Cineverse Corp. Commitments Disclosure
8. COMMITMENTS AND CONTINGENCIES
Operating Leases
Cineverse is a virtual company that operates without domestic operating leases. The Company previously maintained one domestic operating lease acquired through the acquisition of Digital Media Rights ("DMR"), which was subleased to a third-party. The Company was not relieved of its original lease obligation and therefore recognized both a lease liability and right-of-use asset as part of the arrangement through the end of the lease term in January 2025. The Company recognized $0.2 million of sublease income related to this subleasing arrangement for the twelve months ended March 31, 2025.
The Company's two operating leases for its India operations expire in July 2027.
The table below presents the lease-related assets and liabilities recorded on our Consolidated Balance Sheets (in thousands):
|
|
Classification on the Balance Sheet |
|
2025 |
|
|
2024 |
|
||
Assets |
|
|
|
|
|
|
|
|
||
Noncurrent |
|
Other long-term assets |
|
$ |
435 |
|
|
$ |
834 |
|
Liabilities |
|
|
|
|
|
|
|
|
||
Current |
|
Operating leases liabilities |
|
|
187 |
|
|
|
401 |
|
Noncurrent |
|
Operating leases liabilities, net of current |
|
|
275 |
|
|
|
462 |
|
|
|
$ |
462 |
|
|
$ |
863 |
|
||
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 |
|
|
2026 |
|
200 |
|
2027 |
|
210 |
|
2028 |
|
72 |
|
Total lease payments |
$ |
482 |
|
Less imputed interest |
|
(20 |
) |
Total |
$ |
462 |
|
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.
Since our operating leases do not provide a readily determinable implicit rate, the Company estimated its incremental borrowing rate to discount the lease payments based on information available at Cineverse's lease commencement date. The weighted average discount rate utilized was 3.34%.
The Company incurred $423 thousand and $441 thousand in rental expense associated with its operating leases during the years ended March 31, 2025 and 2024, respectively.
Commitments
In the ordinary course of business, the Company enters into contractual arrangements, from time to time, under which it agrees to commitments with content providers for certain rights which are in production or have not yet been completed, delivered to, and accepted by the Company. Based on the nature of these agreements, which may be subject to delay or project abandonment, there is uncertainty with the amounts and timing of its commitments. Certain of these advances are eligible to be recouped through future revenue sharing arrangements. Based on the
stage of the Company's projects, the table presented below represents an estimate of the Company's gross project commitments over the next five fiscal years (in thousands):
|
|
Fiscal Year Ended March 31, |
|
|||||||||||||||||
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
2030 |
|
|||||
Total Project Commitments |
|
$ |
9,047 |
|
|
$ |
2,341 |
|
|
$ |
974 |
|
|
$ |
288 |
|
|
$ |
— |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jun 30, 2025 | Showing above |
| 2024 | Jul 1, 2024 | |
| 2023 | Jun 29, 2023 | |
| 2022 | Jul 1, 2022 | |
| 2021 | Jul 30, 2021 | |
| 2020 | Jul 6, 2020 | |
| 2019 | Jul 16, 2019 | |
| 2018 | Jun 26, 2018 | |
| 2017 | Jun 29, 2017 | |
| 2016 | Jul 14, 2016 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.