Cineverse Files 8-K: Preferred Share Exchange Agreement – Key Details for Investors

Summary of the Transaction

Cineverse (NASDAQ: CNVS) has announced a significant Preferred Share Exchange Agreement, as disclosed in its recent Form 8-K filed on April 30, 2026. The agreement involves the exchange of 3.118 Series A Preferred Shares for newly issued Class A Common Shares, potentially impacting the company’s capital structure and share float.

Key Points Investors Should Know

• Preferred Share Exchange: The Holder of 3.118 Series A Preferred Shares will exchange them for Common Shares. The exchange is structured in up to five tranches, with each tranche subject to specific conditions and calculations.
• Common Share Issuance Calculation: For each tranche, the number of Common Shares to be issued is determined by dividing \$311,800 by the 5-day Volume Weighted Average Price (VWAP) ending on the last trading day before the closing. There is a cap: unless stockholder approval is obtained per Nasdaq Listing Rule 5635, the number of shares issued at a price below the Minimum Price cannot exceed 19.9% of the total outstanding shares before the agreement.
• Dividend Due: Any accrued but unpaid dividends on the Preferred Shares will be paid in Common Shares, calculated similarly to prior dividend payments.
• Immediate Cancellation of Preferred Shares: Upon exchange, Preferred Shares are cancelled, reducing preferred equity and increasing common equity.
• Issuer Representations: Cineverse confirms it has filed all required SEC reports, its financial statements are GAAP-compliant, and the Common Stock remains registered and listed on Nasdaq. There are no pending or threatened proceedings related to the Series A Preferred Stock that would affect the exchange.
• Holder Representations: The Holder is not an affiliate, has owned the Preferred Shares for at least one year, and qualifies as an accredited investor. The Common Shares will be issued free of restrictive legend, relying on Holder representations.
• Resale Restrictions: The Holder intends to sell Common Shares on the open market under Rule 144 or similar exemption. Holder and affiliates cannot sell more than 5% of the daily trading volume on any trading day during the restricted period until all shares are sold.
• Nasdaq Compliance: Cineverse has notified Nasdaq about the issuance of additional shares, and Nasdaq has raised no objection.
• No Broker Fees: Neither Cineverse nor the Holder has retained any investment banker, broker, or finder in connection with this exchange, avoiding additional fees or commissions.

Potential Share Price Impact & Investor Considerations

• Increase in Common Shares Outstanding: The issuance of new Common Shares to exchange Preferred Shares will increase the share float, potentially affecting share price through dilution. Investors should monitor the number of shares issued and the VWAP used for calculation.
• Holder’s Market Sales: The Holder plans to sell the issued Common Shares on the open market, subject to a daily volume cap. This could create selling pressure and impact share price, especially if large tranches are sold.
• Dividend Conversion: Payment of accrued dividends in Common Stock may further increase the float and act as a supply overhang.
• Nasdaq Listing Rule 5635: If the company seeks shareholder approval to exceed the 19.9% cap, this could significantly increase dilution. If not, issuance is limited, providing some protection for current shareholders.
• Removal of Preferred Equity: The cancellation of Preferred Shares will streamline the capital structure, possibly reducing future dividend liabilities and improving financial flexibility.
• No Litigation or Proceedings: The company confirms no legal proceedings affect the Preferred Shares, reducing risk of disruption or litigation uncertainty.

Detailed Transaction Tranches

Investor Action Points

• Monitor company announcements for actual number of shares issued and VWAP calculation dates.
• Watch for shareholder meeting notices if Cineverse seeks approval to exceed dilution limits.
• Track Holder sales of Common Shares, as this could impact trading volume and price.
• Review updated SEC filings for further developments on this transaction.

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