Company: RIVF
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001641172-25-024216
Chunk: 11

Company: Rivulet Entertainment, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 11
---

                                            4-Allocate the transaction price to the performance obligations in the contract

●Step
                                            5-Recognize revenue when (or as) the Company satisfies a performance obligation

The
Company’s contracts with its customers currently contain a single performance obligation comprised of a license to motion picture
rights. In accordance with ASC 606, the Company ( i.e. the “licensor”) has concluded that the license transfer should i)
be considered functional intellectual property and ii) that customers (the “licensees” or “distributors”) that customers are therefore granted a right to use the Company’s intellectual
property as it exists at the point in time at which the license is granted. As such, revenue is recognized
at a point in time upon the Company’s delivery of the license to the licensee. The Company does not currently provide any form
of extended payment terms to its customers and, as such, a fixed payment is typically received from the customer within 90 days after
the license is transferred.

    7

In
determining the transaction price, the Company’s contracts with its customers do not include a significant financing component,
non-cash consideration or consideration payable to the customer. However, the Company’s contracts typically will include sales-based
or usage-based royalties that are triggered by the attainment of certain levels of box office receipts or video on demand (“VOD”)
purchases. To that extent, in accordance with ASC 606-10-55, the Company will recognize the sales-based or usage-based royalties only
when the later of the following events occur-a) the subsequent sale or usage occurs or b) the performance obligation to which the sales-based
or usage-based royalty has been satisfied.

As
it pertains to incremental costs of obtaining a contract, the Company does not incur any type of sales commissions.

During
the three months ended December 31, 2024 the Company sold film rights to a customer for $10.0 million. The Company concluded that the
sale represented the transfer of a functional license to the customer and that it had satisfied all of its performance obligations stemming
from the agreement during the period. As such, the entire $10.0 million fixed sale price was recognized as revenue during the period.
The Company does not expect to generate additional revenues from the film.

Exploitation
and Participation Costs

The
Company accounts for advertising costs in accordance with ASC 720-35, Other Expenses-Advertising Costs. All other direct
costs incurred in connection