ErosSTX Releases Historical Pro Forma Financials

Eros STX Global Corporation (NYSE: ESGC) ("ErosSTX” or the "Company”), a global entertainment company, today submitted to the SEC a Form 6-K (the "Form 6-K”) that contains (1) unaudited pro forma U.S. GAAP financial statements in connection with the merger (the "Merger”) of STX Filmworks, Inc ("STX”) and Eros International Plc ("Eros”), for the twelve months ended June 30, 2020 and (2) unaudited U.S. GAAP financial statements for legacy STX for the three months ended June 30, 2020.

The company recently announced that Ernst & Young LLP ("EY”) was appointed its auditor, effective December 2, 2020, for the fiscal year ending March 31, 2021. Prior to the Merger, EY was the auditor for STX and Grant Thornton Bharat LLP was the auditor for Eros. For additional details on this topic, please refer to the Company’s Form 6-K submitted to the SEC on December 3, 2020.

Pro Forma Financials: The financial information included in the Form 6-K reflects certain pro forma adjustments to the historical consolidated Eros financial statements to (1) convert them from IFRS to U.S. GAAP accounting standards, and (2) conform their accounting and presentation policies to those applied by STX. In the Form 6-K, these adjustments are detailed quantitatively in the financial statements, which include a bridge from the legacy figures to the pro forma figures, and qualitatively in the footnotes to the financial statements. Additionally, the balance sheet adjustments reflect the company’s updated and current view of the impact from the COVID-19 pandemic.

The pro forma balance sheet as of June 30, 2020 combines the historical audited balance sheet of STX and the March 31, 2020 historical audited balance sheet of Eros, on a pro forma basis as if the Merger had been consummated on June 30, 2020. This presentation, even with the mismatch in reporting periods for STX and Eros, is consistent with the SEC accounting guidelines and regulations.

The pro forma combined income statement for the twelve months ended June 30, 2020, combine the historical statements of operations of STX and Eros on a pro forma basis as if the Merger had been consummated on July 1, 2019.

Legacy STX Financials: The stand-alone STX financial statements for the three months ended June 30, 2020 show a year-on-year increase in operating income, net income and operating cash flow despite a year-on-year decrease in revenue. While the COVID-19 pandemic had a noticeable impact on the company’s financial results this quarter the results, these results also underscore the high profit generation from STX’s growing film and TV library. During the three months ended June 30, 2020, total revenue declined by $13 million year-on-year to $97 million, reflecting a $17 million decrease in theatrical revenue (to nil) due to the closure of movie theaters caused by COVID-19, and a $17 million decrease in TV and Other revenue from a difficult comparison to the prior year period that included the delivery of an unscripted TV series without a comparable delivery this period. These revenue declines were partially offset by an $18 million increase in TV/Streaming from film licensing. Meanwhile, total operating expenses decreased by $85 million year-on-year to $76 million driven by a $57 million decrease in distribution and marketing expenses from the absence of theatrical releases due to COVID-19. Operating cash flow increased by $101 million year-on-year to $41 million, reflecting the aforementioned decrease in marketing and distribution expenses, as well as a $28 million decrease in film and television cash investment due to the suspension of productions caused by COVID-19.

Therefore, the Company does not believe these quarterly results are fully representative of legacy STX’s future revenue and profit potential if production and release activities normalize after the COVID-19 pandemic is contained. During COVID-19 STX pursued new film distribution strategies with profit margins and ROIs that are comparable, or in some cases higher, than the traditional box office-led distribution model used in the past, although there can be no assurance that such profit margins or ROIs will be achieved. Going forward, the Company will continue to evaluate the evolving marketplace and will pursue what it believes to be the optimal distribution and monetization strategy for each film, including the potential use of a hybrid model that leverages multiple global distribution channels across theatrical, premium video on-demand (PVOD), physical and digital home video, television and streaming.

Eros STX Global Corporation:

Eros STX Global Corporation, ("ErosSTX”) (NYSE: ESGC) is a global entertainment company that acquires, co-produces and distributes films, digital content & music across multiple formats such as theatrical, television and OTT digital media streaming to consumers around the world. Eros International Plc changed its name to Eros STX Global Corporation pursuant to the July 2020 merger with STX Entertainment, merging two international media and entertainment groups. The combination of one of the largest Indian OTT players and premier studio with one of Hollywood’s fastest-growing independent media companies has created an entertainment powerhouse with a presence in over 150 countries. ErosSTX delivers star-driven premium feature film and episodic content across a multitude of platforms at the intersection of the world's most dynamic and fastest-growing global markets, including US, India, Middle East, Asia and China. The company also owns the rapidly growing OTT platform Eros Now which has rights to over 12,000 films across Hindi and regional languages and had 211.5 million registered users and 36.2 million paying subscribers as of September 30, 2020. For further information, please visit ErosSTX.com.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS:

Information provided in this communication includes "forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbors created thereby. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "approximately,” "anticipate,” "believe,” "estimate,” "continue,” "could,” "expect,” "future,” "intend,” "may,” "plan,” "potential,” "predict,” "project,” "seek,” "should,” "will” and similar expressions. Those statements include, among other things, the discussions of the Company’s business strategy and expectations concerning its and the Company’s market position, future operations, margins, profitability, liquidity and capital resources, tax assessment orders and future capital expenditures. All such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we are expecting, including, without limitation: our ability to successfully and cost-effectively source film content; the Company’s ability to achieve the desired growth rate of Eros Now, its digital over-the-top ("OTT”) entertainment service; our ability to maintain or raise sufficient capital; delays, cost overruns, cancellation or abandonment of the completion or release of the Company’s films; our ability to predict the popularity of its films, or changing consumer tastes; our ability to maintain existing rights, and to acquire new rights, to film content; our ability to successfully defend any future class action lawsuits we are a party to in the U.S.; anonymous letters to regulators or business associates or anonymous allegations on social media regarding the Company’s business practices, accounting practices and/or officers and directors; our ability to recoup the full amount of box office revenues to which it is entitled due to underreporting of box office receipts by theater operators; our dependence on our relationships with theater operators and other industry participants to exploit the Company’s film content; our ability to mitigate risks relating to distribution and collection in international markets; our ability to compete with other forms of entertainment; our ability to combat piracy and to protect our intellectual property; our ability to maintain an effective system of internal control over financial reporting; contingent liabilities that may materialize, our exposure to liabilities on account of unfavorable judgments/decisions in relation to legal proceedings involving the Company or its subsidiaries and certain of its directors and officers; our ability to successfully respond to technological changes; our ability to satisfy debt obligations, fund working capital and pay dividends; the monetary and fiscal policies of countries around the world, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices; our ability to address the risks associated with acquisition opportunities; risks that the ongoing novel coronavirus pandemic and its spread, and related public health measures, may have material adverse effects on our business, financial position, results of operations and/or cash flows; challenges, disruptions and costs of the Merger and related transactions, integrating the Eros and STX businesses and achieving anticipated synergies, and the risk that such synergies will take longer to realize than expected or may not be realized in whole or in part; the amount of any costs, fees, expenses, impairments and charges related to the Merger and related transactions; uncertainty as to the effects of the consummation of the Merger and related transactions on the market price of our A Ordinary Shares and/or the Company’s financial performance; and uncertainty as to the long-term value of the Company’s ordinary shares.

The forward-looking statements contained in this communication are based on historical performance and management’s current plans, estimates and expectations in light of information currently available and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond the Company’s control. Should one or more of these risks or uncertainties materialize or should any of the Company’s assumptions prove to be incorrect, the Company’s actual results may vary in material respects from what the Company may have expressed or implied by these forward-looking statements. The Company cautions that you should not place undue reliance on any of its forward-looking statements. Any forward-looking statement made by the Company in this communication speaks only as of the date on which the Company makes it. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.

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