Reading International Inc: Form 10-Q for the period ended Mar 31, 2026

The MD&A should be read in conjunction with our condensed consolidated financial statements and related notes in this Report.

Business Overview & Updates

Cinema Exhibition Segment

We are encouraged by the improved performance of our cinema business in the first quarter of 2026, which reinforces our confidence in the continued recovery of our operations and the global cinema industry. While macroeconomic challenges remain, our first quarter 2026 results reflect improving industry momentum and support our confidence in the continued growth of our cinema business. Q1 2026 benefited from theatrical successes including Project Hail Mary, Wuthering Heights, GOAT, and Hoppers. Additionally, this quarter also saw the continued momentum of blockbuster hits from last quarter including Avatar: Fire and Ash, Zootopia 2, Wicked: For Good, Marty Supreme, and The Housemaid.

Certain current macroeconomic conditions continued to present challenges for our cinema operations during the relevant periods, which are listed below:

Cinema attendance levels have not returned to pre-pandemic levels;

The number of movies released by the major Hollywood studios and other distributors, while increasing from pandemic levels, have not yet returned to their higher pre-pandemic levels;

The traditional exclusive theatrical release window remains shorter than historic periods, however, the major studios are indicating their intent to return to longer exclusivity periods;

Inflationary pressures, ongoing supply chain issues and increased operating expenses continue to push up our variable costs while we encounter consumer resistance to higher ticket prices;

Labor costs continue to rise due to mandated minimum wage increases;

Significant and ongoing rises in fuel costs, which impact the cost of utilities;

Increased fixed costs for third party cinema rents, some of which are increasing due to base rent escalations, some of which are fixed and some of which are adjusted by reference to changes in the cost of living index, which are exacerbated by our obligation to also pay deferrals of past rent. We have been able to mitigate this somewhat by negotiating for rent abatements and revised rental terms and through the closure of certain underperforming venues; and

General market and economic conditions.

We believe that our ongoing focus on operational efficiency and strategic initiatives has improved our operations results. Over the past quarter, we have worked to optimize the efficiency of our locations, by:

Renegotiating our cinema leases and aligning our occupancy costs more effectively with attendance levels that, in general, remain behind pre-pandemic levels.

Prioritizing the elevation of the guest experience through our expanded Food and Beverage program. Beer and wine, and liquor service is available at nearly every one of our U.S. cinema locations. These enhancements are mirrored in our Australian and New Zealand markets, ensuring a consistent and premium experience for audiences across all regions. This strong focus on Food and Beverage contributed in revenue increases in all countries for the quarter compared to same period in the prior year.

We are expanding our loyalty and membership ecosystem to strengthen guest engagement. In late 2024, we transitioned from Reel Club to Reading Rewards and Angelika Rewards in Australia and New Zealand. Members can also upgrade to Reading and Angelika Rewards Boost with a fee. In the United States, we transitioned from Cinema Extras in our U.S. Consolidated Theatres to a new free to join Consolidated rewards program and paid subscription premium membership at the end of 2025 and in our U.S. Reading Cinemas to a new free-to-join Reading rewards program and paid subscription premium membership in early 2026. Our existing Angelika free membership program in the U.S. continues to grow, with membership increasing meaningfully compared to the prior year and we plan to add an Angelika paid subscription premium membership in Q2 2026.

These initiatives have contributed to improved revenue generation and enhanced cost management, while highlighting our focus on delivering a compelling and differentiated cinema experience that supports repeat visitation.

Looking ahead, we believe that the rest of the 2026 film slate presents a major opportunity to continue the positive momentum that we are seeing. As of today, titles such as Super Mario Galaxy Movie and Michael have generated strong box office results, reinforcing continued audience appetite for compelling, broadly appealing theatrical releases. We will continue to have highly anticipated major releases throughout the remainder of the year including The Devil Wears Prada 2, Toy Story 5, Supergirl, Minions 3, Moana, The Odyssey, Spider Man: Brand New Day, The Cat in the Hat, Avengers: Doomsday, and Dune: Part Three. These 2026 future releases are positioned to appeal to a wide variety of audiences, which should allow for a strong carry-through for the rest of the year. These titles cover a wide range of genres, from family animation to science fiction, each with the potential to produce significant box office results. Supported by our strategic operational initiatives and continued audience engagement efforts, this diverse slate positions us for a robust year.

Real Estate Segment

In the United States, we now own 100% of our Cinemas 1,2,3 property and as of February 2026 we have classified this property as held for sale. At our 44 Union Square property in New York, Petco continues to occupy the cellar, ground, and second floors under a long-term lease on a full rent-paying basis, while we work to secure tenant(s) for the remaining space. We believe that demand for space in the Union Square submarket is improving. Additionally, we continue to hold our Newberry Yard property in Williamsport, Pennsylvania for sale.

In Australia, our real estate revenues continue to have steady, strong performance, especially when measured in local currency.

In New Zealand, we signed a purchase and sale agreement on March 4, 2026 to monetize our Napier property. The transaction is currently in its due diligence period.

To align with our liquidity priorities, we have largely deferred new real estate development. Capital spending in 2025 and to date in 2026 has been primarily focused on upgrades to our existing cinemas.

Company Overview

We are an internationally diversified company principally focused on the development, ownership, and operation of entertainment and real estate assets in the United States, Australia, and New Zealand. Currently, we operate in two business segments:

Cinema exhibition, through our 58 cinemas.

Real estate, including real estate development and the rental of retail, commercial, and Live Theatre assets.

In the post-pandemic period, we have monetized nine property assets, but we believe our cinema and real estate segments remain complementary and central to our long-term growth strategy. Prior to the pandemic, cinema generated cash flows supported the capital requirements of our real estate development activities. During this period, we relied more heavily on income from our real estate assets and selectively monetized embedded value to support the Company. With the effects of COVID-19 and the 2023 Hollywood strikes now largely behind us, we expect improved film quality and consistency to drive increased attendance and restore cinema generated cash flows as a key source of capital to expand and enhance our existing cinema and real estate portfolios. To address anticipated liquidity needs, Newberry Yard and Cinemas 1,2,3 are held for sale. Following these planned dispositions, we expect to retain assets in Pennsylvania, Manhattan, and Australia that we believe offer meaningful long term value creation opportunities as capital resources permit.

Cinema Key Performance Indicators (“KPIs”)

‎(Unaudited; U.S. Dollars and functional currency thousands, except per patron data)

Food and Beverage Spend Per Patron

A key performance indicator utilized by management in our cinema exhibition segment is Food and Beverage (“F&B”) Spend Per Patron (“SPP”), which is calculated based on our total Food & Beverage Revenues on a post-tax basis divided by our attendance during a specific period.

One of our key strategic priorities has been the continued enhancement of food and beverage offerings across several of our global cinema locations. We have a total of 38 theater locations that offer elevated food and beverage menus (i.e. menus that are beyond traditional popcorn, soda, and candy). We use F&B SPP as a measure of our food and beverage operational performance as compared to that of our competitors. Although the profitability of our food and beverage operations is influenced by numerous factors, including labor and cost of goods, F&B SPP serves as an indicator of our ability to achieve consistent strong top-line performance. In addition, F&B SPP highlights our ability to optimize revenue by effectively promoting and selling supplementary products to our customers during each visit. Moreover, this metric assists in evaluating how well we can differentiate our F&B offerings from our competitors. Management uses F&B SPP to adjust food and beverage pricing strategies at our individual theaters, measure the effectiveness of promotional marketing initiatives, optimize menu offerings, and ensure price barriers are not created for our customers. F&B revenue is particularly important to cinema operators, as film distributors do not share in this revenue stream.

Our F&B SPP in functional currency for the three months ended March 31, 2026, and March 31, 2025, are as follows:

Average Ticket Price per Patron

An additional key performance indicator utilized by management in our cinema exhibition segment is Average Ticket Price (“ATP”) Per Patron, which is calculated based on our total Box Office Revenues on a post-tax basis divided by our attendance during a specific period. ATP serves to measure our operational cinema performance when compared to that of our competitors. ATP is a useful metric for evaluating our ability to achieve a strong top line performance, gauging the effectiveness of our cinemas’ pricing strategies and our ability to draw audiences back to our theaters. Management uses ATP to adjust and inform ticket pricing schemes for our individual theaters, measure the effectiveness of our content programming, and ensure that price barriers are not created for core guests.

Our ATP in functional currency for the three months ended March 31, 2026, and March 31, 2025, are as follows:

Real Estate Key Performance Indicators

The key performance indicators used by management in our real estate segment vary according to jurisdiction. At the current time, in the United States, we assess our real estate division (including 44 Union Square and our historical railroad assets, but excluding our Live Theatres), solely on a net operating income basis. We have no specific key performance standards to compare performance from period to period. Rather we analyze operating budgets and projections and compare actual results to budgeted or projected results from time to time.

In Australia and New Zealand, we assess our properties held for rent using net operating income, occupancy factor (the percentage of the net rentable area of our properties that are leased) and average lease duration. We believe our chosen indicators help us effectively assess the return on investment on our real estate assets.

Our real estate key performance indicator results for the three months ended March 31, 2026, and March 31, 2025, measured in functional currencies, are as follows:

In the case of our Live Theatres, with respect to key performance indicators, we primarily look to the Live Theatre rental revenue and ancillary income from the theatres. This key performance indicator represents box office revenues less amounts paid to producers for license fee settlements, plus ancillary income earned by us from certain theatre operations. Our Live Theatre rental revenue and ancillary income for the first quarter of 2026 improved to $0.7 million compared to $0.5 million for the first quarter of 2025.

Cinema Exhibition Segment Overview

We operate our worldwide cinema businesses through various subsidiaries under various brands:

in the U.S., under the Reading Cinemas, Angelika Film Centers, and Consolidated Theatres brands.

in Australia, under the Reading Cinemas, Angelika Cinemas, the State Cinema by Angelika, and for our one unconsolidated joint venture theatre, Event Cinemas brands.

in New Zealand, under the Reading Cinemas and for our two unconsolidated joint venture theatres, Rialto Cinemas brands.

Shown in the following table are the number of locations and screens in our cinema circuit in each country, by state/territory/region, our cinema brands, and our interest in the underlying assets as of March 31, 2026.

(1) Our Company has a 33.3% unincorporated joint venture interest in a 16-screen cinema located in Mt. Gravatt, Queensland managed by Event Cinemas.

(2) Our Company is a 50% joint venture partner in two New Zealand Rialto Cinemas, with a total of 13 screens. We are responsible for the booking of these cinemas and our joint venture partner, Event Cinemas, manages their day-to-day operations.

Our cinema revenues consist primarily of cinema ticket sales, F&B sales, screen advertising, gift card sales, cinema rentals, and online convenience fee revenue generated by the sale of our cinema tickets through our websites and mobile apps. Cinema operating expenses consist of the costs directly attributable to the operation of the cinemas, including (i) film rent expense, (ii) cost of goods sold, (iii) operating costs, such as labor costs and utilities, and (iv) occupancy costs. Cinema revenues and certain expenses fluctuate with the availability of quality content and the number of weeks such content stays on screen. For a breakdown of our current cinema assets that we own and/or manage, please refer to Part I, Item 1 – Our Business of our 2025 Form 10-K.

Cinema Pipeline and Closures

On January 31, 2025, in connection with our sale of our Wellington Properties to Prime Property Group Limited (“Prime”), we entered into an Agreement to Lease with Prime to fit out and operate under a long-term lease our previously owned 10 screen cinema at the to be redeveloped Courtenay Central in Wellington, New Zealand (the “ATL”). Under the ATL, Prime is obligated to redevelop Courtenay Central and upgrade it to meet current earthquake standards. We intend to renovate the existing cinema to a “best-in-class” standard.

Our Board has also authorized management to proceed with the negotiation of a lease for a new state-of-the-art cinema, located in Noosa, Queensland, Australia.

On February 9, 2025, we closed our underperforming cinema located in Queenstown.

On April 15, 2025, we closed our underperforming cinema located in San Diego, California.

Cinema Upgrades

The upgrades to our cinema circuit’s film exhibition technology and amenities over the years are as summarized in the following table as of March 31, 2026:

(1) Gold Lounge: This is our "First Class Full Dine-in Service" in our Australian and New Zealand cinemas, which includes an upgraded F&B menu (with alcoholic beverages), luxury recliner seating features (intimate 25-50 seat cinemas) and waiter service.

(2) Premium Service: This is our "Business Class Dine-in Service" in our Australian and New Zealand cinemas, which typically includes upgraded F&B menu (some with alcoholic beverages) and may include luxury recliner seating features (less intimate 80-seat cinemas), but no waiter service.

(3) Upgraded Food & Beverage Menu: Features an elevated F&B menu including a menu of locally inspired and freshly prepared items that go beyond traditional concessions, which we have worked with former Food Network executives to create. The elevated menu also includes beer, wine and/or spirits at most of our locations.

(4) Liquor Licenses: Licenses are applicable at each cinema location, rather than each cinema auditorium. As of today, we have beer and wine licenses in 100% of our cinemas and liquor licenses in all but three of our cinemas operating in the U.S. In Australia, 86% of our cinemas are licensed and we have no liquor licenses pending. In New Zealand, 38% of our cinemas are licensed.

Real Estate Segment Overview

Through our various subsidiaries, we engage in the real estate business through the development, ownership, rental or licensing to third parties of retail, commercial, and Live Theatre assets. Our real estate business creates long-term value for our stockholders through the continuous improvement and development of our investment and operating properties, including our ETCs. In addition to owning the fee interests in 7 of our cinemas (as presented in the table under Cinema Exhibition Overview), as of March 31, 2026, we:

own our 44 Union Square property in Manhattan comprised of retail and office space, which is currently in the lease-up phase. The cellar, ground floor, and second floor of the building are now fully leased to Petco, which is in occupancy of its premises on a full rent paying basis;

own and operate two ETCs known as Newmarket Village (in a suburb of Brisbane), and the Belmont Common (in a suburb of Perth), the cinema components of which are included in the fee owned screen count above;

own and operate our administrative office building in South Melbourne, Australia;

own and operate the fee interests in two developed commercial properties in Manhattan improved with Live Theatres comprised of a single stage in each location;

own a 100% interest in Sutton Hill Properties LLC, a limited liability company, which in turn owns the fee interest in and improvements constituting our Cinemas 1,2,3 located in Manhattan. In addition, in the fourth quarter of 2025, we wound up our long term relationship with Sutton Hill Associates pursuant to a transaction whereby we purchased the 25% non-controlling minority interest in our Cinemas 1,2,3, property (also identified above as an “owned” cinema property) that we did not already own and the ground-lessee’s interest in the land and improvements constituting our Village East property. In February 2026, we classified our Cinemas 1,2,3 property as held for sale;

own the approximately 23.9-acre Newberry Yard property in Williamsport, Pennsylvania, which is currently being held for sale; and

own approximately 201-acres principally in Pennsylvania from our legacy railroad business, including the Reading Viaduct in downtown Philadelphia;

For a breakdown of our real estate assets, made current by our discussion below, please refer to Part I, Item 1 – Our Business of our 2025 Form 10-K.

The combination of the COVID-19 pandemic, the lack of any material U.S. public pandemic financial assistance due to our public company status, the 2023 Hollywood Strikes, increased interest rates, inflation, increased labor costs, and decreases in the value of the Australian Dollar and New Zealand Dollar vis-a-vis the U.S. Dollar over the past five years, have significantly impacted our cinema operations and necessitated capital conservation to sustain our cinema operations and service our debt. This has required us to rethink our real estate business plan and to monetize a number of properties that had pre-COVID been slated for long-term development.

Since 2021, we have monetized the following property assets:

(i) Our non-income producing land holdings in Coachella, California (March 5, 2021) and Manukau, New Zealand (March 4, 2021);

(ii) Our Redyard ETC in Auburn, Australia (June 9, 2021);

(iii) Our Royal George Live Theatre complex in Chicago (June 30, 2021, slated for redevelopment, and now being redeveloped for residential purposes by the new owner);

(iv) The land underlying our cinema in Invercargill, New Zealand (August 30, 2021);

(v) Our non-competitive four-screen cinema in Maitland, Australia (October 25, 2023);

(vi) Our administrative office building in Culver City, California (February 23, 2024);

(vii) On January 31, 2025, our approximately 3.7 acre five-parcel assemblage in the entertainment center of Wellington, New Zealand, which includes the Courtenay Central building; and

(viii) Most recently, on May 21, 2025, our Cannon Park property in Townsville, Queensland, Australia.

These properties were identified for sale and sold for various reasons, such reasons have included without limitation

(i) our need for liquidity due to the circumstances referred to above,

(ii) the amount of capital required to materially increase their value in the immediate to mid-term,

(iii) with respect to certain assets, their immaterial or non-income producing nature, or

(iv) in the case of our Culver City office building, the property was not required for our operations because it exceeded our office size requirements. Since the sale of this office building, we have been working remotely in Southern California.

As of the date of this Report, we continue to own our approximately 23.9-acre Newberry Yard in Williamsport, Pennsylvania (also currently non-income producing), which is being held for sale.

United States:

44 Union Square Redevelopment (New York, N.Y.) – On January 27, 2022, we entered a long-term lease with Petco for the lower level, ground floor, and second floor of the building. Petco continues to be open for business and in occupancy on a full rent paying basis. We continue to explore a variety of possible office and non-office types of uses for the remainder of the building.

Minetta Lane Theatre (New York, N.Y.) – Audible has a license agreement with us through March 15, 2027. Audible presents productions and special live performance engagements on the Audible streaming service. During the first quarter of 2026, Audible presented a number of original productions, including The Disappear, Michael Cruz Kayne – What Else What Else, and the critically acclaimed play Sexual Misconduct of the Middle Class with Hugh Jackman, which played previously during the second quarter of 2025.

Orpheum Theatre (New York, N.Y.) – STOMP closed (after 30 years at our theatre) on January 8, 2023. Under our termination agreement with the producers of STOMP, we have certain rights to provide the New York City venue for any future production of that show. Following *STOMP’*s historic run at the Orpheum, the theatre has hosted a variety of productions including Rachel Bloom’s Death, Let Me Do My Show, Hamlet starring Eddie Izzard, The Big Gay Jamboree, The Jonathon Larson Project, Ginger Twinsies, and 11 to Midnight, which will run through next quarter.

Cinemas 1,2,3 (New York, N.Y.) – Currently operated as the Cinemas 1,2,3, we have historically treated this property as an asset held for long term development. However, in February 2026, we classified our Cinemas 1,2,3 property as held for sale.

The Reading Viaduct and Adjacent Properties (Philadelphia, Pennsylvania) – We continue work to realize the value of our real estate holdings in the City of Philadelphia. Our properties include the 0.7-mile-long Reading Viaduct – a raised railbed with bridges spanning the Callowhill and Poplar neighborhoods of Philadelphia and reaching Vine Street in the City’s Central Business District. The Reading Viaduct comprises over 6.0 acres of land, calculated inclusive of our contiguous properties and bridges arching over various public streets and sidewalks that connect our multiple parcels into one continuous land-holding, unimpaired by public thoroughfares. Representatives of the City of Philadelphia and the City Center District have expressed interest in acquiring the Reading Viaduct for park purposes as an extension to the existing Rail Park. According to its website, the City Center District is “a private-sector organization dedicated to making Center City Philadelphia clean, safe, and attractive, is committed to maintaining Center City’s competitive edge as a regional employment center, a quality place to live, and a premier regional destination for dining, shopping, and cultural attractions.” For more information, go to www.CenterCityPhila.org (http://www.CenterCityPhila.org). In December 2023, the City adopted an ordinance enabling the condemnation of the Reading Viaduct, and the transfer of the property to the City Center District for use as a public park. Furthering these initiatives, since railroad property (such as the Reading Viaduct) is exempt from condemnation by state governments so long as such property is subject to the jurisdiction and oversight of the Federal Surface Transportation Board (the “STB”), the City has petitioned the STB for a determination that the Reading Viaduct is no longer railroad property subject to STB jurisdiction and oversight (the “STB Proceeding”). On September 24, 2025 the STB ruled in the City’s favor, which determination we have appealed. We continue to believe that Reading Viaduct offers a substantial long-term opportunity for our Company through a potential sale, lease or joint venture of part or all of the property. Our properties adjoining our Reading Viaduct include various free-standing legal parcels that could be monetized separately and/or apart from the main body of our Reading Viaduct.

Australia:

Newmarket Village ETC (Brisbane, Australia) – We will continue to operate our Newmarket Village ETC, which includes Reading Cinemas as an anchor tenant. Our site includes a 23,218 square foot parcel adjacent to the center, improved with an office building. Over the next few years, we will be evaluating different development options for this space. The combined center and office building is 98% leased.

The Belmont Common, (Belmont, Perth, Australia) – The total gross leasable area of the Belmont Common is 60,117 square feet of net rentable land. Our multiplex cinema is the anchor tenant with six third-party tenants. The site is currently 100% leased.

On May 21, 2025, we sold our Cannon Park ETC in Townsville, Queensland, Australia, which consisted of our Cannon Park City Center and Cannon Park Discount Center properties, comprising approximately 9.4-acres, for a purchase price of $20.7 million (AU$32.0 million). We have retained a long-term lease of the cinema component of that property.

New Zealand:

On January 31, 2025, we sold all of our properties in Wellington, New Zealand (including the Courtenay Central building) to Prime Property Group (“Prime”) for a purchase price of $21.5 million (NZ$38.0 million). We understand that Prime intends to redevelop the properties, including a seismic upgrade of the existing Courtenay Central building. As a part of that sale transaction, we have entered into an Agreement to Lease for the cinema component of the to be upgraded Courtenay Central building.

On March 4, 2026, we signed a purchase and sale agreement to monetize our Napier, New Zealand property for a purchase price of NZ$2.5 million. The transaction is currently in its due diligence period.

For a complete list of our principal properties, see Part I, Item 2 – Properties under the heading “Investment and Development Property” in our 2025 Form 10-K.

Corporate Matters

Refer to Part I – Financial Information, Item 1 – Notes to Condensed Consolidated Financial Statements-- Note 18 – Stock-Based Compensation and Stock Repurchases for details regarding our stock repurchase program and Board, Executive and Employee stock-based remuneration programs.

Please refer to our 2025 Form 10-K for more details on our cinema and real estate segments.

RESULTS OF OPERATIONS

The table below summarizes the results of operations for each of our principal business segments along with the non-segment information for the quarter ended March 31, 2026, and March 31, 2025, respectively:

(Dollars in thousands)

Consolidated and Non-Segment Results:

First Quarter Net Results

Revenue

Revenue for the quarter ended March 31, 2026, increased by 12% (or $5.0 million), to $45.1 million, compared to the same period in the prior year, primarily due to (i) increased cinema revenues in the U.S. and Australia as a result of stronger overall movie slate in the first quarter of 2026 compared to the same period 2025 (despite a cinema closure in the U.S. in the second quarter of 2025), (ii) increased real estate revenues in the U.S., and (iii) the strengthening of the AU/NZ foreign exchange rates against the U.S. dollar. These increases in revenue were offset by (i) a decline in real estate rent revenues in Australia due to the sale of Cannon Park, and (ii) increased costs in Australia and New Zealand due to the above referenced strengthening of the AU/NZ foreign exchange rate.

Segment Operating Income/(Loss)

Our total segment operating income for the quarter ended March 31, 2026, increased by $2.9 million, from a loss of $2.9 million to net operating income of $48,000, due to improved box office revenue and Food & Beverage revenues in U.S. and Australia as a result of a stronger movie slate, which included Avatar: Fire and Ash, Project Hail Mary and Wuthering Heights.

During the first quarter of 2026, both the Australia and New Zealand dollars strengthened against the U.S. dollar. The average Australia dollar exchange rate against the U.S. dollar for the first quarter of 2026 increased by 10.8% compared to the same period in 2025. The average New Zealand dollar exchange rate against the U.S. dollar for the first quarter of 2026 increased by 3.9% compared to the same period in 2025.

Net Income/(Loss)

For the quarter ended March 31, 2026, net loss attributable to Reading International, Inc. increased by 71%, from a loss of $4.8 million to a loss of $8.1 million, when compared to the same period in the prior year primarily. This was primarily due to a $6.6 million gain on sale of our property assets in Wellington, New Zealand including Courtenay Central in the first quarter of 2025 (income not replicated in the first quarter of 2026), offset by improved segment results, decreased interest expense (a reduction of $514,000), and decreased general and administrative expense (a reduction of $293,000).

Income Tax Expense

Income tax benefit for the three months ended March 31, 2026, decreased by $0.3 million compared to the equivalent prior-year period. The change between 2026 and 2025 is primarily related to an increase in reserve for valuation allowance in 2026.

Business Segment Results

Cinema Exhibition

The following table details our cinema exhibition segment operating results for the quarter ended March 31, 2026, and March 31, 2025, respectively:

(Dollars in thousands)

37

First Quarter Results

Revenue

For the quarter ended March 31, 2026, cinema revenue increased by $5.1 million, to $41.5 million compared to the same period in the prior year. Despite the closure of a 14-screen U.S. cinema, this increase was primarily driven by (i) improved box office revenues in the U.S. and Australia due to a stronger movie slate including Avatar: Fire and Ash, Project Hail Mary and Wuthering Heights (ii) higher Food & Beverage revenues in our U.S. and Australia cinema circuit due to increased attendance combined with higher F&B SPP and (iii) the impact of the strengthening of the Australian and New Zealand dollars. Our results were partially offset by lower cinema revenues in New Zealand, which was adversely impacted by the closure of an underperforming cinema in the first quarter of 2025.

Cinema Exhibition Segment Operating Income/(Loss)

Cinema exhibition segment operating loss for the quarter ended March 31, 2026, improved by $3.1 million, from a loss of $4.5 million to a loss of $1.3 million when compared to the same period in the prior year. The improvement in segment operating loss is due to (i) increased cinema revenues in all three categories in the U.S. and Australia resulting from a better movie slate and higher attendance (ii) and a decrease in depreciation and amortization globally, partially offset by an increase in operating expenses in Australia.

Operating Expenses

Operating expenses for the quarter ended March 31, 2026, increased by $2.2 million to $39.8 million, compared to $37.7 million in the same period in the prior year, due to due to higher attendance in the U.S. and Australia, which resulted in higher film rent, Food and Beverage cost, and other variable costs, plus higher occupancy cost globally. Furthermore, our expenses increased generally in U.S. dollar terms with the strengthening of the Australian and New Zealand dollars. This was offset by the savings in labor, cleaning and maintenance, and other operating expenses in the U.S. and a decrease in operating expense in New Zealand partly due to the closure of an underperforming cinema.

Depreciation, amortization, impairment, general and administrative expense

Depreciation, amortization, impairment, and general and administrative expenses for the quarter ended March 31, 2026, decreased by $0.2 million, to $3.0 million, compared to the same period in the prior year.

Real Estate

The following table details our real estate segment operating results for the quarter ended March 31, 2026 and March 31, 2025, respectively:

(Dollars in thousands)

First Quarter Results

Revenue

Real estate rent revenue for the quarter ended March 31, 2026, decreased by $0.2 million to $4.6 million, compared to the same period in the prior year primarily due to loss of Australia and New Zealand property rental income from the monetization of Wellington property assets in New Zealand in January 2025, and Cannon Park ETC in Townsville, Queensland, Australia in May 2025. This is partially offset by higher Live Theatre rental and ancillary income, and the impact of the strengthening of the Australian and New Zealand dollars.

Real Estate Segment Income/(Loss)

Real estate segment operating income for the quarter ended March 31, 2026 decreased by $0.2 million to $1.4 million, compared to $1.6 million in the same period in the prior year. This decrease was due to a reduction in Australia and New Zealand rental income and an increase in the U.S. operating expense, partially offset by an increase in U.S. Live Theatre rental and ancillary income and a reduction in Australia and New Zealand operating expenses.

LIQUIDITY AND CAPITAL RESOURCES

Our Financing Strategy

Prior to the COVID-19 pandemic, we used cash generated from operations and other excess cash, to the extent not needed, to fund capital investments contemplated by our business plan, in order to pay down our loans and credit facilities. This provided us with availability under our loan facilities for future use and thereby, reduced interest charges. On a periodic basis, we reviewed the maturities of our borrowing arrangements and negotiated renewals and extensions where necessary.

However, disruptions to our cinema cash flow caused by the COVID-19 pandemic, the 2023 Hollywood Strikes and periods of weak theatrical releases, augmented by changing consumer habits due to each of the foregoing, and continuing macroeconomic headwinds, have made it necessary for us to defer capital expenditures and to rely on the proceeds of asset monetizations to cover our costs of operations, pay interest, and pay down debt.

Our NAB financing requires that our Company comply with certain covenants. Furthermore, our Company’s use of loan funds from NAB is limited due to restrictions on the expatriation of funds from Australia to the United States. We believe that our lenders understand that the continuing effects of the factors discussed in the preceding paragraph, and various economic factors, are not of our own making, that we are taking aggressive steps to manage these industry headwinds, and that, generally speaking, our relationships with our lenders are positive.

While our Company believes that global cinema business is recovering, we still face macroeconomic pressures such as high interest rates, inflation, supply chain issues and increased film rent (particularly on popular releases), labor, and operating costs, many of which are beyond our control. We have taken a variety of steps across our various operating jurisdictions to reduce our spending, including, without limitation, deferring non-essential capital expenditures, deferring certain operational expenses, renegotiating occupancy arrangements, closing certain unprofitable cinemas, deferring compensation expenses, and eliminating certain travel and entertainment expenses. We closely monitor our debt maturity dates, and where appropriate, we may seek necessary term extensions. Notably, on November 12, 2025, we extended our NAB facility by 5 years and on November 13, 2025, and on March 30, 2026, in anticipation of the upcoming scheduled NAB debt repayments, NAB has agreed to reduce our minimum liquidity requirement for a limited defined period in 2026. On February 6, 2026, we executed an agreement to defer a $500,000 principal payment related to our 44 Union Square loan, which we then settled on March 13, 2026. On February 27, 2026, we modified our Bank of America facility to modify current principal repayments. The maturity date and interest rate remain unchanged. As of March 31, 2026, we have debt of $35.5 million coming due in the next 12 months. While the Central Banks of the three countries in which we do business have reduced interest rates from recent highs, rates remain elevated when compared to pre-pandemic periods.

As discussed elsewhere in this Report, we believe that cinema cash flow for 2026 will be stronger than in recent periods. However, if our Company is unable to generate sufficient cash flow in the upcoming months, we will be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, monetizing additional assets, restructuring our debt and/or our lease obligations or finding additional sources of liquidity. In May 2025, we sold our Cannon Park property assets in Australia for $20.7 million (AU$32.0 million) and repaid our $12.9 million (AU$20.0 million) Bridge Facility. In January 2025, we sold our Wellington property assets in New Zealand for $21.5 million (NZ$38.0 million) and repaid our $10.5 million (NZ$18.8 million) loan to Westpac and paid down $6.1 million to Bank of America.

In early 2024, understanding our reduced need for administrative space during the shift to remote-working, we decreased our overall general and administrative expense by selling our administrative building in Culver City, California, freeing up cash of approximately $1.3 million (after paying off our mortgage, brokerage commissions and transactional fees). We are currently reviewing our need for replacement of office space.

On March 4, 2026, we signed a purchase and sale agreement to monetize our Napier, New Zealand property. The transaction is in its due diligence period. Also, our Newberry Yard property in Williamsport, Pennsylvania continues to be listed as an asset held for sale. This property was historically used as a rail yard, and, accordingly, improved with tracks and switches and has direct access to the area’s rail system. Certain issues as to the location of various railroad rights of way have now been resolved on what we believe to be favorable terms and terms which enhanced the value of the property. Given the specialized nature of this property and the relatively limited carrying costs (principally property taxes), our disposition strategy is to wait for a strategic buyer who will place value on the nature of our rail yard property and its access to nationwide rail systems.

In December 2025 we wound up our relationship with Sutton Hill Associates (“SHA”) to among other things, obtain complete legal ownership of our Cinemas 1,2,3 property. Our 2025 Form 10-K discusses the mechanics of this transaction. In February 2026 we retained Newmark & Company Real Estate, Inc to monetize the property. While no assurances can be given, we believe it reasonable to assume that these assets can be monetized before the end of the third quarter of this year. We assume that any buyer will be contemplating the redevelopment of the property for residential purposes (which we believe to be the highest and best use of the property and which we do not currently have the capital to pursue) and have advised our brokers that we are prepared to remain in occupancy during the development period. The only debt on our Cinemas 1,2,3 property is a $19.7 million first mortgage.

If we cannot obtain sufficient net proceeds from the disposition of these assets (or determine to defer disposition due to unfavorable market conditions), in addition to other strategies, we may look to monetize other real estate assets.

For more information about our borrowings, please refer to Part I – Financial Information, Item 1 – Notes to Condensed Consolidated Financial Statements - Note 13 – Borrowings. For more information about our efforts to manage our liquidity issues, see Part I - Financial Information, Item 1 – Notes to Condensed Consolidated Financial Statements – Note 2 – Liquidity and Impairment Assessment.

The changes in cash and cash equivalents for the quarter ended March 31, 2026, and March 31, 2025, respectively, are discussed as follows:

(Dollars in thousands)

Operating activities

Cash used in operating activities for the quarter ended March 31, 2026, decreased by $5.2 million, to $2.5 million compared to cash used in the same period in prior year of $7.7 million. This was primarily driven by a decrease in net operating loss of $2.8 million and increase in net payables of $2.5 million.

Investing activities

Cash used in investing activities during the quarter ended March 31, 2026 was $0.5 million, compared to cash provided in the same prior year period of $17.9 million. This was due to proceeds from sale of our Wellington properties, New Zealand in the first quarter of 2025.

Financing activities

Cash used in financing activities for the quarter months ended March 31, 2026, decreased by $14.6 million, to $2.3 million compared to cash used by financing activities of $16.9 million in the same prior year period. This was primarily due to pay off of our $10.5 million loan to Westpac and a $6.1 million repayment to Bank of America, following the sale of our Wellington properties, New Zealand in the first quarter of 2025.

The table below presents the changes in our total available resources (cash and borrowings), debt-to-equity ratio, working capital, and other relevant information addressing our liquidity for the three months ended March 31, 2026, and preceding four years:

($ in thousands)

(1) Our working capital is reported as a deficit, as we receive revenue from our cinema business ahead of the time that we have to pay our associated liabilities. We use the money we receive to pay down our borrowings in the first instance.

As of March 31, 2026, we had $5.5 million in unrestricted cash and cash equivalents compared to $10.5 million on December 31, 2025. On March 31, 2026, our total outstanding borrowings were $184.6 million compared to $185.1 million on December 31, 2025.

We manage our cash, investments, and capital structure to meet the short-term and long-term obligations of our business, while maintaining financial flexibility and liquidity. We forecast, analyze, and monitor our cash flows to enable investment and financing within the overall constraints of our financial strategy. In the past, we used cash generated from operations and other excess cash to the extent not needed for any capital expenditures, to pay down our loans and credit facilities providing us some flexibility on our available loan facilities for future use and thereby, reducing interest charges.

The U.S. dollar value of our Australian borrowings is subject to changes in foreign exchange rates, which may or may not be material depending on currency fluctuations. However, since we intend to repay this debt using Australian revenues, we do not consider such fluctuations material to our overall strategy.

CONTRACTUAL OBLIGATIONS, COMMITMENTS AND CONTINGENCIES

The following table provides information with respect to the maturities and scheduled principal repayments of our recorded contractual obligations and certain of our commitments and contingencies, either recorded or off-balance sheet, as of March 31, 2026:

(Dollars in thousands)

(1) Information is presented gross of deferred financing costs.

(2) Estimated interest on debt is based on the anticipated loan balances for future periods and current applicable interest rates.

Litigation

We are currently involved in certain legal proceedings and, as required, have accrued estimates of probable and estimable losses for the resolution of these claims.

Please refer to Part I, Item 3 – Legal Proceedings in our 2025 Form 10-K for more information. There have been no material changes to our litigation since our 2025 Form 10-K, except as set forth in Notes to Condensed Consolidated Financial Statements - Note 16 – Commitments and Contingencies included herein in Part I – Financial Information, Item 1 – Financial Statements on this Quarterly Report on Form 10-Q. This note sets out our litigation accounting policies.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements or obligations (including contingent obligations) that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in the financial condition, revenue or expense, results of operations, liquidity, capital expenditures or capital resources.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We believe that the application of the following accounting policies requires significant judgments and estimates in the preparation of our Condensed Consolidated Financial Statements and hence, are critical to our business operations and the understanding of our financial results:

(i) Impairment of Long-lived Assets (other than Goodwill and Intangible Assets with indefinite lives) – we evaluate our long-lived assets and finite-lived intangible assets using historical and projected data of cash flows as our primary indicator of potential impairment and we take into consideration the seasonality of our business. If the sum of the estimated, undiscounted future cash flows is less than the carrying amount of the asset, then an impairment is recognized for the amount by which the carrying value of the asset exceeds its estimated fair value based on an appraisal or a discounted cash flow calculation. For certain non-income producing properties or for those assets with no consistent historical or projected cash flows, we obtain appraisals or other evidence to evaluate whether there are impairment indicators for these assets.

No impairment losses were recorded for long-lived and finite-lived intangible assets for the quarter ended March 31, 2026.

(ii) Impairment of Goodwill and Intangible Assets with indefinite lives – goodwill and intangible assets with indefinite useful lives are not amortized, but instead, tested for impairment at least annually on a reporting unit basis. The impairment evaluation is based on the present value of estimated future cash flows of each reporting unit plus the expected terminal value. There are significant assumptions and estimates used in determining the future cash flows and terminal value. The most significant assumptions include our cost of debt and cost of equity assumptions that comprise the weighted average cost of capital for each reporting unit. Accordingly, actual results could vary materially from such estimates.

No impairment losses were recorded for goodwill and indefinite-lived intangible assets for the quarter ended March 31, 2026.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Our statements in this quarterly report, including the documents incorporated herein by reference, contain a variety of forward-looking statements as defined by the Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "may," "will," "expect," "believe," "intend," "future," and "anticipate" and similar references to future periods. Examples of forward-looking statements include, among others, our beliefs regarding the impact of the 2023 Hollywood Strikes on the cinema business; our expected operating results, including our ultimate return to pre-pandemic type results; our expectations regarding the recovery and future of the cinema exhibition industry, including the strength of movies anticipated for release in the future; our expectations regarding patrons returning to our theatres and continuing to use discretionary funds on entertainment outside of the home; our beliefs regarding the impact of our cinema-anchored real estate developments; our beliefs regarding the success of our diversified business strategy; our belief regarding the attractiveness of 44 Union Square to potential tenants and ability to lease space on acceptable terms; our ability to complete the sale of our Cinemas 1,2,3 property; our expectations regarding the effects of our enhanced F&B offerings on our operating results; our expectations regarding our ability to monetize our assets on terms acceptable to us; our expectations regarding credit facility covenant compliance and our ability to continue to obtain necessary covenant waivers and loan extensions on terms acceptable to us; and our expectations of our liquidity and capital requirements and the allocation of funds.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

With respect to our cinema and Live Theatre operations:

reduced consumer demand due to inflationary pressures and other macroeconomic pressures;

the adverse continuing effects of external events of the past pandemic and the 2023 Hollywood strikes on our Company’s results from operations, liquidity, cash flows, financial condition, and access to credit markets;

a change in consumer behavior in favor of alternative forms or mediums of entertainment, and limited availability of wide motion picture release content;

reduction in operating margins (or negative operating margins) due to (i) decreased attendance, (ii) limited availability of wide release content, and (iii) increased operating expenses;

competition from cinema operators who have successfully used debtor laws to reduce their debt and/or rent exposure;

the uncertainty as to the scope and extent of our government’s potential responses to future outbreak of infectious diseases;

the number and attractiveness to moviegoers of the films released in future periods, and potential changes in release dates for motion pictures;

the lack of availability of films in the short- or long-term as a result of (i) major film distributors releasing scheduled theatrical films on alternative channels; (ii) disruptions of film production;

the amount of money spent by film distributors to promote their motion pictures;

the licensing fees and terms required by film distributors from motion picture exhibitors in order to exhibit their films;

the comparative attractiveness of motion pictures as a source of entertainment and willingness and/or ability of consumers (i) to spend their dollars on entertainment and (ii) to spend their entertainment dollars on movies in an outside-the-home environment;

the extent to which we encounter competition from other cinema exhibitors, from other sources of outside-the-home entertainment, and from inside-the-home entertainment options, such as “home cinemas” and competitive film product distribution technology, such as, streaming, cable, satellite broadcast, and video on demand platforms;

our ability to continue to obtain, to the extent needed, waivers or other financial accommodations from our lenders and landlords;

the impact of major movies being released directly to one of the multitudes of streaming services available;

the impact of certain competitors’ subscription or advance pay programs;

the failure of our new initiatives to gain significant customer acceptance and use or to generate meaningful profits;

the cost and impact of improvements to our cinemas, such as improved seating, enhanced F&B offerings, and other improvements;

the ability to negotiate favorable rent abatement, deferral and repayment terms with our landlords (which may include lenders who have foreclosed on the collateral held by our prior landlords);

disruptions during cinema improvements;

in the U.S., the impact of the termination and phase-out of the so called “Paramount Decree;”

the risk of damage and/or disruption of cinema businesses from earthquakes as certain of our operations are in geologically active areas;

the impact of protests, demonstrations, and civil unrest on, among other things, government policy, consumer willingness to go to the movies;

labor shortages and increased labor costs related to such shortages and to increasingly costly labor laws and regulations applicable to part time non-exempt workers. Disruptions in film supply and film marketing due to the 2023 Hollywood Strikes; and

competition from a newly restructured Regal, which may have lower occupancy costs than our cinemas.

With respect to our real estate development and operation activities:

the increased costs of wages, supplies, services and other development expenses from inflation;

the impact on tenants from inflationary pressures;

uncertainty as to governmental responses to infectious diseases;

the rental rates and capitalization rates applicable to the markets in which we operate and the quality of properties that we own;

the ability to negotiate and execute lease agreements with material tenants;

the extent to which we can obtain on a timely basis the various land use approvals and entitlements needed to develop our properties;

the risks and uncertainties associated with real estate development;

the availability and cost of labor and materials;

the ability to obtain all permits to construct improvements;

the ability to finance improvements, including, but not limited to increased cost of borrowing and tightened lender credit policies;

the disruptions to our business from construction and/or renovations;

the possibility of construction delays, work stoppage, and material shortage;

competition for development sites and tenants;

environmental remediation issues;

the extent to which our cinemas can continue to serve as an anchor tenant that will, in turn, be influenced by the same factors as will influence generally the results of our cinema operations;

the increased depreciation and amortization expense as construction projects transition to leased real property;

the ability to negotiate and execute joint venture opportunities and relationships;

the risk of damage and/or disruption of real estate businesses from earthquakes as certain of our operations are in geologically active areas;

the disruptions or reductions in the utilization of entertainment, shopping and hospitality venues, as well as in our operations, due to pandemics, epidemics, widespread health emergencies, or outbreaks of infectious diseases, or to changing consumer tastes and habits; and

the impact of protests, demonstrations, civil unrest on government policy, consumer willingness to visit shopping centers.

With respect to our operations generally as an international company involved in both the development and operation of cinemas and the development and operation of real estate and previously engaged for many years in the railroad business in the United States:

our ability to renew, extend, renegotiate or replace our loans that mature in 2026 and beyond, and the impact of increasing interest rates;

our ability to grow our Company and provide value to our stockholders;

our ongoing access to borrowed funds and capital and the interest that must be paid on that debt and the returns that must be paid on such capital, and our ability to borrow funds to help cover the cessation of cash flows we experienced during and following the COVID-19 pandemic;

our ability to reallocate funds among jurisdictions to meet short-term liquidity needs;

the relative values of the currency used in the countries in which we operate;

changes in government regulation, including by way of example, the costs resulting from the requirements of Sarbanes-Oxley and other increased regulatory requirements;

our labor relations and costs of labor (including future government requirements with respect to minimum wages, shift scheduling, the use of consultants, pension liabilities, disability insurance and health coverage, and vacations and leave);

our exposure from time to time to legal claims and to uninsurable risks, such as those related to our historic railroad operations, including potential environmental claims and health-related claims relating to alleged exposure to asbestos or other substances now or in the future recognized as being possible causes of cancer or other health related problems, and class actions and private attorney general wage and hour and/or safe workplace-based claims;

our exposure to cybersecurity risks, including misappropriation of customer information or other breaches of information security;

the impact of future major outbreaks of contagious diseases;

the availability of employees and/or their ability or willingness to conduct work under any revised work environment protocols;

the increased risks related to employee matters, including increased employment litigation and claims relating to terminations or furloughs caused by cinema and ETC closures;

our ability to generate significant cash flow from operations if our cinemas and/or ETCs continue to experience demand at levels significantly lower than historical levels, which could lead to a substantial increase in indebtedness and negatively impact our ability to comply with the financial covenants, if applicable, in our debt agreements;

our ability to comply with credit facility covenants and our ability to obtain necessary covenant waivers and necessary credit facility amendments;

changes in future effective tax rates and the results of currently ongoing and future potential audits by taxing authorities having jurisdiction over our various companies;

inflationary pressures on labor and supplies, and supply chain disruptions;

changes in applicable accounting policies and practices;

changes in future effective tax rates and the results of currently ongoing and future potential audits by taxing authorities having jurisdiction over our various companies;

the impact of the conflict events occurring in Eastern Europe and the threats of potential conflicts in the Asia-Pacific region;

the impact of the conflict events occurring in Israel and the threats of other potential conflicts in the Middle East, and

the impact of tariff regulations enforced by the U.S. against various nations.

The above list is not necessarily exhaustive, as business is by definition unpredictable and risky, and subject to influence by numerous factors outside of our control, such as changes in government regulation or policy, competition, interest rates, supply, technological innovation, changes in consumer taste, weather, earthquakes, pandemics, and the extent to which consumers in our markets have the economic wherewithal to spend money on beyond-the-home entertainment. Refer to Item 1A - Risk Factors, as well as the risk factors set forth in any other filings made under the Securities Act of 1934, as amended, including any of our Quarterly Reports on Form 10-Q, for more information.

Given the variety and unpredictability of the factors that will ultimately influence our businesses and our results of operation, no guarantees can be given that any of our forward-looking statements will ultimately prove to be correct. Actual results will undoubtedly vary and there is no guarantee as to how our securities will perform either when considered in isolation or when compared to other securities or investment opportunities.

Forward-looking statements made by us in this quarter report are based only on information currently available to us and are current only as of the date of this Quarterly Report on Form 10-Q for the period ended March 31, 2026. We undertake no obligation to publicly update or to revise any of our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law. Accordingly, you should always note the date to which our forward-looking statements speak.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Company’s reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the above-mentioned new controls, and our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based upon that evaluation, we concluded that, as of March 31, 2026, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the first quarter ended March 31, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the risk factors we previously disclosed in Item 1A of our 2025 Form 10-K.

We encourage investors to review the risks and uncertainties relating to our business disclosed under the heading Risk Factors or otherwise in the 2025 Form 10-K, as well as those contained in Part I – Forward-Looking Statements thereof, as revised or supplemented by our Quarterly Reports filed with the SEC since the filing of the 2025 Form 10-K.