Cineverse Corp. (CNVS) Earnings Call Transcript & Summary

Good afternoon. Welcome to the Cinedigm Corporation Annual Meeting of Stockholders. I would now like to turn the conference over to Chris McGurk. Please go ahead.

Thank you, and good afternoon, ladies and gentlemen. It's now 2:00 in the afternoon Pacific Time on Monday, October 11, 2021, and I would like to call this meeting to order. My name is Chris McGurk. I am the Chief Executive Officer of Cinedigm Corp., and I have the pleasure of serving as Chairman of the Board of Directors. Presenting with me today is Gary Loffredo, President, Chief Operating Officer, General Counsel and Secretary of the company. I want to thank you for joining us today at the Annual Meeting of Stockholders. As we mentioned in September, when we first convened this meeting, in light of current events, we're hosting this meeting virtually again this year. We have stockholders attending via the web portal. And through that portal, stockholders may cast votes and submit questions germane to the meeting. We may not be able to answer every question submitted, and if not, will address unanswered questions after the meeting. I would now like to introduce our other directors: Ashok Amritraj, Chairman and CEO of Hyde Park Entertainment, Inc. and a member of the Nominating Committee and the Audit Committee; Peter C. Brown, Chairman of Grassmere Partners, LLC and Chairman of the Nominating Committee and a member of the Compensation Committee and the Audit Committee; Patrick W. O’Brien, Managing Director and Principal of Granville Wolcott Advisors and Chairman of the Compensation Committee and a member of the Audit Committee and the Nominating Committee; Peixin Xu, a Founder, Executive Director of Bison Capital Holding Company Limited. And now I shall ask Gary Loffredo as Secretary to report on the calling of the meeting.

Mr. Chairman, we mailed the proxy statement and annual report to stockholders as required by law. July 28, 2021, was set as the record date for determination of stockholders entitled to receive notice and to vote at this meeting. As of the July 28 record date, there were 167,800,341 shares of Class A common stock outstanding and entitled to vote at this meeting. Holders of Class A common stock are entitled to 1 vote for each share held. We have at the meeting today, an independent Inspector of Election, Jim Alden, a representative of American Election Services. I have a list of all stockholders entitled to vote at this meeting and the number of shares held by each. I have confirmed that a quorum is present. It is now time to proceed with the official business. We have set aside time for questions following completion of the official business. You will note from the proxy statement, there are 6 items of business for consideration today: The election of a Board of 5 directors for the ensuing year; a vote to approve by nonbinding advisory vote executive compensation; an amendment to our 2017 equity incentive plan to increase the total number of shares of Class A common stock available for issuance; an amendment to the company's certificate of incorporation to increase the number of shares of Class A common stock authorized for issuance; an amendment to the company's certificate of incorporation to effect a reverse stock split at the Board's discretion; and six, the ratification of the appointment of EisnerAmper as the company's independent auditors for the fiscal year ending March 31, 2022. The polls are now open. If you have previously returned your proxy, no further action is required on your part. If you have not already voted, please do so by clicking on the voting button on the web portal. We will now consider the election of the individuals who have been nominated to serve on the Board of Directors for the ensuing year. The Board's nominees for director are: Mr. McGurk, Mr. Amritraj, Mr. Brown, Mr. O’Brien and Mr. Xu.

The Chair declares the nominees to be duly nominated and declare the nominations closed.

Second proposal properly brought before the meeting is to approve by nonbinding advisory vote executive compensation. The third proposal brought before the meeting is the amendment of the company's 2017 equity incentive plan to increase the number of shares of Class A common stock authorized for issuance. The fourth proposal brought before the meeting is the amendment of the company's certificate of incorporation to increase the total number of shares of Class A common stock authorized for issuance. The fifth proposal properly brought before the meeting is the amendment of the company's certificate of incorporation to effect a reverse stock split at the Board's discretion. The sixth proposal brought before the meeting is the ratification of the appointment of EisnerAmper as the company's independent auditors for the fiscal year ending March 31, 2022. We are ready to vote on the 6 proposals. If you are voting through the portal, please submit your vote at this time. [Voting]

Since there are no other official items of business on the agenda for this meeting, the polls are now closed. So although I presented a business update when we last spoke, less than 3 weeks ago, I didn't want to miss the opportunity to address our stockholders once again today because our remarkable business progress has continued unabated. In just the last 20 days, we announced several key initiatives to further drive our streaming business forward. We added 6 more of our streaming channels to Dish Networks' Sling TV, including the Bob Ross and Real Madrid channels. We relaunched our independent cinema channel, Fandor, called the Netflix of [ ndfilm ] by The Wall Street Journal with a new look, much wider distribution footprint and hundreds of new films and series. We also added enhanced community features like podcasts and the revived editorial site [ KeyPlant ], all powered by our proprietary industry-leading Matchpoint streaming technology. We announced a partnership with the iconic chorographer and pop culture influencer, Laurieann Gibson to launch the Bob channel, the first ever streaming channel devoted to all things dance. Laurieann has developed the visual style for dozens of the world's biggest artists, including Lady Gaga, Nicki Minaj and Katy Perry, and will bring her decades of experience building iconic brands to bear with this new global streaming service. We also announced a partnership with artificial intelligence Pioneer Paper Cup to help take the incredibly successful Bob Ross streaming channel Global using Paper Cup's AI dubbing technology. And just today, we announced the continuation of our very successful distribution partnership with Crown Media Family networks, the Hallmark Channel, which for years has been a premier supplier of quality family entertainment to audiences around the world. And it's very likely that this heavy volume of quality deal flow will continue for the foreseeable future. With a successful portfolio now of more than 2 dozen targeted enthusiast streaming channels, a huge distribution footprint into more than 1 billion streaming devices, the distribution library of more than 40,000 hours of quality film and TV content and our industry-leading mass point streaming technology, Cinedigm is a clear top choice for branded partners and companies looking to enter the streaming space quickly, effectively and successfully. So look for our stream of new initiatives and partnerships to continue and also stay tuned for some very interesting Cinedigm NFT news as well. We also expect our recent record growth to continue. Having just put up 2 quarters in a row of triple-digit streaming revenue growth and having booked net income of over $5 million last quarter, we expect that the second fiscal quarter results will be very strong again, even though it's a seasonally slow period. We are very eager to speak with you again in November about our second quarter results ended September 30, and our continued rapid business progress. With 0 debt, our coveted public currency and the strongest balance sheet in our history, we will also continue to pursue the successful streaming asset acquisition strategy that in just the last 10 months added 5 streaming channels, more than 15,000 films and TV episodes, full ownership of our proprietary Matchpoint streaming technology and a business footprint in the high-growth South Asia and India markets. Our unique competitive streaming position as the only independent media company with a vast content library, a successful 6-year track record of launching and managing streaming channels, a state-of-the-art proprietary streaming platform and a huge distribution footprint has led us to a robust queue of additional streaming acquisition targets. And our acquisition philosophy is relatively simple. We target technology, content and streaming channel assets that we believe 100% support and build our streaming future. We focus on accretive acquisitions that can immediately benefit from our infrastructure, technology, content and distribution to ensure large synergies and growth. And we will only buy assets at multiples far below our own projected trading multiples, with a focus on our own proprietary deal flow. Much like companies that have grown rapidly via M&A, like Zynga and Cisco, we view our competencies in M&A and our platform approach to be a very significant competitive advantage. So let me underscore that we are only making accretive acquisitions, and we will finance those deals as appropriate to ensure that outcome. And we will smartly raise funds to finance those deals based on specific accretive content technology and streaming channel opportunities. We are not in the business of raising cash and stockpiling it on our balance sheet. We have turned down multiple opportunities to do that. We will only look at options to finance accretive deals in the future at the lowest possible cost of capital, combined with the highest potential return to continue to create shareholder value. I would also like to touch on the provision to have the option to do a reverse stock split. This has no impact on our go-forward strategy. As I've said previously, this was an option to give us flexibility. Now that our stock price is almost quadrupled this year, and we have analyst price targets pointing considerably northward from today's price, as well as the robust deal flow and strong results we expect to report again in the very near future, a reverse split option is not necessary. And with that, I would like to thank all of our shareholders for their support and turn the floor back over to Gary Loffredo.

The votes on the proposals have been tabulated by American Election Services. I have been advised by American Election Services that, on a preliminary basis, each of the directors standing for election has received the majority of the votes cast and each has been elected. The proposals concerning say-on-pay, the increase in shares under our 2017 equity incentive plan and the ratification of EisnerAmper have each received a majority of the votes cast and accordingly, have also been approved. The proposal concerning the increase in authorized shares under our certificate of incorporation, received the majority of the votes entitled to vote at this annual meeting and accordingly has been approved. However, the reverse stock split at the Board's discretion did not receive a majority of the votes entitled to vote at this annual meeting and accordingly, has not been approved. We will be reporting the final vote results in a Form 8-K to be filed within 4 business days.

Thanks, Gary. We've now come to that part of the meeting providing for general questions and discussion. Anyone wishing to ask a question pertaining to the matters being considered at today's annual meeting may submit it through the portal. As I noted at the beginning of this meeting, we may not be able to answer every question submitted, and if not, we will address unanswered questions after the meeting. Gary, are there any questions?

There have been no questions submitted on the portal.

All right, then. On behalf of all of the newly elected directors, I would like to express our appreciation to the stockholders for your continued support. We appreciate your interest and courtesy, and thank you for attending. As there is no other formal business to be addressed at the meeting, I now declare this meeting formally adjourned. Thank you all.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.