Cineverse Corp 10-K for FY2021

Cineverse Corp. (CNVS)

10-K 2021-07-30 For: 2021-03-31

Added on April 10, 2026

About this 10-K

Cineverse Corp filed this 10-K on July 30, 2021, covering the fiscal year ended March 31, 2021 (FY2021).

Headline figures

Fiscal year ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $31.42M; down 20.0% from $39.29M a year earlier
Net loss: $62.82M; compared with a net loss of $14.73M a year earlier
Diluted EPS: -$0.49; compared with -$0.34 a year earlier

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Delaware		22-3720962
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

237 West 35th Street, Suite 605, New York, NY		10001
(Address of principal executive offices)		(Zip Code)

Title of each class		Trading Symbol		Name of each exchange on which registered
CLASS A COMMON STOCK, PAR VALUE $0.001 PER SHARE		CIDM		NASDAQ GLOBAL MARKET

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.		Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.		Yes ☐ No ☒

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 an 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		☐

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.		☐

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

		Page
FORWARD-LOOKING STATEMENTS		ii

PART I

ITEM 1.	Business	1
ITEM 1A.	Risk Factors	10
ITEM 1B.	Unresolved Staff Comments	21
ITEM 2.	Properties	22
ITEM 3.	Legal Proceedings	22
ITEM 4.	Mine Safety Disclosures	22

PART II

ITEM 5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	23
ITEM 6.	[Reserved]	24
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
ITEM 8.	Financial Statements and Supplementary Data	40
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	41
ITEM 9A.	Controls and Procedures	41
ITEM 9B.	Other Information	42

PART III

ITEM 10.	Directors, Executive Officers and Corporate Governance	43
ITEM 11.	Executive Compensation	48
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	63
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	64
ITEM 14.	Principal Accountant Fees and Services	65

PART IV

ITEM 15.	Exhibits and Financial Statement Schedules	67

SIGNATURES		75

	●	Audience: Growing viewership and subscription numbers significantly beyond our current base of more than 23 million viewers to potentially hundreds of millions of global viewers across billions of connected devices.

	●	Financial Performance/Metrics:

Location		Square Feet (Approx.)			Lease Expiration Date		Primary Use
New York City, New York		3,500			October, 2021 (1)		Corporate executive and administrative headquarters. Shared between all business segments.

	For the Fiscal Year Ended March 31,
	2021				2020
	HIGH		LOW		HIGH		LOW
April 1 – June 30	$	3.20	$	0.32	$	2.00	$	1.29
July 1 – September 30	$	2.49	$	0.55	$	1.36	$	0.85
October 1 – December 31	$	1.09	$	0.45	$	1.09	$	0.69
January 1 – March 31	$	2.33	$	0.69	$	0.82	$	0.29

Computer equipment and software		3-5 years
Internal use software		5 years
Digital cinema projection systems		10 years
Machinery and equipment		3-10 years
Furniture and fixtures		3-6 years

	For the Fiscal Year Ended March 31,
($ in thousands)	2021		2020		$ Change			% Change
Cinema Equipment Business	$	3,222	$	12,741	$	(9,519	)		(74.7	)%
Content & Entertainment		28,197		26,550		1,647			6.2	%
	$	31,419	$	39,291	$	(7,872	)		(20.0	)%

	For the Fiscal Year Ended March 31,
($ in thousands)	2021			2020
Net loss	$	(62,905	)	$	(14,724	)
Add Back:
Income tax (benefit)/expense		(315	)		313
Depreciation and amortization of property and equipment		4,404			6,620
Amortization of intangible assets		2,515			2,772
Loss on extinguishment of note payable		1,498			-
Interest expense, net		4,050			7,237
Change in fair value on equity investment in Starrise		43,518			1,618
Other expense, net		1,475			1,585
(Recovery) Provision for doubtful accounts		(122	)		758
Stock-based compensation		2,892			543
Net income (loss) attributable to noncontrolling interest		85			(10	)
Adjusted EBITDA	$	(2,905	)	$	6,712

Adjustments related to the Cinema Equipment Business
Depreciation and amortization of property and equipment	$	(3,916	)	$	(6,087	)
Amortization of intangible assets		(23	)		(46	)
Stock-based compensation and expenses		73			7
Income from operations		4,142			(1,721	)
Adjusted EBITDA from non-cinema equipment business	$	(2,629	)	$	(1,135	)

	For the Fiscal Years Ended March 31,
($ in thousands)	2021			2020
Net cash (used in) provided by operating activities	$	(20,007	)	$	7,762
Net cash used in investing activities		(1,710	)		(1,247	)
Net cash provided by (used in) financing activities		24,272			(10,093	)
Net increase (decrease) in cash and cash equivalents	$	2,555		$	(3,578	)

Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets at March 31, 2021 and 2020		F-2
Consolidated Statements of Operations for the fiscal years ended March 31, 2021 and 2020		F-3
Consolidated Statements of Comprehensive Loss for the fiscal years ended March 31, 2021 and 2020		F-4
Consolidated Statements of Equity (Deficit) for the fiscal years ended March 31, 2021 and 2020		F-5
Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2021 and 2020		F-7
Notes to Consolidated Financial Statements		F-8

	March 31,
	2021			2020
ASSETS
Current assets
Cash and cash equivalents	$	16,849		$	14,294
Accounts receivable, net		21,093			34,785
Inventory, net		166			582
Unbilled revenue		1,377			1,992
Prepaid and other current assets		3,657			5,382
Total current assets		43,142			57,035
Restricted cash		1,000			1,000
Equity investment in Starrise, a related party, at fair value		6,443			23,433
Property and equipment, net		3,500			7,967
Operating lease right-of use assets		100			1,210
Intangible assets, net		9,860			6,924
Goodwill		8,701			8,701
Other long-term assets		2,700			4,170
Total assets	$	75,446		$	110,440

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued expenses	$	46,627		$	77,085
Current portion of notes payable, including unamortized debt discount and debt issuance costs of $0 and $460, respectively (see Note 6)		1,956			37,249
Current portion of notes payable, non-recourse including unamortized debt discount of $0 and $763, respectively (see Note 6)		7,786			11,442
Operating lease liabilities		87			593
Current portion of deferred revenue		924			1,645
Total current liabilities		57,380			128,014
PPP Loan		2,152			—
Operating lease liabilities, net of current portion		13			684
Deferred revenue, net of current portion		—			919
Other long-term liabilities		19			110
Total liabilities		59,564			129,727
Commitments and contingencies (see Note 8)
Stockholders’ Equity (Deficit)
Preferred stock, 15,000,000 shares authorized; Series A 10% - $0.001 par value per share; 20 shares authorized; 7 shares issued and outstanding at March 31, 2021 and 2020. Liquidation preference of $3,648		3,559			3,559
Common stock, $0.001 par value; Class A stock 200,000,000 and 150,000,000 shares authorized at March 31, 2021 and 2020, respectively, 167,542,404 and 63,251,429 shares issued and 166,228,568 and 61,937,593 shares outstanding at March 31, 2021 and 2020, respectively.		164			62
Additional paid-in capital		499,272			400,784
Treasury stock, at cost; 1,313,836 Class A common shares at March 31, 2021 and 2020.		(11,603	)		(11,603	)
Accumulated deficit		(474,080	)		(410,904	)
Accumulated other comprehensive (loss) income		(68	)		92
Total stockholders’ equity (deficit) of Cinedigm Corp.		17,244			(18,010	)
Deficit attributable to noncontrolling interest		(1,362	)		(1,277	)
Total equity (deficit)		15,882			(19,287	)
Total liabilities and equity (deficit)	$	75,446		$	110,440

	For the Fiscal Year Ended March 31,
	2021			2020
Revenues	$	31,419		$	39,291
Costs and expenses:
Direct operating (excludes depreciation and amortization shown below)		16,103			17,146
Selling, general and administrative		21,992			16,344
(Recovery) Provision for doubtful accounts		(122	)		758
Depreciation and amortization of property and equipment		4,404			6,620
Amortization of intangible assets		2,515			2,772
Total operating expenses		44,892			43,640
Loss from operations		(13,473	)		(4,349	)
Interest income		37			21
Interest expense		(4,087	)		(7,258	)
Changes in fair value of equity investment in Starrise, a related party		(43,518	)		(1,618	)
Loss in extinguishment of note payable		(1,498	)		—
Other expense, net		(681	)		(1,207	)
Loss from operations before income taxes		(63,220	)		(14,411	)
Income tax benefit (expense)		315			(313	)
Net loss		(62,905	)		(14,724	)
Net income (loss) attributable to noncontrolling interest		85			(10	)
Net loss attributable to controlling interests		(62,820	)		(14,734	)
Preferred stock dividends		(356	)		(356	)
Net loss attributable to common stockholders	$	(63,176	)	$	(15,090	)

Net loss per Class A common stock attributable to common stockholders - basic and diluted:
Net loss attributable to common stockholders	$	(0.49	)	$	(0.34	)
Weighted average number of Class A common stock outstanding: basic and diluted		127,787,379			44,004,780

	Series A Preferred Stock				Class A Common Stock				Treasury Stock					Additional Paid-In		Accumulated			Accumulated Other Comprehensive (Loss)		Total Stockholders’			Non-Controlling			Total
	Shares		Amount		Shares		Amount		Shares		Amount			Capital		Deficit			Income		Deficit			Interest			Deficit
Balances as of March 31, 2019		7	$	3,559		35,678,597	$	36		1,313,836	$	(11,603	)	$	368,531	$	(395,814	)	$	10	$	(35,281	)	$	(1,287	)	$	(36,568	)
Foreign exchange translation		—		—		—		—		—		—			—		—			82		82			—			82
Issuance of Class A common stock for third party professional services		—		—		374,286		—		—		—			—		—			—		—			—			—
Issuance of Class A common stock to Bison		—		—		3,900,000		4		—		—			5,846		—			—		5,850			—			5,850
Issuance of Class A common stock in connection with the Starrise transaction, a related party		—		—		21,646,604		22		—		—			11,235		—			—		11,257			—			11,257
Contributed capital under the Starrise transaction, a related party		—		—		—		—		—		—			13,795		—			—		13,795			—			13,795
Fair value of conversion feature in connection with convertible note		—		—		—		—		—		—			478		—			—		478			—			478
Stock-based compensation		—		—		—		—		—		—			543		—			—		543			—			543
Preferred stock dividends paid with common stock		—		—		338,106		—		—		—			356		(356	)		—		—			—			—
Net loss		—		—		—		—		—		—			—		(14,734	)		—		(14,734	)		10			(14,724	)
Balances as of March 31, 2020		7	$	3,559		61,937,593	$	62		1,313,836	$	(11,603	)	$	400,784	$	(410,904	)	$	92	$	(18,010	)	$	(1,277	)	$	(19,287	)

	March 31, 2020 (as reported)		Reclassification			March 31, 2020 (as reclassified)
Prepaid and other current assets	$	9,409	$	(4,027	)	$	5,382
Total current asset		61,062		(4,027	)		57,035
Other long-term assets		143		4,027			4,170
Total assets	$	110,440	$	—		$	110,440

	As of
(in thousands)	March 31, 2021		March 31, 2020
Cash and Cash Equivalents	$	16,849	$	14,294
Restricted Cash		1,000		1,000
	$	17,849	$	15,294

Computer equipment and software		3 - 5 years
Internal use software		5 years
Digital cinema projection systems		10 years
Machinery and equipment		3 - 10 years
Furniture and fixtures		3 - 6 years

As of March 31, 2021

(in thousands)	Level 1		Level 2		Level 3		Total
Restricted cash	$	1,000	$	—	$	—	$	1,000
Equity investment in Starrise, at fair value		6,443		—		—		6,443
	$	7,443	$	—		—	$	7,443

As of March 31, 2020

(in thousands)	Level 1		Level 2		Level 3		Total
Restricted cash	$	1,000	$	—	$	—	$	1,000
Equity investment in Starrise, at fair value		23,433		—		—		23,433
	$	24,433	$	—	$	—	$	24,433

(In thousands)
Goodwill	$	32,701
Accumulated impairment charges		(24,000	)
Goodwill at March 31, 2021 and 2020	$	8,701

	Year Ended March 31,
	2021		2020
Cinema Equipment Business:
Phase I Deployment	$	552	$	5,476
Phase II Deployment		1,531		1,717
Services		539		4,122
Digital System Sales		600		1,426
Total Cinema Equipment Business revenue	$	3,222	$	12,714

Content & Entertainment Business:
Base Distribution Business	$	10,230	$	13,984
OTT Streaming and Digital		17,967		12,566
Total Content & Entertainment Business revenue	$	28,197	$	26,550

	Year Ended March 31, 2021
SARs Outstanding March 31, 2020		1,462,610
Issued		7,692,323
Forfeited		—
Total SARs Outstanding March 31, 2021		9,154,933

Basic and diluted net loss per common share attributable to common stockholders	=		Net loss attributable to common stockholders
			Weighted average number of common stock outstanding during the period

	As of March 31, 2021
(In thousands)	Gross Carrying Amount		Accumulated Amortization			Net Amount		Useful life (years)
Trademarks	$	2,839	$	(382	)	$	2,457		3
Customer relationships and contracts		22,137		(17,610	)		4,527		3-15
Theatre relationships		550		(550	)		-		10-12
Content library		23,148		(20,272	)		2,876		3-6
Total	$	48,674	$	(38,814	)	$	9,860

(In thousands) Fiscal years ending March 31,
2022	$	2,760
2023		2,090
2024		1,920
2025		1,091
2026		177
Thereafter		1,822
Total	$	9,860

Asset	Amount in ($000)		Useful Life
Content Library	$	2,471	20 years
Distribution Contracts		124	2 years
Trade Name		24	2 years
Other		32	3 years
Total	$	2,651

	March 31, 2021				March 31, 2020
(In thousands)	Current Portion		Long Term Portion		Current Portion			Long Term Portion
Prospect Loan	$	7,786	$	—	$	12,205		$	—
Total non-recourse notes payable		7,786		—		12,205			—
Less: Unamortized debt issuance costs and debt discounts		—		—		(763	)		—
Total non-recourse notes payable, net of unamortized debt issuance costs and debt discounts	$	7,786	$	—	$	11,442		$	—
Bison Note Payable	$	—		—	$	10,000		$	—
Second Lien Loans		—		—		8,222			—
Credit Facility		1,956		—		14,487			—
Mingtai Convertible Note		—		—		5,000			—
PPP Loan				2,152		—			—
Total recourse notes payable		1,956		2,152		37,709			—
Less: Unamortized debt issuance costs and debt discounts		—		—		(460	)		—
Total recourse notes payable, net of unamortized debt issuance costs and debt discounts	$	1,956	$	2,152	$	37,249		$	—
Total notes payable, net of unamortized debt issuance costs	$	9,742	$	2,152	$	48,691		$	—

As of March 31, 2021
Range of Prices	Options Outstanding		Weighted Average Remaining Life in Years		Weighted Average Exercise Price		Aggregate Intrinsic Value (In thousands)
$1.16 - $7.40		5,000		4.25	$	7.40	$	—
$13.70 - $24.40		249,087		2.12		14.69		—
$30.00 - $50.00		7,500		0.38		30.00		—
		261,587					$	—

Options Exercisable				Weighted Average Remaining Life in Years				Weighted Average Exercise Price				Aggregate Intrinsic Value (In thousands)
	261,587				2.11			$	14.99				—

Recipient	Amount outstanding		Expiration	Exercise price per share
Strategic management service provider		52,500	July 2021	$	17.20 - $30.00
Warrants issued in connection with Convertible Notes exchange transaction		246,019	December 2021	$	1.30
5-year Warrant issued to BEMG in connection with a term loan agreement		1,400,000	December 2022	$	1.80

(In thousands)	Classification on the Balance Sheet	March 31, 2021
Assets
Noncurrent	Operating lease right-of-use asset	$	100
Liabilities
Current	Operating leases - current portion		87
Noncurrent	Operating leases - long-term portion		13
Total operating lease liabilities		$	100
Weighted-average discount rate (1)			5.1%

	Year Ended
(In thousands)	March 31, 2021
Operating lease cost	$	195
Total lease cost	$	195

Operations of:		Products and services provided:
Cinema Equipment Business		Financing vehicles and administrators for 3,122 Systems installed nationwide in our first deployment phase (“Phase I Deployment”) to theatrical exhibitors and for 3,104 Systems installed domestically and internationally in our second deployment phase (“Phase II Deployment”). We retain ownership of the Systems and the residual cash flows related to the Systems in Phase I Deployment after the repayment of all non-recourse debt at the expiration of exhibitor master license agreements. For certain Phase II Deployment Systems, we do not retain ownership of the residual cash flows and digital cinema equipment in Phase II Deployment after the completion of cost recoupment and at the expiration of the exhibitor master license agreements. The Cinema Equipment Business segment also provides monitoring, collection, verification and management services to this segment, as well as to exhibitors who purchase their own equipment, and also collects and disburses VPFs from motion picture studios, distributors and ACFs from alternative content providers, movie exhibitors and theatrical exhibitors (collectively, “Services”).

Content & Entertainment Business		Leading independent streaming company of content and channels. We collaborate with producers and other content owners to market, source, curate and distribute independent content to targeted and under-served audiences in theatres and homes, and via mobile and emerging platforms.