Cineverse (CNVS) - 2026 Q1 - Quarterly Report

General Information Cineverse Corp. filed a Form 10-Q for Q1 FY2026, with its Class A Common Stock listed on Nasdaq, classified as a non-accelerated filer - Cineverse Corp. filed a Quarterly Report on Form 10-Q for the fiscal period ended June 30, 2025[1] - The company's Class A Common Stock (CNVS) is listed on The Nasdaq Stock Market[1] - Cineverse Corp. is classified as a non-accelerated filer and a smaller reporting company[2] - As of August 8, 2025, there were 19,075,264 shares of Class A Common Stock outstanding[3] PART I - FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Cineverse Corp Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements of Cineverse Corp. for the period ended June 30, 2025, along with detailed notes Condensed Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2025, and March 31, 2025 | Metric (in thousands) | June 30, 2025 | March 31, 2025 | Change ($) | Change (%) | | :-------------------- | :------------ | :------------- | :--------- | :--------- | | Total Assets | $61,534 | $72,516 | $(10,982) | -15.14% | | Total Liabilities | $25,380 | $34,724 | $(9,344) | -26.91% | | Total Stockholders' Equity | $37,070 | $38,752 | $(1,682) | -4.34% | | Cash and cash equivalents | $1,985 | $13,941 | $(11,956) | -85.76% | | Total current assets | $24,863 | $38,081 | $(13,218) | -34.71% | | Total current liabilities | $25,139 | $34,435 | $(9,296) | -27.00% | Unaudited Condensed Consolidated Statements of Operations Details the company's revenues, expenses, and net loss for the three months ended June 30, 2025, and 2024 | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :--------- | :--------- | | Revenues | $11,119 | $9,127 | $1,992 | 21.82% | | Total operating expenses | $14,821 | $11,905 | $2,916 | 24.50% | | Operating loss | $(3,702) | $(2,778) | $(924) | 33.26% | | Net loss | $(3,516) | $(3,050) | $(466) | 15.28% | | Net loss attributable to common stock holders | $(3,649) | $(3,162) | $(487) | 15.39% | | Basic EPS | $(0.21) | $(0.20) | $(0.01) | 5.00% | | Diluted EPS | $(0.21) | $(0.20) | $(0.01) | 5.00% | Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income Reports the net loss and other comprehensive income/loss components for the three months ended June 30, 2025, and 2024 | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Net loss | $(3,516) | $(3,050) | $(466) | 15.28% | | Foreign exchange translation | $16 | $55 | $(39) | -70.91% | | Net income attributable to noncontrolling interest | $(44) | $(23) | $(21) | 91.30% | | Comprehensive loss | $(3,544) | $(3,018) | $(526) | 17.43% | Unaudited Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities for the three months ended June 30, 2025, and 2024 | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Net cash used in operating activities | $(14,524) | $(2,344) | $(12,180) | 519.62% | | Net cash used in investing activities | $(16) | $151 | $(167) | -110.60% | | Net cash provided by financing activities | $2,568 | $925 | $1,643 | 177.62% | | Net Change in Cash and Cash Equivalents | $(11,972) | $(1,267) | $(10,705) | 844.91% | | Cash and cash equivalents at end of period | $1,985 | $3,955 | $(1,970) | -49.81% | Unaudited Condensed Consolidated Statements of Equity Details changes in stockholders' equity, including net loss, stock issuances, and treasury stock transactions, for the period - As of June 30, 2025, total stockholders' equity was $37,070 thousand, a decrease from $38,752 thousand as of March 31, 2025. Key changes include a net loss of $3,560 thousand, an increase in additional paid-in capital by $2,900 thousand (driven by stock-based compensation and common stock issuance for deferred consideration), and an increase in treasury stock by $965 thousand due to employee tax payments[21][23] Notes to the Condensed Consolidated Financial Statements (Unaudited) Provides detailed explanations and disclosures supporting the financial statements, covering accounting policies, segment information, and debt 1. Nature of Operations and Liquidity Describes Cineverse's business as a streaming technology and entertainment company and assesses its liquidity position - Cineverse operates as a streaming technology and entertainment company, focusing on owned/operated streaming channels, global content aggregation/distribution, and its Matchpoint™ SaaS platform for OTT app development and content distribution (SVOD, AVOD, FAST, social video, audio podcasts)[25][26] - The company distributes content for major brands like Hallmark, ITV, NFL, and various content creators across digital platforms (Apple iTunes, Amazon Prime, Netflix, Hulu, Xbox, Pluto, Tubi) and physical goods (DVD, Blu-ray)[27] Financial Metric (as of June 30, 2025) | Financial Metric (as of June 30, 2025) | Amount (in millions) | | :------------------------------------- | :------------------- | | Accumulated Deficit | $(504.6) | | Working Capital | $(0.3) | | Net Loss (3 months ended June 30, 2025) | $(3.6) | | Net Cash Used in Operating Activities (3 months ended June 30, 2025) | $(14.5) | - The company has a Line of Credit Facility with East West Bank, providing up to $12.5 million (expandable to $15.0 million) at an interest rate of 1.25% above the prime rate (8.75% as of June 30, 2025), maturing April 8, 2028. $3.6 million was outstanding as of June 30, 2025[29][30] - Management believes current cash and the Line of Credit Facility will provide sufficient liquidity for at least the next twelve months, despite ongoing investments in content development and acquisitions[34] 2. Basis of Presentation and Summary of Significant Accounting Policies Outlines the accounting principles used for interim financial statements, key estimates, and significant accounting policies Basis of Presentation Explains that interim financial statements are unaudited and prepared in conformity with GAAP and SEC rules - The interim financial statements are unaudited, prepared in conformity with GAAP and SEC rules, and include all normal recurring adjustments[35][37] Use of Estimates Highlights management's reliance on estimates and judgments in preparing financial statements, which may differ from actual results - Management makes estimates and judgments affecting reported amounts, particularly for revenue recognition, credit losses, goodwill/intangible asset impairments, share-based compensation, valuation allowance for deferred income taxes, and amortization of intangible assets[39][41] Accounting Policies Confirms no material changes to significant accounting policies since the last annual report - There have been no material changes in the company's significant accounting policies compared to the Annual Report on Form 10-K for the year ended March 31, 2025[42] Segment Reporting States that the company manages its operations and business as a single reporting segment - The Company manages its operations and business in one reporting segment[43] Cash and Cash Equivalents Defines cash equivalents and addresses potential risks related to bank account balances exceeding insured limits - Highly liquid investments with original maturities of three months or less are considered cash equivalents. Bank accounts may exceed FDIC insured limits, but the risk of any loss is minimal[45] Property and Equipment, Net Describes the accounting treatment for property and equipment, including depreciation methods and capitalization of internally developed software - Property and equipment are stated at cost, less accumulated depreciation and amortization, recorded using the straight-line method over estimated useful lives (3-10 years). Costs associated with internally developed software are capitalized when the preliminary project stage is completed and amortized over its useful life[46] Intangible Assets, Net Explains the accounting for intangible assets, including amortization methods and impairment testing for finite and indefinite-lived assets - Intangible assets are stated at cost less accumulated amortization. Finite-lived assets are amortized using the straight-line method over estimated useful lives (3-20 years), while indefinite-lived assets are tested annually for impairment[47][49] Intangible Asset Net Values (in thousands) | Intangible Asset (in thousands) | Net as of June 30, 2025 | Net as of March 31, 2025 | | :------------------------------ | :---------------------- | :----------------------- | | Content Library | $2,856 | $2,527 | | Advertiser Relationships and Channel | $8,193 | $8,621 | | Customer Relationships | $477 | $545 | | Software | $1,920 | $2,000 | | Tradenames, Trademarks and Patents | $733 | $758 | | Capitalized Content | $4,270 | $3,717 | | Total Intangible Assets | $18,449 | $18,168 | - Amortization expense for intangible assets was $1.0 million for the three months ended June 30, 2025, compared to $0.7 million for the same period in 2024[49] Capitalized Content Details the capitalization and amortization of direct costs incurred in content production expected to generate future returns - Direct costs incurred in the production of content are capitalized if expected to generate a return over the anticipated useful life and are amortized as a group within Depreciation and Amortization[50][51] Impairment of Long-lived and Finite-lived Intangible Assets Describes the process for reviewing long-lived and finite-lived intangible assets for impairment, with no charges recorded this quarter - The recoverability of long-lived and finite-lived intangible assets is reviewed when events or conditions indicate possible impairment. No impairment charges were recorded during the three months ended June 30, 2025 and 2024[52] Goodwill Explains the annual impairment testing for goodwill, with no impairment charges recorded in the current or prior quarter - Goodwill is tested for impairment annually or more often if warranted by events or changes in circumstances. No goodwill impairment charge was recorded in the three months ended June 30, 2025 and 2024[53][55] Fair Value Measurements Discusses fair value measurement disclosures and confirms no assets or liabilities were carried at fair value as of June 30, 2025 - Fair value measurement disclosures are grouped into three levels based on valuation factors. There were no assets and liabilities carried at fair value as of June 30, 2025[56][57] Content Advances Describes content advances as prepayments to studios for distribution services, regularly evaluated for recoverability - Content advances are prepayments to studios for distribution services, regularly evaluated for recoverability. Long-term content advances were $5.9 million as of June 30, 2025. A $128 thousand reduction in the reserve for recovery of advances was recognized for the three months ended June 30, 2025[58] Accounts Payable and Accrued Expenses Provides a breakdown of accounts payable and accrued expenses, including amounts due to producers and accrued compensation | Category (in thousands) | As of June 30, 2025 | As of March 31, 2025 | | :---------------------- | :------------------ | :------------------- | | Accounts payable | $5,468 | $7,298 | | Amounts due to producers | $9,292 | $16,488 | | Accrued compensation and benefits | $1,655 | $1,398 | | Accrued other expenses | $4,342 | $5,925 | | Total | $20,757 | $31,109 | Deferred Consideration Details the final payments for the DMR and FTV acquisitions, made through common stock issuance and cash - The final deferred consideration payment of $2.4 million for the Digital Media Rights (DMR) acquisition was made on April 1, 2025, through the issuance of 677 thousand shares of Common Stock. The deferred consideration related to the FoundationTV (FTV) acquisition was $464 thousand as of June 30, 2025, and was paid in cash in July 2025[60][61] Revenue Recognition Explains the company's revenue recognition policies across streaming, podcast, and base distribution segments | Revenue Source (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :---------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Streaming and digital | $9,104 | $7,703 | $1,401 | 18.19% | | Podcast and other | $989 | $1,043 | $(54) | -5.18% | | Base distribution | $1,024 | $351 | $673 | 191.74% | | Other non-recurring | $2 | $30 | $(28) | -93.33% | | Total Revenue | $11,119 | $9,127 | $1,992 | 21.82% | - Streaming and digital revenue pertains to the OTT business, including licensing, service, advertising, and subscription revenue. Base distribution revenue relates to non-streaming revenue like Theatrical and DVD sales. Podcast and other revenue primarily relate to the Bloody Disgusting Podcast Network[63] Credit Losses Describes the company's policy for maintaining reserves for expected credit losses on accounts receivable - Reserves for expected credit losses on accounts receivable are maintained primarily on a specific identification basis. The allowance for credit losses was $406 thousand as of June 30, 2025, an increase of $99 thousand from March 31, 2025[68][69] Contract Liabilities Explains the recording of deferred revenue as a contract liability when payments are received in advance of performance - Deferred revenue (contract liability) is recorded when cash payments are received or due in advance of performance. The ending deferred revenue balance was $0.1 million as of June 30, 2025, down from $0.2 million as of March 31, 2025[70][71] Participations and Royalties Payable Defines participations payable for revenue-sharing and royalties owed to studios or content producers - Participations payable represent amounts owed to distributors under revenue-sharing arrangements for Company-owned content. Accounts payable and accrued expenses are recorded for royalties owed to studios or content producers for licensing arrangements[74] Concentrations Identifies significant customer concentrations in consolidated revenue and accounts receivable - For the three months ended June 30, 2025, one customer represented 27% of consolidated revenue (down from 39% in 2024). As of June 30, 2025, two customers represented 21% and 12% of consolidated accounts receivable[75] Direct Operating Expenses Lists the components of direct operating expenses, including cost of revenue, fulfillment, and royalty 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[76] Stock-based Compensation Describes the accounting for stock-based awards issued to employees and non-employees, recognizing expense over the service period - The company issues stock-based awards (restricted stock, RSUs, SARs, PSUs) to employees and non-employees, recognizing compensation expense based on fair value over the service period. Forfeitures are recognized as they occur[77] Income Taxes Explains the asset and liability method for income taxes, deferred tax assets, valuation allowances, and uncertain tax positions - Income taxes are accounted for using the asset and liability method, with deferred tax assets and liabilities recognized for future tax consequences. Valuation allowances are established when deferred tax assets are unlikely to be realized. The company had no uncertain tax positions as of June 30, 2025[78][79][82] Recently Issued Accounting Pronouncements Discusses the company's adoption plans for new accounting standards related to income tax disclosures and expense disaggregation - The company is adopting ASU 2023-09 (Income Taxes - Improvements to Income Tax Disclosures) for its December 31, 2025 year-end disclosure. It is evaluating the impact of ASU 2024-03 (Income Statement-Reporting Comprehensive Income- Expense Disaggregation Disclosures), effective for fiscal years beginning after December 15, 2026[84][85] 3. Segment Information Confirms Cineverse operates as a single reportable segment, with the CEO reviewing consolidated financial data for decision-making - The Company operates as a single reportable segment. The CEO (CODM) reviews consolidated financial information, operating income/loss, net income/loss, and specific expense categories (royalty, license, payroll, professional services, advertising, G&A, amortization) for decision-making[86][87] Segment Performance (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Revenues | $11,119 | $9,127 | | Total operating expenses | $14,821 | $11,905 | | Operating loss | $(3,702) | $(2,778) | | Net loss | $(3,516) | $(3,050) | 4. Other Interests Details the company's investments in unconsolidated VIEs, consolidated subsidiaries, and other entities accounted for using the cost method - Cineverse indirectly owns 100% of CDF2 Holdings, an unconsolidated Variable Interest Entity (VIE) created for digital cinema conversion. The company's maximum exposure to loss is limited to its initial $2.0 million investment, which is carried at $0 as of June 30, 2025[90][91][94] - Cineverse owns an 85% interest in CONtv, LLC, a worldwide digital network that creates original content and distributes on-demand digital content, which is consolidated in the financial statements[95] - The company holds an investment in Roundtable Entertainment Holdings, Inc., accounted for using the cost method, made in connection with a proposed collaboration for streaming content production and distribution[97] 5. Stockholders' Equity Provides details on changes in common stock, warrants, preferred stock, treasury stock, and equity incentive plans - As of June 30, 2025, 275 million shares of Common Stock were authorized. During the three months ended June 30, 2025, 1.1 million shares were issued for preferred stock dividends, acquisition deferred consideration, and employee equity awards[98] - As of June 30, 2025, 2.7 million warrants were exercisable. Subsequent to June 30, 2025, 1.9 million warrants were exercised for net proceeds of $5.8 million[100] - Cumulative dividends in arrears on Series A Preferred Stock were $89 thousand as of June 30, 2025, and were paid in Common Stock[101] - Treasury stock increased to 830 thousand shares as of June 30, 2025, primarily due to 326 thousand shares retained for employee taxes related to restricted stock awards[102][107] - The company issued 522 thousand RSUs to certain employees during the three months ended June 30, 2025, vesting over a 3-year period with a fair value of $1.5 million. Stock-based compensation expense was $0.4 million for both the three months ended June 30, 2025 and 2024[106][108] 6. Earnings Per Share Explains the computation of basic and diluted earnings per share, noting that potentially dilutive securities were anti-dilutive due to net loss | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | | Net loss attributable to Common Stock holders (in thousands) | $(3,649) | $(3,162) | | Weighted average shares of Common Stock - basic | 16,992,358 | 15,702,144 | | Basic and Diluted EPS | $(0.21) | $(0.20) | - Potentially dilutive common equivalent shares (options, SARs, warrants, restricted stock units/awards) were excluded from diluted EPS computation because their effect would have been anti-dilutive due to the net loss[110][112] 7. Debt Details the company's Line of Credit Facility and a Term Loan, including terms, outstanding amounts, and interest expenses - The Line of Credit Facility with East West Bank provides up to $12.5 million (expandable to $15.0 million) at 1.25% above the prime rate (8.75% as of June 30, 2025), maturing April 8, 2028. $3.6 million was outstanding as of June 30, 2025[113] - Interest expense for the Line of Credit Facility was $0.1 million for the three months ended June 30, 2025, compared to $0.2 million in the prior year quarter[114] - A Term Loan (T3 Loan) of up to $3.666 million was used for funding distribution arrangements for the film 'Terrifier 3'. The principal was paid during the three months ended December 31, 2024. Subsequent to June 30, 2025, a $375 thousand reduction to accrued Participation Interest was negotiated, and a final payment of $944 thousand was made to the T3 Lender[115][116][118][119][120] 8. Commitments and Contingencies (Leases) Describes the company's operating lease liabilities, primarily for Cineverse India operations, and associated cash flows - Cineverse operates without domestic operating leases, except for two operating leases related to its Cineverse India operations, with expiration dates in July 2027. Lease expenses were $49 thousand for the three months ended June 30, 2025, compared to $115 thousand in 2024[121] Lease-Related Liabilities (in thousands) | Lease-Related Liabilities (in thousands) | As of June 30, 2025 | As of March 31, 2025 | | :------------------------------------- | :------------------ | :------------------- | | Current Operating Lease Liabilities | $191 | $187 | | Noncurrent Operating Lease Liabilities | $226 | $275 | | Total | $417 | $462 | Operating Lease Commitments (in thousands) | Fiscal Year Ending March 31, | Operating Lease Commitments (in thousands) | | :--------------------------- | :--------------------------------------- | | 2025 (remainder) | $152 | | 2026 | $210 | | 2027 | $71 | | Thereafter | $0 | | Total Lease Payments | $433 | 9. Income Taxes Explains the company's income tax expense, effective tax rate, and the impact of recent tax legislation - Income tax expense was $14 thousand for the three months ended June 30, 2025, primarily attributable to taxable income earned in India and U.S. state income taxes. A valuation allowance is provided for all U.S. net deferred tax assets[124][125] Income Tax Metrics (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | | Income Tax Expense (in thousands) | $14 | $7 | | Effective Tax Rate | (0.4)% | (0.3)% | - The 'One Big Beautiful Bill Act' (OBBBA), signed July 4, 2025, introduces significant changes to the Internal Revenue Code, including restoring 100% bonus depreciation and permitting immediate expensing of domestic research and experimental costs. These provisions are treated as a non-recognized subsequent event as enactment occurred after June 30, 2025[126][127] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on the company's financial condition, operational results, and liquidity, including a business overview Business Overview Describes Cineverse's transformation into a leading independent streaming company, leveraging technology for entertainment distribution - Cineverse has transformed from a digital cinema equipment and physical content distributor to a leading independent streaming company, leveraging technology to transform the entertainment industry[131] - The core business includes a portfolio of owned and operated streaming channels, large-scale global aggregation and distribution of feature films and television programs, and a proprietary technology software-as-a-service platform (Matchpoint™) for OTT app development and content distribution[132][133] Financial Condition and Liquidity Assesses the company's financial health, including accumulated deficit, working capital, net loss, and liquidity sources - As of June 30, 2025, the company had an accumulated deficit of $504.6 million and a working capital deficit of $(0.3) million, with a net loss attributable to common stock holders of $3.6 million for the three months ended June 30, 2025. Net cash used in operating activities was $14.5 million, including $1.2 million of incremental investment in content[135] - Subsequent to June 30, 2025, 1.9 million warrants were exercised for net proceeds of $5.8 million[135] - The company has a Line of Credit Facility of up to $12.5 million (expandable to $15.0 million), with $3.6 million outstanding as of June 30, 2025. Management believes current cash and the Line of Credit Facility will be sufficient to support operations for at least the next twelve months[136][137][139] Critical Accounting Estimates Discusses management's significant assumptions and judgments in financial reporting, which may impact reported amounts - The preparation of financial statements requires management to make assumptions and estimates about future events and apply judgments that affect reported amounts of assets, liabilities, revenue, and expenses. These estimates are reviewed regularly, but actual results could differ materially[140] Results of Operations for the Three Months Ended June 30, 2025 and 2024 (Unaudited) Analyzes the company's financial performance, including revenue, expenses, and profitability, for the specified periods Revenue Details the sources and changes in total revenue, including streaming, podcast, and base distribution segments | Revenue Source (in thousands) | 2025 | 2024 | $ Change | % Change | 2025 (% of Total) | 2024 (% of Total) | | :---------------------------- | :----------- | :----------- | :------- | :------- | :---------------- | :---------------- | | Streaming and digital | $9,104 | $7,703 | $1,401 | 18% | 82% | 84% | | Podcast and other | $989 | $1,043 | $(54) | (5)% | 9% | 11% | | Base distribution | $1,024 | $351 | $673 | 192% | 9% | 4% | | Other and non-recurring | $2 | $30 | $(28) | (93)% | —% | —% | | Total Revenue | $11,119 | $9,127 | $1,992 | 22% | 100% | 100% | - Total revenue increased by $2.0 million (22%) year-over-year. Streaming and digital revenue increased by $1.4 million, driven by subscriber revenue, Terrifier 3 transaction revenue, and barter revenue. Base distribution revenue increased by $0.7 million due to increased physical sales for the Terrifier 3 DVD release[142][143] Direct Operating Expenses Analyzes the changes in direct operating expenses, primarily driven by variable costs associated with revenue increases | Metric (in thousands) | 2025 | 2024 | $ Change | % Change | 2025 (% of Revenue) | 2024 (% of Revenue) | | :-------------------- | :------ | :------ | :------- | :------- | :------------------ | :------------------ | | Direct operating expenses | $4,807 | $4,479 | $328 | 7% | 43% | 49% | - Direct operating expenses increased by $0.3 million, primarily driven by higher variable costs associated with the increase in revenue, including royalty and participation expenses, and manufacturing, freight, and fulfillment charges[146] Selling, General and Administrative Expenses Examines the increase in SG&A expenses, attributed to higher compensation, marketing, and legal costs | Metric (in thousands) | 2025 | 2024 | $ Change | % Change | 2025 (% of Revenue) | 2024 (% of Revenue) | | :-------------------- | :------ | :------ | :------- | :------- | :------------------ | :------------------ | | Compensation expense | $5,129 | $4,051 | $1,078 | 27% | 46% | 44% | | Corporate expenses | $1,196 | $1,012 | $184 | 18% | 11% | 11% | | Share-based compensation | $418 | $470 | $(52) | (11)% | 4% | 5% | | Other operating expenses | $2,209 | $1,030 | $1,179 | 114% | 20% | 11% | | Total SG&A | $8,952 | $6,563 | $2,389 | 36% | 81% | 72% | - Selling, general and administrative expenses increased by $2.4 million (36%), driven by a $1.1 million increase in compensation expense due to increased headcount and a $1.2 million increase in other operating expenses primarily from higher marketing and legal costs associated with increased theatrical offerings[147] Depreciation and Amortization Expense Discusses the increase in depreciation and amortization, mainly due to internally developed software assets | Metric (in thousands) | 2025 | 2024 | $ Change | % Change | 2025 (% of Revenue) | 2024 (% of Revenue) | | :-------------------- | :------ | :------ | :------- | :------- | :------------------ | :------------------ | | Amortization of intangible assets | $957 | $709 | $248 | 35% | 9% | 8% | | Depreciation of property and equipment | $105 | $154 | $(49) | (32)% | 1% | 2% | | Total D&A | $1,062 | $863 | $199 | 23% | 10% | 9% | - Depreciation and amortization expense increased by $0.2 million (23%) compared to the prior year quarter, primarily due to internally developed software assets being placed into service[148] Interest expense, net Explains the decrease in net interest expense due to a lower Line of Credit balance and a discount from a lender - Net interest expense decreased by $0.7 million to $(0.3) million for the three months ended June 30, 2025, primarily due to a lower average balance on the Line of Credit Facility and a $0.4 million discount to accrued interest provided by the Terrifier 3 lender[149] Adjusted EBITDA Presents Adjusted EBITDA as a non-GAAP measure used by management to assess financial performance - Adjusted EBITDA is a non-GAAP measure used by management to assess financial performance, excluding 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[150][151][152] Adjusted EBITDA (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Net loss | $(3,516) | $(3,050) | | Adjusted EBITDA | $(2,134) | $(1,356) | Cash Flow Analyzes changes in cash flows from operating, investing, and financing activities, highlighting seasonal patterns | Cash Flow Activity (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(14,524) | $(2,344) | | Net cash used in investing activities | $(16) | $151 | | Net cash provided by financing activities | $2,568 | $925 | | Net Change in Cash and Cash Equivalents | $(11,972) | $(1,267) | - Net cash used in operating activities significantly increased to $(14.5) million, primarily driven by loss from operations, content advances, operating prepayments, and a decrease in accounts payable and accrued expenses. Operating cash flows are typically seasonally lower during the first two fiscal quarters[156][158][159] - Cash provided by financing activities increased to $2.6 million, primarily driven by proceeds, net of payments, on the Line of Credit Facility[158] Off-balance sheet arrangements Confirms the company has no material off-balance sheet arrangements, except for an unconsolidated VIE - The company is not a party to any off-balance sheet arrangements, other than its 100% equity interest in CDF2 Holdings, an unconsolidated variable interest entity (VIE) for which it is not the primary beneficiary[161] Item 4. Controls and Procedures Management evaluated the effectiveness of disclosure controls and procedures, concluding they were effective, with no material changes in internal control - Disclosure controls and procedures are designed to reasonably ensure that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized, and reported timely and communicated to management[163] - As of June 30, 2025, the principal executive officer and principal financial and accounting officer concluded that the company's disclosure controls and procedures were effective[164] - There have been no material changes in the company's internal control over financial reporting during the three months ended June 30, 2025[165] PART II - OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, defaults, and other disclosures Item 1. Legal Proceedings The company reported no legal proceedings during the period - None[166] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes to the Risk Factors disclosed in Item 1A of the Annual Report on Form 10-K for the fiscal year ended March 31, 2025[167] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds - None[168] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[169] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not Applicable[170] Item 5. Other Information The company plans to move its 2025 annual meeting of stockholders, affecting deadlines for proposals and nominations - The company is planning to move its 2025 annual meeting of stockholders ahead by more than 30 days of the date of the 2024 annual meeting[171] - Stockholder proposals for inclusion in the proxy statement must be received by August 30, 2025. Advance notice proposals and nominations must be received between July 15, 2025, and August 24, 2025[172][173] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including officer certifications and XBRL documents - Exhibits include Officer's Certificates (31.1, 31.2), Certification of Chief Executive Officer (32.1), Certification of Chief Financial Officer (32.2), and Inline XBRL documents (101.INS, 101.SCH, 104)[177] Signatures The report is duly signed by the Chief Executive Officer and Chief Financial Officer of Cineverse Corp - The report was signed by Christopher J. McGurk (Chief Executive Officer and Chairman of the Board of Directors) and Mark Lindsey (Chief Financial Officer) on August 14, 2025[181]