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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2024 or

¨   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ______

Commission File No. 1-8625

READING INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including Area Code: (213) 235-2240

Securities Registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No þ

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for shorter period than the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.

Large Accelerated Filer ¨ Accelerated Filer ¨ Non-Accelerated Filer þ Smaller Reporting Company þ Emerging Growth Company ¨

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. 

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o

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

As of June 28, 2024 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the registrant's voting and non-voting common equity held by non-affiliates based on the closing price on that date as reported by the Nasdaq Stock Market was $37,083,486. As of March 28, 2025, there were 20,603,203 shares of class A non-voting common stock, par value $0.01 per share and 1,680,590 shares of class B voting common stock, par value $0.01 per share, outstanding.

Documents Incorporated by Reference

Certain portions of the registrant’s definitive Proxy Statement for the 2025 annual meeting of the stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year ended December 31, 2024 are incorporated by reference into Part III of this Annual Report on Form 10-K.
‎

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READING INTERNATIONAL, INC.

ANNUAL REPORT ON FORM 10-K

YEAR ENDED DECEMBER 31, 2024

INDEX

 

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PART I

Item 1 – Our Business

GENERAL

Reading International, Inc. (“RDI” and collectively with our consolidated subsidiaries and corporate predecessors, our “Company,” “Reading,” “we,” “us,” or “our”) was incorporated in 1999 incident to our reincorporation in the State of Nevada. Our class A non-voting common stock (“Class A Stock”) and class B voting common stock (“Class B Stock”) are listed for trading on the NASDAQ Capital Market (Nasdaq-CM) under the symbols RDI and RDIB, respectively. Our Corporate Headquarters is at 189 Second Avenue, Suite 2S, New York, New York, 10003.

Our corporate website address is www.ReadingRDI.com. We provide, free of charge on our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we have electronically filed such material with, or furnished it to, the Securities and Exchange Commission (the “SEC”) (www.sec.gov). The contents of our Company website are not incorporated into this report. Our corporate governance charters for our Audit and Conflicts Committee and Compensation and Stock Options Committee are available on our website.

BUSINESS DESCRIPTION

Synergistic Diversification and Branding

We are an internationally diversified company focused on the development, ownership and operation of entertainment and real property assets in three jurisdictions: (i) United States (“U.S.”), (ii) Australia, and (iii) New Zealand. We group our businesses in two operating segments, which are owned and operated through various operating subsidiaries:

Theatrical Motion Picture Exhibition (“Cinema Exhibition”), through as of the date of this 2024 Annual Report, our 60 cinemas.

Real Estate, including real estate development and the rental or licensing of retail, commercial and live theatre assets comprised, as of the date of this 2024 Annual Report, of approximately 9,700,000 square feet of land and approximately 670,000 square feet of net rentable area.

Impacts on our Business due to the 2023 Hollywood strikes, the dramatic Interest Rate Rise and Increased Operating Costs, together with our Company’s Responses

Since the COVID-19 pandemic began in March 2020, our business has faced a variety of headwinds. Fortunately, however, recently released movies, such as Inside Out 2, Deadpool & Wolverine, Sonic the Hedgehog, Mufasa: The Lion King and Moana 2 and, and what we believe to be a strong slate of film through the end of 2025, as well as the renewed recognition by the motion picture industry of the importance of a theatrical release window, make us optimistic for the future of the cinema business. Accordingly, we are continuing to support our investment in the beyond the home entertainment industry, to maintain our key cinemas and live theatres, to improve the amenities offered, and to protect those of our real estate assets which we believe offer the most substantial potential for preserving and building stockholder value.

The COVID-19 pandemic, while largely behind us now, had a significant impact on both the global economy and the cinema industry, affecting our operations and depleting our liquidity. In March 2020, government regulations mandated the temporary closure of our cinemas and live theaters across the United States, Australia, and New Zealand. This led to an immediate loss of cinema revenue and income, compounded by a shift in consumer behavior as people became more hesitant to engage in public entertainment. While recovering from the aftermath of the COVID-19, in 2023, our cinema operations faced unexpected disruptions and impacts due to the strikes by the Writers Guild of America (WGA) and the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA), stemming from labor disputes with the Alliance of Motion Picture and Television Producers (AMPTP), known as the “2023 Hollywood strikes.” Additionally, between March 2022 and July 2023, the Federal Reserve raised the Federal Funds rate from 0.25% to 5.5%, marking the fastest interest rate hike in U.S. history. This in turn led to an increase in our interest expense. 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-Covid periods..

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Additionally, over the last two years, our global cinema divisions have experienced (i) increased labor costs which have been legislated post-COVID-19 pandemic and (ii) increases in our cost of goods sold, utilities, and insurance. The legislatively mandated increased labor costs have impacted not only hourly compensation rates, but also leave time, the calculation of overtime pay, and the amount of administration and record keeping required to maintain and to document regulatory compliance. Our Company has, to some extent, balanced these overall increased expenses with strategic increases in ticket and food and beverage prices. However, our ability to pass on these costs is limited by our need to not increase prices to the extent that they present cost barriers and deter the generation of revenues. Furthermore, due to the fact that film licensing fees are fixed at a percentage of gross box office, typically more than a majority of any increase in ticket prices passes on directly to the film distributor and cannot be used by exhibitors to offset other increasing costs.

To address our liquidity challenges created by the above headwinds, our Company implemented a series of measures, including, without limitation, the following:

(i)While typically leasing back any cinema component on what we believe to be beneficial terms, monetizing eight real estate assets

from 2021 through the end of the first quarter of 2025;

(ii)Negotiating loan term extensions and covenant waivers with various lenders;

(iii)Closing unprofitable cinemas: in the U.S. one in 2022, three in 2023, and one in 2024, and in New Zealand one in 2023;

(iv)Negotiating rent abatements and deferrals with various of our cinema landlords; and

(v)Implementing cash preservation strategies such as delaying non-essential capital expenditures.

However, where we have been able to negotiate rent deferrals, we still face the burden of paying back those deferrals which totaled $9.6 million as of December 31, 2024. Also, we need to address the deferral of capital expenditures related to certain cinemas that may not have the level of amenity that we would desire and, in some cases, we believe that this has adversely impacted our revenues. Our loan extension and covenant waivers have, in some cases, necessitated our agreement to pay increased interest margins.

Due to our status as a public company, together with only three other U.S. publicly traded exhibitors (Marcus, Cinemark, and AMC), we were excluded from certain U.S. federal pandemic relief programs (i.e. Payroll Protection Program and U.S. Shuttered Venue Grant Program). This exclusion exacerbated our financial strain compared to other U.S. exhibitors. In some markets, we also face competition from competitors who have been able to make use of U.S. bankruptcy laws to renegotiate their lease and other liabilities.

In the post-COVID landscape, we have focused on key strategic initiatives to improve operational margins. Each of our global cinema divisions achieved a record-high annual Food & Beverage per capita in 2024. Additionally, all of our domestic cinemas and 71% of our cinemas in Australia and New Zealand now hold liquor licenses. The rollout of our mobile ticketing and food and beverage apps has helped us boost Food & Beverage revenues while reducing employee hours, without in our view negatively impacting service quality. In many locations, we have also eliminated the need for a physical box office. Furthermore, we are continuously monitoring and, where appropriate, adjusting our hours of operation to better align with moviegoer demand.

Our real estate monetizations, beginning in 2021 and continuing through the date of this 2024 Annual Report, have produced $156.1 million in net proceeds, which permitted us to pay down $82.2 million in debt to banks and another institutional lender and to invest approximately $35 million in capital improvements, while over the same period sustaining our operations and allowing us to retain our key employees and maintain our workforce. 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 office space and believe that the disposition of this asset will save us approximately $2.0 million in operating and holding costs for year 2025.

Additional cash will likely be required to maintain our liquidity through 2026, as the movie release schedule supporting the global cinema business normalizes following the 2023 Hollywood strikes and we pay back deferred rents and pay down interest bearing debt. In addition to working with our existing lenders for financing relief, we believe we can reasonably look to the monetization of certain additional real estate assets to provide a source of funding. While no assurances can be given as to the amounts that ultimately could be raised from the monetization of such assets, we believe that based on independent appraisals and our track record of successful monetizations, we can raise sufficient funding to provide our Company the additional liquidity that we anticipate will be needed for 2025 and 2026. In March, 2025, we entered into a call option agreement to sell our properties in Townsville, Queensland, Australia for A$ 32 million, which is in its due diligence period. Those assets have a book value of $17.4 million. For local tax reasons, property transaction which include any buyer due diligence rights are structured as “option agreements.” While no assurances can be given, the option, if exercised, contemplates settlement in mid-April and the option holder has made a refundable deposit of A$ 1.6 million. We would be retaining a leasehold estate in our cinema at that location.

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Going forward, our focus with respect to maintaining our liquidity will continue to be to look to the monetization of real estate assets that, in our judgment and given our capital resources, will not likely provide core long-term growth opportunities for our stockholders into the future.

Since 2020, our ability to raise additional liquidity has allowed us to navigate the ongoing challenges in the cinema industry. As we begin to transition away from certain adverse environmental factors affecting us (such as the Pandemic, and the 2023 Hollywood strikes), we are seeing a strengthening of our cinema revenues. Except for the decline in 2024 due to the 2023 Hollywood strikes, overall revenues have shown an upward trend since 2020. Our total revenues for the years ended December 31, 2020, 2021, 2022, 2023, and 2024 were $77.9 million, $139.1 million, $203.1 million, $222.7 million, and, dipping somewhat in 2024 to $210.5 million, respectively, compared to $276.8 million for the year ended December 31, 2019, the last pre-pandemic year. While 2024 saw a slight decrease in revenues, reflecting what we believe to have been the carryover from the interruption in production and release schedules caused by the strikes, there has been a clear upward trajectory since 2020, reflecting the ongoing adaptation of our business strategy and the evolving market dynamics.

After navigating the fallout from an unprecedented pandemic, the WGA went on strike from May 2, 2023, until September 27, 2023, followed by the SAG strike, which began on July 14, 2023, and lasted until November 9, 2023. This marked the first time in 63 years that both the WGA and SAG were on strike simultaneously. The strikes significantly impacted the first two quarters of 2024, with many major films facing delays in production and promotional activities. As a result, the box office performances of films released during this period were below expectations, particularly for cast-driven movies that lacked the typical promotional push from actors. For example, no major releases were scheduled for January 26, 2024, and only Argylle opened the following weekend. This strain on the industry led to 2024 losses of up to $2 billion, according to The Hollywood Reporter. Major films like Captain America: Brave New World, Mission: Impossible 8, and Avatar sequels were delayed to 2025, while others pushed into late 2024 would not contribute materially to grosses until 2025. Although this was the case, the last two quarters of 2024 saw a notable recovery, driven by major box office hits such as Wicked Part 1, Deadpool & Wolverine, Inside Out 2, and many others. These successful releases helped drive stronger audience engagement and contributed to a more robust second half of the year, improving the overall industry outlook despite the earlier setbacks.

Despite the challenges we have faced and continue to face, we feel confident that the 2023 Hollywood strikes and their aftermath will only have a short term impact on our cinema business with the attendance and revenues growing in the last two quarters for 2024. We believe that our Company will overcome the obstacles that may lie ahead. As of the date of this 2024 Annual Report, audience levels are rebounding, and the box office success of certain films in the first half of 2024 such as Inside Out 2, Dune: Part Two, and Kung Fu Panda 4, together with the overall successful second half of 2024, which included highly anticipated releases such as, Deadpool & Wolverine, Despicable Me 4, Beetlejuice, Beetlejuice, Moana 2, Wicked and Gladiator 2, reaffirm our confidence that moviegoers remain enthusiastic about the cinematic experience. That second half of 2024 supports our expectation and enthusiasm that the full year of 2025 will deliver a stronger box office than 2024, which includes releases previously slated for 2024 but got bumped to 2025.

While our cinemas are continuing to recover from the pandemic and the 2023 Hollywood strikes, our real estate business exhibited greater resilience. Most of our tenants in Australia continued operations and met rental obligations, providing a stable revenue stream. As of the date of this Report, in Australia and New Zealand, our third party (or non-cinema) rental space is 96% leased on a full rent paying basis.

With regard to our architectural award winning 44 Union Square redevelopment project in New York City, in January 2022 we secured a long-term lease for the cellar, ground floor, and second floor of the building with an affiliate of Petco Health and Wellness Company, Inc. (NASDAQ: WOOF), a leading pet health and wellness company (“Petco”), which is in the premises on a full rent cash paying basis. 

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OUR COMMERCIAL BRANDS

Set forth below is a brief description of the various brands under which we organize our business operations:

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Our business plan has been to coordinate cinema-based entertainment and real estate to create a mutually beneficial partnership. Our historically strong and consistent cash flows from our cinemas have, prior to the pandemic and the 2023 Hollywood strikes, enabled us to be strategic and proactive in acquiring and holding long-term real estate assets, including non-income producing land, fueling our real estate development endeavors. However, while we believe our cinema operations to be on the rebound, the uncertainty as to the current U.S. cinema cash flows has required that we continue to constrain our activities on both the cinema and real estate sides of our business.

To date, our real estate portfolio has provided us with a good foundation and has helped us weather unforeseeable events. Historically, this has given us financial leverage providing us with a collateral base to support comparatively long term and stable real estate-based borrowing. More specifically, the combination of these two segments can provide a variety of business advantages. Over the past four years of the COVID-19 pandemic, the 2023 Hollywood strikes, and spiking interest rates, our real estate base has helped us to sustain our key operations and assets. We have monetized approximately $159.3 million in real estate assets over this period, which we have used to pay down debt, sustain operations, pay interest and satisfy capital commitments. We anticipate that strategic monetization of real estate assets which, in our view, do not offer significant opportunities for future enhancement given our current capital situation, will sustain us while the cinema industry returns to normal and while, in the meantime, we pay back rent deferrals and reduce interest bearing debt.

Our hybrid, multi-country strategy emphasizes diversification, and the building of long-term hard asset values. We believe that this business strategy is proving its worth as we have progressed through and are emerging from the aftermath of the COVID-19 pandemic 2023 Hollywood strikes and recent spikes in interest rates.

As of December 31, 2024, our principal tangible assets included:

interests in 60 cinemas comprising of 486 screens;

own our 44 Union Square property in Manhattan. The cellar, ground floor, and second floor of the building are fully leased to Petco, which is in occupancy of its premises on a full rent paying basis;

own and operate four Entertainment Themed Centers (“ETCs”) known as Newmarket Village (in a suburb of Brisbane), The Belmont Common (in a suburb of Perth), and Cannon Park (in Townsville) in Australia (currently being held for sale), and Courtenay Central (in Wellington) in New Zealand, which was sold on January 31, 2025. (We have entered into an Agreement to Lease for the cinema at that site);

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

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

own a 75% managing member interest in a limited liability company which in turn owns the fee interest in and improvements constituting our Cinemas 1,2,3 located in Manhattan;

own an approximately 23.9-acre rail access industrial property in Williamsport, Pennsylvania, which is currently being held for sale;

have exercised our option to purchase the improvements and ground lease comprising our Village East by Angelika cinema and headquarters building at 189 Second Avenue in Manhattan; and own approximately 201-acres principally in Pennsylvania from our legacy railroad business, including the Reading Viaduct, comprising over 6 acres in downtown Philadelphia; and

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held cash and cash equivalents, aggregating $12.3 million

 

For a breakdown of our real estate assets, please refer to Part I, Item 2 – Properties.

We now present an overview of our business segments.

CINEMA EXHIBITION

Overall

We are committed to delivering exceptional cinematic experiences for our guests, combining hospitality-driven comfort and service with state-of-the-art cinematic presentations. Our offerings include uniquely designed venues, carefully curated film and event programming, and thoughtfully crafted food and beverage selections. As previously mentioned, we operate our global cinema exhibition business under three primary distinguished brands: Reading Cinemas, Consolidated Theatres and Angelika Film Centers.

Shown in the following table are the number of locations and screens in our theater circuit in each country, by state/territory/region, our cinema brands, and our interest in the underlying asset as of December 31, 2024:

(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 totaling 13 screens. We are responsible for the booking of these cinemas and our joint venture partner, Event Cinemas, manages their day-to-day operations.

Considering current cash flow constraints, we remain focused on enhancing our existing cinema facilities, securing liquor licenses in Australia and New Zealand, and pursuing new cinema development opportunities to offer our customers premium experiences. These include luxury recliner seating, advanced presentation technologies such as superior sound systems, lounges, cafés, bar services, and additional amenities. Presently, 195 of our auditoriums are equipped with recliner seating (excluding joint ventures), while 33 auditoriums feature large-format screens, including TITAN XC, TITAN LUXE, or IMAX. While our circuit did transition to digital projection and sound systems; we retained the capability to showcase films in both 35MM and 70MM formats in select cinemas, catering to the preferences of certain directors and cinephiles.

Although we operate cinemas in three countries, the general nature of our operations and operating strategies do not vary materially from jurisdiction to jurisdiction. In each jurisdiction, our gross receipts are primarily from box office receipts, food and beverage sales, gift card purchases, online ticketing fees, and screen advertising. Our ancillary revenue is created principally from theater rentals (for example, for film festivals and special events), and ancillary programming (such as concerts and sporting events).

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Our cinemas generated approximately 57% of their 2024 revenue from box office receipts. Ticket prices vary by location, with reduced rates available for senior citizens, children and, in certain markets, military personnel and students. In addition, across our U.S. based cinemas, we offer value ticket days, including Half Priced Tuesday and Mahalo Tuesdays (in our Hawaii locations.)

Showtimes and features are advertised across our websites, various internet platforms, and, in some markets, in select local newspapers. We are continuously expanding our presence on social media, which has allowed us to reduce our reliance on print advertising. Additionally, film distributors may promote certain feature films through various print, radio, television, and internet channels, with distributors typically covering these advertising costs.

Food and beverage (F&B) sales accounted for approximately 34% of our total 2024 cinema revenue. While nearly all of our global cinemas are licensed for the sale and on-site consumption of alcoholic beverages, our traditional F&B offerings have predominantly consisted of popcorn, candy, and soda. This is evolving, as more of our theaters are expanding their F&B selections. One of our key strategic priorities is to enhance our existing cinemas with a broader range of F&B options that align with emerging trends and customer preferences. We measure our performance in this area using spend per patron (SPP), comparing it both to our competitors and as an indicator of the effectiveness of our F&B operations. While the profitability of our F&B operations is influenced by various factors, including labor costs and the cost of goods sold, we believe this metric provides valuable insight into our top-line performance.

Screen advertising and other revenue contributed approximately 9% to our total 2024 cinema revenue. Except for certain rights that we have retained to sell screen advertising to local advertisers, we are not in the screen advertising business and nationally recognized screen-advertising companies’ contract with us for the right to show such advertising on our screens.

Management of Cinemas

Except for our three unconsolidated cinemas, we manage our cinemas with executives located in Los Angeles and Manhattan in the U.S., Melbourne, Australia, and Wellington, New Zealand. Our two New Zealand Rialto cinemas are owned by a joint venture in which Reading New Zealand is a 50% joint venture partner. While we assist with the booking of these two cinemas, our joint venture partner, Event Cinemas, manages their day-to-day operations. Our one-third interest in a 16-screen Brisbane cinema is passive in nature. That cinema is also managed by Event Cinemas.

Licensing and Pricing

Movies are sourced from a wide range of distributors, including major studios such as Paramount Pictures, Warner Bros., Disney, Sony Pictures, Universal Pictures, and Lionsgate, as well as numerous smaller independent film distributors. In Australia and New Zealand, some of these major distributors work through local unaffiliated distributors. Globally, the major film distributors dominate the market for mainstream conventional films. In the U.S., art-house and specialty films are distributed through the specialty divisions of these major studios, such as Searchlight Pictures and Sony Pictures Classics, as well as through independent distributors like A24 and Neon. Payment terms for films are typically based on an agreed-upon percentage of box office receipts, which may vary depending on the specific film or theater.

Competition

Film is allocated by the applicable distributor among competitive cinemas and in an increasingly material number of situations to streaming services. As a result, there may be instances where we are unable to secure the rights to every film we wish to feature. In the Australian and New Zealand markets, we typically have access to the full range of films available. However, partly due to the impact of the COVID-19 pandemic, there has been a significant increase in the availability and quality of films offered by streaming services. Additionally, some major distributors have begun bypassing the traditional theatrical release window in favor of direct-to-streaming, premium video on demand (PVOD), or video on demand (VOD) platforms. Over the past few years, video content has become a fundamental aspect of internet usage, with its prevalence rising across all online platforms as a key component of digital marketing strategies. Whether through social media, websites, email campaigns, or other communication channels, both short-form and long-form videos have become the primary method for engaging audiences.

The dominance of certain streaming subscription services such as Netflix, Amazon Prime, and Hulu continue to provide a form of competition to the theatrical experience offered in cinemas. Netflix's Hit Man and Carry On experienced popularity solely available for streaming. Additionally, Amazon Prime exclusively streamed Road House and did not have a theatrical run. And, recently Apple provided a short release window for the star-studded Wolfs, Most recently Universal Pictures released Bridget Jones: Mad About the Boy directly to Peacock in the United States, while the film enjoyed a successful theatrical run in Australia and New Zealand in early 2025.

Competition for films may be intense, depending upon the number of cinemas in a particularly competitive market. Our ability to obtain top grossing, first run feature films may be adversely impacted by our comparatively small size, and the limited number of screens and markets that we can supply to distributors. Moreover, because of the dramatic consolidation of screens into the hands of a few very large and powerful exhibitors such as AMC, Regal, and Cinemark, who between them control over 61% of the North American market, these mega-exhibition companies can offer distributors access to many more screens in major markets than we can.

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Also, the major exhibitors have a substantial number of markets where they operate without material competition, meaning that the distributors have no alternative exhibitor for their films in these markets. As a result, distributors may prioritize these large exhibitors when licensing top-grossing films, rather than engaging with independent exhibitors such as ourselves. In contrast, the situation in Australia and New Zealand differs, as most major multiplex cinemas typically have access to all films currently in distribution, regardless of the ownership of the cinema. However, we face increased competition in these markets from boutique operators, who are able to secure limited-run bookings for top-grossing commercial films, thereby intensifying competition for customers seeking to view these high-demand films.

The availability of advanced technology and luxury recliner seating can significantly influence customer preferences when choosing a cinema. Recently, several cinemas have either opened or undergone renovations to incorporate luxury recliner seating and/or expanded food and beverage services, including the sale of alcoholic beverages and in-seat food delivery that compete with our cinemas. Some of our competitors, as a result of bankruptcy debt relief and/or what we believe to have been dilutive equity or convertible debt issuances, have more financial resources that do we to compete with cinema upgrades and enhancements.

Following substantial investments in our cinema portfolio since 2015, we believe our circuit is well-positioned for a strong recovery in the post-COVID-19 and post-Hollywood strike environment. Key metrics include:

Luxury Recliner Seating:

o57% of our U.S. screens are equipped with luxury recliner seating.

o32% of our Australian and New Zealand (AU/NZ) screens feature luxury recliner seating.

Premium Large Format (PLF) Auditoriums:

o37% of our U.S. theaters feature at least one PLF auditorium (IMAX, TITAN LUXE, or TITAN XC).

o53% of our AU/NZ theaters feature a PLF auditorium (TITAN XC or TITAN LUXE).

Enhanced Food and Beverage (F&B) Offerings:

o84% of our U.S. cinemas offer enhanced F&B menus, including alcoholic beverages.

o55% of our AU/NZ cinemas provide enhanced F&B menus.

o81% of our global cinemas serve alcoholic beverages.

The film exhibition markets in the United States, Australia, and New Zealand are influenced by a small number of major exhibition companies with significant financial resources, enabling them to compete more aggressively than we can. Based on information in filings with the SEC, as of December 31, 2024, the principal exhibitors in the United States are: AMC (with 7,185 screens in 544 cinemas); Regal (with 5,594 screens in 416 cinemas), owned by Cineworld Group, the U.K.’s largest cinema operator; and Cinemark (with 4,255 screens in 304 cinemas). As of December 31, 2024, we were the 15th largest exhibitor in the United States with 193 screens in 19 cinemas.

The principal exhibitors in Australia are Event Cinemas (a subsidiary of Event Hospitality and Entertainment, Limited) (“Event”), Hoyts Cinemas (“Hoyts”), and Village Cinemas (“Village”). The major exhibitors control approximately 66% of the total cinema box office: Event 28%, Hoyts 27%, and Village 11%. By comparison, our 210 screens (excluding our joint venture theaters) represent approximately 8% of the total box office making us the fourth largest exhibitor in Australia. The industry is vertically integrated in Australia and New Zealand, in that Roadshow Film Distributors, a subsidiary of Village, serves as a distributor of film in Australia and New Zealand. As of December 31, 2024, we were the 4th largest exhibitor in Australia with 210 screens in 29 cinemas.

The principal exhibitors in New Zealand are Event Cinemas with 130 screens and Hoyts with 76 screens, nationally. The major exhibitors in New Zealand control approximately 53% of the total box office: Event 32% and Hoyts 21%. We have 9% of the market (Event and Reading market share figures exclude any joint venture theaters) and are the third largest exhibitor in New Zealand, operating 54 screens in 9 cinemas.

In-Home, Streaming and Mobile Device Competition

The in-home streaming and mobile device entertainment industry has experienced significant leaps in recent periods in both the quality and affordability of in-home and mobile device entertainment systems and in the accessibility to, and quality of, entertainment programming through cable, satellite, and internet distribution channels. The success of these alternative distribution channels (like Netflix, Hulu, AppleTV, Disney+, HBO Max, Peacock, and Amazon Prime Video) and the emergence of specially curated content for home and streaming markets is competing with films produced for theatrical release, placing additional pressure on film distributors to shorten or eliminate the time gap between theatrical and secondary release dates.

We are addressing these challenges by enhancing the comfort and service levels at our cinemas, offering convenient online ticket reservation services with guaranteed seating, investing in larger screens and superior sound systems, providing more specialized and alternative content to our audiences, and delivering greater value for moviegoers. Our focus is on emphasizing the unique social experience of attending the movies, and we are committed to making that experience as enjoyable as possible, within applicable capex limitations. To distinguish ourselves from other forms of video entertainment, we aim to highlight the special nature of viewing films and alternative content in a cinema setting, while developing strategies to capitalize on the increased production of films and feature content.

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These challenges are relevant to both our U.S. and international cinema operations. We are proactively adapting our operational, programming, and marketing strategies to address the far-reaching impacts of the pandemic. Moving forward, we anticipate growing our cinema business through a disciplined approach to renovations and new opportunities on a global scale.

For instance, we are now expanding our rewards and membership offerings to enhance our overall cinematic experience. During the fourth quarter 2024, we launched paid subscription program in Australia that offers our guests a variety of values and perks. These services are in addition to free to join membership programs offered in the Angelika and Consolidated circuits in the U.S.

Further competitive issues are discussed under Item 1A – Risk Factors.

Seasonality

Major films are generally released to coincide with holidays. Historically, this has provided us with some balancing of our revenue because, apart from Christmas and New Years, there is no material overlap between holidays in the United States and those in Australia and New Zealand. Distributors may delay, in certain cases, releases in Australia and New Zealand to take advantage of Australian and New Zealand holidays that are not celebrated in the United States. However, the deferral of releases is becoming increasingly less common, given the need to address the internet and other channels of distribution that operate on a worldwide basis and are less tied to holiday schedules.

Following a disappointing slate of film in January and February, 2024, we started enjoying momentum in March 2024 with major films such as Dune: Part Two ($715 million) and Kung Fu Panda 4 ($548 million). With major hits releasing throughout the year such as Inside Out 2 ($1.7 billion) and Deadpool & Wolverine ($1.3 billion), we saw the momentum continue but it was not until the end of the year when we really saw the box office bolster up. Films such as Wicked, Moana 2, Gladiator 2, Sonic the Hedgehog 3 and Mufasa strengthened the last two months of 2024.

REAL ESTATE

Overall

We engage in the real estate business through the development and our ownership and rental or licensing to third parties of retail, commercial and live theatre assets. As of December 31, 2024, we own the fee interests in both of our live theatres, and in 9 of our cinemas (as presented in the preceding table within the “Cinema Exhibition” section). We believe that 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.

Our real estate activities have historically consisted principally of:

the ownership of fee or long-term leasehold interests in properties used in our cinema exhibition activities or which were acquired for the development of cinemas or cinema-based real estate development projects;

the acquisition and holding of fee interests in land for general real estate development;

the licensing to production companies of our live theatres; and

the redevelopment of our existing fee-owned cinema or live theatre sites to their highest and best use.

All our leasehold interests are cinema operating properties. We use office space at the Village East cinema building for our corporate headquarters.

We have brought all our Australia, New Zealand and U.S. real estate operations in-house,

In addition to our principal properties as set out below, we own certain historic railroad properties (such as our Reading Viaduct and adjacent commercial properties in Philadelphia, which together make up approximately 6.5 acres of land in Philadelphia).

United States

Live Theatres – Minetta Lane and Orpheum

Included among our real estate holdings are two Off-Broadway style live theatres, operated through our Liberty Theatres subsidiary. We license theatre auditoriums to the producers of Off-Broadway theatrical productions and provide various box office and concessions services. The terms of our licenses are, except in the case of our license at the Minetta Lane, naturally, principally dependent upon the commercial success of our licensees. While we attempt to choose productions that we believe will be successful, we have no control over the production itself. At the current time, we have two single-auditorium theatres in Manhattan:

the Minetta Lane (399 seats); and Liberty Theatres is primarily in the business of licensing theatre space.

the Orpheum (347 seats).

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However, we may from time to time participate as an investor in a play, which can help facilitate the exhibition of the play at one of our theatres and do from time to time rent space on a basis that allows us to share in a production’s revenues or profits. Rental revenues, expenses, and profits are reported as part of the real estate segment of our business.

44 Union Square

At the end of 2019, we substantially completed the construction phase of our 44 Union Square redevelopment project, achieving approximately 73,000 square feet of net rentable area (calculated inclusive of anticipated BOMA adjustments) comprised of retail and office space. We have leased the first two floors and most of the cellar to Petco for a flagship, state-of-the-art facility. 44 Union Square/Tammany Hall, hailed as a dramatic pièce de résistance with its first in the city, over 800-piece, glass dome, brings the future to New York’s fabled past and in the last few years has been awarded the (i) The American Architecture Award for Restoration and Renovation, (ii) the ACEC NY Engineering Excellence Award, (iii) and the Building/Technology Systems Diamond Award. Please refer to Item 7 – Recent Developments.

Cinemas 1,2,3

Currently operated as the Cinemas 123, we have historically treated this property as an asset held for long term development. However, in light of a variety of factors, such as market conditions in Manhattan for real estate assets, cost of capital and demands on our liquidity, we have begun to explore alternatives for this property.

Philadelphia Properties

We continue work to develop and 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 rail bed and bridges reaching through the Callowhill and Poplar neighborhoods of Philadelphia and reaching to Vine Street in the City’s Central Business District. Calculated inclusive of our contiguous properties, the Reading Viaduct comprises approximately 6.5 acres of land, plus various bridges passing over various public streets and sidewalks connecting our various parcels into one continuous land holding, unimpaired by any public thoroughfares.

Representatives of the City of Philadelphia and the City Center District have expressed an interest in acquiring the Reading Viaduct for park purposes as an extension to the existing Rail Park and in December 2023, the City adopted an ordinance enabling the condemnation of the Reading Viaduct, and the transfer of the property to a not-for-profit for use as a public park. However, since rail road 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 rail road property subject to STB jurisdiction and oversight (the “STB Proceeding”).

In our view, potentially adding to the value of the Reading Viaduct as a park and pedestrian corridor, the City last year was awarded a $158 million federal grant to reconnect the Chinatown community with surrounding neighborhoods by covering the Vine Street Expressway I-676. This project will start directly across the street to the terminus of the Reading Viaduct at Vine Street, thus enhancing the value of the connectivity provided by our Reading Viaduct.

We believe the Reading Viaduct offers a substantial long-term opportunity for our Company through potentially selling or joint venturing (in whole or in part) part or all of the property. Our properties adjoining our Reading Viaduct include a number of free-standing legal parcels that could be monetized separately and/or apart from the main body of our Reading Viaduct.

Australia

We own and operate three ETCs in Australia. Our revenues from these sites consist of rental income and other ancillary charges from our various tenants.

Newmarket Village and Newmarket Office

Located on 219,228 square feet of land in suburban Brisbane, Newmarket Village is currently comprised of approximately 144,419 square feet of net rentable area, including a Coles Supermarket and 44 other third-party tenants. We added a state-of-the-art eight-screen Reading Cinemas with TITAN LUXE in December 2017. In 2024, we also executed 2 new leases and 11 renewal or other leases.

Cannon Park

Comprising 9.4-acres across two properties, Cannon Park City Center and Cannon Park Discount Center. Cannon Park was acquired in December 2015. Our multiplex cinema is one of the anchor tenants for Cannon Park City Center, the combined City and Discount Centre features 16 third-party F&B and leisure tenants.

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In 2024, we executed 2 renewals or other leases. As of May 2024, we have classified this property as held for sale.

The Belmont Common

Anchored by our 10-screen Reading Cinemas with TITAN XC and six F&B or third-party tenants, The Belmont Common is located in Perth, Australia, and is currently comprised of 103,204 square feet of land and 60,117 square feet of net rentable area.

New Zealand

Courtenay Central

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 NZ$38 million. We understand that Prime intends to redevelop the property, including a seismic upgrade of the existing Courtenay Central building. As a part of that transaction we have entered into an Agreement to Lease for the cinema component of that upgraded Courtenay Central building.

Our real estate holdings are described in further detail in Item 2 – Properties. Our real estate developments are described in Item 7 – Recent Developments.

Competition

A summary discussion of our view as to the competitive aspects of the markets where we own real estate properties is as follows:

United States

Demand for office space has declined generally in Manhattan since the onset of the COVID-19 pandemic with the increase in remote working. However, we are advised that demand for office space in the area of our 44 Union Square office space is increasing. Moreover, our building is not generic in nature, given its key Union Square location, its boutique size and brandability. The first two floors and most of the cellar of our 44 Union Square property are now fully leased to Petco. In addition to office uses, we are investigating a variety of possible non-office types of use for the remainder of the building.

Australia and New Zealand

Both countries have relatively stable economies with varying degrees of economic growth that are mostly influenced by global trends. Also, we have noted that our Australian and New Zealand developed properties have had consistent growth in rentals and values. This is in part a product of the fact that our tenancies have focused on entertainment services (cinemas, food and beverage) and essentials (such as groceries and pharmacies), which has to some extent insulated us from internet competition. We have lesser exposure to the office market in Australia, as we have one office building (21,582 sf) at Newmarket Village (which is 96% leased) and we own an office building (8,557sf) in South Melbourne (which is 100% leased) that serves as our corporate headquarters in Australia. We remain optimistic that our Australian and New Zealand holdings will continue to provide value and cash flows to our operations.

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BUSINESS MIX AND FOREIGN CURRENCY IMPACT

At December 31, 2024, the book value of our assets was $471.0 million, and our consolidated stockholders’ book equity was ($4.8) million. Calculated based on book value, $191.0 million, or 40% of our assets, relate to our cinema exhibition activities and $207.0 million, or 44%, of our assets, relate to our real estate activities.

For additional segment financial information, please see Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements-- Note 4 –Segment Reporting.

We have diversified our assets among three countries: the United States, Australia, and New Zealand. Based on book value, at December 31, 2024, we had approximately 56% of our assets in the United States, 36% in Australia and 8% in New Zealand

We have worked to maintain a balance both between our cinema and real estate assets and between our U.S. and our Australian and New Zealand assets. In 2024, we invested approximately $0.8 million in our U.S. assets for the improvements of our cinema assets. We invested approximately $1.2 million in our Australian assets, primarily for the development of our cinema assets and the Cannon Park City Centre. We invested approximately $0.2 million in our New Zealand assets. Due to a variety of factors, including the COVID-19 pandemic, the 2023 Hollywood strikes and spiking interest rates, we have strategically monetized certain real estate assets, and may continue to do so in order to support our liquidity while the global cinema returns to normal. This has and will impact our allocations of assets and revenues among the U.S., Australia and New Zealand. As a subsequent event, we monetized our properties in Wellington, New Zealand for NZ$ 38.0 million.

At December 31, 2024, we had cash and cash equivalents of $12.3 million, which are treated as corporate assets. Our cash included $5.0 million, $6.4 million (AU$10.3 million), and $0.9 million (NZ$1.7 million). We had total worldwide non-current assets of $445.9 million, distributed as follows: $249.9 million in the United States, $158.6 million (AU$256.4 million) in Australia and $37.4 million (NZ$66.8 million) in New Zealand. We had no unrestricted unused capacity of available corporate credit facilities on December 31, 2024.

For 2024, our gross revenues in the United States, Australia, and New Zealand were $106.2 million (50%), $90.5 million (43%), and $13.9 million (7%), respectively, compared to $120.0 million (54%), $88.1 million (40%), and $14.6 million (6%) for 2023. Our total gross revenues decreased in 2023 primarily because of a weaker film slate in 2024 compared to 2023 and the closing of underperforming theaters.

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As shown in the chart set forth in the International Business Risks section, exchange rates for the currencies of these jurisdictions have varied, sometimes materially. These ratios, naturally, have an impact on our revenues and asset values, which are reported in USD. The U.S. dollar has been appreciating compared to the Australian and New Zealand Dollar, which has the effect of reducing the value of our Australia and New Zealand earnings and cash flow from a U.S. point of view. Notwithstanding these fluctuations, we continue to believe that, over the long term, operating in Australia and New Zealand is a prudent diversification of risk. Over the years, Australia and New Zealand have continued to be ranked among the best countries to live by U.S. News in terms of quality of life. In our view, the economies of Australia and New Zealand are stable economies, and their lifestyles support our entertainment/lifestyle focus.

HUMAN CAPITAL RESOURCES

Our Company is committed to diversity and does not discriminate on the basis of sex, race, gender, ethnicity, religious beliefs or practices or any other protected characteristics. We strive to recruit and retain a diverse group of employees.

Our cinemas typically employ persons from the communities that they serve and accordingly, we believe that they reasonably reflect the diversification of such communities. Many of our jobs are entry level positions and offer comparatively flexible hours attractive to students and others seeking part-time employment. We believe that we provide a starting point for younger people entering the job market for the first time, as well as an opportunity for individuals with other life commitments and interests and who are not seeking full-time employment. Finding and retaining cinema staff has been a challenge in the post COVID period.

As of December 31, 2024, we had approximately (i) 89 executive/administrative and 8 real estate employees who were primarily full-time and (ii) 20 live theatre and 1,908 cinema employees worldwide who were predominantly part-time/casual employees. A small number of our cinema employees in New Zealand are union members. None of our Australian-based employees or other employees are subject to union contracts. We have a collective bargaining agreement in AU (referred to as an Enterprise Agreement) that covers all cinema wage earners. Overall, we are of the view that the existence of these collective bargaining agreements does not materially increase our costs of labor or our ability to compete.

We offer our employees what we believe to be a competitive benefits package. In the U.S., we offer a 401(k)-retirement savings plan (our “401(k) Plan”) that allows eligible U.S. employees to defer a portion of their compensation, within limits prescribed by the Internal Revenue Code, on a pre- and post-tax basis through contributions to the plan. We match contributions made by participants in our 401(k) Plan up to a specified percentage, and these matching contributions are fully vested as of the date on which the contributions are made. Currently, matching has been deferred as allowed by our 401(k)-plan due to COVID-19. For our employees in Australia and New Zealand, we offer superannuation plans in line with the requirements as they pertain to each government. We believe that providing a vehicle for retirement savings through our 401(k) Plan or superannuation plan, and making fully vested matching contributions in the U.S., in accordance with our compensation policies, adds to the overall desirability of our employee compensation package and further incentivizes our employees.

We have adopted a Code of Business Conduct and Ethics (the “Code of Conduct”) designed to help our Directors and employees resolve ethical issues. We have also adopted an Anti-Discrimination, Anti-Harassment and Anti-Bullying Policy (our “Anti-Discrimination Policy”). Our Code of Conduct and Anti-Discrimination Policy apply to all Directors and employees and are posted on our website. Our Board has established a means for employees to report a violation or suspected violation of the Code of Conduct and/or our anti-discrimination policy anonymously. In addition, we have adopted an “Amended and Restated Whistleblower Policy and Procedures,” which is also posted on our website, and establishes a process by which employees may anonymously disclose to our Principal Compliance Officer alleged fraud or violations of accounting, internal accounting controls or auditing matters. Each of these policies have also been adopted by each of our subsidiaries that has employees in the United States.

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Similar policies have been adopted by our overseas employer subsidiaries. We are firm supporters of equal rights and diversity.

Our Green Initiatives.

We strive to do our part in the fight against climate change.

United States

In our U.S. theaters we are exploring options to transition to paper straws and bamboo biodegradable cutlery in the immediate future. We provide recycling bins and eco-friendly popcorn bags and to go containers at all our theaters. And, as we continue to recover from the pandemic our capex and maintenance budgets have been limited, but we have continued our energy enhancements programs, including the installation of (i) LED fixtures/bulbs to lower KWH usage and reduce our energy consumption across all the existing theatres (ii) budgeting and planning to continue modernizing our energy management systems, to efficiently control the current HVAC systems, and (iii) selective replacement HVAC package units, as warranted to improve our carbon footprint.

Australia and New Zealand

In our theaters in Australia and New Zealand, we have fully transitioned to (i) using commercially compostable bamboo takeaway cutlery nationally, (ii) using commercially compostable paper straws, and (iii) using commercially compostable soft drink cold cups, coffee cups, popcorn boxes, takeaway pizza boxes and takeaway clamshell hot food boxes. Our initiative to have our compostable range meet the Australia household compostable standard (AS 5810) has been granted. Additional environmental initiatives include (i) the ongoing transition of all lighting from halogen to LED, (ii) a paperless objective, creating editable forms stored securely in the cloud, and (iii) the purchase of laser projectors with significant operational energy savings and the removal of xenon bulb purchasing and disposal needs. Our first integrated BMS & film programming software interface completed in 2024 at our Millers Junction cinema, delivers energy consumption savings, via the film programming schedule soley determining the HVAC requirements of each auditorium. ‎ Our statements in this annual 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.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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 expectations regarding renovations and addition of cinemas; 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 people 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 expectations regarding our ability to enter into an extension agreement with Audible on terms acceptable to us; our expectations regarding the impact of streaming and mobile video services on the cinema exhibition industry; our expectations regarding the timing of the completions our renovation projects; 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 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;

the adverse continuing impact of external events of past pandemic and strikes, on our cinema operations, liquidity, cash flows, financial condition, and access to credit markets;

the decrease in attendance at our cinemas and theatres due to (i) increased ticket prices (ii) a change in consumer behavior in favor of alternative forms or mediums of entertainment, and (iii) limited availability of wide 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;

unwillingness of employees to report to work due to illness or diseases or to otherwise conduct work under any revised work environment protocols;

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 government responses to future outbreak of infectious diseases;

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;

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 films on alternative channels, (ii) disruptions of film production, or (iii.) rescheduling of movie releases into later periods, as most currently experienced due to the implications of the Hollywood strikes;

the amount of money allocated and 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, video on demand platforms, and Blu-ray/DVD rentals and sales; 

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);

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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 or floods as certain of our operations are in geologically active or flood susceptible areas;

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

the ability to fund necessary refurbishments, remodels and upgrades,

the impact of new laws related to internet privacy and/or marketing, and of private litigation to obtain interpretation and/or enforcement of the same, and

labor shortages and increased labor costs related to such shortages and to increasing costly labor laws and regulations applicable to part time non-exempt workers.

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

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

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, and 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 2024 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 that we experienced during 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);

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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;

impacts from the proposed tariffs;

changes in applicable accounting policies and practices; and

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

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 and fancy, 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 annual report are based only on information currently available to us and are current only as of the date of this 2024 Annual Report. 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.

Additionally, certain of the presentations included in this annual report may contain “non-GAAP financial measures.” In such case, a reconciliation of this information to our GAAP financial statements will be made available in connection with such statements.

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Item 1A – Risk Factors

Like any other investment, investing in our securities involves risk. Set forth below is a summary of various risk factors that you should consider in connection with your investment in our Company. This summary should be considered in the context of our overall Annual Report on Form 10-K.

BUSINESS RISK FACTORS

We are in the cinema exhibition and real estate businesses. We discuss separately the risks we believe to be material to our involvement in each of these segments. We have discussed separately the risks relating to the international nature of our business activities, our use of leverage, and our status as a controlled corporation. While we report the results of our live theatre operations as real estate operations – because we are principally in the business of renting space to producers rather than in producing plays ourselves – the cinema exhibition and live theatre businesses share certain risk factors and are, accordingly, discussed together.

Cinema Exhibition and Live Theatre Business Risk Factors

Our cinema and live theatre businesses are dependent upon attendance, the availability of attractive entertainment product and employees willing to work in a public environment and, accordingly, are vulnerable to the adverse effects of any future pandemics which may result in government ordered closures, imposition of social distancing requirements, and changes in film release patterns. As demonstrated by the governmental and public response to the COVID-19 pandemic, businesses that bring large numbers of unrelated people together in an enclosed environment are particularly vulnerable to business disruption in the face of contagious diseases with life threatening potential. Not only may government authorities order closures or reduce operating capacities, but the public may feel uncomfortable attending our performances in the face of such an infectious disease risk. Our cinema business has high fixed costs (rent and increasing labor) and our revenue in this segment (ticket sales, food and beverage sales, screen advertising fees) is directly tied to our success at attracting customers to our venues.

We are dependent upon third parties to supply the entertainment product we need for our cinemas and live theatres to attract customers. We do not produce the films we show at our cinemas and, generally speaking, we do not produce the plays that are performed at our live theatres. Film distributors have no obligation to supply us with film and producers have no obligation to make use of our live theatres. Any disruption in the production of these films (including by reason of a strike) could hurt our business and results of operations. The Hollywood strikes in 2023 halted production of films for several months, did delay or otherwise affect the supply of certain films. The disruption in film production may also cause delays for currently scheduled film release dates. It is difficult to anticipate the scope and timing of such delays. It is difficult to predict the full extent of the adverse impact of the strikes on our business and results of operations in future reporting periods.

We face competition from other sources of entertainment and other entertainment delivery systems. Both our cinema and live theatre operations face competition from “in-home” and mobile device sources of entertainment. These include competition from network, cable and satellite television, and Video on Demand, internet streaming video services such as Netflix, Hulu, Disney+, HBO Max, Peacock, and Amazon Prime, and social media or user generated internet programing such as, YouTube, TikTok, Reddit, Instagram, and Snapchat, video games and other sources of entertainment. The quality of “in-home” and mobile entertainment systems, as well as programming available on an in-home and mobile basis, has improved and increased, while the cost to consumers of such systems (and such programming) has decreased in recent periods, and some consumers may prefer the security and/or convenience of an “in-home” or mobile entertainment experience to the more public and presentation-oriented experience offered by our cinemas and live theatres. Film distributors have been responding to these developments by, in some cases, decreasing or eliminating the period of time between cinema release and the date such product is made available to “in-home” or mobile forms of distribution. During the COVID-19 pandemic, many distributors moved product onto their proprietary streaming service platforms or onto third party platforms (like Netflix) either in lieu of or simultaneously with a cinema release. Even before the COVID-19 pandemic, some traditional in-home and mobile distributors had begun to produce full-length movies, specifically for the purpose of direct or simultaneous release to the in-home and mobile markets. Cinemas will need to meet these competitive factors to continue to attract customers. This may require substantial capital outlays and increased labor expense, which exhibitors may not be able to fully pass on to their customers.

We also face competition from various other forms of “beyond-the-home” entertainment, including sporting events, concerts, restaurants, casinos, video game arcades, and nightclubs. Our cinemas also face competition from live theatres and vice versa.

Supply chain disruptions may negatively impact our operating results. We rely on certain suppliers for a number of our products, supplies and services. Shortages, delays, or interruptions in the availability of food and beverage items and other supplies to our theatres and restaurants may be caused by adverse weather conditions; natural disasters; governmental regulation; recalls; commodity availability; seasonality; public health crises or pandemics; labor issues or other operational disruptions; the inability of our suppliers to manage adverse business conditions, obtain credit or remain solvent; or other conditions beyond our control. Such shortages, delays or interruptions could adversely affect the availability, quality, and cost of the items we buy and the operations of our business. Supply chain risk could increase our costs and limit the availability of products that are critical to our operations. We expect these issues to continue for the foreseeable future and plan to minimize the impact by focusing on the supply of those items with the greatest impact on our sales and operations.

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We operate in a highly competitive environment with many competitors who are significantly larger and may have significantly better access to films and to funds than we do. We are a comparatively small cinema operator and face competition from much larger exhibitors who are able to offer distributors more screens in more markets – including markets where they may be the exclusive exhibitor – than can we. This may adversely impact our access to films, which may adversely affect our revenue and profitability. These larger competitors may also enjoy (i) greater cash flow, which can be used to develop additional cinemas, including cinemas that may be competitive with our existing cinemas, (ii) better access to equity capital and debt, (iii) better visibility to landlords and real estate developers, (iv) for the sake of building volume, to operate cinemas with margins below our threshold for cinema acquisitions and/or development, and (v) better economies of scale. Access to reasonably priced funding is increasingly important as cinema operators need to upgrade their presentation and food and beverage in order to compete with in-home entertainment options.

In the case of our live theatres, we compete for shows not only with other commercial Off-Broadway operators, but also with “not-for-profit” theatres. We believe our live theatres are generally competitive with other Off-Broadway venues.

We are vulnerable to a variety of factors which are beyond our control.

Our cinema and live theatre businesses may be vulnerable to fears of terrorism and random shooter incidents which could cause customers to avoid public assembly venues. Events, such as terrorist attacks and random shooter incidents may discourage patrons from attending our cinemas. We believe that recent shooting incidents have resulted in material increases in insurance premiums for cinema operators.

Our cinema business may be vulnerable to natural disasters. Natural disasters, such as tropical storms, floods, fires, and earthquakes, have damaged and forced the temporary closure, and are likely in the future to similarly impact our cinema operations. A material portion of our cinemas are located in seismically active areas, such as California, Hawaii and New Zealand.

We may be more subject to general economic conditions than some other businesses. Going to a movie or a play is a luxury, not a necessity. Furthermore, consumer demand for better amenities and food offerings have resulted in an increase of the cost of a night at the movies. Accordingly, a decline in the economy resulting in a decrease in discretionary income, or a perception of such a decline, may result in decreased discretionary spending, which could adversely affect our cinema and live theatre businesses. Adverse economic conditions can also affect the supply side of our business, as reduced liquidity can adversely affect the availability of funding for movies and plays. This is particularly true in the case of Off-Broadway plays, which are often times financed by high-net-worth individuals (or groups of such individuals) and that are very risky due to the absence of any ability to recoup investment in secondary markets like – cable, satellite or internet distribution.

We face competition from competitors offering food and beverage and luxury seating as an integral part of their cinema offerings. The number of our competitors offering expanded food and beverage menus (including the sale of alcoholic beverages) and luxury seating, has continued to grow in recent periods. In addition, more competitors such as AMC are converting existing cinemas to provide such expanded menu offerings and in-theater dining options. The existence of such cinemas may alter traditional cinema selection practices of moviegoers, as they seek out cinemas with such expanded offerings as a preferred alternative to traditional cinemas. In order to compete with these new cinemas, the Company has been required to materially increase its capital expenditures to add such features to many of our cinemas and to take on additional and more highly trained (and, consequently, compensated) staff. Also, the conversion to luxury seating typically requires a material reduction in the number of seats that an auditorium can accommodate which may translate into fewer movie tickets being sold and the shutdown (or limitation of activities) during the time required to complete such modifications.

Our failure to obtain and maintain liquor licenses at any of our cinemas could adversely affect our ability to compete. Each of our cinemas offering alcoholic beverages, is subject to licensing and regulation. Typically, licenses must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of the daily operations of each cinema, including minimum age of patrons and employees, hours of operation, advertising, wholesale purchasing, inventory control and handling and storage and dispensing of alcoholic beverages. The failure to receive or retain a liquor license, or any other required permit or license, in a particular location, or to continue to qualify for, or renew licenses, could have a material adverse effect on our profitability, our ability to attract patrons, and our ability to obtain such a liquor license in other locations.

We may be subject to increased labor and benefits costs generally. We are subject to inflationary pressures which have resulted in increased costs of goods and increased cost of film. Also, labor shortages may impact our ability to hire and retain employees. In venues that have alcohol licenses, there are higher labor, inventory, and insurance costs. Our cinemas are a major user of electricity, and utility costs are also rising. Given competitive pressures and other forces adversely impacting movie attendances, it may not be possible to pass all or any material portion of these increased costs on to consumers. In addition, we are subject to a variety of changing laws governing such matters as minimum wages, access to benefits and paid or unpaid leave, working conditions and overtime under which minor violations can result in material liabilities.

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In California and New York, in particular, law firms have developed which advertise for plaintiffs and bring such cases on a class action, contingent fee basis, where typically between 25% and 40% of any recovery goes to the law firm. Moreover, given the statutory basis of such claims, insurance is not available to cover such exposure. In recent periods, legislatures have been actively increasing minimum wages, mandating minimum hours or imposing notice and leave provisions that make it increasingly difficult to adjust staffing levels to accommodate fluctuating cinema attendance levels, all of which have resulted in increased operating costs as we work to maintain a high level of amenity to our customers.

We are subject to a variety of litigation risks. The legal landscape in which we do business is subject to rapid change due to legislative enactments at the federal, state and local levels. Often these requirements are not stated in a uniform manner, and may vary, in intent or as the result of judicial determination, from jurisdiction to jurisdiction. Many have material periodic penalties for non-compliance and allow (or have been interpreted to allow) private litigants to challenge whether such laws have been violated. As a consequence, we find that our vulnerability to forced settlements, litigation exposure and cost of liability insurance generally are substantially higher in the United States (and in particular in states such as California) than in Australia and New Zealand. The defense of such suits, even if successful, can be very costly due , among other things, to the cost of electronic discovery.

Real Estate Development and Ownership Business Risks

Specific Risks Related to Our Real Estate Business.

Our real estate business suffered effects from the coronavirus outbreak from which it has not fully recovered. The COVID-19 pandemic resulted in the closure or reduced capacity of certain of our retail tenants. All of our ETCs are anchored by our cinemas, which suffered temporary closures and/or reductions in seating capacities during the COVID-19 Pandemic, thereby reducing foot traffic to our ETCs. In some cases, we have been compelled to provide our tenants with rent abatements or deferrals and some tenants continue to be impacted.

Competition from the Digital Economy may adversely impact our ability to lease and obtain reasonable rents for our properties. An increasing amount of shopping is being done online, a trend that has been given momentum by the stay-at-home admonitions and restrictions associated with our previous battle against the COVID virus. This has adversely impacted retail tenants (particularly those dealing in consumer goods), which may impact our ability to attract such retailers and to obtain rents at historic levels. This is a particular risk to us, given our high percentage of retail tenants. Also, initially motivated by the need to work from home during the COVID-19 pandemic, employers are rethinking the scope and extent of the need for their office space. Some markets may have become overbuilt, which may complicate our ability to lease our properties, to obtain reasonable rents, and to finance future development.

Many of our Properties are located in areas prone to natural disasters. Many of our properties are located in areas subject to a risk of fires such as California and Australia; of hurricanes, tropical storms and/or flooding, such as Australia, California, Hawaii and New York, New Jersey; or earthquakes in New Zealand, Hawaii and California. The availability of insurance for natural disasters (particularly earthquake) may be limited.

Our entertainment properties may be more subject to access litigation than other properties. Substantially all our properties consist of, or include as a material component, entertainment venues. These facilities may attract more access-based litigation (for example, claims under the Americans with Disabilities Act) than other types of real estate.

We operate in a highly competitive environment in which we must compete against companies with much greater financial and human resources than we have. We have limited financial and human resources, compared to our principal real estate competitors. In recent periods, we have relied heavily on outside professionals in connection with our real estate development activities. Many of our competitors have significantly greater resources and may be able to achieve greater economies of scale than we can. Given our structure as a taxable corporation, our cost of capital is typically higher than other real estate investment vehicles such as real estate investment trusts.

Risks Related to the Real Estate Industry Generally

Our financial performance will be affected by risks associated with the real estate industry generally. Events and conditions generally applicable to developers, owners, and operators of real property will affect our performance as well. These include (i) changes in the national, regional and local economic climate, (ii) local conditions, such as an oversupply of, or a reduction in demand for, commercial space and/or entertainment-oriented properties, (iii) reduced attractiveness of our properties to tenants, (iv) the rental rates and capitalization rates applicable to the markets in which we operate and the quality of properties that we own, (v) competition from other properties, (vi) inability to collect rent from tenants, (vii) increased operating costs, including labor, materials, real estate taxes, insurance premiums, and utilities, (viii) costs of complying with changes in law and government regulations including those relating to access, energy conservation and environmental matters, (ix) the relative illiquidity of real estate investments, and (x) decreases in sources of both construction and long-term lending as traditional sources of such funding leave or reduce their commitments to real estate-based lending. In addition, periods of rising interest rates or declining demand for real estate (for example, due to competition from internet sellers the demand for brick and mortar retail spaces has declined and may continue to decline, and due to the increasing popularity of tele-commuting demand for traditional office space has likewise declined and may likewise continue to decline), or the public perception that any of these events may occur, could result in declining rents or increased lease defaults.

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Increasing cap rates can result in lower property values.

Risk of Reliance on Appraisals. In our business planning and forecasts we rely on independent third-party appraisals as to the value of our real estate holdings. Such appraisals are inherently subjective, and a reasonable appraiser can reach significantly different views as to fair market value of a given parcel of real property. Valuations of historic railroad properties can be impacted by uncertainties as to title and property line boundaries. Accordingly, no assurances can be given that the fair market value assigned to a parcel of real property can be achieved in the open market. Further, USPAP methodology is inherently backwards looking and, as a result, can overstate value in times of declining real estate values and understate value in raising markets.

Illiquidity of real estate investments could impede our ability to respond to adverse changes in the performance of our properties. Real estate investments can be relatively illiquid and, therefore, tend to limit our ability to vary our portfolio promptly in response to changes in economic or other conditions. Many of our properties are either “special purpose” properties that could not be readily converted to general residential, retail or office use. In addition, certain significant expenditures associated with real estate investment, such as real estate taxes and maintenance costs, are generally not reduced when circumstances cause a reduction in income from the investment, and competitive factors may prevent the pass-through of such costs to tenants.

Real estate development involves a variety of risks.

Real estate development involves a variety of risks, including the following:

The identification and acquisition of suitable development properties. Competition for suitable development properties is intense. Our ability to identify and acquire development properties may be limited by our size and resources. Also, as we and our affiliates are considered to be “foreign owned” for purposes of certain Australian and New Zealand statutes, we have been in the past, and may in the future be, subject to regulations that are not applicable to other persons doing business in those countries.

The procurement of necessary land use entitlements for the project. This process can take many years, particularly if opposed by competing interests. Competitors and community groups (sometimes funded by such competitors) may object based on various factors, including, for example, impacts on density, parking, traffic, noise levels and the historic or architectural nature of the building being replaced. If they are unsuccessful at the local governmental level, they may seek recourse to the courts or other tribunals. This can delay projects and increase costs.

The construction of the project on time and on budget. Construction risks include the availability and cost of financing; the availability and costs of material and labor; the costs of dealing with unknown site conditions (including addressing pollution or environmental wastes deposited upon the property by prior owners); inclement weather conditions; and the ever-present potential for labor-related disruptions.

The leasing or sell-out of the project. Ultimately, there are risks involved in the leasing of a rental property or the sale of a condominium or built-for-sale property. For our ETCs, the extent to which our cinemas can continue to serve as anchor tenants will be influenced by the same factors as will influence generally the results of our cinema operations. Leasing or sale can be influenced by economic factors that are neither known nor knowable at the commencement of the development process and by local, national, and even international economic conditions, both real and perceived.

The refinancing of completed properties. Properties are often developed using relatively short-term loans. Upon completion of the project, it may be necessary to find replacement financing for these loans. This process involves risk as to the availability of such permanent or other take-out financing, the interest rates, and the payment terms applicable to such financing, which may be adversely influenced by local, national, or international factors. Recent increases in lending interest rates and potential tightening of lending given the recent bank crisis may make more difficult refinancing debt or obtaining new debt.

The ownership of properties involves risk. The ownership of properties involves risks, such as: (i) ongoing leasing and re-leasing risks, (ii) ongoing financing and re-financing risks, (iii) market risks as to the multiples offered by buyers of investment properties, (iv) risks related to the ongoing compliance with changing governmental regulation (including, without limitation, laws and regulations related to access, energy conservation and environmental matters), (v) relative illiquidity compared to some other types of assets, and (vi) susceptibility of assets to uninsurable risks, such as biological, chemical or nuclear terrorism, or risks that are subject to caps tied to the concentration of such assets in certain geographic areas, such as earthquakes. Furthermore, as our properties are typically developed around an entertainment use, the attractiveness of these properties to tenants, sources of finance and real estate investors will be influenced by market perceptions of the benefits and detriments of such entertainment-type properties.

We may be subject to liability under environmental laws and regulations. We own and operate cinemas and other properties within the U.S. and internationally, which may be subject to various foreign, federal, state and local laws and regulations relating to the protection of the environment or human health. Such environmental laws and regulations include those that impose liability for the investigation and remediation of spills or releases of hazardous materials. We may incur such liability, including for any currently or formerly owned, leased or operated property, or for any site, to which we may have disposed, or arranged for the disposal of, hazardous materials or wastes.

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Certain of these laws and regulations may impose liability, including on a joint and several liability, which can result in a liable party being obliged to pay for greater than its share, regardless of fault or the legality of the original disposal. Environmental conditions relating to our properties or operations could have an adverse effect on our business and results of operations and cash flows.

Legislative or regulatory initiatives related to global warming/climate change concerns may negatively impact our business. Recently, there has been an increasing focus and continuous debate on global climate change including increased attention from regulatory agencies and legislative bodies. This increased focus may lead to new initiatives directed at regulating an as yet unspecified array of environmental matters. Legislative, regulatory or other efforts in the U.S. to combat climate change could result in future increases in the cost of raw materials, taxes, transportation and utilities for our vendors and for us which would result in higher operating costs for the Company. Also, compliance by our cinemas and accompanying real estate with new and revised environmental, zoning, land-use or building codes, laws, rules or regulations, could have a material and adverse effect on our business. However, we are unable to predict at this time, the potential effects, if any, that any future environmental initiatives may have on our business.

Changes in interest rates may increase our interest expense. Because most of our debt bears interest at variable rates, increases in interest rates could materially increase our interest expense. Approximately $174.8 million of our current debt will mature over the next twenty-four months and will require refinancing. Based on our debt outstanding as of December 31, 2024, if interest rates were to increase by 1%, the corresponding increase in interest expense on our variable rate debt would decrease future earnings and cash flows by approximately $2.0 million per year. Potential future increases in interest rates may therefore negatively affect our financial condition and results of operations and reduce our access to the debt or equity capital markets.

International Business Risks. Our Company transacts business in Australia and New Zealand and is subject to risks associated with changing foreign currency exchange rates. During year 2024, the Australian dollar and New Zealand dollar weakened against the U.S. dollar by 0.8% and 1.5%, respectively, compared to the prior year. Our international operations are subject to a variety of risks, including the following:

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Currency Risk: While we report our earnings and net assets in U.S. dollars, substantial portions of our revenue and of our obligations are denominated in either Australian or New Zealand dollars. The value of these currencies can vary significantly compared to the U.S. dollar and compared to each other. We do not hedge the currency risk, but rather have relied upon the natural hedges that exist as a result of the fact that our film costs are typically fixed as a percentage of the box office, and our local operating costs and obligations are likewise typically denominated in local currencies. Set forth below is a chart of the exchange ratios between these three currencies since 1996:

In recent periods, our debt levels in Australia are higher than they would have been if funds had not been repatriated. On a company wide basis, this means that a reduction in the relative strength of the U.S. dollar versus the Australian Dollar and/or the New Zealand dollar would effectively raise the overall cost of our borrowing and capital and make it more expensive to return funds from the United States to Australia and New Zealand. As the impacts of COVID on our business operations in Australia and New Zealand have been less severe than on our operations in the U.S., plus the impact of Hollywood strikes on US operations, we have been looking to our operations in Australia and New Zealand to fund our overall corporate general and administrative expense (most of which is resident in the U.S.). The current strength of the U.S. Dollar has diminished the value to our Company of our Australia and New Zealand cash flow.

Risk of adverse government regulation: Currently, we believe that relations between the United States, Australia, and New Zealand are good. However, no assurances can be given that these relationships will continue, and that Australia and New Zealand will not in the future seek to regulate more highly the business done by U.S. companies in their countries.

Risk of adverse labor relations: Deterioration in labor relations could lead to an increased cost of labor (including the cost of future government requirements with respect to scheduling, accommodation, pension liabilities, disability insurance and health coverage, vacations and leave).

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Trade disputes and geopolitical instability outside of the U.S. may adversely impact the U.S. and global economies.

In 2024, global growth weakened, trade tensions heightened, and several emerging markets experienced significant downturns as macroeconomic and geopolitical developments weighed on market sentiments. Governmental policies of developed economies, such as the U.S., have a substantial effect on emerging markets, and the consequences of a trade war between two developed countries, like that of the U.S. and China, could further contribute to the adverse economic and political conditions of emerging and other developed economies. Additionally, North Korea’s nuclear weapons capabilities, Chinese activities relative to the South China Sea, Taiwan, and Hong Kong, and the Russian invasion of Ukraine continue to be an ongoing security concern and worsening relations between the U.S. and North Korea, Russia and China continue to create a global security issue that may adversely affect international business and economic conditions. While it is difficult for us to predict the effect of such trade wars and heightened geopolitical and economic instability on our business, they could lead to currency devaluation, economic and political turmoil, market volatility, and a loss of consumer confidence in the broader U.S. economy.

Risks Associated with Certain Discontinued Operations

Certain of our subsidiaries were previously in industrial businesses. As a consequence, properties that are currently owned or may have in the past been owned by these subsidiaries may prove to have environmental issues. Where we have knowledge of such environmental issues and are able to make an assessment as to our exposure, we have established what we believe to be appropriate reserves, but we are exposed to the risk that currently unknown problems may be discovered. These subsidiaries are also exposed to potential claims related to exposure of former employees to coal dust, asbestos, and other materials now considered to be, or which in the future may be found to be, carcinogenic or otherwise injurious to health.

Operating, Financial Structure and Borrowing Risk

Typically, we have negative working capital. As we invest our cash in new acquisitions and the development of our existing properties, we have negative working capital. This negative working capital is typical in the cinema exhibition industry because our short-term liabilities are in part financing our long-term assets instead of long-term liabilities financing short-term assets, as is the case in other industries such as manufacturing and distribution. Our short-term liabilities also include significant obligations related to our cinema leases. See Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements-- Note 3 - Summary of Significant Accounting Policies – Operating Leases.

We are subject to complex taxation, changes in tax rates, adoption of new U.S. or international tax legislation and disagreements with tax authorities that could adversely affect our business, financial condition, or results of operations. We are subject to many different forms of taxation in both the U.S. and in foreign jurisdictions where we operate, such as the U.S. Tax Cuts and Jobs Act signed into law in December 2017. The new laws are still evolving and require that we interpret the provisions of the law as we work to comply with them. The costs of compliance with these laws and regulations are high and are likely to increase in the future. Any failure on our part to comply with these laws and regulations can result in negative publicity and diversion of management’s time and effort and may subject us to significant liabilities and other penalties.

We have substantial short- to medium-term debt. Generally speaking, we have historically financed our operations through relatively short-term debt. No assurances can be given that we will be able to refinance this debt, or if we can, that the terms will be reasonable. However, as a counterbalance to this debt, we have certain unencumbered real property assets, which could be sold to pay debt or encumbered to assist in the refinancing of existing debt, if necessary.

We have substantial lease liabilities. Most of our cinemas operate in leased facilities. These leases typically have “cost of living” or other rent adjustment features and require that we operate the properties as cinemas. The COVID-19 pandemic, increased competition from the internet, streaming and cable-based entertainment, and changes in film distribution have adversely affect the ability of our cinema operating subsidiaries to meet these rental obligations. Even if our cinema exhibition business returns to pre-Pandemic levels and thereafter remains relatively constant, cinema level cash flow will likely be adversely affected unless we can increase our revenue sufficiently to offset increases in our rental liabilities.

If our company suffers cybersecurity attacks, data security challenges or privacy incidents that result in security breaches, we could suffer a loss of sales, additional liability, reputational harm or other adverse consequences. The effective operation of our international businesses depends on our network infrastructure, computer systems, physical, virtual and/or cloud based, and software. Our information technology systems collect and process information provided by customers, employees and vendors. In addition, third-party vendors’ systems process ticketing for our theaters. These various information technology systems and the data stored within them are subject to penetration by cyber attackers. We utilize industry accepted security protocols to securely maintain and protect proprietary and confidential information. However, despite our best efforts, our information systems may fail to operate for a variety of technological or human reasons. An interruption or failure of our information technology systems and of those maintained by our third-party providers could adversely affect our business, liquidity or results of operations and result in increases in reputational risk, litigation or penalties. Furthermore, any such occurrence, if significant could require us to expend resources to remediate and upgrade information technology systems.

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Since 2015, we have annually procured cybersecurity insurance to protect against cybersecurity risks; however, we cannot provide any assurance regarding the adequacy of such insurance coverage.

Our stock is thinly traded. Our stock is thinly traded, with an average daily volume in 2024 of only approximately 30,231 shares of Class A Stock. Our Class B Stock is very thinly traded with even less volume. This can result in significant volatility, as demand by buyers and sellers can easily get out of balance.

Uninsured bank deposits may be at risk. We maintain cash in certain financial institution bank accounts in the United States, Australia, and New Zealand. In the United States, the Federal Deposit Insurance Corporation insures accounts in the amount of $250,000 per depositor, per insured bank, for each account ownership category. At certain of our financial institutions, we have more than $250,000 in deposit and those amounts may not be insured in the event of a bank failure.

Ownership and Management Structure, Corporate Governance, and Change of Control Risks

According to a Schedule 13D/A filed on October 27, 2023 by Margaret Cotter (the Chair of our Board, Executive Vice President of our Company and sister of Ellen Cotter), Ellen Cotter (the Vice-Chair of our Board, President and Chief Executive Officer of our Company and sister of Margaret Cotter) and certain of their affiliates (the “Cotter Schedule 13D”), Margaret Cotter has sole voting control over 1,058,988 shares of Class B Stock and shared voting power with Ellen Cotter over 100,000 shares of Class B Stock, collectively representing 69% of the outstanding Class B stock of the Company.

For as long as Margaret Cotter continues to have voting power over more than 2/3rds of the Class B Stock, Margaret Cotter will be able to unilaterally elect or remove all of the members of our Board of Directors and determine the outcome of all matters submitted to a vote of our stockholders, including matters involving mergers or other business combinations, the acquisition or disposition of assets, the incurrence of indebtedness, the issuance of any additional shares of common stock or other equity securities, related party transactions, and the payment of dividends on common stock. Margaret Cotter will also have the unilateral power to prevent or cause a change in control and could take other actions that might be desirable to her and/or other members of her family, but not to other stockholders.

For as long as Margaret Cotter continues to have voting power over more than 2/3rds of the Class B Stock, Margaret will have the power to sell the control of our Company to a purchaser or purchasers of her choosing without any approval of our Company’s Board or any other stockholder. To the extent that the Margaret Cotter controls more than two-thirds of our outstanding Class B Stock, she will have the power under Nevada law at any time, with or without cause, to remove any one or more Directors (up to and including the entire Board of Directors) by written consent taken without a meeting of the stockholders.

While controlling stockholders may owe certain fiduciary duties to our Company and/or minority stockholders, these duties are limited. No assurances can be given that Margaret Cotter, alone or in conjunction with Ellen Cotter, will not take action that, while beneficial to her and members of her family (including Ellen Cotter) and legally enforceable, would not necessarily be in the best interests of our Company and/or our stockholders generally. Margaret Cotter holds her beneficial ownership of 409,552 shares of our Class B Stock ultimately as the trustee of the DMC Trust, under which she owes fiduciary duties to her children which may conflict with her obligations as a controlling stockholder of our Company.

Reference is made to the Cotter Schedule 13D for more detail information of the scope and extent of the holdings of Margaret Cotter and Ellen Cotter. Our Class A Stock is non-voting and accordingly our Class B Stock represents all of the voting power of our Company. 

We are a “Controlled Company” under applicable NASDAQ Regulations. As permitted by those Regulations, our Board has elected to opt-out of certain corporate governance rules applicable to non-controlled companies. Generally speaking, NASDAQ requires listed companies to meet certain minimum corporate governance provisions. However, a “Controlled Company,” such as we, may elect not to be governed by certain of these provisions. Our Board of Directors has elected to exempt our Company from requirements that (i) at least a majority of our Directors be independent and (ii) nominees to our Board of Directors be nominated by a committee comprised entirely of independent Directors or by a majority of our Company’s independent Directors. Notwithstanding the determination by our Board of Directors to opt-out of these NASDAQ requirements, we believe that a majority of our Board of Directors and the entirety of our Compensation Committee are nevertheless currently comprised of independent Directors. As a practical matter, subject to her fiduciary duties as a controlling stockholder, Margaret Cotter controls the composition of our Board of Directors.

We depend on key personnel for our current and future performance. Our current and future performance depends to a significant degree upon the continued contributions of our senior management team and other key personnel. The loss or unavailability to us of any member of our senior management team or a key employee could significantly harm us. We cannot assure you that we would be able to locate or employ qualified replacements for senior management or key employees on acceptable terms. Due to the uncertainty of our control situation, the ongoing availability of these employees and our ability to replace them is uncertain. Recent action by the Securities Exchange Commission with respect to the claw back of executive bonuses under certain circumstances may, in our view, put us at a competitive disadvantage compared to private companies in recruiting talented executives.

 

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Item 1B – Unresolved Staff Comments

None.

Item 1C – Cybersecurity

RISK MANAGEMENT AND STRATEGY

We have implemented a cybersecurity program to address all levels of cybersecurity threats based on our determination of the risk level. Our program includes policies and procedures that dictate the method in which we develop, deploy, and maintain security measures and controls. We use a cybersecurity framework to select security controls to protect against identified risks. When designing the controls, we consider the severity of risk and its impact on the Company, including the cost of the control and the impact it may have on the Company operations. We use various combinations of controls and tools to mitigate the risk to the Company such as firewalls and intrusion devices, endpoint threat detection systems, multi-factor authentication systems, endpoint threat detection systems as well patch management to prevent exploitable vulnerabilities.

We utilize third-party cybersecurity firms in various capacities to operate some of these controls, including remote monitoring, cloud-based platforms and services as well as on-premises services. For example, we use third parties to perform a variety of functions for the Company, including, but not limited to cybersecurity audits, targeted ransomware assessment and table-top exercises, internal penetration tests and other internal and external audits. These expert services enable us to leverage specialized knowledge and insights into our cybersecurity strategies and processes.

We maintain a written incident response plan and carry out periodic tabletop exercises to improve incident response readiness. Employees undergo security awareness training when hired and periodically thereafter; the scope of this training is continually updated to address newly identified threats. We utilize a risk-based approach and analysis to determine the cybersecurity controls to implement, and hence, there is a possibility that these controls may not adequately address every risk if we do not identify or place a high enough risk factor on a given threat. We are at risk of zero-day attacks and other vulnerabilities that may have been placed at a very low risk. In addition, even well-designed and properly deployed controls may not fully eliminate a given risk.

CYBERSECURITY THREATS

We have not had any cybersecurity incidents that we believe have materially affected or are likely to materially affect the Company.

GOVERNANCE.

Board Member Guy W. Adams serves as our Lead Technology and Cyber Risk Director. In December 2017, Mr. Adams was recognized as a Governance Fellow for the National Association of Corporate Directors, The Gold Standard Director Credential®. In 2018, Director Adams completed the Cyber-Risk Oversight course presented by the National Association of Corporate Directors.

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Item 2 – Properties

OPERATING PROPERTY

As of December 31, 2024, we own fee interests across our two operating segments in approximately 670,000 square feet of income-producing properties (including certain properties principally occupied by our cinemas) as follows:

(1)Rental square footage refers to the amount of potential area available to be rented to third parties. A number of our real estate holdings include entertainment components rented to one or more of our subsidiaries at fair market rent. The rental area to such subsidiaries is noted under the entertainment square footage.

(2)Represents the percentage of available rental square footage currently leased or licensed to third parties.

(3)Refers to the net carrying value of the land and buildings of the property presented as “Operating Property” in our Consolidated Balance Sheet as of December 31, 2024 (net of any impairments recorded).

(4)Owned by a limited liability company in which we hold a 75% managing member interest. The remaining 25% is owned by Sutton Hill Capital, LLC (“SHC”), a company owned in equal parts by the Cotter Estate and a third party.

(5)Our Cannon Park City and Discount Centers are operated as a single ETC.

(6)This property was sold on January 31, 2025.

(7)This schedule does not include (i) our leasehold assets on cinemas under leased-facility model, (ii) those portions of the owned assets that are not income-producing or purely used for administrative purposes, and (iii) our assets on our legacy business principally in Pennsylvania.

ENTERTAINMENT PROPERTIES

As of December 31, 2024, we leased approximately 1,970,000 square feet of completed cinema space in the United States, Australia, and New Zealand as follows:

 

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In certain cases, we have long-term leases that we view more akin to real estate investments than cinema leases. As of 2024, we had approximately 90,000 square feet of space subject to such long-term leases, which are reported as part of our Cinema Exhibition segment, detailed as follows:

 

(1)Rental square footage refers to the amount of area available to be rented to third parties. A number of our real estate holdings include entertainment components rented to one or more of our subsidiaries at fair market rent. The rental area to such subsidiaries is noted under the entertainment square footage.

(2)Represents the percentage of rental square footage currently leased to third parties.

(3)Refers to the net carrying value of the leasehold property presented as “Operating Property” in our Consolidated Balance Sheet as of December 31, 2024 (net of any impairments recorded).

INVESTMENT AND DEVELOPMENT PROPERTY

Before the COVID-19 Pandemic, we were engaged in several investment and development projects relative to our currently undeveloped parcels of land. As of today, certain of those parcels, including in Wellington, NZ on Wakefield Street and Tory Street, have been sold. As our financial conditions improves, we will continue to pursue redevelopment plans on certain existing developed properties to take them to their highest and best use.

 

Some of our income producing properties and our investment and development properties carry various debt encumbrances based on their income streams and geographic locations. For an explanation of our debt and the associated security collateral please see Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements--Note 13 – Borrowings.

EXECUTIVE AND ADMINISTRATIVE OFFICES

In the United States, we occupy approximately 3,500 square feet at our Village East leasehold property in New York for administrative purposes and our principal executive offices. We occupied approximately 12,500 square feet of our Culver City office building for administrative purposes. In February 2024, we sold our Culver City office and our employees who formerly worked at that office are currently working remotely until we secure a new Los Angeles office.

In Australia, we own an approximately 9,000 square foot office building in Melbourne, Australia, approximately 6,000 square feet of which serve as the administrative office for our Australian and New Zealand operations (the remainder being leased to an unrelated third party).

OTHER PROPERTY INTERESTS AND INVESTMENTS

We own the fee interests in various parcels related to our historic railroad operations, currently comprised of 201-acres principally in Pennsylvania. These are primarily vacant land. With the exception of certain properties located in Philadelphia (including the raised railroad bed near Center City, known as the Reading Viaduct), the properties are principally located in rural areas of Pennsylvania. These properties are unencumbered by any debt.

 

Item 3 – Legal Proceedings

The information required under Part I, Item 3 – Legal Proceedings is incorporated by reference to the information contained in Note 15 – Commitments and Contingencies to the Consolidated Financial Statements included herein in Part II, Item 8 – Financial Statements and Supplementary Data on this Annual Report on Form 10-K.

 

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Item 4 – Mine Safety Disclosures

Not Applicable.

 

PART II

Item 5 – Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

MARKET INFORMATION

Our common stock is traded on the NASDAQ under the symbols RDI (Class A Stock) and RDIB (Class B Stock).

As of March 28, 2025, the approximate number of common stockholders of record was 323 for Class A Stock and 46 for Class B Stock.

We have never declared a cash dividend on either class of our common stock, and we have no current plans to declare a dividend.

Performance Graph

The following line graph compares the cumulative total stockholder return on RDI’s Class A Stock for the five-year period ended December 31, 2024, against the cumulative total return as calculated by the NASDAQ composite, a peer group of public companies engaged in the motion picture theater operator industry and a peer group of public companies engaged in the real estate operator industry. Measurement points are the last trading day for each of the five-years ended December 31, 2024. The graph assumes that $100 was invested on December 31, 2018, in our Class A Stock, the NASDAQ composite and the noted peer groups, and assumes reinvestment of any dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance.

The following performance graph shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, nor shall this information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into a filing.

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Reading underperformed in 2024 compared to the market due to the aftermath of COVID-19 pandemic and Hollywood strikes, delayed releases of movies and/or movies going straight to streaming or PVOD, and a weakening foreign currency exchange rate.

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EQUITY COMPENSATION

Please refer to Part II, Item 8 – Financial Statements and Supplementary Data-Notes to Consolidated Financial Statements – Note 17 – Share-Based Compensation and Share Repurchase Plans

RECENT SALES OF UNREGISTERED SECURITIES

None

REPURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

None

 

Item 6 – [RESERVED]

Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

OUR BUSINESS

Where have we been, and where we are going.

We have discussed in some detail under the heading “Business Description” in Part I of this Report our views as to the historic impact of the COVID-19 pandemic, the 2023 Hollywood strikes, spiking interest rates and certain labor laws on our business and, while not repeating that disclosure here, we incorporate that more detailed discussion by reference to provide context and background. Our discussion below is intended to be more summary in nature.

Impact of the COVID-19 Pandemic

Since the onset of the COVID-19 pandemic, our business has faced significant challenges. However, the performance of certain 2024 blockbuster movie releases, including Inside Out 2, Deadpool & Wolverine, Wicked, Moana 2, Despicable Me 4, and Beetlejuice Beetlejuice, have reaffirmed the interest of audiences in the theatrical experience. While 2024 cinema revenues were behind 2023, due principally to the weaker overall movie slate in the first few months of 2024 – a legacy of the 2023 Hollywood strikes --, with a strong slate of films anticipated through the end of 2025 and a renewed commitment from the motion picture industry to prioritize theatrical releases, we remain optimistic about the future of the cinema business. Accordingly, we continue to use our resources (including the sale of non-cinema real estate assets) to support our investment in beyond-the-home entertainment, maintaining key cinemas and live theatres, enhancing amenities, while protecting those of our real estate assets which we believe offer the most significant potential for long term value accretion.

Challenges from the 2023 Hollywood strikes

The Writers Guild of America (WGA) and Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) strikes, which occurred from May 2, 2023, to September 27, 2023, and July 14, 2023 to November 9, 2023, respectively marked the first time in 63 years both unions struck simultaneously and halted film productions. This action delayed film releases and significantly impacted marketing and promotion efforts. Consequently, films released during the strike period, such as Blue Beetle and Expendables 4, underperformed at the box office, while many films were rescheduled causing disruption to the 2024 box office release calendar.

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With production now resumed, the cinema industry in 2024 navigated the ripple effects of the strikes, including postponed releases, which was evident during the first half of 2024.

Rising Interest Rates and Operating Costs

Between March 2022 and July 2023, the Federal Reserve raised the Federal Funds interest rates from 0.25% to 5.5%, the fastest hike in U.S. modern history. This significantly increased our interest expenses, further straining our liquidity. Although subsequent rate cuts in late 2024 provided some relief, the higher interest rates continue to impact our business.

Additionally, post-pandemic legislation has increased our labor costs, affecting wages, leave policies, and compliance expenses. Rising costs for goods, utilities, and insurance have caused compounding financial pressures. To offset these challenges, we have continued to look for ways to operate at our most efficient levels while also strategically raising ticket and Food and Beverage (F&B) prices so that we do not create barriers that would alienate or deter our customers. The hyper litigation environment in the U.S. has also put pressure on our earnings and cash flow, as plaintiff’s class action firms seek to enforce various internet privacy laws and laws pertaining to the structuring and regulation of social and business relationships in ways that we believe are beyond the scope of what was intended by the legislatures adopting these laws.

Strategic Measures and Financial Adjustments

To mitigate financial pressures and enhance liquidity, we have undertaken several initiatives:

1.Asset Monetization: Between 2021 and 2024, we sold seven real estate assets, generating $156.1 million in net proceeds. These proceeds helped pay down $82.2 million in debt, and fund $35.0 million capital improvements, while also helping us to sustain our operations. In addition, on January 31, 2025, we monetized our real estate holdings in Wellington, New Zealand, for NZ$38.0 million, part of which has been used to pay off New Zealand debt and repatriate to US.

While no assurances can be given, we have entered into a call option agreement with respect to our real property in Townsville, Queensland, Australia, providing for a purchase price of A$32.0 million. Due to Queensland tax issues, sales of commercial real estate in this province which have a due diligence component are structured as option agreements. The option holder has posted A$1.6 million in earnest money. The option agreement contemplates closing in mid-April, if following due diligence the option holder elects to proceed with the transaction. Maintaining our cinema focus, in the case of our Wellington properties, we have entered into an agreement for lease with respect to the cinema existing at Courtenay Central. In the case of our Townsville property, we intend to be leased back our existing cinema under a long-term lease.

2.Cinema Closures and Lease Adjustments: We have closed underperforming cinemas, where possible, including one in the U.S. in 2022, four in 2023 (three in the U.S. and one in New Zealand), and one in the U.S. in 2024. Additionally, we have renegotiated leases to reduce occupancy costs, receive deferrals or abatements, or shift to percentage-based rent agreements.

3.Administrative Cost-Saving Measures: We streamlined operations by selling our administrative office in Culver City, California, freeing up $1.3 million in cash and saving an estimated $2 million in operating costs for year 2025. We anticipate returning to an office environment in California later this year.

4.Food & Beverage Innovations: In 2024, our global cinema divisions achieved record-high F&B sales per capita. Beer and wine are available in all U.S. locations, with liquor licenses secured at most locations in Australia and New Zealand. The introduction of mobile ticketing and F&B apps has assisted in generating additional revenue while reducing staffing needs.

5.Deferrals of Capital Improvements: We have generally constrained capital investment in the refurbishment of our cinemas, and have only built out 5 cinemas over the past 5 years. This has, however, likely adversely impacted revenues at some of our cinemas to the extent that they are in competition with more recently updated or renovated offerings.

6.Ongoing Liquidity Management: We continue to evaluate our assets to evaluate any future monetization that may be needed, focusing on non-core real estate assets that do not offer long-term growth opportunities for our stockholders, and we will continue to close underperforming cinemas at the end of their lease terms. While the exact proceeds from future asset dispositions and the extent that they will ultimately be needed are uncertain, we remain confident in our ability to meet liquidity needs for 2025 and 2026.

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Real Estate Operations

Despite challenges in our cinema business, our real estate segment has remained resilient. Most of our Australian tenants have met rental obligations, providing a stable revenue stream. With regard to our architectural award winning 44 Union Square redevelopment project in New York City, in January 2022 we secured a long-term lease with Petco Health and Wellness Company (“Petco”), which opened in June 2023, and is paying rent on a full cash basis. Through 2024, our current broker, George Comfort & Sons, explored deals with tenants of varying uses, including wellness and entertainment.

In Australia and New Zealand, our third party (or non-cinema) rental space is 96% leased on a full rent paying basis, demonstrating the strength of these real estate holdings.

Looking Ahead

We anticipate continued improvements in cinema operations as audience levels rebound. The successes of films such as Inside Out 2, Deadpool & Wolverine, and Despicable Me 4 reaffirm the enduring appeal of the theatrical experience. Looking ahead, anticipated releases such as Mission Impossible 8, Lilo & Stitch, Superman, Jurassic World: Rebirth, Wicked: Part Two and Avatar: Fire and Ash strengthen our confidence in the cinema industry's future.

While challenges remain, we are committed to adapting and evolving. Through strategic investments, cost-saving measures, and a focus on audience engagement, we believe our Company is well positioned to navigate the evolving entertainment landscape and achieve sustainable growth in the coming years.

Our anticipated plans for 2025 and beyond are discussed in greater detail below.

RECENT DEVELOPMENTS

Recent developments in our two business segments are discussed below. For an overview of our two business segments, including a breakdown of assets that we own and/or manage, please see Part I, Item 1 – Our Business of this 2024 Form 10-K.

Cinema Exhibition

Key Performance Indicators

Food and Beverage Spend Per Patron

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

One of our strategic priorities has been to continue upgrading the food and beverage menu at several of our global cinemas. As of December 31, 2024, we have a total of 38 theater locations with an upgraded 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 F&B operational performance as compared to that of our competitors. Although the profitability of our F&B 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 in turn 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 to ensure price barriers are not created for our attendance.

During the fourth quarter of 2024, the F&B SPP of our U.S. Cinemas, $8.28, exceeded the F&B SPP of any publicly traded exhibitors.

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Average Ticket Price Per Patron

An additional key performance indicator utilized by management in our cinema 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. In addition, ATP gauges the effectiveness of our cinemas’ pricing strategies and our ability to draw back audiences 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.

The key performance indicators used by management in our real estate segment with respect to our properties held for rent (other than our Live Theatres) are net operating income, occupancy factor (the percentage of the net rentable area of our properties that is leased) and average lease duration. Set forth in the table below is a comparison of these indicators for the fourth quarter and twelve months ended December 31, 2024 compared to the corresponding periods in 2023.

Real Estate Key Performance Indicators

In the case of our Live Theatres, with respect to key performance indicators, we primarily look to the live theater licensing revenue and ancillary income from the theatres. This is the fixed fee income paid to us as a license fee, plus variable fees for various services (like box office and concessions). The licensee takes all risks of the success or failure of the production. However, due to our ancillary variable revenue, we do better with a well performing show than a poorly performing show or no show at all.

Historically, in the case of our development properties (such as 44 Union Square in New York City) and our various international properties such as Newmarket Village in Australia, we have no specific key performance standards to compare performance from period to period. Rather we continue to analyze budgets and projections and compare actual results to budgeted or projected results from time to time.