be issued to employees, outside directors or consultants in any of the following forms (or a combination thereof) (i) stock option awards; (ii) SARs; (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 were 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. On November 1, 2017, upon the consummation of the initial equity investment in Cineverse by Bison Entertainment Investment Limited, as a result of which there was a change of control of the Company, all stock options (incentive and non-statutory) and shares of restricted stock were vested immediately and the options became fully exercisable.

In August 2017, the Company adopted 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 up to 905 thousand shares of Common Stock, in the form of various awards, including stock options, SARs, restricted stock, restricted stock units, PSUs and cash awards.

For the three and nine months ended December 31, 2023, the Company incurred stock-based compensation expenses of $0.2 million and $1.1 million, respectively. Of these amounts, $0.1 million and $0.3 million related to Board of Director compensation, respectively.

For the three and nine months ended December 31, 2022, the Company incurred stock-based compensation expenses of $0.7 million and $3.9 million, respectively. Of these amounts, $0.1 million and $0.3 million related to Board of Director compensation, respectively.

Share-based compensation expense is reported within Selling, General and Administrative expenses.

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Line of Credit Facility

9 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

LINE OF CREDIT FACILITY

5. LINE OF CREDIT FACILITY

The Company is party to a Loan, Guaranty, and Security Agreement with East West Bank ("EWB") providing for a revolving line of credit (the "Line of Credit Facility") of $5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries' assets. The Line of Credit bears an interest rate equal to 1.5% above the prime rate, and was 10.00% as of December 31, 2023. As of December 31, 2023 and March 31, 2023, a balance of $5.0 million was outstanding on the line of the Credit Facility, gross of unamortized issuance costs of $69 thousand and $76 thousand, respectively. Under the Line of Credit Facility, the Company is subject to certain financial and nonfinancial 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. The Line of Credit Facility matures on September 15, 2024. On February 9, 2024, the Company expanded the Line of Credit Facility to $7.5 million at the same interest rate and with the same maturity date.

During the three and nine months ended December 31, 2023, the Company had interest expense, including cash interest and amortization, of $0.2 million and $0.4 million related to its Line of Credit Facility, respectively.

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Commitments and Contingencies

9 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

6. COMMITMENTS AND CONTINGENCIES

LEASES

Cineverse is a virtual company with one domestic operating lease, acquired through the acquisition of DMR which is subleased to a third party. The Company has not been relieved of the original lease obligation and therefore recognizes both a lease liability and right-of-use asset as part of the arrangement. The end of both the original lease and sublease's term is January 2025. In addition, the Company has two operating leases related to its Cineverse India operations, with expiration dates in July 2027. Expenses related to these leases were $109 thousand and $337 thousand during the three and nine months ended December 31, 2023 and $94 thousand and $242 thousand three and nine months ended December 31, 2022, respectively.

The Company has recognized $45 thousand and $135 thousand of income related to its subleasing arrangement during three and nine months ended December 31, 2023, respectively. The Company recognized $44 thousand and $71 thousand of income related to its subleasing arrangement for the three and nine months ended December 31, 2022, respectively.

The table below presents the lease-related assets and liabilities recorded on our Consolidated Balance Sheets (in thousands):

Classification on the Balance Sheet		December 31, 2023		March 31, 2023
Assets
Noncurrent	Other long-term assets	$	943	$	1,265
Liabilities
Current	Operating leases liabilities		440		418
Noncurrent	Operating leases liabilities, net of current portion		531		863
Total operating lease liabilities		$	971	$	1,281

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
2024	$	115
2025		376
2026		247
2027		210
2028		72
Thereafter		—
Total lease payments	$	1,020
Less imputed interest		(49	)
Total	$	971

For leases which have a term of twelve months or less and do not contain an option to extend which the Company is reasonably certain to extend the term, the Company has elected to not apply the recognition provisions of ASC 842 and recognizes these expenses on a straight-line basis over the term of the agreement.

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

Fiscal year ending March 31,	Sublease Payments
2024	$	45
2025		154
2026		—
2027		—
2028		—
Thereafter		—
Total	$	199

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Income Taxes

9 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

7. INCOME TAXES

We calculate income tax expense based upon an annual effective tax rate forecast, which includes estimates and assumptions. We recognized income tax (benefit) expense of approximately $(24) thousand and $12 thousand for the three and nine months ended December 31, 2023, respectively. We recognized $0 for both the three and nine months ended December 31, 2022. The Company's annual income tax expense is attributable to taxable income earned in India relating to transfer pricing.

We have not recorded tax benefits on our loss before income taxes because we have provided for a full valuation allowance that offsets potential deferred tax assets resulting from net operating loss carry forwards, reflecting our inability to use such loss carry forwards.

Our effective tax rate was (0.9%) and 0.2% for the three and nine months ended December 31, 2023, respectively, and 0% and 0% for the three and nine months ended December 31, 2022.

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Consolidation

Consolidation

The accompanying interim Condensed Consolidated Financial Statements of Cineverse Corp. have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended March 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on June 29, 2023. These Condensed Consolidated Financial Statements are unaudited and have been prepared by the Company following the rules and regulations of the SEC.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, the Company believes the disclosures are adequate to make the information presented not misleading. Certain columns and rows may not add due to the use of rounded numbers.

The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2023. Interim results are not necessarily indicative of the results for a full year.

The preparation of the Condensed 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, allowance for credit losses, returns and recovery reserves, goodwill and intangible asset impairments, share-based compensation expense, valuation allowance for deferred income taxes and amortization of 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.

We own an 85% interest in CON TV, LLC ("CONtv"), a worldwide digital network that creates original content, and sells and distributes on-demand digital content on the internet and other consumer digital distribution platforms, such as gaming consoles, set-top boxes, handsets, and tablets. We evaluated the investment under the voting interest entity model and determined that the entity should be consolidated as we have a controlling financial interest in the entity through our ownership of outstanding voting shares, and that other equity holders do not have substantive voting, participating or liquidation rights.

Accounting Policies

Accounting Policies

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended March 31, 2023.

Reclassifications

Reclassifications

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

Cash and Cash Equivalents

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be “cash equivalents.” We maintain bank accounts with major banks, which from time to time may exceed the Federal Deposit Insurance Corporation’s insured limits. We periodically assess the financial condition of the institutions and believe that the risk of any loss is minimal.

Segment Reporting

Segment Reporting

Beginning in fiscal year 2024, following the run-off of the Company's digital cinema operations, the Company now manages its operations and manages its business in one reporting segment. Earlier periods presented herein have been presented to conform to this reportable segment composition.

Employee Retention Tax Credit

Employee Retention Tax Credit

The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") provided an employee retention tax credit ("ERTC") which was a refundable tax credit against certain employment taxes. The Consolidated Appropriations Act (the "Appropriations Act") extended and expanded the availability of the employee retention credit through December 31, 2021. The Appropriations Act amended the employee retention credit to be equal to 70% of qualified wages paid to employees during the 2021 fiscal year.

The Company qualified for the employee retention credit beginning in June 2020 for qualified wages through September 2021 and filed a cash refund claim during the fiscal year ended March 31, 2023 in the amount of $2.5 million in the Employee retention tax credit line on the Company’s Condensed Consolidated Statements of Operations, of which $2.0 million was recognized during the three months ended December 31, 2022. As of December 31, 2023 and March 31, 2023, the tax credit receivable of $1.7 and $2.1 million, respectively, has been included in the Employee retention tax credit line on the Company's Condensed Consolidated Balance Sheet.

The Company has received notification during the second quarter of fiscal year 2024 that its ERTC claim is under examination with the Internal Revenue Service ("IRS"). As of the date of this report, the examination is ongoing, and the Company is responding to audit requests as they arise.

Property and Equipment, Net

Property and Equipment, Net

Property and equipment, net 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 as follows:

Computer equipment and software	3 - 5 years
Internal use software	3 - 5 years
Machinery and equipment	3 - 10 years
Furniture and fixtures	2 - 7 years

We capitalize costs associated with software developed or obtained for internal use when the preliminary project stage is completed, and it is determined that the software will provide significantly enhanced capabilities and modifications. These capitalized costs are included in property and equipment, net and include external direct cost of services procured in developing or obtaining internal-use software and personnel and related expenses for employees who are directly associated with, and who devote time to internal-use software projects. Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended use. Once the software is ready for its intended use, the costs are amortized over the useful life of the software. Post-configuration training and maintenance costs are expensed as incurred. We amortize internal-use software over its estimated useful life on a straight-line basis.

Intangible Assets, Net

Intangible Assets, Net

Intangible assets are stated at cost less accumulated amortization. For intangible assets that have finite lives, the assets are amortized using the straight-line method over the estimated useful lives of the related assets. For intangible assets with indefinite lives, the assets are tested annually for impairment or sooner if a triggering event occurs.

Amortization lives of intangible assets are as follows:

Content Library	3 – 20 years
Trademarks and Tradenames	2 – 15 years
Customer Relationships	5 – 13 years
Advertiser Relationships and Channel	2 – 13 years
Software	10 years
Capitalized Content	3 years
Supplier Agreements	2 years

The Company’s intangible assets included the following (in thousands):

	As of December 31, 2023
	Cost Basis		Accumulated Amortization			Net
Content Library	$	24,096	$	(21,378	)	$	2,718
Advertiser Relationships and Channel		12,604		(2,132	)		10,472
Customer Relationships		8,690		(7,804	)		886
Software		3,200		(800	)		2,400
Trademark and Tradenames		4,026		(3,056	)		970
Capitalized Content		1,371		(90	)		1,281
Total Intangible Assets	$	53,987	$	(35,260	)	$	18,727

	As of March 31, 2023
	Cost Basis		Accumulated Amortization			Net
Content Library	$	23,970	$	(21,126	)	$	2,844
Advertiser Relationships and Channel		12,604		(1,062	)		11,542
Customer Relationships		8,690		(7,600	)		1,090
Trademark and Tradenames		4,026		(2,274	)		1,752
Software		3,200		(560	)		2,640
Total Intangible Assets	$	52,490	$	(32,622	)	$	19,868

During the three and nine months ended December 31, 2023, the Company had amortization expense of $879 thousand and $2,381 thousand, respectively. During the three and nine months ended December 31, 2022, the Company had amortization expense of $712 thousand and $2,193 thousand, respectively.

As of December 31, 2023, amortization expense is expected to be (in thousands):

	Total
In-process intangible assets	$	411
Remainder of fiscal year 2024		1,254
2025		3,264
2026		3,001
2027		1,772
2028		1,246
Thereafter		7,779
	$	18,727

Capitalized Content

Capitalized Content

The Company capitalizes direct costs incurred in the production of content from which it expects to generate a return over the anticipated useful life and the Company’s predominant monetization strategy informs the method of amortizing these deferred costs. The determination of the predominant monetization strategy is made at commencement of the production or license period and the classification of the monetization strategy as individual or group only changes if there is a significant change to the title’s monetization strategy relative to its initial assessment. The costs are capitalized to the Capitalized Content costs within Intangible Assets and are amortized as a group within Depreciation and Amortization within the Condensed Consolidated Statements of Operations.

Impairment of Long-lived and Finite-lived Intangible Assets

Impairment of Long-lived and Finite-lived Intangible Assets

We review the recoverability of our long-lived assets and finite-lived intangible assets, when events or conditions occur that indicate a possible impairment exists. The assessment for recoverability is based primarily on our ability to recover the carrying value of our long-lived and finite-lived assets from expected future undiscounted net cash flows. If the total of expected future undiscounted net cash flows is less than the total carrying value of the asset, the asset is deemed not to be recoverable and possibly impaired. We then estimate the fair value of the asset to determine whether an impairment loss should be recognized. An impairment loss will be recognized if the asset’s fair value is determined to be less than its carrying value. Fair value is determined by computing the expected future discounted cash flows. There were no impairment charges recorded for long-lived and finite-lived intangible assets during the three and nine months ended December 31, 2023 and 2022.

Goodwill

Goodwill

Goodwill is the excess of the purchase price paid over the fair value of the net assets of an acquired business. Goodwill is tested for impairment on an annual basis or more often if warranted by events or changes in circumstances indicating that the carrying value may exceed fair value, also known as impairment indicators.

Inherent in the fair value determination for each reporting unit are certain judgments and estimates relating to future cash flows, including management’s interpretation of current economic indicators and market conditions, and assumptions about our strategic plans with regard to its operations. To the extent additional information arises, market conditions change, or our strategies change, it is possible that the conclusion regarding whether our remaining goodwill is impaired could change and result in future goodwill impairment charges that will have a material effect on our consolidated financial position or results of operations.

The Company has the option to assess goodwill for possible impairment by performing a qualitative analysis to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount or to perform the quantitative impairment test. The Company annually assesses goodwill for potential impairment during its fourth fiscal quarter, or sooner if event occurs or circumstances would indicate it would be more likely than not that fair value would be reduced below its carrying amount. No goodwill impairment charge was recorded in the three and nine months ended December 31, 2023 and 2022.

Fair Value Measurements

Fair Value Measurements

The fair value measurement disclosures are grouped into three levels based on valuation factors:

•Level 1 – quoted prices in active markets for identical investments

•Level 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs)

•Level 3 – significant unobservable inputs (including our own assumptions in determining the fair value of investments)

The following tables summarize the levels of fair value measurements of our financial assets and liabilities (in thousands):

	As of December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Equity investment in Metaverse, at fair value	$	1,276	$	—	$	—	$	1,276
	$	1,276	$	—	$	—	$	1,276
Liabilities:
Current portion of earnout consideration on purchase of a business	$	—	$	—	$	110	$	110
	$	—	$	—	$	110	$	110

	As of March 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Equity investment in Metaverse, at fair value			$	—	$	5,200	$	5,200
	$	—	$	—	$	5,200	$	5,200
Liabilities:
Current portion of earnout consideration on purchase of a business	$	—	$	—	$	1,444	$	1,444
	$	—	$	—	$	1,444	$	1,444

The Company has an investment in A Metaverse Company ("Metaverse") (SEHK: 1616) accounted for under the equity method of accounting as the Company can exert significant influence over Metaverse with its direct

ownership of approximately 15% and affiliation with the Company’s largest shareholder. The Company has also made an irrevocable election to apply the fair value option under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 825-10, Financial Instruments, as it relates to its equity investment in Metaverse. Changes in the investment's fair value are recognized within the "Loss from equity investment in Metaverse, a related party" line item within the Condensed Consolidated Statements of Operations.

Following the halting of Metaverse stock trading on The Stock Exchange of Hong Kong Limited on April 1, 2022, the Company valued our equity investment in Metaverse using a market approach and the investment was categorized as a Level 3 valuation based on unobservable inputs. As such, as of March 31, 2023, the Company estimated the fair value of Metaverse based the last known enterprise value, adjusting for trends in enterprise valuations and market capitalization for comparable companies with a resulting fair value was $5.2 million.

On November 6, 2023, Metaverse's stock resumed trading on The Stock Exchange of Hong Kong Limited. During the quarter ended December 31, 2023, the Company sold 30 million of the 362 million shares held as of September 30, 2023, which resulted in a realized loss of $131 thousand during the three months ended December 31, 2023. The resumption of active trading status represented renewed availability of quoted, unadjusted prices in active markets for identical assets, upon which the Company can execute a sale and readily access pricing information at the measurement date. Accordingly, the Company has presented the fair value of its Metaverse shares held as of December 31, 2023 within the Level 1 grouping. The fair value of the shares held as of December 31, 2023 was $1.3 million, with associated unrealized losses of $3.6 million.

The Company estimated the fair value of its earnout consideration using contractual inputs from the related business combination, which established specific fiscal year revenue growth, profitability and EBITDA targets. The Company utilizes the most up to date forecast to estimate the outcome against these targets to determine the ultimate estimated payout. During the nine months ended December 31, 2023, the Company estimated a $682 thousand decrease in the estimated ultimate earnout payments based on Bloody Disgusting's performance, made cash payments of $291 thousand, and issued equity to settle earnout liability of $392 thousand, and accrued interest of $29 thousand.

Our cash and cash equivalents, accounts receivable, unbilled revenue, accounts payable and accrued expenses are financial instruments and are recorded at cost in the Condensed Consolidated Balance Sheets. The estimated fair values of these financial instruments approximate their carrying amounts because of their short-term nature.

Prepaid and Other Current Assets

Content advances represents 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 in more than 12 months are classified as long term and presented within content advances, net of current portion, which were $3.2 million and $1.4 million as of December 31, 2023, and March 31, 2023, respectively. For the nine months ended December 31, 2023, the Company recorded a recovery in the provision for advances of $0.5 million.

Accounts Payable and Accrued Expenses

Accounts Payable and Accrued Expenses

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

	As of
	December 31, 2023		March 31, 2023
Accounts payable	$	6,568	$	15,042
Amounts due to producers		15,553		13,114
Accrued compensation and benefits		1,209		2,532
Accrued other expenses		3,657		3,843
Total accounts payable and accrued expenses	$	26,987	$	34,531

Compared to March 31, 2023, the decrease in accounts payable was primarily attributable to an $8.3 million decrease from the run-off of the Company's digital cinema operations, and the decrease in accrued compensation and benefits was driven by a decrease of $1.2 million due to a reduced bonus accrual.

Deferred Consideration

Deferred Consideration

The Company has recognized liabilities related to deferred consideration arrangements related to the acquisition of FoundationTV ("FTV") and Digital Media Rights ("DMR"). These payments are fixed in nature and are due to the sellers of the respective companies. The Company initially recognized the liability at fair value at the time of acquisition and has since recognizes interest expense related to accretion in advance of the ultimate settlement of these liabilities. Amounts due within 12 months under the terms of the agreements are classified as current within the Condensed Consolidated Balance Sheets.

The deferred consideration related to the acquisition of DMR is payable in either Class A common shares of the Company stock or cash, at the Company's discretion and subject to certain conditions. Payments of $3.0 million and $2.4 million are due in March 2024 and March 2025, respectively.

The deferred consideration related to the FTV acquisition is payable in the amount of $238 thousand in each of June 2024 and December 2024, and $464 thousand in June 2025. There is $617 thousand presently due and payable. The Company has the right to pay up to 25% of post-close purchase price in equity.

Revenue Recognition

Revenue Recognition

Payment terms and conditions vary by customer and typically provide net 30 to 90 day terms. We do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to our customer and payment for that product or service will be one year or less.

The following tables present the Company’s disaggregated revenue by source (in thousands):

	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Streaming and digital	$	9,537	$	11,598	$	29,006	$	31,375
Base distribution		2,811		8,121		4,529		11,145
Podcast and other		864		977		1,953		1,740
Other non-recurring		64		7,186		3,780		11,218
Total revenue	$	13,276	$	27,882	$	39,268	$	55,478

The Company's Streaming and digital revenue pertains to its OTT business, including the licensing, service, advertising, and subscription revenue related to the Company's streaming business and partnerships. Base

distribution revenue relates to non-streaming revenue, including Theatrical revenue and the sale of DVD's. Podcast and other revenue primarily relates to the Company's Bloody Disgusting Podcast Network. As the Company satisfies its performance obligations from these revenue sources, whether relating to the delivery of digital content, physical goods, or licensing, revenue is generally measured at a point in time.

Other non-recurring revenue relates to the Company's legacy digital cinema operations, whose operations have run-off, still may generate non-recurring revenue from the sale of cinema assets or the recognition of variable consideration as the associated uncertainty associated with the revenue is resolved.

The Company follows the five-step model established by ASC 606, Revenue from contracts with customers ("ASC 606") when preparing its assessment of revenue recognition.

Principal Agent Considerations

Revenue earned from the delivery of digital content and physical goods may be recognized gross or net depending on the terms of the arrangement. We determine whether revenue should be reported on a gross or net basis based on each revenue stream. Key indicators that we use in evaluating gross versus net treatment include, but are not limited to, the following:

•which party is primarily responsible for fulfilling the promise to provide the specified good or service; and

•which party has discretion in establishing the price for the specified good or service.

Shipping and Handling

Shipping and handling costs are incurred to move physical goods (e.g., DVDs and Blu-ray Discs) to customers. We recognize all shipping and handling costs as an expense in direct operating expenses because we are responsible for delivery of the product to our customers prior to transfer of control to the customer.

Credit Losses

We maintain reserves for expected credit losses on accounts receivable primarily on a specific identification basis. We review the composition of accounts receivable and analyze historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.

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

During the three and nine months ended December 31, 2023, we did not recognize any credit losses as part of our ongoing operations or reversals of previously recorded provisions. During the three and nine months ended December 31, 2022, we recognized credit losses of $7 thousand and $54 thousand, respectively.

Contract Liabilities

We generally record a receivable related to revenue when we have an unconditional right to invoice and receive payment, and we record deferred revenue (contract liability) when cash payments are received or due in advance of our performance, such as the sale of DVDs with future release dates, even if amounts are refundable. Amounts recorded as contract liabilities are generally not long-term in nature.

The ending deferred revenue balance, including current and non-current balances as of December 31, 2023 and March 31, 2023, was and $0.2 million and $0.2 million, respectively. In each period, the additions to our deferred revenue balance are due to cash payments received or due in advance of satisfying performance

obligations, while the reductions are due to the recognition of revenue upon fulfillment of our performance obligations, both of which were in the ordinary course of business.

Participations and royalties payable

When we use third-parties to distribute company owned content, we record participations payable, which represent amounts owed to the distributor under revenue-sharing arrangements. When we provide content distribution services, we record accounts payable and accrued expenses to studios or content producers for royalties owed under licensing arrangements. We identify and record as a reduction to the liability any expenses that are to be reimbursed to us by such studios or content producers.

Concentrations

For the three and nine months ended December 31, 2023, one customer represented 26% and 23% of consolidated revenues, respectively. For the three months ended December 31, 2022, one customer represented approximately 16% of consolidated revenues and another customer represented 14% of consolidated revenues, respectively. For the nine months ended December 31, 2022, one customer represented 11% of consolidated revenues.

Direct Operating Expenses

Direct Operating Expenses

Direct operating expenses consist of cost of revenue, fulfillment expenses, shipping costs, property taxes and insurance on systems, royalty expenses, reserves against advances and marketing and direct personnel costs.

Stock-based Compensation

Stock-based Compensation

The Company issues stock-based awards to employees and non-employees, generally in the form of restricted stock, restricted stock units, stock appreciation rights ("SARs") and performance stock units ("PSUs"). 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 Condensed Consolidated Statements of Operations and Comprehensive Loss based on their fair values. The Company measures the compensation expense of employee and nonemployee 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 or nonemployee is required to provide service in exchange for the award. The fair values of options and SARs 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. Forfeitures are recognized as they occur.

Income Taxes

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to operating loss and tax credit carryforwards and for differences between the carrying amounts of existing assets and liabilities and their respective tax bases.

Valuation allowances are established when management is unable to conclude that it is more likely than not that some portion, or all, of the deferred tax asset will ultimately be realized. The Company is primarily subject to income taxes in the United States and India.

The Company accounts for uncertain tax positions in accordance with an amendment to ASC Topic 740-10, Income Taxes (Accounting for Uncertainty in Income Taxes), which clarified the accounting for uncertainty in tax positions. This amendment 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 had no uncertain tax positions as of December 31, 2023 and March 31, 2023.

Earnings per Share

Earnings per Share

Basic net income (loss) per share is computed based on the weighted average number of shares of Common Stock outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include stock options and warrants outstanding during the period, using the treasury stock method. Potentially dilutive common shares are excluded from the computations of diluted income (loss) per share if their effect would be anti-dilutive. A net loss available to common stockholders causes all potentially dilutive securities to be anti-dilutive and are not included.

Basic and diluted net loss per share are computed as follows (in thousands, except share and per share data):

	Three Months Ended December 31,					Nine Months Ended December 31,
	2023			2022		2023			2022
Basic net income (loss) per share:
Net income (loss) attributable to common stockholders	$	(2,864	)		4,926	$	(6,946	)	$	(6,919	)
Shares used in basic computation:
Weighted-average shares of Common Stock outstanding		12,828			8,945		11,678			8,854
Basic net income (loss) per share	$	(0.22	)	$	0.55	$	(0.59	)	$	(0.78	)
Shares used in diluted computation:
Weighted-average shares of Common Stock outstanding		12,828			8,945		11,678			8,854
Stock options and SARs		—			—		—			—
Weighted-average number of shares		12,828			8,945		11,678			8,854
Diluted net income (loss) per share	$	(0.22	)	$	0.55	$	(0.59	)	$	(0.78	)

The calculation of diluted net loss per share for the three and nine months ended December 31, 2023 does not include the impact of 798 thousand and 763 thousand anti-dilutive shares, respectively. The calculation of diluted net loss per share for the three and nine months ended December 31, 2022 does not include the impact of 674 thousand and 640 thousand potentially anti-dilutive shares, respectively.

Recently Issued Accounting Pronouncements

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 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures." The update requires disclosure of incremental segment information, including significant segment expenses, on an annual and interim basis, and would apply to single segment companies. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 with early adoption is permitted. The Company is required to apply the updates retrospectively. The Company is assessing the impact of ASU 2023-07 on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740)—Improvements to Income Tax Disclosures" On an annual basis, this update requires the disclosure of specific tax categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The amendments are effective for annual periods beginning after December 15, 2024. Prospective and retrospective adoption is permitted. The Company is still evaluating its method of adoption and assessing the impact of ASU 2023-09 on the disclosures within its consolidated financial statements.

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Basis of Presentation and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Schedule of estimated useful lives of property and equipment, net

Property and equipment, net 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 as follows:

Computer equipment and software	3 - 5 years
Internal use software	3 - 5 years
Machinery and equipment	3 - 10 years
Furniture and fixtures	2 - 7 years

Schedule of amortization expense

Amortization lives of intangible assets are as follows:

Content Library	3 – 20 years
Trademarks and Tradenames	2 – 15 years
Customer Relationships	5 – 13 years
Advertiser Relationships and Channel	2 – 13 years
Software	10 years
Capitalized Content	3 years
Supplier Agreements	2 years

Schedule of intangible assets

The Company’s intangible assets included the following (in thousands):

	As of December 31, 2023
	Cost Basis		Accumulated Amortization			Net
Content Library	$	24,096	$	(21,378	)	$	2,718
Advertiser Relationships and Channel		12,604		(2,132	)		10,472
Customer Relationships		8,690		(7,804	)		886
Software		3,200		(800	)		2,400
Trademark and Tradenames		4,026		(3,056	)		970
Capitalized Content		1,371		(90	)		1,281
Total Intangible Assets	$	53,987	$	(35,260	)	$	18,727

	As of March 31, 2023
	Cost Basis		Accumulated Amortization			Net
Content Library	$	23,970	$	(21,126	)	$	2,844
Advertiser Relationships and Channel		12,604		(1,062	)		11,542
Customer Relationships		8,690		(7,600	)		1,090
Trademark and Tradenames		4,026		(2,274	)		1,752
Software		3,200		(560	)		2,640
Total Intangible Assets	$	52,490	$	(32,622	)	$	19,868

Schedule of amortization expense for intangible assets

As of December 31, 2023, amortization expense is expected to be (in thousands):

	Total
In-process intangible assets	$	411
Remainder of fiscal year 2024		1,254
2025		3,264
2026		3,001
2027		1,772
2028		1,246
Thereafter		7,779
	$	18,727

Schedule of fair value measurements of our financial assets and liabilities

	As of December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Equity investment in Metaverse, at fair value	$	1,276	$	—	$	—	$	1,276
	$	1,276	$	—	$	—	$	1,276
Liabilities:
Current portion of earnout consideration on purchase of a business	$	—	$	—	$	110	$	110
	$	—	$	—	$	110	$	110

	As of March 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Equity investment in Metaverse, at fair value			$	—	$	5,200	$	5,200
	$	—	$	—	$	5,200	$	5,200
Liabilities:
Current portion of earnout consideration on purchase of a business	$	—	$	—	$	1,444	$	1,444
	$	—	$	—	$	1,444	$	1,444

Schedule of accounts payable and accrued expenses

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

	As of
	December 31, 2023		March 31, 2023
Accounts payable	$	6,568	$	15,042
Amounts due to producers		15,553		13,114
Accrued compensation and benefits		1,209		2,532
Accrued other expenses		3,657		3,843
Total accounts payable and accrued expenses	$	26,987	$	34,531

Schedule of revenue disaggregation

The following tables present the Company’s disaggregated revenue by source (in thousands):

	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Streaming and digital	$	9,537	$	11,598	$	29,006	$	31,375
Base distribution		2,811		8,121		4,529		11,145
Podcast and other		864		977		1,953		1,740
Other non-recurring		64		7,186		3,780		11,218
Total revenue	$	13,276	$	27,882	$	39,268	$	55,478

Schedule of basic and diluted net loss per share

Basic and diluted net loss per share are computed as follows (in thousands, except share and per share data):

	Three Months Ended December 31,					Nine Months Ended December 31,
	2023			2022		2023			2022
Basic net income (loss) per share:
Net income (loss) attributable to common stockholders	$	(2,864	)		4,926	$	(6,946	)	$	(6,919	)
Shares used in basic computation:
Weighted-average shares of Common Stock outstanding		12,828			8,945		11,678			8,854
Basic net income (loss) per share	$	(0.22	)	$	0.55	$	(0.59	)	$	(0.78	)
Shares used in diluted computation:
Weighted-average shares of Common Stock outstanding		12,828			8,945		11,678			8,854
Stock options and SARs		—			—		—			—
Weighted-average number of shares		12,828			8,945		11,678			8,854
Diluted net income (loss) per share	$	(0.22	)	$	0.55	$	(0.59	)	$	(0.78	)

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Commitments and Contingencies (Tables)

9 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of lease-related assets and liabilities

The table below presents the lease-related assets and liabilities recorded on our Consolidated Balance Sheets (in thousands):

Classification on the Balance Sheet		December 31, 2023		March 31, 2023
Assets
Noncurrent	Other long-term assets	$	943	$	1,265
Liabilities
Current	Operating leases liabilities		440		418
Noncurrent	Operating leases liabilities, net of current portion		531		863
Total operating lease liabilities		$	971	$	1,281

Schedule of operating lease commitments and subleasing arrangements

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
2024	$	115
2025		376
2026		247
2027		210
2028		72
Thereafter		—
Total lease payments	$	1,020
Less imputed interest		(49	)
Total	$	971

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

Fiscal year ending March 31,	Sublease Payments
2024	$	45
2025		154
2026		—
2027		—
2028		—
Thereafter		—
Total	$	199

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Nature of Operations and Liquidity (Details) - USD ($)		1 Months Ended	3 Months Ended		9 Months Ended
	Jun. 16, 2023	Jul. 31, 2023	Dec. 31, 2023	Jun. 30, 2023	Dec. 31, 2023	Dec. 31, 2022	Feb. 09, 2024	Mar. 31, 2023	Jul. 31, 2020
Nature of Operations and Liquidity [Abstract]
Bid price requirement				$ 1
Net loss					$ (6,900,000)
Accumulated deficit			$ 489,300,000		489,300,000
Working capital			400,000		400,000
Net cash used by operating activities					9,300,000
Number of shares sold	2,150,000
Warrants to purchase common stock	2,667,000
Pre funded warrants	517,000
Pre funded warrants exercised		516,667
Proceeds from Issuance of Warrants		$ 500
Pre-funded warrants exercise price per share	$ 2.999
Class of remaining pre-funded warrants due exercise price per share	0.001
Cash outlay related to investments					6,500,000
Combined offering price per share	$ 3
Aggregate gross proceeds from equity financing	$ 7,400,000
Payments of Stock Issuance Costs	$ 600,000
Warrants exercise price	$ 3
Warrants expiration term	5 years
Proceeds after deduction of commissions and fees					8,542,000
Unamortized issuance costs			69,000		69,000			$ 76,000
Short term content advances			8,477,000		8,477,000			3,724,000
Content advances, net of current portion			$ 3,153,000		$ 3,153,000			$ 1,421,000
Common Class A [Member]
Nature of Operations and Liquidity [Abstract]
Common stock, par value (in Dollars per share)			$ 0.001		$ 0.001			$ 0.001
Common Stock [Member]
Nature of Operations and Liquidity [Abstract]
Number of shares sold			500,000		3,900,000	179,000
Remaining number of shares authorized to be repurchased			500,000		500,000
ATM Sales Agreement [Member]
Nature of Operations and Liquidity [Abstract]
Aggregate Offering Price									$ 30,000,000
ATM Sales Agreement [Member] | Common Stock [Member]
Nature of Operations and Liquidity [Abstract]
Number of shares sold			0	177,000	177,000
Proceeds after deduction of commissions and fees					$ 1,100,000
Revolving Credit Facility [Member] | East West Bank [Member]
Nature of Operations and Liquidity [Abstract]
Line of credit facility interest rate description					The Line of Credit Facility bears interest at a rate equal to 1.5% above the prime rate, 10.00% as of December 31, 2023
Credit facility expiration date					Sep. 15, 2024
Revolving line of credit			$ 5,000,000		$ 5,000,000
Outstanding principal line of credit facility			5,000,000		5,000,000
Unamortized issuance costs			69,000		69,000			$ 76,000
Outstanding amount of debt, gross			5,000,000		5,000,000			$ 5,000,000
Fixed interest charge			$ 200,000		$ 400,000
Revolving Credit Facility [Member] | East West Bank [Member] | Subsequent Event [Member]
Nature of Operations and Liquidity [Abstract]
Revolving line of credit							$ 7,500,000
Revolving Credit Facility [Member] | Prime Rate [Member] | East West Bank [Member]
Nature of Operations and Liquidity [Abstract]
Interest rate, stated percentage			10.00%		10.00%
Interest rate percentage over the prime rarte					1.50%

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Basis of Presentation and Summary of Significant Accounting Policies (Details) shares in Thousands	3 Months Ended		9 Months Ended			12 Months Ended
	Dec. 31, 2023 USD ($) Customers shares	Dec. 31, 2022 USD ($) Customers shares	Dec. 31, 2023 USD ($) Customers shares	Dec. 31, 2022 USD ($) Customers shares	Dec. 31, 2021	Mar. 31, 2023 USD ($)	Sep. 30, 2023 shares
Summary of Significant Accounting Policies (Details) [Line Items]
Employee retention tax credit percentage					70.00%
Employee retention credit cash refund claim						$ 2,500,000
Employee retention tax credit recognized		$ 2,000,000
Employee Retention Tax Credit Receivable	$ 1,700,000		$ 1,700,000			2,100,000
Provision for advances			500,000
Impairment charges recorded for long-lived and finite-lived intangible assets	0	0	0	$ 0
Amortization expense (in Dollars)	$ 879,000	712,000	2,381,000	2,193,000
Payment of earnout consideration in cash			$ 291,000	665,000
Shares sold | shares	30,000		30,000
Shares held for sale | shares							362,000
Shares sold resulted in a realized loss	$ 131,000
Fair value of shares held	1,276,000		$ 1,276,000			5,200,000
Decrease in accounts payable from run-off digital cinema operations			8,300,000
Decrease in accrued compensation and benefits due to reduced bonus accrual			1,200,000
Content advances, net of current portion	3,153,000		3,153,000			1,421,000
Goodwill impairment charge	0	0	0	0
Credit losses on accounts receivable	0	$ 7,000	0	$ 54,000
Deferred revenue current and non-current balances (in Dollars)	$ 200,000		$ 200,000			200,000
Number of customers | Customers	1	1	1	1
Concentration risk percentage	26.00%	16.00%	23.00%	11.00%
Weighted-average shares of Common Stock outstanding | shares	12,828	8,945	11,678	8,854
Anti-dilutive shares excluded from calculation of diluted net loss per share | shares	798	674	763	640
Level 1 [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Fair value of shares held	$ 1,300,000		$ 1,300,000
Fair value of shares held resulted unrealized losses	(3,600,000)
Bloody Disgusting, LLC [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Accrued interest	29,000		29,000
Decrease in estimated earnout liability			682,000
Payment of earnout consideration in cash			291,000
Issued equity to settle earnout liability	$ 392,000		392,000
Digital Media Rights, Payment due in March 2024 [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Payments due related to the acquisition			3,000,000
Digital Media Rights, Payment due in March 2025 [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Payments due related to the acquisition			2,400,000
Foundation TV, Payment Due in June 2024 [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Payments due related to the acquisition			238,000
Foundation TV, Payment Due in December 2024 [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Payments due related to the acquisition			238,000
Foundation TV, Payment Due in June 2025 [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Payments due related to the acquisition			464,000
Foundation TV [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Payments due related to the acquisition			$ 617,000
Right to pay post-close purchase price in equity			25.00%
Minimum [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Percentage of threshold tax benefit recognized upon ultimate settlement			50.00%
Starrise Media Holdings Limited [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Majority interest, percentage	15.00%		15.00%
Starrise Media Holdings Limited [Member] | Stock Exchange of Hong Kong [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Fair value of equity method investment						$ 5,200,000
CON TV, LLC [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Majority interest, percentage	85.00%		85.00%
Another customer [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Concentration risk percentage		14.00%

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Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of property and equipment, net	Dec. 31, 2023
Computer equipment and software [Member] | Minimum [Member]
Public Utility, Property, Plant and Equipment [Line Items]
Property and equipment estimated useful lives	3 years
Computer equipment and software [Member] | Maximum [Member]
Public Utility, Property, Plant and Equipment [Line Items]
Property and equipment estimated useful lives	5 years
Machinery and equipment [Member] | Minimum [Member]
Public Utility, Property, Plant and Equipment [Line Items]
Property and equipment estimated useful lives	3 years
Machinery and equipment [Member] | Maximum [Member]
Public Utility, Property, Plant and Equipment [Line Items]
Property and equipment estimated useful lives	10 years
Furniture and fixtures [Member] | Minimum [Member]
Public Utility, Property, Plant and Equipment [Line Items]
Property and equipment estimated useful lives	2 years
Furniture and fixtures [Member] | Maximum [Member]
Public Utility, Property, Plant and Equipment [Line Items]
Property and equipment estimated useful lives	7 years
Internal use software [Member] | Minimum [Member]
Public Utility, Property, Plant and Equipment [Line Items]
Property and equipment estimated useful lives	3 years
Internal use software [Member] | Maximum [Member]
Public Utility, Property, Plant and Equipment [Line Items]
Property and equipment estimated useful lives	5 years

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Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of amortization expense	Dec. 31, 2023
Advertiser Relationships and Channel [Member] | Minimum [Member]
Amortization Expense Per Equivalent Unit of Production or Per Dollar of Gross Revenue [Line Items]
Estimated useful lives	2 years
Advertiser Relationships and Channel [Member] | Maximum [Member]
Amortization Expense Per Equivalent Unit of Production or Per Dollar of Gross Revenue [Line Items]
Estimated useful lives	13 years
Trademarks and Trade Names [Member] | Minimum [Member]
Amortization Expense Per Equivalent Unit of Production or Per Dollar of Gross Revenue [Line Items]
Estimated useful lives	2 years
Trademarks and Trade Names [Member] | Maximum [Member]
Amortization Expense Per Equivalent Unit of Production or Per Dollar of Gross Revenue [Line Items]
Estimated useful lives	15 years
Content Library [Member] | Minimum [Member]
Amortization Expense Per Equivalent Unit of Production or Per Dollar of Gross Revenue [Line Items]
Estimated useful lives	3 years
Content Library [Member] | Maximum [Member]
Amortization Expense Per Equivalent Unit of Production or Per Dollar of Gross Revenue [Line Items]
Estimated useful lives	20 years
Customer Relationships [Member] | Minimum [Member]
Amortization Expense Per Equivalent Unit of Production or Per Dollar of Gross Revenue [Line Items]
Estimated useful lives	5 years
Customer Relationships [Member] | Maximum [Member]
Amortization Expense Per Equivalent Unit of Production or Per Dollar of Gross Revenue [Line Items]
Estimated useful lives	13 years
Supplier Agreements [Member]
Amortization Expense Per Equivalent Unit of Production or Per Dollar of Gross Revenue [Line Items]
Estimated useful lives	2 years
Capitalized Content [Member]
Amortization Expense Per Equivalent Unit of Production or Per Dollar of Gross Revenue [Line Items]
Estimated useful lives	3 years
Software [Member]
Amortization Expense Per Equivalent Unit of Production or Per Dollar of Gross Revenue [Line Items]
Estimated useful lives	10 years

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Basis of Presentation and Summary of Significant Accounting Policies - Schedule of intangible assets (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Mar. 31, 2023
Content Library [Member]
Summary of Significant Accounting Policies (Details) - Schedule of intangible assets [Line Items]
Cost Basis	$ 24,096	$ 23,970
Accumulated Amortization	(21,378)	(21,126)
Net	2,718	2,844
Advertiser Relationships and Channel [Member]
Summary of Significant Accounting Policies (Details) - Schedule of intangible assets [Line Items]
Cost Basis	12,604	12,604
Accumulated Amortization	(2,132)	(1,062)
Net	10,472	11,542
Customer Relationships [Member]
Summary of Significant Accounting Policies (Details) - Schedule of intangible assets [Line Items]
Cost Basis	8,690	8,690
Accumulated Amortization	(7,804)	(7,600)
Net	886	1,090
Software [Member]
Summary of Significant Accounting Policies (Details) - Schedule of intangible assets [Line Items]
Cost Basis	3,200	3,200
Accumulated Amortization	(800)	(560)
Net	2,400	2,640
Trademarks and Trade Names [Member]
Summary of Significant Accounting Policies (Details) - Schedule of intangible assets [Line Items]
Cost Basis	4,026	4,026
Accumulated Amortization	(3,056)	(2,274)
Net	970	1,752
Capitalized Content [Member]
Summary of Significant Accounting Policies (Details) - Schedule of intangible assets [Line Items]
Cost Basis	1,371
Accumulated Amortization	(90)
Net	1,281
Total Intangible Assets [Member]
Summary of Significant Accounting Policies (Details) - Schedule of intangible assets [Line Items]
Cost Basis	53,987	52,490
Accumulated Amortization	(35,260)	(32,622)
Net	$ 18,727	$ 19,868

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Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of amortization expense for intangible assets - Intangible assets [Member] $ in Thousands	Dec. 31, 2023 USD ($)
Summary of Significant Accounting Policies (Details) - Schedule of amortization expense for intangible assets [Line Items]
In-process intangible assets	$ 411
Remainder of fiscal year 2024	1,254
2025	3,264
2026	3,001
2027	1,772
2028	1,246
Thereafter	7,779
Total	$ 18,727

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Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of fair value measurements of our financial assets and liabilities - USD ($) $ in Thousands	Dec. 31, 2023	Mar. 31, 2023
Assets:
Equity investment in Metaverse, at fair value	$ 1,276	$ 5,200
Total Assets	1,276	5,200
Liabilities:
Current portion of earnout consideration on purchase of a business	110	1,444
Total Liabilities	110	1,444
Level 1 [Member]
Assets:
Equity investment in Metaverse, at fair value	1,276
Total Assets	1,276
Liabilities:
Current portion of earnout consideration on purchase of a business
Total Liabilities
Level 2 [Member]
Assets:
Equity investment in Metaverse, at fair value
Total Assets
Liabilities:
Current portion of earnout consideration on purchase of a business
Total Liabilities
Level 3 [Member]
Assets:
Equity investment in Metaverse, at fair value		5,200
Total Assets		5,200
Liabilities:
Current portion of earnout consideration on purchase of a business	110	1,444
Total Liabilities	$ 110	$ 1,444

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Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of accounts payable and accrued expenses - USD ($) $ in Thousands	Dec. 31, 2023	Mar. 31, 2023
Schedule Of Accounts Payable And Accrued Expenses [Abstract]
Accounts payable	$ 6,568	$ 15,042
Amounts due to producers	15,553	13,114
Accrued compensation and benefits	1,209	2,532
Accrued other expenses	3,657	3,843
Total accounts payable and accrued expenses	$ 26,987	$ 34,531

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Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of revenue categories - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Disaggregation of Revenue [Line Items]
Total revenue	$ 13,276	$ 27,882	$ 39,268	$ 55,478
Streaming and Digital [Member]
Disaggregation of Revenue [Line Items]
Total revenue	9,537	11,598	29,006	31,375
Base Distribution [Member]
Disaggregation of Revenue [Line Items]
Total revenue	2,811	8,121	4,529	11,145
Podcast And Other [Member]
Disaggregation of Revenue [Line Items]
Total revenue	864	977	1,953	1,740
Other Non-Recurring [Member]
Disaggregation of Revenue [Line Items]
Total revenue	$ 64	$ 7,186	$ 3,780	$ 11,218

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Basis of Presentation and Summary of Significant Accounting Policies (Details) - Schedule of Basic and Diluted Net Income Loss Per Share - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Basic net income (loss) per share:
Net income (loss) attributable to common shareholders	$ (2,864)	$ 4,926	$ (6,946)	$ (6,919)
Weighted-average shares of Common Stock outstanding	12,828	8,945	11,678	8,854
Basic net income (loss) per share	$ (0.22)	$ 0.55	$ (0.59)	$ (0.78)
Shares used in diluted computation:
Weighted-average shares of Common Stock outstanding	12,828	8,945	11,678	8,854
Weighted-average number of shares	12,828	8,945	11,678	8,854
Diluted net income (loss) per share	$ (0.22)	$ 0.55	$ (0.59)	$ (0.78)

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Other Interests (Details)		3 Months Ended		9 Months Ended
	Mar. 15, 2022 USD ($) shares	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Mar. 31, 2023 USD ($)
Other Interests Details [Line Items]
Purchase price shares (in Shares) | shares	16,000
Investments for purchase of roundtable securities	$ 200,000
Maximum roundtable investment percentage	20
Common Stock [Member]
Other Interests Details [Line Items]
Warrant shares (in Shares) | shares	100
CDF2 Holdings [Member]
Other Interests Details [Line Items]
Ownership percentage				100.00%
Accounts receivable		$ 0		$ 0		$ 500,000
Digital cinema servicing revenue		0	$ 100,000	0	$ 200,000
Total stockholders’ deficit		59,200,000		59,200,000		59,200,000
Initial investment amount		$ 2,000,000		$ 2,000,000		$ 0
Series A Preferred Stock [Member]
Other Interests Details [Line Items]
Preferred stock shares (in Shares) | shares	500

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Stockholders’ Equity (Details) - USD ($)		1 Months Ended		3 Months Ended					9 Months Ended
	Jun. 16, 2023	Jul. 31, 2023	Aug. 31, 2017	Dec. 31, 2023	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2023	Dec. 31, 2022	Mar. 31, 2023
Stockholders’ Equity (Details) [Line Items]
Shares of common stock	2,150,000
Preferred stock dividends				74,000			11,000		56,000	14,000
Pre funded warrants	517,000
Warrants to purchase common stock	2,667,000
Proceeds from pre funded warrants		$ 500
Treasury stock shares				288,554					288,554		65,792
Shares acquired in connection with employee bonuses					$ 370,000
Selling, General and Administrative Expenses [Member]
Stockholders’ Equity (Details) [Line Items]
Stock based compensation (in Dollars)				$ 200			$ 700		$ 1,100	$ 3,900
Equity Incentive Plan [Member]
Stockholders’ Equity (Details) [Line Items]
Percent voting power threshold									10.00%
Exercise price if voting threshold is met, percent									110.00%
Common Stock [Member]
Stockholders’ Equity (Details) [Line Items]
Common stock, shares authorized				275,000,000			275,000,000		275,000,000	275,000,000
Shares of common stock				500,000					3,900,000	179,000
Issuance of common stock in connection with direct equity offering (in Shares)	2,150,000					2,150,000
ATM Sales Agreement [Member] | Common Stock [Member]
Stockholders’ Equity (Details) [Line Items]
Shares of common stock				0		177,000			177,000
Shares Issuance in Connection with Employee Bonuses [Member] | Common Stock [Member]
Stockholders’ Equity (Details) [Line Items]
Shares of common stock				502,000			34,000			103
Shares Issued for Earnout-Related Liabilities [Member] | Common Stock [Member]
Stockholders’ Equity (Details) [Line Items]
Shares of common stock				400,000			17,000			41,000
Exercise of Pre-Funded Warrants [Member] | Common Stock [Member]
Stockholders’ Equity (Details) [Line Items]
Shares of common stock				517,000
Class A Common Stock [Member]
Stockholders’ Equity (Details) [Line Items]
Common stock, shares authorized				275,000,000					275,000,000		275,000,000
Shares acquired in connection with employee bonuses				$ 223,000
Common stock shares			905,000
Series A Preferred Stock [Member]
Stockholders’ Equity (Details) [Line Items]
Dividends preferred stock (in Dollars)									$ 87,000	$ 88,000
Preferred stock, shares issued				7					7		7
Preferred stock, shares outstanding				7					7		7
Board of Directors [Member] | Selling, General and Administrative Expenses [Member]
Stockholders’ Equity (Details) [Line Items]
Stock based compensation (in Dollars)				$ 100				$ 100	$ 300	$ 300

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Line of Credit Facility (Details) - USD ($)		3 Months Ended	9 Months Ended
	Feb. 09, 2024	Dec. 31, 2023	Dec. 31, 2023	Mar. 31, 2023
Line of Credit Facility [Line Items]
Unamortized issuance costs		$ 69,000	$ 69,000	$ 76,000
Revolving Credit Facility [Member] | East West Bank [Member]
Line of Credit Facility [Line Items]
Revolving line of credit		5,000,000	$ 5,000,000
Credit facility expiration date			Sep. 15, 2024
Outstanding amount of debt, gross		5,000,000	$ 5,000,000	5,000,000
Unamortized issuance costs		69,000	69,000	$ 76,000
Interest expense, including cash interest and amortization		$ 200,000	$ 400,000
Revolving Credit Facility [Member] | East West Bank [Member] | Subsequent Event [Member]
Line of Credit Facility [Line Items]
Revolving line of credit	$ 7,500,000
Expanded Line of Credit Facility	$ 7,500,000
Revolving Credit Facility [Member] | East West Bank [Member] | Prime Rate [Member]
Line of Credit Facility [Line Items]
Interest rate percentage over the prime rarte			1.50%
Interest rate, stated percentage		10.00%	10.00%

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Commitments and Contingencies (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023 USD ($) Lease	Dec. 31, 2022 USD ($)	Dec. 31, 2023 USD ($) Lease	Dec. 31, 2022 USD ($)
Commitments and Contingencies (Details) [Line Items]
Sublease term			2025-01
Rental expense | $	$ 109	$ 94	$ 337	$ 242
Income related to subleasing arrangement | $	$ 45	$ 44	$ 135	$ 71
Domestic Operating Lease
Commitments and Contingencies (Details) [Line Items]
Number of operating lease | Lease	1		1
India Operations
Commitments and Contingencies (Details) [Line Items]
Number of operating lease | Lease	2		2
Lease expiration			2027-07

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Commitments and Contingencies (Details) - Schedule of lease-related assets and liabilities - USD ($) $ in Thousands	Dec. 31, 2023	Mar. 31, 2023
Liabilities
Total operating lease liabilities	$ 971	$ 1,281
Operating lease right-of-use asset [Member]
Assets
Noncurrent	943	1,265
Operating leases liabilities [Member]
Liabilities
Current	440	418
Operating leases liabilities, net of current portion [Member]
Liabilities
Noncurrent	$ 531	$ 863

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Commitments and Contingencies (Details) - Schedule of operating lease commitments and subleasing arrangements (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Operating Lease Commitments
2024	$ 115
2025	376
2026	247
2027	210
2028	72
Total lease payments	1,020
Less imputed interest	(49)
Total	971
Sublease Payments
2024	45
2025	154
Total	$ 199

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ (24)	$ 0	$ 12	$ 0
Tax rate	(0.90%)	0.00%	0.20%	0.00%