Company: RIVF
Filing Date: 2025-10-15
Form Type: 10-K
Source: 0001493152-25-018109
Chunk: 443

Company: Rivulet Entertainment, Inc.
Filing Date: 2025-10-15
Form: 10-K
Item: Item 7A
Chunk 443
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 for income taxes were calculated by applying a “separate
return” method. Under this method, the current provision was the amount of tax payable or refundable on the basis of a hypothetical,
current-year separate return. Any deferred taxes on temporary differences, including any carryforwards, that could be claimed on a hypothetical
return were assessed on the basis of the projected separate return results for purposes of determining the need for a valuation allowance.

Consistent
with the application of this guidance, the Company recognized current and deferred income tax consequences as if it were a separate taxpayer
rather than a member of its consolidated tax group. As such, the deferred tax assets and liabilities reflect certain tax attributes resulting
from its separate return accounting (for fiscal year 2024). For the current year, all items of income, deductions, assets, and liabilities
were included within the consolidated tax return of Rivulet Entertainment, inc. (i.e. and not calculated based on a hypothetical separate
return method).

As
of June 30, 2025 and 2024, the Company recorded a gross deferred tax asset, for federal net operating loss carryforwards (“NOLs”)
of $10.5 million and $5.7 million, respectively. As noted above, the prior year NOLs were generated while part of a combined tax return
and may not legally exist or may offset income in the consolidated return of the parent which is not included in the consolidated financial
statements.

Our
ability to use our net operating losses to offset future taxable income may be subject to certain limitations. In general, under Section
382 of the Code, a corporation that undergoes an “ownership change,” generally defined as a greater than 50% change by value
in its equity ownership over a three-year period, is subject to limitations on its ability to utilize its pre change net operating losses,
or NOLs, to offset future taxable income. Our existing NOLs may be subject to limitations arising from ownership changes that we might
have undergone in the past and a detailed study has not been performed to date. Future changes in our stock ownership, some of which
might be beyond our control, could result in an ownership change under Section 382 of the Code, further limiting our ability to utilize
a material portion of the NOLs even if we attain profitability. During the years ended June 30, 2025 and 2024, the Company’s valuation
allowance increased by approximately $20,000 and approximately $5