What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-06-29 compared with 2022-07-01 · 771 added, 1431 removed, 198 unchanged (92% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CINEDIGM CORP.

Cineverse Corp.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID# 274 ) F-1

Consolidated Balance Sheets at March 31, 2022 and 2021 F-3

Consolidated Statements of Operations for the fiscal years ended March 31, 2022 and 2021 F-4

Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended March 31, 2022 and 2021 F-5

Consolidated Statements of Equity (Deficit) for the fiscal years ended March 31, 2022 and 2021 F-6

Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2022 and 2021 F-8

Notes to Consolidated Financial Statements F-9

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

Report of Independent Registered Public Accounting Firm (PCAOB ID# 274 )

Consolidated Balance Sheets at March 31, 2023 and 2022

Consolidated Statements of Operations for the fiscal years ended March 31, 2023 and 2022

Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended March 31, 2023 and 2022

Consolidated Statements of Equity (Deficit) for the fiscal years ended March 31, 2023 and 2022

Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2023 and 2022

Notes to Consolidated Financial Statements

REP ORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Cinedigm Corp.

Cineverse Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of Cinedigm Corp.

(the “Company”) as of March 31, 2022 and 2021, and the related consolidated statements

of operations, comprehensive income (loss), stockholders’ equity (deficit), and cash flows for each of the years then ended, and the

related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present

fairly, in all material respects, the financial position of the Company as of March 31, 2022 and 2021, and the results of their

operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the

United States of America.

We have audited the accompanying consolidated balance sheets of Cineverse Corp.

(the “Company”) as of March 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive income (loss), stockholders’

equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2023 and 2022, and the results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below

are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to

the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our

especially challenging, subjective, or complex judgments.

The communication of the critical audit matters does not alter in any way our

opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate

opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue recognition – Content & Entertainment

Business segment.

As disclosed in Note 2 to the consolidated financial

statements, the Company’s Content & Entertainment business segment (“CEG”) earns fees for the distribution of content

in the home entertainment markets via several distribution channels, including digital, video on demand (“VOD”) and physical

Fees earned are a based on a percentage of the net amounts received from customers, when the Company is an agent in the transaction

and represents the entire amount received from the customer when the Company is considered the principal.

The Company’s performance

obligations include the delivery of content for transactional, subscription and ad supported streaming on the digital platforms, and shipment

of DVDS and Blu-Ray disks.

Revenue is recognized when the content is available for subscription on the digital platform, at the time of

shipment of physical goods, or point-of-sale for transactional and VOD services as the control over the content or the physical titles

is transferred to the customer.

Physical revenue is recognized after deducting the reserves for sales returns and revenue reductions,

which are accounted for as variable consideration.

Total CEG revenues for the year ended March 31, 2022 $37.9 million.

We identified revenue recognition for CEG as a

critical audit matter due the level of judgement and estimation required by management in the recognition of fees earned from customers

and estimation of revenues accrued at period end;

this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing

procedures and evaluating audit evidence related to management’s determination of management’s revenue recognition for CEG.

Addressing the matter involved performing procedures

and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

We obtained an

understanding and evaluated the design of the Company’s controls over the revenue recognition of CEG, including obtaining and evaluating

the service auditor’s report relating to controls over the third party information used by management in estimating digital revenue.

We gained an understanding of the Company’s role as either principal or agent in the revenue streams and management’s determination

of revenue streams as either gross or net based on the transfer of control for the good and service.

Our audit procedures included, among

others, comparing the revenue recognized to third party statements/reports, which can include sales, cash receipts, returns, revenue deductions,

advance payments, advance recoupments, expenses, and other information, to reconcile to the revenue recognized or the net amounts in which

fees are calculated on, as determined by the underlying contracts or third party statements for a sample of transactions.

We also tested

the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements,

as well as the Company’s estimation process, on a sample basis, for revenues accrued at period end.

Valuation of Intangible Assets Acquired in

Business Combinations

in Note 4, the Company completed three business combinations during the year ended March 31, 2022.

The business combinations were accounted

for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

Topic 805, Business Combinations.

Accordingly, the purchase prices of each acquisition

were allocated to the assets acquired and liabilities assumed based on their respective fair values, including intangible assets aggregating

to $14.9 million.

valued the acquired intangible assets, comprised of developed technology, advertiser relationships, and channels and platform, at fair

value on the date of the acquisitions using income approaches.

The methods used to estimate fair value required management to make significant

estimates and assumptions related to the forecasts of future cash flows, customer attrition rates, discount rates, and royalty rates.

the accounting for acquisitions was complex due to the significant estimation uncertainty in determining the fair values of identified

intangible assets.

The significant estimation uncertainty was primarily due to the sensitivity of the respective fair values to underlying

assumptions about future performance of the acquired businesses and due to the limited historical data on which to base these assumptions.

audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased

extent of effort, including the use of professionals with specialized skill and knowledge to assist in performing these procedures and

evaluating the audit evidence obtained.

We obtained an understanding and evaluated the design of the Company’s controls over its

accounting for acquisitions.

procedures also included evaluating the appropriateness of the valuation models, and testing the completeness, accuracy and relevance

of the underlying data used in the models, and testing the reasonableness of the forecasts of future cash flows, attrition rates, discount

rates, and royalty rates for the intangible assets acquired.

We assessed the reasonableness of management’s forecasts of future

cash flows by comparing the projections to historical results.

We also evaluated whether the estimated future cash flows were consistent

with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in

evaluating the reasonableness of the valuation models and significant assumptions, including the discount and royalty rates that were

independently developed using publicly available market data for comparable companies.

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue recognition –

Content & Entertainment Business segment.

As disclosed in Note 2 to the consolidated financial statements, the Company’s Content & Entertainment business segment (“CEG”) earns fees for the distribution of content in the home entertainment markets via several distribution channels, including digital, video on demand (“VOD”) and physical goods.

Fees earned are recognized as revenue based on a percentage of the net amounts received from customers when the Company is an agent in the transaction, and revenue represents the entire amount received from the customer when the Company is considered the principal.

The Company’s performance obligations include the delivery of content for transactional, subscription and ad supported streaming on digital platforms, and shipment of physical product (DVDs and Blu-Ray disks).

Revenue is recognized when the content is available for subscription on the digital platform, at the time of shipment of physical goods, or point-of-sale for transactional and video on demand services as the control over the content or the physical

titles is transferred to the customer.

Physical product revenue is recognized after deducting the reserves for sales returns and revenue reductions, which are accounted for as variable consideration.

Total CEG revenues for the year ended March 31, 2023 were $56.0 million.

We identified revenue recognition for CEG as a critical audit matter due the level of judgement and estimation required by management in the recognition of fees earned from customers and estimation of revenues accrued at period end;

this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s determination of management’s revenue recognition for CEG.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

We obtained an understanding and evaluated the design of the Company’s controls over the revenue recognition of CEG.

We gained an understanding of the Company’s role as either principal or agent in the revenue streams and management’s determination of revenue streams as either gross or net based on the transfer of control for the good and service.

Our audit procedures included, among others, comparing the revenue recognized to third party statements/reports, which can include sales, cash receipts, returns, revenue deductions, advance payments, advance recoupments, expenses, and other information, to reconcile to the revenue recognized or the net amounts in which fees are calculated on, as determined by the underlying contracts or third party statements for a sample of transactions.

We also tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements, as well as the Company’s estimation process, on a sample basis, for revenues accrued at period end.

/s/EISNERAMPER LLP

We have served as the Company’s auditor

We have served as the Company’s auditor since 2004.

EISNERAMPER LLP

Iselin, New Jersey

CINEDIGM CORP.

June 29, 2023

Cineverse Corp.

CONSOLIDATED BALANCE SHEETS

1 unchanged sentence

Current assets

Cash and cash

Cash and cash equivalents

Accounts receivable, net of allowance of $ 0 and $ 2,921 , respectively

Unbilled revenue

and other current assets

Employee retention tax credit

Prepaid and other current assets

Total current assets

Restricted cash

Equity investment in A Metaverse

Company, a related party, at fair value

Property and equipment,

Operating lease right-of

use assets, net

Equity investment in A Metaverse Company, a related party, at fair value

Property and equipment, net

Intangible assets, net

long-term assets

AND STOCKHOLDERS’ EQUITY

Other long-term assets

LIABILITIES AND STOCKHOLDERS’

Current liabilities

Accounts payable and accrued

Current portion of notes payable, including unamortized debt discount and debt issuance costs of $ 0 and $ 460 , respectively (see Note 5)

Current portion of notes payable, non-recourse including unamortized debt discount of $ 0 and $ 763 , respectively (see Note 5)

Current portion of deferred

consideration on purchase of business

Current portion of earnout

consideration on purchase of business

Accounts payable and accrued expenses

Line of credit, including unamortized debt discount of $ 76 and $ 0 , respectively (see Note 5)

Current portion of deferred consideration on purchase of business

Current portion of earnout consideration on purchase of business

Operating lease liabilities

portion of deferred revenue

Current portion of deferred revenue

Total current liabilities

Deferred consideration on

purchase – net of current portion

Earnout consideration on

purchase – net of current portion

Operating lease liabilities,

Deferred consideration on purchase –

net of current portion

long-term liabilities

Commitments and contingencies

Stockholders’ Equity

Earnout consideration on purchase –

net of current portion

Operating lease liabilities, net of current portion

Other long-term liabilities

Total liabilities

Commitments and contingencies (see Note 6)

Stockholders’

Preferred stock, 15,000,000 shares authorized;

1 unchanged sentence

20 shares authorized;

7 shares issued and outstanding at March 31, 2022 and 2021.

7 shares issued and outstanding, respectively.

Liquidation preference of $ 3,648 .

Common stock, $ 0.001 par value;

Class A stock 275,000,000 and 200,000,000 shares authorized at March 31, 2022 and 2021, respectively, 176,629,435 and 167,542,404 shares issued and 175,313,584 and 166,228,568 shares outstanding at March 31, 2022 and 2021, respectively.

Class A stock 275,000,000 shares authorized at March 31, 2023 and 2022, 9,413,597 and 8,831,471 shares issued and 9,347,805 and 8,765,679 shares outstanding at March 31, 2023 and 2022, respectively.

Additional paid-in capital

Treasury stock, at cost;

1,315,851 and 1,313,836 Class A common shares at March 31, 2022 and 2021, respectively.

65,792 shares

Accumulated deficit

other comprehensive loss

Total stockholders’

equity of Cinedigm Corp.

attributable to noncontrolling interest

liabilities and equity

See accompanying Notes to Consolidated Financial

CINEDIGM CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for share and per share data)

Accumulated other comprehensive loss

Total stockholders’

equity of Cineverse Corp.

Deficit attributable to noncontrolling interest

Total liabilities and equity

See accompanying Notes to Consolidated Financial Statements

Cineverse Corp.

CONSOLIDATED STATEMEN TS OF OPERATIONS

(In thousands, except for per share data)

For the Fiscal Year Ended

Costs and expenses:

Direct operating (excludes depreciation and amortization shown below)

Operating expenses

Direct operating

Selling, general and administrative

Depreciation and amortization of property and equipment

Amortization of intangible assets

Intangible impairment

Depreciation and amortization

Impairment of intangible assets

Total operating expenses

Loss from operations

Interest income, net

Operating loss

Interest expense

Changes in fair value of equity investment in Metaverse, a related party

Income (loss) on extinguishment of note payable

Other expense, net

Net income (loss) from operations before income taxes

Income tax benefit

Net income (loss)

Net (loss) income attributable to noncontrolling

Net income (loss) attributable to controlling interests

(Decrease) increase in fair value of equity investment in Metaverse, a related party

Gain on forgiveness of PPP loan

Employee retention tax credit

Other income (expense), net

Net (loss) income before income taxes

Income tax (expense) benefit

Net (loss) income

Net loss attributable to noncontrolling interest

Net (loss) income attributable to controlling interests

Preferred stock dividends

Net income (loss) attributable to common stockholders

Net income (loss) per Class A common stock attributable to common stockholders - basic:

Weighted average number of Class A common stock outstanding:

Net income (loss) per Class A common stock attributable to common stockholders - diluted:

Weighted average number of Class A common stock outstanding:

See accompanying Notes to Consolidated Financial

CINEDIGM CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Net (loss) income attributable to common stockholders

Net (loss) income per share attributable to common stockholders:

Weighted average shares of common stock outstanding:

See accompanying Notes to Consolidated Financial Statements

Cineverse Corp.

CONSOLIDATED STATEMENTS OF COMPREH ENSIVE INCOME (LOSS)

(In thousands)

For the Fiscal Year Ended

Net income (loss)

Net (loss) income

Other comprehensive loss:

Foreign exchange translation

Comprehensive income (loss)

comprehensive (loss) income attributable to noncontrolling interest

Comprehensive income (loss) attributable to controlling interests

See accompanying Notes to Consolidated Financial

CINEDIGM CORP.

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

(In thousands, except

Preferred Stock

Comprehensive

Stockholders’

as of March 31, 2020

$ ( 410,904 )

exchange translation

of Class A common stock in connection with public offerings

of Class A common stock in connection with the Metaverse transaction, a related party

capital under the Metaverse transaction, a related party

stock issued in connection with conversion of Convertible Notes and second lien loans

of warrants for Class A common stock

A common stock to be issued in connection with asset acquisitions

of f Class A common stock for third party professional services

stock dividends paid with common stock

as of March 31, 2021

$ ( 474,080 )

See accompanying Notes to Consolidated Financial

CINEDIGM CORP.

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

(In thousands, except share data)

Preferred Stock

Comprehensive

Stockholders’

March 31, 2021

$ ( 474,080 )

exchange translation

compensation and expenses

of common stock in connection with business combinations

stock dividends paid in stock

stock in connection with taxes withheld from employees

stock dividends accrued

of common stock for third party equity purchase commitment

of common stock in connection with performance stock units

of common stock in connection with ATM raises, net

as of March 31, 2022

$ ( 472,310 )

See accompanying Notes to Consolidated Financial

CINEDIGM CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Comprehensive loss attributable to noncontrolling interest

Comprehensive (loss) income attributable to controlling interests

See accompanying Notes to Consolidated Financial Statements

Cineverse Corp.

CONSOLIDATED STATEMENTS OF CAS H FLOWS

(In thousands)

1 unchanged sentence

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:

Depreciation and amortization of property and equipment and amortization of intangible assets

Net (loss) income

Adjustments to reconcile net (loss) income to cash (used in) provided by

operating activities:

Depreciation and amortization

Deferred income tax

Impairment of prepaid advances

Allowance for prepaid advances

Impairment of intangibles

Changes in fair value of equity investment in Metaverse

Loss from sale of property and equipment

Amortization of debt issuance costs included in interest expense

Stock-based compensation and expenses

Stock-based compensation

Interest expense for deferred consideration

Change in fair value of earnout for earnout consideration

(Gain) loss on extinguishment of note payable

Accretion and PIK interest expense added to note payable

Change in estimated earnout consideration

Gain on extinguishment of note payable

Interest expense for earnout consideration

Revenue recognized under nonmonetary purchase and exchange of content

Changes in operating assets and liabilities, net of acquisitions:

8 unchanged sentences

Purchase of intangible assets

Purchase of business, net of cash acquired

Proceeds from the sale of property and equipment

Purchase of businesses

Sale of equity investment securities

1 unchanged sentence

Cash flows from financing activities:

Payments of notes payable

Repayments under revolving credit agreement, net

Proceeds from PPP Loan

Payments of notes payable and deferred consideration

Proceeds from line of credit

Payments of line of credit

Debt issuance costs

Net proceeds from issuance of Class A common stock

Net cash provided by financing activities

Net change in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of year

Cash, cash equivalents and restricted cash at end of year

See accompanying Notes to Consolidated Financial

CINEDIGM CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

See accompanying Notes to Consolidated Financial Statements

Cineverse Corp.

SUPPLEMENTAL CASH FLOW INFORMATION AND DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITY

(In thousands)

For the Fiscal Year Ended

Cash interest paid

Income taxes paid

Lease liability related payments

Noncash investing and financing activities:

Accrued dividends on preferred stock

Issuance of Class A common stock for payment of preferred stock dividends

Issuance of Class A common stock for intangible asset purchase

Deferred consideration in purchase of a business

Right of use assets recognized underlying lease arrangements

Earnout consideration in purchase of a business

Treasury shares acquired for withholding taxes

Cineverse Corp.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

Preferred Stock

Accumulated Other

Stockholders’

Comprehensive Loss

Balances as of March 31, 2022

Foreign exchange translation

Stock-based compensation

Preferred stock dividends paid with common stock

Preferred stock dividends accrued

Issuance of common stock for with PSUs and incentives, net of payroll taxes

Issuance of common stock for earnout commitment

Issuance of common stock for Board of Director compensation

Issuance of common stock for acquisition

Net income (loss)

Balances as of March 31, 2023

See accompanying Notes to Consolidated Financial Statements

Cineverse Corp.

CONSOLIDATED STATEM ENTS OF EQUITY

(In thousands)

Preferred Stock

Accumulated Other

Stockholders’

Comprehensive Loss

Balances as of March 31, 2021

Foreign exchange translation

Stock compensation and expenses

Issuance of common stock in connection with business combinations

Preferred stock dividends paid in stock

Treasury stock in connection with taxes withheld from employees

Preferred stock dividends accrued

Issuance of common stock for third party equity purchase commitment

Issuance of common stock in connection with performance stock units

Issuance of common stock in connection with ATM raises, net

Balances as of March 31, 2022

See accompanying Notes to Consolidated Financial Statements

Cineverse Corp.

NOTE S TO CONSOLIDATED FINANCIAL STATEMENTS

NATURE OF OPERATIONS AND LIQUIDITY

Cinedigm Corp.

the “Company,” “we,” “us,” or similar pronouns) was incorporated in Delaware on March 31, 2000.

are (i) a distributor and aggregator of independent movie, television and other short form content managing a library of distribution

rights to thousands of titles and episodes released across digital, physical, theatrical, home and mobile entertainment platforms (“Streaming”)

and (ii) a servicer of digital cinema assets (“Systems”) for movie screens in both North America and several international

We report our financial results

in two primary segments as follows:

(1) cinema equipment business and (2) content and entertainment business (“Content & Entertainment”

The cinema equipment business segment consists of the non-recourse, financing vehicles and administrators for our

digital cinema equipment (the “Systems”) installed in movie theatres throughout North America and Australia.

It also provides

fee-based support to music and movie screens as well as directly to exhibitors and other third-party customers in the form of monitoring,

billing, collection and verification services.

Cineverse Corp.

(“Cineverse”, “us”, “our”, and “Company”

refers to Cineverse Corp.

and its subsidiaries unless the context otherwise requires) was incorporated in Delaware on March 31, 2000.

On May 22, 2023, the Company changed its corporate name to Cineverse Corp.

Cineverse is (i) a distributor and aggregator of independent movie, television and other short form content managing a library of distribution rights to thousands of titles and episodes released across digital, physical, theatrical, home and mobile entertainment platforms and (ii) a servicer of digital cinema assets for movie screens in both North America and several international countries.

We report our consolidated financial results in two primary segments as follows:

(1) Cinema Equipment and (2) Content & Entertainment (“Content & Entertainment”).

The Cinema Equipment segment consists of the non-recourse, financing vehicles and administrators for our digital cinema equipment (the “Systems”) installed in movie theatres throughout North America and Australia.

It also provides fee-based support to music and movie screens as well as directly to exhibitors and other third-party customers in the form of monitoring, billing, collection and verification services.

This segment's contracts have substantially completed as of March 31, 2023 and the Company does not anticipate significant revenue, profit or loss from this segment in fiscal year 2024.

Our Content & Entertainment segment operates in:

(1) ancillary market aggregation and

distribution of entertainment content and (2) branded and curated over-the-top (“OTT”) digital network business providing

entertainment channels and applications.

Risks and Uncertainties

The COVID-19 pandemic and related economic repercussions created significant

volatility and uncertainty impacting the Company’s results for the period.

As part of our Content & Entertainment business,

the Company sells DVDs and Blu-ray discs at brick-and-mortar stores.

Due to the lingering effects of the COVID-19 pandemic in the year

ended March 31, 2022, the sale of physical discs through our retail partners declined although this was partially offset by digital purchases

of physical product and increases in streaming views.

As part of our Cinema Equipment business, the Company earns revenue when movies

are exhibited in theatres.

Many movie theaters in the United States slowly re-opened with limited capacities through March 31, 2022.

majority of major studios resumed blockbuster films releases during the year which showed an encouraging return of consumer confidence

for the theatrical experience.

As vaccines became readily available and COVID cases decreased, major studios resumed theatrical releases

and there was an uptick in box-office revenue during the period ending March 31, 2022.

We have incurred net losses historically and have net income of $ 2.3

million for the year ended March 31, 2022.

We also have an accumulated deficit of $ 472.3 million and negative working capital of

$ 4.8 million as of March 31, 2022.

Net cash provided by operating activities for the fiscal year ended March 31, 2022 was $ 4.9 million.

(1) ancillary market aggregation and distribution of entertainment content and (2) branded and curated over-the-top (“OTT”) digital network business providing entertainment channels and applications.

Financial Condition and Liquidity

As of March 31, 2023, the Company has an accumulated deficit of $ 482.4 million and negative working capital of $ 7.8 million.

For the year ended March 31, 2023, the Company had a net loss attributable to common shareholders of $ 10.1 million.

Net cash used in operating activities for the year ended March 31, 2023 was $ 8.8 million.

We may continue to generate net losses for the foreseeable future.

Based on these conditions, the Company entered into the following transactions

described below:

of Cinematic Equipment

On March 17, 2021, the Company

entered into two separate agreements for the sale of cinematic equipment to American Multi-Cinema, Inc.

The agreements

included the sale in tranches of a total of 2,369 cinematic projectors starting in March 2021 and continuing through January

2023 for total cash consideration of $ 10.8 million.

For the year ended March 31, 2022, the Company recognized aggregate revenue for

$9.9 million.

A portion of the total proceeds were used to pay down the remaining outstanding balance of the Prospect Loan notes

22, 2021, the maturity date of the East West Credit Facility (as defined in Note 5 - Notes Payable) with East West Bank

was extended from June 30, 2021 to September 28, 2021 and was not extended.

15, 2020, the Company received $ 2.2 million from East West Bank, pursuant to the Paycheck Protection Program (the “PPP Loan”)

of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The PPP Loan matures on April 10, 2022 (the “PPP

Maturity Date”), accrues interest at 1 % per annum and may be prepaid in whole or in part without penalty.

No interest payments

are due within the initial six months of the PPP Loan.

The interest accrued during the initial six-month period is due and payable, together

with the principal, on the PPP Maturity Date.

The Company used all proceeds from the PPP Loan to retain employees, maintain payroll and

make lease and utility payments to support business continuity throughout the COVID-19 pandemic, which amounts were intended to be eligible

for forgiveness, subject to the provisions of the CARES Act, and could be subject to repayment.

On July 7, 2021, the Company received

notification from the lender that the U.S.

Small Business Administration had approved the Company’s PPP Loan forgiveness application

for the entire PPP Loan amount and accrued interest effective as of June 30, 2021.

The forgiveness of the PPP Loan was recognized as a

gain of $ 2.2 million during the Company’s fiscal quarter ended June 30, 2021.

Upon a series

of payments between April 30 and July 9, 2021, the Company paid in full the Prospect loan non-recourse outstanding debt amount by paying

an aggregate principal amount of $ 7.8 million.

Pre-payment of the Prospect Loan was permissible without penalty.

Stock Purchase Agreement

2021, we entered into a Common Stock Purchase Agreement (the “Equity Line Purchase Agreement”) and a Registration Rights Agreement

(the “Registration Rights Agreement”) with B.

Riley Principal Capital, LLC (“B.

Riley Principal Capital”).

to the Equity Line Purchase Agreement, the Company has the right to sell to B.

Riley Principal Capital up to the lesser of (i) $50,000,000

of newly issued shares of Common Stock and (ii) the Exchange Cap (as defined in the Equity Line Purchase Agreement), from time to time

during the 24-month period from and after the October 21, 2021.

Sales of Common Stock pursuant to the Equity Line Purchase Agreement,

and the timing of any sales, are solely at the option of the Company, and the Company is under no obligation to sell any securities to

Riley Principal Capital under the Equity Line Purchase Agreement.

As consideration for B.

Riley Principal Capital’s commitment

to purchase shares of Common Stock at the Company’s direction upon the terms and subject to the conditions set forth in the Equity

Line Purchase Agreement, upon execution of the Equity Line Purchase Agreement, the Company issued 210,084 shares of Common Stock to B.

Riley Principal Capital (the “Commitment Shares”).

The purchase price of the shares of Common Stock that we elect to sell

Riley Principal Capital pursuant to the Equity Line Purchase Agreement will be determined by reference to the volume weighted average

price of the Common Stock (“VWAP”) during the applicable purchase date, less a fixed 5% discount to such VWAP.

the Registration Rights Agreement, the Company filed a Registration Statement on Form S-1 that was declared effective by the Securities

and Exchange Commission on October 21, 2021 (File No.

333-260210) for the resale by B.

Riley Principal Capital of up to 25,210,084 shares

of Common Stock (including the Commitment Shares) acquired pursuant to the Equity Line Purchase Agreement.

During October and November

2021, we sold 5,300,000 shares of Common Stock under the Equity Line Purchase Agreement.

Net proceeds from such sales totaled $12.4 million.

We believe the combination of:

(i) our cash and cash equivalent balances at March 31, 2022 and (ii) expected cash flow from operations, will be sufficient for our operations

and capital needs, for at least twelve months from the filing of this report.

Our capital requirements will depend on many factors, and

we may need to use capital resources and obtain additional capital.

Failure to generate additional revenues, obtain additional capital

or manage discretionary spending could have an adverse effect on our financial position, results of operations and liquidity.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND CONSOLIDATION

Our consolidated financial statements include

the accounts of Cinedigm and its wholly owned and majority owned subsidiaries.

All intercompany transactions and balances have been eliminated

in consolidation.

Investments in which we do not have a controlling interest or are not

the primary beneficiary, but have the ability to exert significant influence, are accounted for under the equity method at fair value

where we have elected the fair value option.

Noncontrolling interests for which we have been determined to be the primary beneficiary

are consolidated and recorded as net loss attributable to noncontrolling interest.

See Note 3 - Other Interests to the

Consolidated Financial Statements for a discussion of our noncontrolling interests.

The Company is party to a Loan, Guaranty, and Security Agreement with East West Bank (“EWB”) providing for a revolving line of credit (the “Line of Credit Facility”) of $ 5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries’

The Line of Credit Facility bears interest at a rate equal to 1.5 % above the prime rate, and was 9.0 % as of March 31, 2023.

The Line of Credit Facility expires on September 15, 2023 with a one-year extension available at EWB’s discretion.

As of March 31, 2023, $ 5.0 million was outstanding on the Line of Credit Facility.

The Company was out of compliance during a portion of fiscal year 2023, but obtained waivers from EWB.

On June 28, 2023, the Company was notified in writing by EWB that it intends to extend the maturity date of the Line of Credit Facility to September 15, 2024 , subject to definitive documentation.

We believe our cash and cash equivalent balances as of March 31, 2023 and proceeds from the subsequent issuance of equity (See Note 9 - Subsequent Events ) will be sufficient to support our operations for at least twelve months from the filing of this report.

The Company may also undertake equity or debt offerings, if necessary and opportunistically available, for further capital needs.

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

The accompanying consolidated financial statements of Cineverse Corp.

have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”).

These consolidated financial Statements have been prepared by the Company following the rules and regulations of the SEC.

All intercompany transactions and balances have been eliminated in consolidation.

We own an 85 % interest in CON TV, LLC ("CONtv"), a worldwide digital network that creates original content, and sells and distributes on-demand digital content on the internet and other consumer digital distribution platforms, such as gaming consoles, set-top boxes, handsets, and tablets.

We evaluated the investment under the voting interest entity model and determined that the entity should be consolidated as we have a controlling financial interest in the entity through our ownership of outstanding voting shares, and that other equity holders do not have substantive voting, participating or liquidation rights.

We recorded net loss attributable to noncontrolling interest in our Consolidated Statements of Operations equal to 11 % of outstanding profit interest units retained by the noncontrolling interests.

We indirectly own 100 % of the common equity of CDF2 Holdings, LLC (“CDF2 Holdings”), which was created for the purpose of capitalizing on the conversion of the exhibition industry from film to digital technology.

CDF2 Holdings assists its customers in procuring the equipment necessary to convert their systems to digital technology by providing financing, equipment, installation and related ongoing services.

CDF2 Holdings is a Variable Interest Entity (“VIE”), as defined in ASC 810, Consolidation ("ASC 810") .

ASC 810 requires the consolidation of VIEs by an entity that has a controlling financial interest in the VIE which entity is thereby defined as the primary beneficiary of the VIE.

To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, among other factors.

Although we indirectly, wholly own CDF2 Holdings, we, a third party that also has a variable interest in CDF2 Holdings, and an independent third party manager must mutually approve all business activities and transactions that significantly impact CDF2 Holdings’

economic performance.

We have therefore assessed our variable interests in CDF2 Holdings and determined that we are not the primary beneficiary of CDF2 Holdings.

As a result, CDF2 Holdings’

financial position and results of operations are not consolidated in our financial position and results of operations.

In completing our assessment, we identified the activities that we consider most significant to the economic performance of CDF2 Holdings and determined that we do not have the power to direct those activities, and therefore we account for our investment in CDF2 Holdings under the equity method of accounting.

Use of Estimates

The preparation of consolidated financial statements in conformity

with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and assumptions

that affect the assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements

and the reported amounts of revenue and expenses during the reporting period.

Such estimates include the adequacy of digital revenue,

accounts receivable reserves, return reserves, inventory reserves, recovery of advances, assessment of goodwill impairment, intangible

asset impairment and estimated amortization lives, fair value for asset acquisitions and business combinations, valuation allowances for

income taxes and stock awards.

Actual results could differ from these estimates.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

We consider all highly liquid investments with an original maturity

of three months or less to be “cash equivalents.” We maintain bank accounts with major banks, which from time to time may

exceed the Federal Deposit Insurance Corporation’s insured limits.

We periodically assess the financial condition of the institutions

and believe that the risk of any loss is minimal.

Our Prospect Loan required that we maintain specified cash balances that are restricted

to repayment of interest thereunder.

See Note 5- Notes Payable for information about our restricted cash balances.

Cash, cash equivalents, and restricted cash consisted of the following:

(in thousands)

The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes.

Significant items subject to such estimates and assumptions include revenue recognition, share-based compensation expense, valuation allowance for deferred income taxes, recovery of advances, fair value for asset acquisitions and business combinations, goodwill and intangible asset impairments, the fair value of our investment in Metaverse, and the assessment of amortization lives to intangible assets.

The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances.

On a regular basis, the Company evaluates the assumptions, judgments and estimates.

Actual results may differ from these estimates.

Reclassifications

Certain amounts have been reclassified to conform to the current presentation.

Cash and Cash Equivalents

Restricted Cash

EQUITY INVESTMENT IN A METAVERSE COMPANY, A RELATED PARTY

On February 14, 2020, the Company acquired an

approximately 11.5 % interest in A Metaverse Company (“Metaverse”), a leading publicly traded Chinese entertainment company,

formerly Starrise Media Holdings Limited, whose ordinary shares are listed on the Stock Exchange

of Hong Kong.

The Company acquired such interest as a strategic investment and in a private transaction from a shareholder of Metaverse

that is related to our major shareholders.

Our major shareholders also maintain a significant beneficial interest ownership in Metaverse.

Upon consummation of the transaction on February 14, 2020, the Company recorded an initial investment of approximately $ 25.1 million,

which is the fair market value of the Metaverse shares on the transaction date on the Stock Exchange of Hong Kong, in exchange for the

Company’s common stock of $ 11.2 million, valued as of the date of the issuance of the Common Stock of the Company.

The difference

in value of shares received in Metaverse and shares issued by the Company is deemed as contributed capital and recorded in additional

paid-in capital.

On April 10, 2020, the Company purchased an additional

15 % interest in Metaverse in a private transaction from shareholders of Metaverse that are affiliated with the major shareholder of the

The Company recorded an additional equity investment of approximately $ 28.2 million, which is the fair market value of the

Metaverse shares on the transaction date on the Stock Exchange of Hong Kong, in exchange for the Company’s common stock of $ 11.0 million,

valued at the date of the issuance of the Common Stock of the Company.

The difference in the value of shares received in Metaverse and

shares issued by the Company is deemed as contributed capital and recorded in additional paid-in capital.

This transaction was also recorded

as an equity investment in Metaverse.

The Company has accounted for these investments

under the equity method of accounting as the Company can exert significant influence over Metaverse with its direct ownership and affiliation

with the Company’s majority shareholders.

The Company has made an irrevocable election to apply the fair value option under ASC

825-10, Financial Instruments , as it relates to its equity investment in Metaverse.

During the years ended March 31, 2022 and March 31, 2021, the Company

sold 680,000 shares of Metaverse shares for net proceeds of approximately $ 12.3 thousand and 8,370,000 of Metaverse shares for net proceeds

of approximately $ 0.8 million, respectively, which resulted in a loss on sale of approximately $ 1 thousand and $ 73 thousand,

respectively.

As of March, 31, 2022 and 2021, the value of our equity investment

in Metaverse, using the readily determinable fair value method from the quoted trading price of the Stock Exchange of Hong Kong, was approximately

$ 7.03 million and $ 6.44 million, respectively, resulting in a change in fair value of approximately $ 0.59 million for the year ended March

At March 31, 2022, the Company owned 362,307,397 shares or 17 % of Metaverse.

Equity Investment in Metaverse, a related party transaction

On December 27, 2019, the Company

entered into, and on February 14, 2020 amended, (see Note 2 - Summary of Significant Accounting Policies ), a stock purchase

agreement (as so amended, the “Metaverse Stock Purchase Agreement”) with BeiTai Investment LP (“BeiTai”), a related

party for accounting purposes of Cinedigm and Aim Right Ventures Limited (“Aim Right”), two shareholders of A Metaverse Company,

a leading Chinese entertainment company (“Metaverse”), formerly Starrise Media Holdings Limited, to buy from them an aggregate

of 410,901,000 outstanding Metaverse ordinary shares (the “Metaverse Share Acquisition”).

On February 14, 2020, the Company

purchased 162,162,162 of the Metaverse ordinary shares from BeiTai and issued BeiTai 21,646,604 shares of its Class

A common stock, par value $ .001 per share (the “Common Stock”) in consideration therefor.

The Metaverse shares received

were valued at approximately $ 25 million and the Company issued shares that were valued at approximately $ 11.2 million.

10, 2020, the Company, in accordance with the terms of the Stock Purchase Agreement, terminated its obligation to purchase Metaverse ordinary

shares from Aim Right under the Metaverse Stock Purchase Agreement.

On April 10, 2020, the Company

entered into another stock purchase agreement (the “April Metaverse Stock Purchase Agreement”) with five (5) shareholders

of Metaverse - Bison Global Investment SPC - Bison Global No.

1 SP, Huatai Investment LP, Antai Investment LP, Mingtai Investment LP and

Shangtai Asset Management LP, all of which are related parties to the Company to buy - an aggregate of 223,380,000 outstanding Metaverse

ordinary shares from them and for the Company to issue to them an aggregate of 29,855,081 shares of its Common Stock as consideration

therefor (the “April Metaverse Share Acquisition”).

On April 15, 2020, the April Metaverse Share Acquisition was consummated

and this transaction was also recorded as an equity investment in Metaverse.

Metaverse’s ordinary shares

(HK 1616) are listed on the main board of the Stock Exchange of Hong Kong Limited.

Based on the closing price of .152 per share on March

31, 2022, calculated at an exchange rate of 7.83 Hong Kong Dollars to 1 US dollar, the market value of Cinedigm’s ownership in Metaverse

ordinary shares was approximately $7.03 million.

On April 1, 2022, trading of Metaverse’s ordinary shares was halted.

We consider all highly liquid investments with an original maturity of three months or less to be “cash equivalents.”

We maintain bank accounts with major banks, which from time to time may exceed the Federal Deposit Insurance Corporation’s insured limits.

We periodically assess the financial condition of the institutions and believe that the risk of any loss is minimal.

Non-monetary Transactions

year ended March 31, 2020, the Company entered into agreements with certain vendors to transfer 5,139,762 and 14,184,765 Metaverse

ordinary shares to satisfy outstanding liabilities with these vendors.

Upon the sale of the Metaverse shares by the vendors, with certain

restrictions on sales unless the Company gave consent to sell, if the proceeds did not satisfy the amount due to the vendor, the Company

was liable for the balance owed.

Pursuant to such agreements, the Company reduced the amount payable to its vendors by $ 0.8 million

as of March 31, 2021.

There were no such transactions during the year ended March 31, 2022.

There was no gain or loss resulting

from these transactions for the year ended March 31, 2022 and 2021.

ACCOUNTS RECEIVABLE

We maintain reserves for potential credit losses

on accounts receivable.

We review the composition of accounts receivable and analyze historical bad debts, customer concentrations, customer

credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.

are recorded primarily on a specific identification basis.

We record accounts receivable, long-term in connection

with activation fees that we earn from our Systems deployments that have extended payment terms.

Such accounts receivable are discounted

to their present value at prevailing market rate.

Advances, which are recorded within prepaid and other current assets

on the consolidated balance sheets, represent amounts prepaid to studios or content producers for which we provide content distribution

We evaluate advances regularly for recoverability and record impairment charges for amounts that we expect may not be recoverable

as of the consolidated balance sheet date.

Impairments and accelerated amortization related to advances were $ 1.2 million and $ 0.3 million, for

the years ended March 31, 2022 and 2021, respectively.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, less accumulated depreciation

and amortization.

Depreciation expense is recorded using the straight-line method over the estimated useful lives of the respective assets

Computer equipment and software

Internal use software

Digital cinema projection systems

Machinery and equipment

Furniture and fixtures

We capitalize costs associated with software developed

or obtained for internal use when the preliminary project stage is completed, and it is determined that the software will provide significantly

enhanced capabilities and modifications.

These capitalized costs are included in property and equipment and include external direct cost

of services procured in developing or obtaining internal-use software and personnel and related expenses for employees who are directly

associated with, and who devote time to internal-use software projects.

Capitalization of these costs ceases once the project is substantially

complete and the software is ready for its intended use.

Once the software is ready for its intended use, the costs are amortized over

the useful life of the software.

Post-configuration training and maintenance costs are expensed as incurred.

Leasehold improvements are amortized over the

shorter of the lease term or the estimated useful life of the leasehold improvements.

Repair and maintenance costs are charged to expense

Major renewals, improvements and additions are capitalized.

Upon the sale or other disposition of any property and equipment,

the cost and related accumulated depreciation and amortization are removed from the accounts and the gain or loss on disposal is included

in the consolidated statements of operations.

IMPAIRMENT OF LONG-LIVED AND FINITE-LIVED ASSETS

We review the recoverability of our long-lived assets and finite-lived

intangible assets, when events or conditions occur that indicate a possible impairment exists.

The assessment for recoverability is based

primarily on our ability to recover the carrying value of our long-lived and finite-lived assets from expected future undiscounted net

If the total of expected future undiscounted net cash flows is less than the total carrying value of the asset, the asset

is deemed not to be recoverable and possibly impaired.

We then estimate the fair value of the asset to determine whether an impairment

loss should be recognized.

An impairment loss will be recognized if the asset’s fair value is determined to be less than its

carrying value.

Fair value is determined by computing the expected future discounted cash flows.

During the years ended March 31,

2022 and 2021, the Company assessed the future performance of titles included in the customer list intangible asset, which resulted in

an impairment charge of $ 2.0 million and $ 0 was recorded from operations for long-lived assets or finite-lived assets.

INTANGIBLE ASSETS

During the year ended March 31, 2023, the Company entered into a non-monetary transaction for the purchase and sale of content licenses with an unrelated third party.

The fair value of the content was based on a market approach and determined to be $ 1.0 million which is included in Revenues in our Consolidated Statements of Operations.

gain or loss was recognized, as the fair value of the content licenses purchased was determined to be $ 1.0 million and recognized within Intangible Assets, Net on our Consolidated Balance Sheets, and will be amortized over its three year estimated life.

For the year ended March 31, 2023, $ 85 thousand of related amortization expense had been recognized.

Accounts Receivable, Net

We maintain reserves for potential credit losses on accounts receivable.

We review the composition of accounts receivable and analyze historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.

Reserves are recorded primarily on a specific identification basis.

During the year ended March 31, 2023, the Company had written off $ 2.8 million of previously reserved accounts receivable balances.

Employee Retention Tax Credit

The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") provided an employee retention credit which was a refundable tax credit against certain employment taxes.

The Consolidated Appropriations Act (the "Appropriations Act") extended and expanded the availability of the employee retention credit through December 31, 2021.

The Appropriations Act amended the employee retention credit to be equal to 70 % of qualified wages paid to employees during the 2021 fiscal year.

The Company qualified for the employee retention credit beginning in June 2020 for qualified wages through September 2021 and filed a cash refund claim during the twelve months ended March 31, 2023 for $ 2.5 million.

Accordingly, the Company recorded an employee retention credit totaling $ 2.5 million, respectively, in the Employee retention tax credit line on the Company’s Consolidated Statements of Oper ations.

As of March 31, 2023, the tax credit receivable of $ 2.1 million has been included in the Employee retention tax credit line on the Company's Consolidated Balance Sheet.

Advances, which are recorded within prepaid and other current assets on the Consolidated Balance Sheets, represent amounts prepaid to studios or content producers for which we provide content distribution services for which we may have the right to recoup over the term of those services.

We evaluate advances regularly for recoverability and record an allowance o n a specific identification basis for amounts that we expect may not be recoverable as of the Consolidated Balance Sheet dates.

The provision for allowances related to advances were $ 1.3 million and $ 1.2 million , for the years ended March 31, 2023 and 2022 , respectively.

Intangible Assets, Net

Intangible assets are stated at cost less accumulated amortization.

For intangible assets that have finite lives, the assets are amortized using the straight-line method over the estimated useful lives

of the related assets.

For intangible assets with indefinite lives, the assets are tested annually for impairment or sooner if a triggering

event occurs.

During the years ended March 31, 2022 and 2021, we recorded an impairment of $ 2.0 million and $ 0 for our customer relationships,

respectively.

Amortization expense is recorded using the straight-line method over

the estimated useful lives of the respective assets as follows:

For intangible assets that have finite lives, the assets are amortized using the straight-line method over the estimated useful lives of the related assets.

We review the recoverability of our Intangible Assets when events or conditions occur that indicate a possible impairment exists.

An assessment for recoverability is based primarily on our ability to recover the carrying value of our long-lived and finite-lived assets from expected future undiscounted net cash flows.

If the total of expected future undiscounted net cash flows is less than the total carrying value of the asset, the asset is deemed not to be recoverable and possibly impaired.

We then estimate the fair value of the asset to determine whether an impairment loss should be recognized.

An impairment loss will be recognized if the asset’s fair value is determined to be less than its carrying value.

Fair value is determined by computing the expected future discounted cash flows.

During the years ended March 31, 2023 and 2022 , we recorded an impairment of $ 0 and $ 2.0 million for our customer relationships, respectively.

Amortization expense is recorded using the straight-line method over the estimated useful lives of the respective assets as follows:

Content Library

Trademarks and Tradenames

Customer Relationships

Theatre Relationship

Supplier Agreements

Intangible Assets

The Company’s intangible assets include the following on March

Advertiser Relationships and Channel

Supplier Agreements

The Company’s intangible assets include the following (in thousands):

As of March 31, 2023

Content Library

Customer Relationships

Theatre Relationship

Advertiser Relationships and Channel

Supplier Agreements

Intangible Assets

Customer Relationships

Trademarks and Tradenames

Total Intangible Assets

The Company’s intangible assets include

the following on March 31, 2021:

As of March 31, 2022

Content Library

Advertiser Relationships and Channel

Trademarks and Tradenames

Customer Relationships

Theatre Relationship

Total Intangible Assets

Below is the amortization expense

per year for the intangible assets:

Supplier Agreements

Intangible Assets

As of March 31, 2023, amortization expense for each of the successive five years is expected to be (in thousands):

Property and Equipment, Net

Property and equipment are stated at cost, less accumulated depreciation and amortization.

Depreciation expense is recorded using the straight-line method over the estimated useful lives of the respective assets, with useful life ranges by major asset class as follows:

Computer equipment and software

Internal use software

Digital cinema projection systems

Machinery and equipment

Furniture and fixtures

We capitalize costs associated with software developed or obtained for internal use when the preliminary project stage is completed, and it is determined that the software will provide significantly enhanced capabilities and modifications.

These capitalized costs are included in property and equipment and include external direct cost of services procured in developing or obtaining internal-use software and personnel and related expenses for employees who are directly associated with, and who devote time to internal-use software projects.

Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended use.

Once the software is ready for its intended use, the costs are amortized over the useful life of the software on a straight-line basis.

Post-configuration training and maintenance costs are expensed as incurred.

Our Property and Equipment is considered for impairment if a triggering event occurs, following the same methodology described in the Intangible Assets, net section.

As of March 31, 2023, the Company's gross Property and Equipment of $ 68.1 million had $ 66.3 million of associated accumulated depreciation.

As of March 31, 2022, the Company's gross Property and Equipment of $ 111.7 million had $ 109.7 million of associated accumulated depreciation.

Goodwill is the excess of the purchase price paid over the fair value of the net assets of an acquired business.

Goodwill is tested for impairment on an annual basis or more often if warranted by events or changes in circumstances indicating that the carrying value may exceed fair value, also known as impairment indicators.

Inherent in the fair value determination for each reporting unit are certain judgments and estimates relating to future cash flows, including management’s interpretation of current economic indicators and market conditions, and assumptions about our strategic plans with regard to its operations.

To the extent additional information arises, market conditions change, or our strategies change, it is possible that the conclusion regarding whether our remaining goodwill is impaired could change and result in future goodwill impairment charges that will have a material effect on our consolidated financial position or results of operations.

The Company has the option to assess goodwill for possible impairment by performing a qualitative analysis to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount or to perform the quantitative impairment test.

The Company reassessed goodwill impairment on its annual measurement date of March 31, 2023 by performing a qualitative analysis and determined that it was not more likely than not that the fair value of its reporting unit is greater than its carrying amount.

During the year ended March 31, 2023, the Company recorded a purchase price adjustment to reduce Goodwill by $ 260 thousand.

No goodwill impairment charge was recorded in the years ended March 31, 2023 and 2022 .

Fair Value Measurements

The fair value measurement disclosures are grouped into three levels

based on valuation factors:

The authoritative guidance on fair value measurements establishes a framework with respect to measuring assets and liabilities at fair value on a recurring basis and non-recurring basis, within ASC 820, Fair Value Measurement .

Under the framework, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as of the measurement date.

The framework also establishes a three-tier hierarchy for inputs used in measuring fair value that maximizes the use of

observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability and are developed based on the best information available in the circumstances.

The hierarchy consists of the following three levels:

Level 1 –

quoted prices in active markets for identical investments

Level 2 –

other significant observable inputs (including quoted prices for similar investments and market corroborated inputs)

Level 3 –

significant unobservable inputs (including our own assumptions in determining the fair value of investments)

Assets and liabilities measured at fair value

on a recurring basis use the market approach, where prices and other relevant information are generated by market transactions involving

identical or comparable assets or liabilities.

The equity investment in Metaverse is in Hong Kong dollars and was

translated into US dollars as of March 31, 2022 and 2021 at an exchange rate of 7.8 and 7.8 Hong Kong Dollars to 1 US Dollar, respectively.

The fair value of this equity investment is measured by the quoted market price of Metaverse on the Stock Exchange of Hong Kong.

The adjustment

to fair value of this investment resulted in a gain of $ 585 and loss of $ 4,518 for the years ended March 31, 2022 and 2021, respectively.

The following tables summarize the levels of fair

value measurements of our financial assets and liabilities as of March 31, 2022 and, 2021:

March 31, 2022

(in thousands)

The following tables summarize the levels of fair value measurements of our financial assets and liabilities (in thousands):

As of March 31, 2023

Equity investment in Metaverse, at fair value

Current portion of earnout consideration on purchase of a business

Long term portion of earnout consideration on purchase of a business

Current portion of earnout consideration on purchase

of a business

Long term portion of earnout consideration on purchase

of a business

As of March 31, 2022

(in thousands)

Restricted cash

Equity investment in Metaverse, at fair value

Our cash and cash equivalents, accounts receivable, unbilled revenue

and accounts payable and accrued expenses are financial instruments and are recorded at cost in the consolidated balance sheets.

estimated fair values of these financial instruments approximate their carrying amounts because of their short-term nature.

Current portion of earnout consideration on purchase

of a business

Long term portion of earnout consideration on purchase

of a business

On February 14, 2020, the Company acquired an approximate 11.5 % interest in A Metaverse Company (“Metaverse”), a publicly traded Chinese entertainment company, formerly Starrise Media Holdings Limited, whose ordinary shares are listed on the Stock Exchange of Hong Kong.

The Company acquired such interest as a strategic investment and in a private transaction from a shareholder of Metaverse that is related to our major shareholders.

Our major shareholders also maintain a significant beneficial interest ownership in Metaverse.

On April 10, 2020, the Company purchased an additional 15 % interest in Metaverse in a private transaction from shareholders of Metaverse that are affiliated with the major shareholder of the Company.

The Company recorded an additional equity investment of approximately $ 28.2 million, which was the fair market value of the Metaverse shares on the transaction date on the Stock Exchange of Hong Kong, in exchange for the Company’s common stock of $ 11.0 million, valued at the date of the issuance of the Common Stock of the Company.

The difference in the

value of shares received in Metaverse and shares issued by the Company is deemed as contributed capital and recorded in additional paid-in capital.

This transaction was also recorded as an equity investment in Metaverse.

The Company has accounted for this investment under the equity method of accounting as the Company can exert significant influence over Metaverse with its direct ownership and affiliation with the Company’s majority shareholders.

The Company has made an irrevocable election to apply the fair value option under ASC 825-10, Financial Instruments , as it relates to its equity investment in Metaverse.

As of March 31, 2022, the value of our equity investment in Metaverse of $ 7.0 million, using the quoted trading price of the Stock Exchange of Hong Kong, resulting in an increase in fair value of $ 0.6 million for the year ended March 31, 2022.

Following the halting of Metaverse stock trading on the Stock Exchange of Hong Kong in April 2022, the Company valued our equity investment in Metaverse using a market approach and is categorized as a Level 3 valuation based on unobservable inputs.

The Company estimated the fair value of Metaverse based on the last known enterprise value, adjusting for trends in enterprise valuations for comparable companies.

As of March 31, 2023, the fair value was $ 5.2 million, resulting in a decrease in fair value of $ 1.8 million for the year ended March 31, 2023.

The Company estimated the fair value of its earnout liability using contractual inputs from the related business combination, which established specific fiscal year 2023 revenue growth, profitability and EBITDA targets.

The Company utilizes the most up to date forecast to estimate the outcome against these targets to determine the ultimate estimated payout.

The amounts recognized are not discounted.

During the fiscal year ended March 31, 2023, the Company increased the estimated earnout liability by $ 80 thousand and made payments of $ 238 thousand to reduce this liability, partially offset by $ 83 thousand of interest accrued.

Our cash and cash equivalents, accounts receivable, unbilled revenue and accounts payable and accrued expenses are financial instruments and are recorded at cost in the consolidated balance sheets.

The estimated fair values of these financial instruments approximate their carrying amounts because of their short-term nature.

Asset Acquisitions

An asset acquisition is an acquisition of an asset, or a group of assets,

that does not meet the definition of a business.

Asset acquisitions are accounted for by using the cost accumulation model whereby the

cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of relative fair values.

Goodwill is the

excess of the purchase price paid over the fair value of the net assets of an acquired business.

Goodwill is tested for impairment on

an annual basis or more often if warranted by events or changes in circumstances indicating that the carrying value may exceed fair value,

also known as impairment indicators.

in the fair value determination for each reporting unit are certain judgments and estimates relating to future cash flows, including management’s

interpretation of current economic indicators and market conditions, and assumptions about our strategic plans with regard to its operations.

To the extent additional information arises, market conditions change, or our strategies change, it is possible that the conclusion regarding

whether our remaining goodwill is impaired could change and result in future goodwill impairment charges that will have a material effect

on our consolidated financial position or results of operations.

has the option to assess goodwill for possible impairment by performing a qualitative analysis to determine if it is more likely than

not that the fair value of a reporting unit is less than its carrying amount or to perform the quantitative impairment test.

reassessed goodwill impairment on its annual measurement date of March 31, 2022 by performing a qualitative analysis and determined that

it was not more likely than not that the fair value of its reporting unit is less than its carrying amount.

No goodwill impairment charge

was recorded in the years ended March 31, 2022 and 2021.

Gross amounts

of goodwill and accumulated impairment charges that we have recorded are as follows:

(In thousands)

Goodwill at March 31, 2021

Goodwill from business combinations – see Note 4

Goodwill at March 31, 2022

PAYABLE AND ACCRUED EXPENSES

payable and accrued expenses consisted of the following:

(In thousands)

An asset acquisition is an acquisition of an asset, or a group of assets, that does not meet the definition of a business.

Asset acquisitions are accounted for by using the cost accumulation model whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of relative fair values.

Prepaid and Other Current Assets

Prepaid and other current assets consisted of the following (in thousands):

As of March 31,

Advances and Due from Producers

Other receivables

Other prepaid expenses

Total prepaid and other current assets

Advances and amounts due from producers represent amounts prepaid to studios or content producers for which we provide content distribution services.

We evaluate advances and amounts due from producers regularly for recoverability and an allowance for amounts that we expect may not be recoverable.

The provision for allowances and accelerated amortization related to advances and amounts due from producers were $ 1.3 million and $ 1.2 million for the years ended March 31, 2023 and 2022 , respectively.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following (in thousands):

As of March 31,

Accounts payable

Amounts due to producers, net

Amounts due to producers

Accrued compensation and benefits

Accrued taxes (refund) payable

Interest payable

Accrued other expenses

Total accounts payable and accrued expenses

AND OTHER CURRENT ASSETS

and other current assets consisted of the following:

(In thousands)

Non-trade accounts receivable

Due from producers

Prepaid insurance

Other prepaid expenses

Total prepaid and other current assets

Impairments and accelerated amortization related

to advances were $ 1.2 million and $ 0.3 million, for the years ended March 31, 2022 and 2021, respectively.

Revenue Recognition

Payment terms and conditions vary by customer and typically provide

net 30 to 90 day terms.

We do not adjust the promised amount of consideration for the effects of a significant financing component when

we expect, at contract inception, that the period between our transfer of a promised product or service to our customer and payment for

that product or service will be one year or less.

We have in the past entered into arrangements in connection with activation fees due

from our System deployments that had extended payment terms.

The outstanding balances on these arrangements are insignificant and hence

the impact of significant financing would be insignificant.

Cinema Equipment Business

Our Cinema Equipment Business consists of financing vehicles and administrators for Systems installed nationwide in our first deployment

phase (“Phase I Deployment”) to theatrical exhibitors and for Systems installed domestically and internationally in our second

deployment phase (“Phase II Deployment”).

ownership of our Systems and the residual cash flows related to the Systems in Phase I Deployment after the end of the 10 -year deployment

payment period.

Phase II Deployment Systems, we do not retain ownership of the residual cash flows and digital cinema equipment in Phase II Deployment

after the completion of cost recoupment and at the expiration of the exhibitor master license agreements.

Equipment Business also provides monitoring, data collection, serial data verification and management services to this segment, as well

as to exhibitors who purchase their own equipment, in order to collect virtual print fees (“VPFs”) from motion picture studios

and distributors and Alternative Content Fees (“ACFs”) from alternative content providers, and to distribute those fees to

theatrical exhibitors (collectively, “Services”).

earned, net of administrative fees, pursuant to contracts with movie studios and distributors, whereby amounts are payable by a studio

to Phase I Deployment and to Phase II Deployment when movies distributed by the studio are displayed on screens utilizing our Systems

installed in movie theatres.

VPFs are earned and payable to Phase I Deployment based on a defined fee schedule until the end of the VPF

Payment terms and conditions vary by customer and typically provide net 30 to 90 day terms.

We do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to our customer and payment for that product or service will be one year or less.

We have in the past entered into arrangements in connection with activation fees due from our System deployments that had extended payment terms.

The outstanding balances on these arrangements are insignificant and hence the impact of significant financing would be insignificant.

Cinema Equipment Segment

Our Cinema Equipment segment consists of financing vehicles and administrators for Systems installed nationwide in our first deployment phase (“Phase I Deployment”) to theatrical exhibitors and for Systems installed domestically and internationally in our second deployment phase (“Phase II Deployment”).

We retain ownership of our Systems and the residual cash flows related to the Systems in Phase I Deployment after the end of the 10-year deployment payment period.

For certain Phase II Deployment Systems, we do not retain ownership of the residual cash flows and digital cinema equipment in Phase II Deployment after the completion of cost recoupment and at the expiration of the exhibitor master license agreements.

The Cinema Equipment segment also provides monitoring, data collection, serial data verification and management services to this segment, as well as to exhibitors who purchase their own equipment, in order to collect virtual print fees (“VPFs”) from motion picture studios and distributors and Alternative Content Fees (“ACFs”) from alternative content providers, and to distribute those fees to theatrical exhibitors (collectively, “Services”).

VPFs are earned, net of administrative fees, pursuant to contracts with movie studios and distributors, whereby amounts are payable by a studio to Phase I Deployment and to Phase II Deployment when movies distributed by the studio are displayed on screens utilizing our Systems installed in movie theatres.

VPFs are earned and payable to Phase I Deployment based on a defined fee schedule until the end of the VPF term.

One VPF is payable for every digital title initially displayed per System.

The amount of VPF revenue is dependent on the number

of movie titles released and displayed using the Systems in any given accounting period.

VPF revenue is recognized in the period the

title first plays for general audience viewing in a digital projector equipped movie theatre.

The Phase 1 Deployment’s and Phase

2 Deployments performance obligations for revenue recognition are met at this time.

Phase II Deployment’s agreements

with distributors require the payment of VPFs, according to a defined fee schedule, for ten years from the date each system is installed;

however, Phase II Deployment may no longer collect VPFs once “cost recoupment,” as defined in the contracts with movie studios

and distributors, is achieved.

Cost recoupment will occur once the cumulative VPFs and other cash receipts collected by Phase II Deployment

have equaled the total of all cash outflows, including the purchase price of all Systems, all financing costs, all “overhead and

ongoing costs”, as defined, and including service fees, subject to maximum agreed upon amounts during the three-year rollout period

and thereafter.

Further, if cost recoupment occurs before the end of the eighth contract year, the studios will pay us a one-time “cost

recoupment bonus.” The Company evaluated the constraining estimates related to the variable consideration, that it is not probable

to conclude at this point in time that a significant reversal in the amount of cumulative revenue recognized will occur when the uncertainty

associated with the variable consideration is subsequently resolved.

Under the terms of our standard

cinema equipment licensing agreements, exhibitors will continue to have the right to use our Systems through the end of the term of the

licensing agreement, after which time, they have the option to:

(1) return the Systems to us;

(2) renew their license agreement for successive

one-year terms;

or (3) purchase the Systems from us at fair market value.

As permitted by these agreements, we typically pursue the sale

of the Systems to such exhibitors.

Cinedigm recognizes revenue once the customer takes possession of the Systems and Cinedigm received

the sale proceeds.

The amount of VPF revenue is dependent on the number of movie titles released and displayed using the Systems in any given accounting period.

VPF revenue is recognized in the period the title first plays for general audience viewing in a digital projector equipped movie theatre.

The Phase 1 Deployment’s and Phase 2 Deployments performance obligations for revenue recognition are met at this time.

Phase II Deployment’s agreements with distributors require the payment of VPFs, according to a defined fee schedule, for ten years from the date each system is installed;

however, Phase II Deployment may no longer collect VPFs once “cost recoupment,”

as defined in the contracts with movie studios and distributors, is achieved.

Cost recoupment will occur once the cumulative VPFs and other cash receipts collected by Phase II Deployment have equaled the total of all cash outflows, including the purchase price of all Systems, all financing costs, all “overhead and ongoing costs”, as defined, and including service fees, subject to maximum

agreed upon amounts during the three-year rollout period and thereafter.

Further, if cost recoupment occurs before the end of the eighth contract year, the studios will pay us a one-time “cost recoupment bonus.”

Under the terms of our standard cinema equipment licensing agreements, exhibitors will continue to have the right to use our Systems through the end of the term of the licensing agreement, after which time, they have the option to:

(i) return the Systems to us;

(ii) renew their license agreement for successive one-year terms;

or (iii) purchase the Systems from us at fair market value.

As permitted by these agreements, we typically pursue the sale of the Systems to such exhibitors.

Cineverse recognizes revenue once the customer takes possession of the Systems and Cineverse received the sale proceeds.

Such sales were originally contemplated as the conclusion of the digital cinema deployment plan.

Total system sales

executed was $ 6.1 million and $ 6.7 million, during the year ended March

31, 2022 and 2021, respectively.

Revenues earned in connection with up front exhibitor contributions are

deferred and recognized over the expected cost recoupment period.

who purchased and own Systems using their own financing in Phase II of the Cinema Equipment Business paid us an upfront activation fee

of approximately $ 2.0 thousand per screen (the “Exhibitor-Buyer Structure”).

Upfront activation fees were recognized

in the period in which these Systems were delivered and ready for content, as we had no further obligations to the customer after that

time and collection was reasonably assured.

In addition, we recognize activation fee revenue of between $ 1.0 thousand and $ 2.0 thousand

on Phase II Deployment Systems and for Systems installed by CDF2 Holdings, a related party, (See Note 3 - Other Interests )

upon installation and such fees are generally collected upfront upon installation.

Our services division manages and collects VPFs on

behalf of exhibitors, for which it earns an administrative fee equal to 10 % of the VPFs collected.

Equipment Business earns an administrative fee of approximately 5 % of VPFs collected and, in addition, earns an incentive service

fee equal to 2.5 % of the VPFs earned by Phase 1 DC.

This administrative fee is related to the collection and remittance of the VPF’s

and the performance obligation is satisfied at that time the related VPF fees are due which is at the time the movies are displayed on

screens utilizing our Systems installed in movie theatres.

The service fees are recognized as a point in time revenue when the corresponding

VPF fees are due from the movie studios and distributors.

Content & Entertainment Business

CEG earns fees for the distribution

of content in the home entertainment markets via several distribution channels, including digital, video on demand (“VOD”

or “OTT Streaming and Digital”), and physical goods (e.g., DVDs and Blu-ray Discs) (“Physical Revenue” or “Base

Distribution Business”).

For the Fiscal Years ended March 31, 2023 and 2022, the Company recognized revenue of $ 2.6 million and $ 9.6 million from Digital Cinema System Sales, respectively.

The Cinema Equipment segment earns an administrative fee of approximately 5 % of VPFs collected and, in addition, earns an incentive service fee equal to 2.5 % of the VPFs earned by Phase 1 Deployment.

This administrative fee is related to the collection and remittance of the VPF’s and the performance obligation is satisfied at that time the related VPF fees are due which is at the time the movies are displayed on screens utilizing our Systems installed in movie theatres.

The service fees are recognized at a point in time revenue when the corresponding VPF fees are due from the movie studios and distributors.

A limited number of systems from our Phase I deployment remain eligible for VPF's from certain distributors where Phase I exhibitors have renewed their term on an annual basis.

We continue to pursue system sales for these remaining exhibitors.

For the year ended March 31, 2023 and 2022, $ 9.1 million and $ 4.8 million of revenue was recognized that was included in the accounts payable balance as constrained variable consideration at the beginning of the year.

Certain agreements with studios contain the right to audit VPF fees.

As a result, the Company recognized these amounts as constrained variable consideration until audit conclusion or the expiration of the associated audit rights.

The Company recognized the revenue once the uncertainty associated with the variable considerations was resolved.

As of March 31, 2023, approximatel y $ 1.0 million remains on our Consolidated Balance Sheet in accounts payable as constrained variable consideration.

Content & Entertainment Segment

Our Content & Entertainment segment earns fees for the distribution of content in the home entertainment markets via several distribution channels, including digital, video on demand (“VOD”

or “OTT Streaming and Digital”), and physical goods (e.g., DVDs and Blu-ray Discs) (“Base Distribution”).

Fees earned are typically a percentage based on the net amounts received from our customers.

upon the nature of the agreements with the platform and content providers, the fee rate that we earn varies.

The Company’s performance

obligations include the delivery of content for transactional, subscription and ad supported/free ad-supported streaming TV (“FAST”)

on the digital platforms, and shipment of DVDs and Blu-ray Discs.

Revenue is recognized at the point in time when the content is available

for subscription on the digital platform (the company’s digital content is considered functional IP), at the time of shipment for

physical goods, or point-of-sale for transactional and VOD services as the control over the content or the physical title is transferred

to the customer.

Depending upon the nature of the agreements with the platform and content providers, the fee rate that we earn varies.

The Company’s performance obligations include the delivery of content for transactional, subscription and ad supported/free ad-supported streaming TV (“FAST”) on the digital platforms, and shipment of DVDs and Blu-ray Discs.

Revenue is recognized at the point in time when the content is available for subscription on the digital platform (the Company’s digital content is considered functional IP), at the time of shipment for physical goods, or point-of-sale for transactional and VOD services as the control over the content or the physical title is transferred to the customer.

The Company considers the delivery of content through various distribution channels to be a single performance obligation.

Physical revenue from the sale of physical goods is recognized after deducting the reserves for sales returns and other allowances, which

are accounted for as variable consideration.

Reserves for potential sales

returns of physical goods and other allowances are recorded based upon historical experience.

If actual future returns and allowances

differ from past experience, adjustments to our allowances may be required.

has contracts for the theatrical distribution of third party feature movies and alternative content.

CEG’s distribution fee revenue

and CEG’s participation in box office receipts are recognized at the time a feature movie and alternative content are viewed.

has the right to receive or bill a portion of the theatrical distribution fee in advance of the exhibition date, and therefore such amount

is recorded as a receivable at the time of execution, and all related distribution revenue is deferred until the third party feature movies’

or alternative content’s theatrical release date.

The Company follows the five-step model established by ASC 606 when

preparing its assessment of revenue recognition

Base Distribution Revenue from the sale of physical goods is recognized after deducting the reserves for sales returns and other allowances, which are accounted for as variable consideration.

Base Distribution is recognized after deducting reserves for sales returns and other allowances.

Reserves for potential sales returns and other allowances are recorded based upon historical experience.

If actual future returns and allowances differ from past experience, adjustments to our allowances may be required.

The Content & Entertainment segment also has contracts for the theatrical distribution of third party feature movies and alternative content.

The Content & Entertainment segment's distribution fee revenue and participation in box office receipts are recognized at the time a feature movie and alternative content are viewed.

The Content & Entertainment segment has the right to receive or bill a portion of the theatrical

distribution fee in advance of the exhibition date, and therefore such amount is recorded as a receivable at the time of execution, and all related distribution revenue is deferred until the third party feature movies’

or alternative content’s theatrical release date.

The Company follows the five-step model established by ASC 606, Revenue from Contracts with Customers when preparing its assessment of revenue recognition.

Principal Agent Considerations

Revenue earned by our CEG business from the delivery of digital content

and physical goods may be recognized gross or net depending on the terms of the arrangement.

We determine whether revenue should be reported

on a gross or net basis based on each revenue stream.

Key indicators that we use in evaluating gross versus net treatment include, but

are not limited to, the following:

party is primarily responsible for fulfilling the promise to provide the specified good or service;

party has discretion in establishing the price for the specified good or service.

Revenue earned by our Content & Entertainment segment from the delivery of digital content and physical goods may be recognized gross or net depending on the terms of the arrangement.

We determine whether revenue should be reported on a gross or net basis based on each revenue stream.

Key indicators that we use in evaluating gross versus net treatment include, but are not limited to, the following:

which party is primarily responsible for fulfilling the promise to provide the specified good or service;

which party has discretion in establishing the price for the specified good or service.

Shipping and Handling

Shipping and handling costs are incurred to move physical goods (e.g.,

DVDs and Blu-ray Discs) to customers.

We recognize all shipping and handling costs as an expense in cost of goods sold because we are

responsible for delivery of the product to our customers prior to transfer of control to the customer.

reserves for potential credit losses on accounts receivable.

We review the composition of accounts receivable and analyze historical bad

debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate

the adequacy of these reserves.

Shipping and handling costs are incurred to move physical goods (e.g., DVDs and Blu-ray Discs) to customers.

We recognize all shipping and handling costs as an expense in direct operating expenses because we are responsible for delivery of the product to our customers prior to transfer of control to the customer.

Credit Losses

We maintain reserves for potential credit losses on accounts receivable.

Reserves are recorded primarily on a specific identification basis.

segment recognizes accounts receivable, net of an estimated allowance for product returns and customer chargebacks, at the time that it

recognizes revenue from a sale.

Reserves for product returns and other allowances is variable consideration as part of the transaction

Our Content & Entertainment segment recognizes accounts receivable, net of an estimated allowance for product returns and customer chargebacks, at the time that it recognizes revenue from a sale.

Reserves for product returns and other allowances is variable consideration as part of the transaction price.

If actual future returns and allowances differ from past experience, adjustments to our allowances may be required.

accounts receivable, long-term in connection with activation fees that we earn from Systems deployments that have extended payment terms.

We record accounts receivable, long-term in connection with activation fees that we earn from Systems deployments that have extended payment terms.

Such accounts receivable are discounted to their present value at prevailing market rates.

Contract Liabilities

record a receivable related to revenue when we have an unconditional right to invoice and receive payment, and we record deferred revenue

(contract liability) when cash payments are received or due in advance of our performance, even if amounts are refundable.

revenue pertaining to our Content & Entertainment Business includes amounts related to the sale of DVDs with future release dates.

revenue relating to our Cinema Equipment Business pertains to revenues earned in connection with up front exhibitor contributions that

are deferred and recognized over the expected cost recoupment period.

It also includes unamortized balances in connection with activation

fees due from the Systems deployments that have extended payment terms.

The ending deferred revenue balance, including current and non-current

balances, as of March 31, 2022 was $ 0.2 million.

For the year ended March 31, 2022, the additions to our deferred revenue balance were

primarily due to cash payments received or due in advance of satisfying performance obligations, while the reductions to our deferred

revenue balance were primarily due to the recognition of revenue upon fulfillment of our performance obligations, both of which were

in the ordinary course of business.

For year ended March 31, 2022 and March 31, 2021, there was $ 11,792,210 and $ 14,433,054 , respectively,

included in accounts payable that represents a refund liability, a portion or all of which may be recognized as revenue upon completion

of audit periods.

During the year ended March 31, 2022, $ 813 thousand of revenue was

recognized that was included in the deferred revenue balance at the beginning of the year.

During the year ended March 31, 2022, $ 3.9

million of revenue was recognized that was included in the accounts payable balance as constrained variable consideration at the beginning

The Company recognized the revenue related once the uncertainty associated with the variable consideration was resolved.

Participations

and royalties payable

use third parties to distribute company owned content, we record participations payable, which represent amounts owed to the distributor

under revenue-sharing arrangements.

When we provide content distribution services, we record accounts payable and accrued expenses to

studios or content producers for royalties owed under licensing arrangements.

We identify and record as a reduction to the liability any

expenses that are to be reimbursed to us by such studios or content producers.

We generally record a receivable related to revenue when we have an unconditional right to invoice and receive payment, and we record deferred revenue (contract liability) when cash payments are received or due in advance of our performance, even if amounts are refundable.

Deferred revenue pertaining to our Content & Entertainment includes amounts related to the sale of DVDs with future release dates.

Deferred revenue relating to our Cinema Equipment segment pertains to revenues earned in connection with up front exhibitor contributions that are deferred and recognized over the expected cost recoupment period.

It also includes unamortized balances in connection with activation fees due from the Systems deployments that have extended payment terms.

The ending deferred revenue balance, including current as of March 31, 2023 and 2022 was $ 0.2 million .

For the year ended March 31, 2023, the additions to our deferred revenue balance were primarily due to cash payments received or due in advance of satisfying performance obligations, while the reductions to our deferred revenue balance were primarily due to the recognition of revenue upon fulfillment of our performance obligations, both of

which were in the ordinary course of business.

During the year ended March 31, 2023 , $ 0.2 million of revenue was recognized that was included in the deferred revenue balance at the beginning of the year.

Participations and Royalties Payable

When we use third parties to distribute Company owned content, we record participations payable, which represent amounts owed to the distributor under revenue-sharing arrangements.

When we provide content distribution services, we record accounts payable and accrued expenses to studios or content producers for royalties owed under licensing arrangements.

We identify and record as a reduction to the liability any expenses that are to be reimbursed to us by such studios or content producers.

Disaggregation of Revenue

disaggregates revenue into different revenue categories for the Cinema Equipment and CEG Businesses.

The Cinema Equipment Business revenue

categories are:

Phase I Deployment revenue, Phase II Deployment revenue, Services, and Digital System Sales, and the Content & Entertainment

Business revenue categories are:

Base Distribution Business and OTT Streaming and Digital.

The following

tables present the Company’s revenue categories for the years ended March 31, 2022 and 2021 (in thousands):

Cinema Equipment Business:

Phase I Deployment

Phase II Deployment

Digital System Sales

Total Cinema Equipment Business revenue

Content & Entertainment Business:

Physical Goods

OTT Streaming and Digital

Total Content & Entertainment Business revenue

The Company disaggregates revenue into different revenue categories for the Content & Entertainment and Cinema Equipment segments.

The Content & Entertainment segment revenue categories are:

Base Distribution and Streaming and Digital.

The Cinema Equipment segment revenue categories are:

Variable Consideration, System Sales, and Services and Deployment.

The following tables present the Company’s revenue by segment and source (in thousands):

Year Ended March 31,

Content & Entertainment segment:

Streaming and Digital

Base Distribution

Total Content & Entertainment revenue

Cinema Equipment segment:

Variable Consideration

Services and Deployment

Total Cinema Equipment revenue

Total Revenue

As of March 31, 2023, our Phase I Deployment and Phase II Deployment agreements with certain major studios have reached their conclusion and we do not expect any material revenues to be generated in the Cinema Equipment segment except for System Sales.

Concentrations

For the fiscal year ended March 31, 2022, two customers, Amazon

and Distribution Solutions each represented 18 % and 25 % respectively of CEG’s revenues and approximately 6 % and 8 %, respectively,

of our consolidated revenues.

For the fiscal year ended March 31, 2021, Amazon and Distribution Solutions

represented 15 % and 22 % respectively of CEG’s revenues and approximately 9 % and 13 %, respectively, of our consolidated Revenues.

For the fiscal year ended March 31, 2023 , one customer represented 10 % of consolidated revenue, accounting for 18 % of Content & Entertainment revenue and 12 % of Cinema Equipment revenue.

For the fiscal year ended March 31, 2022, no customer accounted for more than 10 % of our consolidated revenue.

Direct Operating Costs

Direct operating costs consist of operating

costs such as cost of revenue, fulfillment expenses, shipping costs, property taxes and insurance on Systems, royalty expenses, impairments

of advances, and marketing and direct personnel costs.

Direct operating costs consist of operating costs such as cost of revenue, fulfillment expenses, shipping costs, property taxes and insurance on systems, royalty expenses, allowance against advances, a nd marketing and direct personnel costs.

Stock-based Compensation

The Company issues stock-based awards to employees

and non-employees, generally in the form of restricted stock, restricted stock units, stock appreciation rights and performance stock

The Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation

ASC 718 requires all stock-based payments, including grants of stock options and restricted stock units and modifications

to existing stock options, to be recognized in the consolidated statements of operations and comprehensive loss based on their fair values.

The Company measures the compensation expense of employee and nonemployee services received in exchange for an award of equity instruments

based on the fair value of the award on the grant date.

That cost is recognized on a straight-line basis over the period during which

the employee and nonemployee is required to provide service in exchange for the award.

The fair values of options and stock appreciation

rights are calculated as of the date of grant using the Black-Scholes option pricing model based on key assumptions such as stock price,

expected volatility and expected term.

The Company’s estimates of these assumptions are primarily based on the trading price of

the Company’s stock, historical data, peer company data and judgment regarding future trends and factors.

The Company accounts for income

taxes using the asset and liability method.

Under this method, deferred tax assets and liabilities are recognized for the future tax consequences

attributable to operating loss and tax credit carryforwards and for differences between the carrying amounts of existing assets and liabilities

and their respective tax bases.

Valuation allowances are established

when management is unable to conclude that it is more likely than not that some portion, or all, of the deferred tax asset will ultimately

The Company is primarily subject to income taxes in the United States.

The Company accounts for uncertain

tax positions in accordance with an amendment to ASC Topic 740-10, Income Taxes (Accounting for Uncertainty in Income

Taxes) , which clarified the accounting for uncertainty in tax positions.

This amendment provides that the tax effects from an uncertain

tax position can be recognized in the financial statements only if the position is “more-likely-than-not” to be sustained

were it to be challenged by a taxing authority.

The assessment of the tax position is based solely on the technical merits of the position,

without regard to the likelihood that the tax position may be challenged.

If an uncertain tax position meets the “more-likely-than-not”

threshold, the largest amount of tax benefit that is more than 50 % likely to be recognized upon ultimate settlement with the taxing

authority is recorded.

The Company issues stock-based awards to employees and non-employees, generally in the form of restricted stock, restricted stock units, stock appreciation rights and performance stock units.

The Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation (“ASC

718”).

ASC 718 requires all stock-based payments, including grants of stock options and restricted stock units and modifications to existing stock options, to be recognized in the Consolidated Statements of Operations and Comprehensive Loss based on their fair values.

The Company measures the compensation expense of employee and non-employee services received in exchange for an award of equity instruments based on the fair value of the award on the grant date.

That cost is recognized on a straight-line basis over the period during which the employee and non-employee is required to provide service in exchange for the award.

The fair values of options and stock appreciation rights are calculated as of the date of grant using the Black-Scholes option pricing model based on key assumptions such as stock price, expected volatility, risk-free rate and expected term.

The Company’s estimates of these assumptions are primarily based on the trading price of the Company’s stock, historical data, peer company data and judgment regarding future trends and factors.

The Company accounts for income taxes using the asset and liability method.

Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to operating loss and tax credit carryforwards and for differences between the carrying amounts of existing assets and liabilities and their respective tax basis.

Valuation allowances are established when management is unable to conclude that it is more likely than not that some portion, or all, of the deferred tax asset will ultimately be realized.

The Company is primarily subject to income taxes in the United States and India.

The Company accounts for uncertain tax positions in accordance with an amendment to ASC Topic 740-10, Income Taxes , which provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is “more-likely-than-not”

to be sustained were it to be challenged by a taxing authority.

The assessment of the tax position is based solely on the technical merits of the position, without regard to the likelihood that the tax position may be challenged.

If an uncertain tax position meets the “more-likely-than-not”

threshold, the largest amount of tax benefit that is more than 50 % likely to be recognized upon ultimate settlement with the taxing authority is recorded.

The Company has no uncertain tax positions.

NET LOSS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS

and diluted net loss per common share has been calculated as follows:

Basic net income (loss) per common share attributable to common stockholders

Net loss attributable to common stockholders

Weighted average number of common stock outstanding during the period

Diluted net income (loss) per common share attributable to common stockholders

Net loss attributable to common stockholders

Weighted average number of common stock outstanding during the period plus potential dilutive shares

and treasury stock repurchased during the period are weighted for the portion of the period that they are outstanding.

Shares issued and

any shares that are reacquired during the period are weighted for the portion of the period that they are outstanding.

had net income for the year ended March 31, 2022, and therefore the impact of potentially dilutive common shares from outstanding stock

options, stock appreciation rights, and warrants, totaling 3,184,247 shares for the year ended March 31, 2022, respectively, was included

in the computations of diluted earnings per share.

The calculation of diluted net income per share for the year ended March 31, 2022

does not include the impact of 6,156,432 potentially dilutive shares relating to stock options, stock appreciation rights, and warrants

as their impact would have been anti-dilutive as their exercise prices are above the Company’s average Common Stock price during

We incurred a net loss for the

year ended March 31, 2021, and therefore the impact of potentially dilutive common shares from outstanding stock options and warrants,

totaling 11,127,539 shares as of March 31, 2021, were excluded from the computations of loss per share as their impact would

have been anti-dilutive.

COMPREHENSIVE LOSS

For the year ended March 31, 2022 and 2021, comprehensive loss consisted

of net loss and foreign currency translation adjustments.

Earnings per Share

Basic net income (loss) per share is computed based on the weighted average number of shares of common stock outstanding during the period.

Diluted net income (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period.

Potentially dilutive common shares include stock options and stock appreciation right outstanding during the period, and performance awards which are expected to be settled in shares and would be issuable at period end, using the treasury stock method.

Potentially dilutive common shares are excluded from the computations of diluted income (loss) per share if their effect would be anti-dilutive.

A net loss available to common stockholders causes all potentially dilutive securities to be anti-dilutive and are not included.

Basic and diluted net income (loss) per share are computed as follows (in thousands, except per share data):

Year Ended March 31,

Basic net income (loss) per share:

Net income (loss) attributable to common stockholders

Shares used in basic computation:

Weighted-average shares of common stock outstanding

Basic net income (loss) per share

Shares used in diluted computation:

Weighted-average shares of common stock outstanding

Stock options and SARs

Weighted-average number of shares

Diluted net income (loss) per share

The calculation of diluted net income (loss) per share for the year ended March 31, 2023 and 2022 does not include the impact of 700 thousand and 339 thousand potentially dilutive shares, respectively, relating to stock options, performance shares and stock appreciation rights, as their impact would have been anti-dilutive due to the respective period's income (loss) and an exercise price which exceeded period-end share price.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

18, 2019, the FASB issued ASU 2019-12, “ Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes, ” which

simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The update also simplifies

GAAP for other areas of Topic 740 by clarifying and amending existing guidance to improve consistent application.

The amendment in this

update is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

Early adoption

is permitted.

The Company adopted this guidance on April 1, 2021 and the adoption of this ASU did not have a material impact on our consolidated

financial statements.

2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial

Instruments (“ASU 2016-13”), which provides new guidance regarding the measurement and recognition of credit

impairment for certain financial assets.

Such guidance will impact how the Company determines its allowance for estimated uncollectible

receivables and evaluates its available-for-sale investments for impairment.

ASU 2016-13 is effective for the Company in the first

quarter of fiscal 2023.

The Company is currently evaluating the effect that ASU 2016-13 will have on its consolidated financial statements

and related disclosures.

The Company evaluates all Accounting Standard Updates ("ASUs") issued but not yet effective by FASB for consideration of their applicability.

ASU's not included in the Company's disclosures were assessed and determined to be not applicable and material to the Company's consolidated financial statements or disclosures.

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU 2021- 08”) 2021-08, " Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ," which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be applied prospectively.

The Company does not expect the adoption of the amendments to have a material impact on its consolidated financial statements.

In June 2022, the FASB issued ASU No.

2022-03, " Fair Value Measurements (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ," which clarifies and amends the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities.

The guidance will be effective for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years.

The Company does not expect the adoption to have a material impact on our consolidated financial statements.

OTHER INTERESTS

in CDF2 Holdings

We indirectly

own 100 % of the common equity of CDF2 Holdings, LLC (“CDF2 Holdings”), which was created for the purpose of capitalizing

on the conversion of the exhibition industry from film to digital technology.

CDF2 Holdings assists its customers in procuring the equipment

necessary to convert their systems to digital technology by providing financing, equipment, installation and related ongoing services.

CDF2 Holdings

is a Variable Interest Entity (“VIE”), as defined in Accounting Standards Codification Topic 810 (“ASC 810”),

“Consolidation.” ASC 810 requires the consolidation of VIEs by an entity that has a controlling financial interest in the

VIE which entity is thereby defined as the primary beneficiary of the VIE.

To be a primary beneficiary, an entity must have the power

to direct the activities of a VIE that most significantly impact the VIE’s economic performance, among other factors.

indirectly, wholly own CDF2 Holdings, we, a third party that also has a variable interest in CDF2 Holdings, and an independent third party

manager must mutually approve all business activities and transactions that significantly impact CDF2 Holdings’ economic performance.

CDF2 Holdings assists its customers in procuring the equipment necessary to convert their systems to digital technology by providing financing, equipment, installation and related ongoing services.

CDF2 Holdings is a Variable Interest Entity (“VIE”), as defined in ASC 810, Consolidation.

ASC 810 requires the consolidation of VIEs by an entity that has a controlling financial interest in the VIE which entity is thereby defined as the primary beneficiary of the VIE.

To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, among other factors.

economic performance.

We have therefore assessed our variable interests in CDF2 Holdings and determined that we are not the primary beneficiary of CDF2 Holdings.

As a result, CDF2 Holdings’ financial position and results of operations are not consolidated in our financial position and results

of operations.

In completing our assessment, we identified the activities that we consider most significant to the economic performance

of CDF2 Holdings and determined that we do not have the power to direct those activities, and therefore we account for our investment

in CDF2 Holdings under the equity method of accounting.

As of March 31, 2022 and March

31, 2021, our maximum exposure to loss, as it relates to the non-consolidated CDF2 Holdings entity, represents accounts receivable for

service fees under a master service agreement with CDF2 Holdings.

Such accounts receivable was $ 0.8 million and $ 0.3 million

as of March 31, 2022 and March 31, 2021, respectively, which are included in accounts receivable, net on the accompanying consolidated

balance sheets.

The accompanying Consolidated

Statements of Operations include $ 0.8 million and $ 128 thousand of digital cinema servicing revenue from CDF2 Holdings for the

year ended March 31, 2022 and 2021, respectively.

Total Stockholders’

Deficit of CDF2 Holdings at March 31, 2022 and March 31, 2021 was $ 55.6 million and $ 46.3 million, respectively.

obligation to fund the operating loss or the stockholders’ deficit beyond our initial investment of $ 2.0 million and, accordingly,

our investment in CDF2 Holdings as of March 31, 2022 and March 31, 2021 is carried at $ 0 .

Interest in CONtv

We own an 85 %

interest in CON TV, LLC, a worldwide digital network that creates original content, and sells and distributes on-demand digital content

on the Internet and other consumer digital distribution platforms, such as gaming consoles, set-top boxes, handsets, and tablets.

in Roundtable

On March 15, 2022, the Company

entered into a stock purchase agreement with Roundtable Entertainment Holdings, Inc.

(“Roundtable”) pursuant to which the

Company purchased 500 shares of Roundtable Series A Preferred Stock and warrants to purchase 100 shares of Roundtable Common Stock (together,

the “Roundtable Securities”).

The Company paid the purchase price for the Roundtable Securities by issuing to Roundtable 316,937

shares of Common Stock is based on the closing price of the company on the date of the purchase.

The Company recorded $ 0.2 million for

the purchase of the Roundtable Securities which is included in other long-term assets on the consolidated balance sheet.

The investment

in the Roundtable Securities was made in connection with a proposed collaboration with Roundtable regarding production and distribution

of streaming content including the launch of high profile branded enthusiast streaming channels.

The Roundatble investment was accounted for using the cost method.

FoundationTV,

On May 12, 2021, the Company entered

into a stock purchase agreement (the “Foundation Stock Purchase Agreement”) with FoundationTV, Inc.

(“FoundationTV”),

to buy all of FoundationTV´s issued and outstanding stock in consideration of an aggregate of $5.2 million, of which $0.7 million

was paid in cash and 1,483,129 shares of Common Stock, which were valued at $2.5 million, were issued at closing stock price of $1.69

on the closing date of June 9, 2021, and an additional $2.0 million will be paid in eight equal installments of one installment on each

six month anniversary of closing over forty-eight months, and a final lump sum payment of $225 thousand on the four year anniversary of

the closing, reduced by $0.2 million settlement of a prior relationship.

The Foundation Stock Purchase Agreement contained certain

conditions to closing, including that the Company obtain approval of its stockholders, applicable lenders, and regulatory authorities,

as applicable, and representations and warranties and covenants as are customary for transactions of this type.

On June 9, 2021, the FoundationTV

acquisition was consummated.

The Company incurred transaction costs of $ 36 thousand during the year ended March 31, 2022.

31, 2022, the deferred consideration initially measured by bringing to present value the agreed-upon cash payments discounted by a 3 %

rate, includes a $ 0.5 million short-term payable and a long-term payable for $ 1.5 million.

FoundationTV is included as a part

of the Content & Entertainment segment.

Purchase Price

Total purchase price

Allocation of purchase price

Developed technology

Deferred tax liability

Total allocation of purchase

developed technology acquired in this transaction has a useful life of 10 years.

During the year ended March 31, 2022, the

Company recorded $ 240 thousand in amortization expense related to the developed technology acquired in the acquisition.

Below is the amortization expense

per year for the developed technology acquired in the business combination:

Disgusting, LLC

On September 17, 2021, the

Company entered into an asset purchase agreement (the “Bloody Disgusting Asset Purchase Agreement”) with Bloody Disgusting,

LLC (“Bloody Disgusting”), to buy substantially all of the assets of Bloody Disgusting, in consideration of an aggregate

of $7.8 million, of which $4.0 million was paid in cash and 1,039,501 shares of Common Stock, which were valued at $2.3 million, were

issued at closing stock price of $2.23 on the closing date of September 17, 2021, and $1.7 million as of the fair value of the earnout

liability, related to earnout targets, as defined, to be met as of March 2022, March 2023 and March 2024.

The fair value of the earnout

liability was estimated considering the weighted probability of scenarios on the earnout metrics possible outcomes during the earnout

The Bloody Disgusting Asset Purchase Agreement contained certain conditions to closing and representations and warranties and

covenants as are customary for transactions of this type.

On September 17, 2021, the Bloody Disgusting acquisition was consummated.

Disgusting, LLC is included as a part of the Content & Entertainment segment.

Purchase Price

Total purchase price

Allocation of purchase price

Current assets

Advertiser relationships

Total allocation of purchase price

The advertiser

relationships acquired in this transaction has a useful life of 12 years and the trade name acquired has a useful life of 10 years.

During the year months ended March 31, 2022, the Company recorded $ 211 thousand in amortization expense related to the intangible

assets acquired.

Below is the amortization expense

per year for the intangible assets acquired in the business combination:

relationships

The Company entered into an Equity Purchase

Agreement among the Company, and David Chu, Augustine Hong, Helen Hong, Michael Hong, Justin Lee, Steven Park, and Kingsoon Ong (collectively,

the “Sellers”) and David Chu as representative of the Sellers (the “DMR Agreement”) to acquire all of the outstanding

membership interests of Asian Media Rights, LLC d/b/a Digital Media Rights (“DMR”), a diversified specialty streaming, advertising,

and content distribution company with significant expertise in building audiences for global content in North America (the “Transaction”).

On March 25, 2022, the Company executed the

Amended and Restated Equity Purchase Agreement (the “A&R DMR Agreement”) among the Company, the Sellers and David Chu

as representative of the Sellers that amended and restated the DMR Agreement.

Pursuant to the A&R DMR Agreement, the purchase price

for the Transaction is $ 14,794,000 , subject to working capital and other adjustments, consisting of (1) $ 8,000,000 in cash

paid at the closing of the Transaction and (ii) $ 8,400,000 paid, at the Company’s option, in either cash or Common Stock at its

then market value, as follows:

(a) $3,000,000 on the first anniversary of the closing of the Transaction, (b) $3,000,000 on the second

anniversary of the closing of the Transaction, and (c) $2,400,000 on the third anniversary of the closing of the Transaction.

is included as a part of the Content & Entertainment segment.

Purchase Price

Total purchase price

Allocation of purchase price

Cash and cash equivalents

Accounts receivable

Prepaid expense

Other receivables

Right of use asset - operating

Furniture & fixtures

Computers and related equipment

Channel & platform

Content rights

Investment in Kor TV

Short term liabilities

Long term liabilities

Total allocation of purchase price

The content library acquired

in this transaction has a useful life of 13 years and channel acquired has a useful life of 13 years.

During the year

ended March 31, 2022, the Company recorded $ 0 in amortization expense related to the intangible assets acquired.

Below is the amortization expense

per year for the intangible assets acquired in the business combination:

Content Library

The amounts of revenue and net loss for the acquired companies included

in the Company's consolidated statement of operations for the period ending in March 31, 2022 are as follows:

(In thousands)

Proforma Information (Unaudited)

The unaudited proforma information in the table below summarizes

the combined results of operations for the Company and its acquisitions of Foundation TV, Inc., Bloody Disgusting, LLC and DMR as if

these acquisitions had been included in the consolidated results of the Company since April 1, 2020 for the each of the two entire

years ended March 31, 2022 and 2021:

(In thousands)

Net Income (Loss)

NOTES PAYABLE

Notes payable consisted of the following:

March 31, 2022

March 31, 2021

(In thousands)

Prospect Loan

Total non-recourse notes payable

Total non-recourse notes payable, net of unamortized debt issuance costs and debt discounts

Credit Facility

Total recourse notes payable

Unamortized debt issuance costs and debt discounts

Total recourse notes payable, net of unamortized debt issuance costs and debt discounts

Total notes payable, net of unamortized debt issuance costs

debt is generally defined as debt whereby the lenders’ sole recourse with respect to defaults is limited to the value of the asset,

which is collateral for the debt.

Certain of our subsidiaries are liable with respect to, and their assets serve as collateral for, certain

indebtedness for which our assets and the assets of our other subsidiaries that are not parties to the transaction are generally not liable.

We have referred to this indebtedness as “non-recourse debt” because the recourse of the lenders is limited to the assets

of specific subsidiaries.

Such indebtedness includes the Prospect Loan.

In February 2013, our subsidiaries

Cinedigm DC Holdings, LLC (“CDCH”), Access Digital Media, Inc (“AccessDM”) and Access Digital Cinema Phase 2,

(“Phase 2 DC”) entered into a term loan agreement (the “Prospect Loan” or the “Term Loan Agreement”)

with Prospect Capital Corporation (“Prospect”), pursuant to which CDCH borrowed $ 70.0 million.

The Prospect Loan included

interest at LIBOR plus 9.0 % (with a 2.0 % LIBOR floor), which was payable in cash, and at an additional 2.50 % accrued as

an increase to the aggregate principal amount of the Prospect Loan until the Prospect Loan was paid off, at which time all accrued interest

became payable in cash.

of CDCH accounts receivable were deposited into accounts designated to pay certain operating expenses, principal, interest, fees, costs

and expenses relating to the Prospect Loan.

On a quarterly basis, if there was excess cash flow, it was used for prepayment of the Prospect

We also maintained a debt service fund under the Prospect Loan for future principal and interest payments.

As of March 31, 2022,

and March 31, 2021, the debt service fund had a balance of $ 0 and $ 1.0 million, respectively, which was classified as part of

restricted cash on our Consolidated Balance Sheets.

4, 2021, CDCH, AccessDM, Phase 2 DC, Christie/AIX, Inc., Cinedigm Digital Funding I, LLC, certain Lenders, and Prospect Capital Corporation,

as administrative agent and collateral agent, entered into Amendment No.

3 (the “Prospect Amendment”) to the Term Loan Agreement.

Under the Prospect Amendment, the maturity date of the loan under the Term Loan Agreement was extended to March 31, 2022.

As a condition

to the effectiveness of the Amendment, CDCH paid $ 3,500,000 to Prospect to reduce the outstanding principal amount of the Loan.

Loan was secured by, among other things, a first priority pledge of the stock of CDF2 Holdings, our wholly-owned unconsolidated subsidiary,

the stock of AccessDM, owned by DC Holdings, and the stock of our Phase 2 DC subsidiary, and was also guaranteed by AccessDM and Phase

We provided limited financial support to the Prospect Loan not to exceed $ 1.5 million per year in the event financial performance

did not meet certain defined benchmarks.

Loan contained customary representations, warranties, affirmative covenants, negative covenants and events of default.

Upon a series

of payments between April 30 and July 9, 2021, the Company paid in full the Prospect Loan outstanding non-recourse debt amount by

paying an aggregate principal amount of $ 7.8 million.

Pre-payment of the Prospect Loan was permissible without penalty.

The following

table summarizes the activity related to the Prospect Loan:

(In thousands)

March 31, 2022

Prospect Loan, at issuance

Payments to date

Prospect Loan, gross

Less unamortized debt issuance costs and debt discounts

Prospect Loan, net

Less current portion

Total long term portion

Convertible Note

Convertible Note had a term ending on March 4, 2021, and bears interest at 5 % per annum.

The principal was due on March 4, 2021,

in cash or in shares of Common Stock, or a combination of cash and Common Stock, at the Company’s option.

The Bison Convertible

Note was convertible at the Company’s option, at any time prior to payment in full of the principal balance and all accrued interest

of the note, to convert this note in whole or in part, into fully paid and nonassessable shares of the Company’s Class A common

On September 11, 2020, Bison

Global converted the Bison Convertible Note in full into an aggregate of 6,666,667 shares of Common Stock at a conversion price

of $ 1.50 per share.

Accordingly, the Bison Convertible Note has been extinguished.

In accordance with ASC 470, the Company recognized

a loss on extinguishment of $ 285 thousand related to unamortized debt issuance costs for the nine months ended December 31, 2020.

Facility and Cinedigm Revolving Loans

30, 2018, the Company entered into the Loan, Guaranty and Security Agreement, dated as of March 30, 2018, by and between the Company,

East West Bank and the Guarantors named therein (the “Credit Facility”) for a maximum of $ 19.0 million in revolving loans

outstanding at any one time with a maturity date of March 31, 2020, which may be extended for two successive one-year periods at the sole

discretion of the lender, subject to certain conditions.

under the Credit Facility is due monthly at a rate elected by the Company of either 0.5 % plus Prime Rate or 3.25 % above LIBOR

Rate established by the lender.

3, 2019, the Company entered into an amendment to the Credit Facility (the “EWB Amendment”).

The EWB Amendment reduced the

size of the facility to $ 18.0 million, required certain prepayments and daily cash sweeps from collections of receivables to be made,

changed in certain respects how the borrowing base is calculated, and extended the maturity date to June 30, 2020.

In connection with

the EWB Amendment, three of our subsidiaries became Guarantors under the Credit Facility.

On June 25, 2020, the Company and East West

Bank amended the Credit Facility to extend the maturity of the Credit Facility to June 30, 2021 and waive events of default provisions.

On June 22, 2021, the maturity date of the Credit Facility was extended to September 28, 2021 .

During this extension period, unless an

amendment had been entered into, we were not able to access any additional borrowings under the Credit Facility.

The September 28,

2021 expiration date has passed and the agreement was not extended.

31, 2022 and March 31, 2021, there was $ 0 and $ 2.0 million outstanding, respectively.

On April 15, 2020, the Company

received $ 2.2 million from East West Bank, the Company’s existing lender, pursuant to the Paycheck Protection Program (the

“PPP Loan”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The PPP Loan matures

on April 10, 2022 (the “PPP Maturity Date”), accrues interest at 1 % per annum and may be prepaid in whole or in part

without penalty.

No interest payments are due within the initial six months of the PPP Loan.

The interest accrued during the initial six-month

period is due and payable, together with the principal, on the PPP Maturity Date.

The Company used all proceeds from the PPP Loan to retain

employees, maintain payroll and make lease and utility payments to support business continuity throughout the COVID-19 pandemic, which

amounts were intended to be eligible for forgiveness, subject to the provisions of the CARES Act, and could be subject to repayment.

July 7, 2021, the Company received notification from the lender that the U.S.

Small Business Administration had approved the Company’s

PPP Loan forgiveness application for the entire PPP Loan amount and accrued interest effective June 30, 2021.

For the year ended March

31, 2022, the Company recognized a gain on extinguishment of note payable of $ 2,178 in the statement of operations for the forgiveness

of PPP loan principal and interest.

STOCKHOLDERS’ EQUITY (DEFICIT)

11, 2021, the Company filed a Certificate of Amendment to the Fifth Amended and Restated Certificate of Incorporation, pursuant to which

the number of shares of Common Stock authorized for issuance was increased to 275,000,000 shares.

year ended March 31, 2022, the Company issued 9,085,016 shares of Common Stock which consist of the sale of shares of our Common

Stock, issuance of Common Stock for business combinations, the issuances of Common Stock in payment of preferred stock dividends and in

payment of board retainer fees, and the issuance of Common Stock as payment pursuant to a Stock Purchase Agreement (See Note 3).

Cumulative dividends in arrears

on preferred stock were $ 0.1 million and $ 0.1 million as of March 31, 2022 and March 31, 2021, respectively.

In May 2021 and

October 2021, we paid preferred stock dividends in arrears in the form of 53,278 and 102,697 shares of Common Stock,

respectively.

treasury stock, at cost, consisting of 1,315,851 and 1,313,836 shares of Common Stock at March 31, 2022 and March

31, 2021, respectively.

As a result, CDF2 Holdings’

financial position and results of operations are not consolidated in our financial statements.

As of March 31, 2023 and 2022, our maximum exposure to loss, as it relates to the non-consolidated CDF2 Holdings entity, represents accounts receivable for service fees under a master service agreement with CDF2 Holdings.

Such accounts receivable was $ 0.5 million and $ 0.8 million as of March 31, 2023 and 2022, respectively, which are included in accounts receivable, net on the accompanying Consolidated Balance Sheets.

The accompanying Consolidated Statements of Operation s include $ 0.2 million and $ 0.8 million of digital cinema servicing revenue from CDF2 Holdings for the year ended March 31, 2023 and 2022, respectively.

Total stockholders’

deficit of CDF2 Holdings at March 31, 2023 and 2022 was $ 59.2 and $ 55.6 million, respectively.

We have no obligation to fund the operating loss or the stockholders’

deficit beyond our initial investment of $ 2.0 million and, accordingly, our investment in CDF2 Holdings as of March 31, 2023 and 2022 is carried at $ 0 .

We own an 85 % interest in CON TV, LLC ("CONtv"), a worldwide digital network that creates original content, and sells and distributes on-demand digital content on the Internet and other consumer digital distribution platforms, such as gaming consoles, set-top boxes, handsets, and tablets.

CONtv is consolidated in our consolidated financial statements with the 15 % minority interest presented as a non-controlling interest.

On March 15, 2022, the Company entered into a stock purchase agreement with Roundtable Entertainment Holdings, Inc.

(“Roundtable”) pursuant to which the Company purchased 0.5 thousand shares of Roundtable Series A Preferred Stock and warrants to purchase 0.1 thousand shares of Roundtable Common Stock (together, the “Roundtable Securities”).

The Company paid the purchase price for the Roundtable Securities by issuing 16 thousand shares of Common Stock to Roundtable , after taking into account the June 2023 reverse stock split (further described in the Stockholders' Equity footnote) .

The Company recorded $ 0.2 million for the purchase of the Roundtable Securities which is included in other long-term assets on the accompanying Consolidated Balance Sheets.

The investment in the Roundtable Securities was made in connection with a proposed collaboration with Roundtable regarding production and distribution of streaming content including the launch of high profile branded enthusiast streaming channels.

The Roundtable investment was accounted for using the cost method of accounting as we own less than 20 % of Roundtable and do not exert a significant influence over their operations.

Our President and Chief Strategy Officer is on the Roundtable Board of Directors.

Christian Cinema LLC

On February 27, 2023, the Company, together with its subsidiary Dove Family Channel, entered into an asset purchase agreement with Christian Cinema LLC and Dove Movies LLC (together, “Christian Channel”), to buy substantially all of the assets of Christian Channel, for consideration of $ 1.5 million, of which $ 602 thousand was paid in cash and $ 898 thousand was paid with 83 thousand shares of the Company's Common Stock , after taking into account the June 2023 reverse stock split (further described in the Stockholders' Equity footnote) .

Cineverse allocated the $ 1.5 million purchase price to Intangibles assets, net on the Consolidated Balance Sheet as of March 31, 2023.

STOCKHOLDERS’

Authorized Common Stock

On June 7, 2023, the Company amended its Certificate of Incorporation to effect a 1:20 reverse stock split , which became effective on June 9, 2023 (the "Reverse Stock Split").

Proportionate adjustments were made to the exercise prices and the number of shares underlying the Company’s outstanding equity awards, as applicable, as well as to the number of shares issuable under the Company’s equity incentive plans.

The Reverse Stock Split did not affect the number of authorized shares of Common Stock or the par value of the Common Stock nor did it change the authorized shares of preferred stock or the relative voting power of such holders of our outstanding Common Stock and preferred stock.

No fractional shares were issued in connection with the Reverse Stock Split.

Stockholders who would have otherwise been entitled to receive fractional shares as a result of the Reverse Stock Split were entitled to a cash payment in lieu thereof after the sale on the open market of the aggregated fractional shares by the exchange agent for the Reverse Stock Split.

All shares and per share amounts discussed in these consolidated financial statements have been retrospectively adjusted for the Reverse Stock Split.

The effects of the Reverse Stock Split have been retrospectively effected throughout this document, including but not limited to earnings per share.

On October 11, 2021, the Company filed an Amended and Restated Certificate of Incorporation which authorized an increase in the n umber of shares of Common Stock for issuance to 275 million shares.

During the year ended March 31, 2023 , the Company issued 582 thousand shares of Common Stock in payment of preferred stock dividends, Board fees, payment of performance shares, pursuant to a business combinations, and the acqui sition of intangible assets, after taking into account the June 2023 Reverse Stock Split.

During the year ended March 31, 2022, the Company issued 455 thousand shares of Common Stock which consist of the sale of shares of our Common Stock, issuance of Common Stock for business combinations, the issuances of Common Stock in payment of preferred stock dividends and in payment of board retainer fees, and as payment pursuant to a Stock Purchase Agreement , after taking into account the Reverse Stock Split.

ATM Sales Agreement

In July 2020, we entered into an At-the-Market sales agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”) and B.

Riley FBR, Inc.

Riley”

and, together with A.G.P., the “Sales Agents”), pursuant to which the Company may offer and sell, from time to time, through the Sales Agents, shares of Common Stock at the market prices prevailing on Nasdaq at the time of the sale of such shares.

The Company is not obligated to sell any shares under the ATM Sales Agreement.

Any sales of shares made under the ATM Sales Agreement will be made pursuant to the 2020 Shelf Registration Statement, for an aggregate offering price of up to $ 30 million.

During the year ended March 31, 2021, we sold 1.4 million shares of Common Stock under the ATM Sales Agreement, taking into account the Reverse Stock Split.

Net proceeds from such sales totaled $ 18.6 million.

No sales under the ATM Sales Agreement were made during the year ended March 31, 2023 or 2022.

Subsequent to March 31, 2023, the Company sold 177 thousand shares of Common Stock under the ATM Sales Agreement for net proceeds of $ 1.1 million.

Common Stock Offering

On June 14, 2023, the Company agreed to sell its shares in a public offering, as further described in Note 9 - Subsequent Events .

Common Stock Purchase Agreement

In October 2021, we entered into a Common Stock Purchase Agreement (the “Equity Line Purchase Agreement”) and a Registration Rights Agreement (the “Registration Rights Agreement”) with B.

Riley Principal Capital, LLC (“B.

Riley”).

Pursuant to the Equity Line Purchase Agreement, the Company has the right to sell to B.

Riley up to the lesser of (i) $ 50 million of newly issued shares of Common Stock and (ii) the Exchange Cap (as defined in the Equity Line Purchase Agreement), from time to time during the 24-month period from and after the October 21, 2021.

Sales of Common Stock pursuant to the Equity Line Purchase Agreement, and the timing of any sales, are solely at the option of the Company, and the Company is under no obligation to sell any securities to B.

Riley under the Equity Line Purchase Agreement.

As consideration for B.

Riley’s commitment to purchase shares of Common Stock at the Company’s direction upon the terms and subject to the conditions set forth in the Equity Line Purchase Agreement, upon execution of the Equity Line Purchase Agreement, the Company issued 10.5 thousand shares of Common Stock to B.

Riley (the “Commitment Shares”), taking into account the Reverse Stock Split.

The purchase price of the shares of Common Stock that we elect to sell to B.

Riley pursuant to the Equity Line Purchase Agreement will be determined by reference to the volume weighted average price of the Common Stock (“VWAP”) during the applicable purchase date, less a fixed 5 % discount to such VWAP.

Pursuant to the Registration Rights Agreement, the Company filed a Registration Statement on Form S-1 that was declared effective by the Securities and Exchange Commission on October 21, 2021 (File No.

333-260210) for the resale by B.

Riley of up to 1.3 million shares of Common Stock (including the Commitment Shares) acquired pursuant to the Equity Line Purchase Agreement, taking into account the Reverse Stock Split.

There were no sales under these agreements for the year ended March 31, 2023 .

As of March 31, 2023, there is still approximately $ 38.0 million available under the 2020 Shelf Registration Statement, and $ 37.6 million available under the Equity Line Purchase Agreement, to raise additional capital.

PREFERRED STOCK

Cumulative dividends in arrears on preferred stock were $ 0.1 million as of March 31, 2023 and 2022 .

For the years ended March 31, 2023 and 2022, we paid preferred stock dividends in the form of 37 thousand and 12 thousand shares of Common Stock, respectively.

TREASURY STOCK

We have treasury stock, at cost, consisting of 66 thousand shares of Common Stock as of March 31, 2023 and 2022.

EQUITY INCENTIVE PLANS

Based Compensation Awards

Awards issued

under our 2000 Equity Incentive Plan (the “2000 Plan”) may be in any of the following forms (or a combination thereof) (i)

stock option awards;

Stock Based Compensation Awards

Awards issued under our 2000 Equity Incentive Plan (the “2000 Plan”) were in any of the following forms (or a combination thereof) (i) stock option awards;

(ii) stock appreciation rights;

1 unchanged sentence

or (iv) performance awards.

The 2000 Plan provides for the granting of incentive stock options (“ISOs”) with exercise prices not less than the fair market

value of our Common Stock on the date of grant.

ISOs granted to shareholders having more than 10 % of the total combined voting power

of the Company must have exercise prices of at least 110 % of the fair market value of our Common Stock on the date of grant.

and non-statutory stock options granted under the 2000 Plan are subject to vesting provisions, and exercise is subject to the continuous

service of the participant.

The exercise prices and vesting periods (if any) for non-statutory options are set at the discretion of our

compensation committee.

On November 1, 2017, upon the consummation of the initial equity investment in Cinedigm by Bison, as a result

of which there was a change of control of the Company, all stock options (incentive and non-statutory) and shares of restricted stock

were vested immediately and the options became fully exercisable.

In connection

with the grants of stock options and shares of restricted stock under the 2000 Plan, we and the participants have executed stock option

agreements and notices of restricted stock awards setting forth the terms of the grants.

The 2000 Plan provided for the issuance of up

to 2,380,000 shares of Common Stock to employees, outside directors and consultants.

As of March 31, 2022, there were 217,337 stock options outstanding

in the 2000 Plan with weighted average exercise price of $ 14.49 and a weighted average contract life of 1.54 years.

of March 31, 2021, there were 261,587 shares pursuant to stock options outstanding in the Plan with weighted average exercise

price of $ 14.99 and a weighted average contract life of 2.11 years.

A total of 44,000 options expired and 250 options

forfeited during the year ended March 31, 2022.

Options outstanding under the 2000 Plan as of

March 31, 2022 is as follows:

The 2000 Plan provides for the granting of incentive stock options (“ISOs”) with exercise prices not less than the fair market value of our Common Stock on the date of grant.

ISOs granted to shareholders having more than 10 % of the total combined voting power of the Company must have exercise prices of at least 110 % of the fair market value of our Common Stock on the date of grant.

ISOs and non-statutory stock options granted under the 2000 Plan are subject to vesting provisions, and exercise is subject to the continuous service of the participant.

The exercise prices and vesting periods (if any) for non-statutory options were set at the discretion of our Compensation Committee.

Options outstanding and exercisable under the 2000 Plan are as follows:

As of March 31, 2023

Range of Prices

Range of Exercise Prices

Options Outstanding

(In thousands)

Weighted Average Remaining Life in Years

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$ 280 - $ 488

An analysis of all options exercisable under

the 2000 Plan as of March 31, 2022 is presented below:

Options Exercisable

Weighted Average

Remaining Life in Years

Weighted Average

Exercise Price

As of March 31, 2022

Range of Exercise Prices

Options Outstanding

(In thousands)

Weighted Average Remaining Life in Years

Weighted Average Exercise Price

Aggregate Intrinsic Value

(In thousands)

In August 2017, the Company adopted the 2017

Equity Incentive Plan (the “2017 Plan).

The 2017 Plan replaced the 2000 Plan, and applies to employees and directors of, and consultants

to, the Company.

The 2017 Plan provided for the issuance of up to 2,108,270 shares of Common Stock, in the form of various

awards, including stock options, stock appreciation rights, stock, restricted stock, restricted stock units, performance awards and cash

The Compensation Committee of the Company’s Board of Directors (the “Board”) is authorized to administer the

2017 Plan and make grants thereunder.

The approval of the 2017 Plan did not affect awards already granted under the 2000 Plan.

4, 2019, upon shareholder approval, the 2017 Plan was amended to increase the maximum number of shares of Common Stock authorized for

issuance thereunder from 2,108,270 shares to 4,098,270 .

On October 23, 2020, the Company amended its

2017 Plan to increase the number of shares authorized for issuance thereunder from 4,098,270 to 14,098,270 .

On October 11, 2021, the Company amended its

2017 Plan to increase the number of shares authorized for issuance thereunder from 14,098,270 to 18,098,270 .

During the year ended March 31, 2022, the Company granted 2,025,250 stock

appreciation rights (“SARs”).

The SARs were granted under the 2017 Plan, except for 600,000 SARs granted to

an officer of the Company as an inducement grant.

All SARs issued have an exercise price equal to the fair value of the Company’s

Common Stock on the date of grant and a maturity date of 10 years.

The SARs were valued on the grant date utilizing an option

pricing model, as follows:

May 23, 2021 – November 30,

Maturity Date:

May 23, 2031 – November

$ 280 - $ 488

A total of 0.4 thousand options were forfeited during the year ended March 31, 2023.

The Company does not estimate forfeitures, but recognizes forfeitures in the period in which they occur.

In August 2017, the Company adopted the 2017 Equity Incentive Plan (the “2017 Plan).

The 2017 Plan replaced the 2000 Plan, and applies to employees and directors of, and consultants to, the Company.

The 2017 Plan provides for the issuance of up to 905 thousand shares of Common Stock, in the form of various awards, including stock options, stock appreciation rights, stock, restricted stock, restricted stock units, performance awards and cash awards.

During the year ended March 31, 2023 , the Company granted 155 thousand stock appreciation rights (“SARs”), which were granted under the 2017 Plan.

All SARs issued have an exercise price equal to the market price of the Company’s Common Stock on the date of grant and a maturity date of 10 years after grant date.

The following weighted average assumptions were used to estimate the fair value of SARs granted, as follows:

For the Year Ended March 31,

Expected dividend yield

Expected equity volatility

Expected term (years)

Risk-free interest rate

0.96 % - 1.63 %

Exercise price

$ 25.80 -$ 51.20

Market price per share

$ 25.80 -$ 51.20

Discount rate:

The weighted average fair value of outstanding the grants made during the year ended March 31, 2023, was $ 8.52 per award.

The weighted average fair value of outstanding the grants made during the year ended March 31, 2022, was $ 32.67 per award.

SARs outstanding under the 2017 Plan are as follows:

As of March 31, 2023

Range of Prices

SARs Outstanding

(In thousands)

Weighted Average Remaining Life in Years

Weighted Average Exercise Price

Aggregate Intrinsic Value

(In thousands)

$ 7.80 - $ 14.80

Expected term:

6 – 6.5 years

Stock appreciation rights outstanding under the

2017 Plan as of March 31, 2022 is as follows:

$ 23.20 - $ 29.40

$ 34.20 - $ 42.00

$ 44.60 - $ 51.20

As of March 31, 2022

1 unchanged sentence

SARs Outstanding

(In thousands)

Weighted Average Remaining Life in Years

6 unchanged sentences

$ 44.60 - $ 51.20

An analysis of all stock appreciation rights

exercisable under the 2017 Plan as of March 31, 2022 is presented below:

SAR Exercisable

Exercisable SARs under the 2017 Plan as of March 31, 2023 are as follows:

SARs Exercisable

(In thousands)

Weighted Average

4 unchanged sentences

(In thousands)

Total SARs outstanding are as follows:

SARs Outstanding March 31, 2021

Total SARs Outstanding March 31, 2022

In addition, in during the year ended March 31, 2022, the Company granted

performance stock unit awards under the 2017 Plan to employees of the Company that vest upon certain performance goals being achieved.

Upon vesting the award shares are issued to the employee.

Following is the activity for performance stock unit awards:

Weighted Average Grant Date Fair Value

Unvested balance at April 1, 2021

Unvested balance at March 31, 2022

During the year ended March 31, 2022, 366,056 shares were issued for

vested awards and 255,219 are to be issued as of March 31, 2022.

Employee and director stock-based compensation

expense related to our stock-based awards was as follows:

(In thousands)

Selling, general and administrative

There was $ 1 and $ 5 thousand of stock-based compensation

recorded for the year ended March 31, 2022 and 2021, respectively, related to employees’ restricted stock awards.

There was $ 386 thousand and $ 293 thousand of stock-based

compensation for the year ended March 31, 2022 and 2021, respectively, related to board of directors.

During the year ended March 31,

2022, the Company issued 280,690 restricted shares to non-employee directors.

OPTIONS GRANTED OUTSIDE CINEDIGM’S EQUITY

INCENTIVE PLAN

In October 2013, we issued options outside of

the 2000 Plan to 10 individuals who became employees as a result of a business combination.

The employees received options

to purchase an aggregate of 62,000 shares of our Common Stock at an exercise price of $ 17.50 per share.

The options were

fully vested as of October 2017 and expire 10 years from the date of grant, if unexercised.

As of March 31, 2022, 12,500 of

such options remained outstanding.

The following table presents information about

outstanding warrants to purchase shares of our Common Stock as of March 31, 2022.

All of the outstanding warrants are fully vested and

Exercise price

5-year Warrant issued to Bison Entertainment and Media Group(“ BEMG”) in connection with a term loan agreement

December 2022

Warrants for the purchase of 298,519 shares

of Common Stock expired unexercised during the year ended March 31, 2022.

As of March 31, 2023, the compensation cost not yet recognized related nonvested SARS awards totaled $ 441 thousand, to be recognized over the weighted average remaining vesting period of 0.64 years.

Total SARs outstanding are as follows (in thousands):

March 31, 2023

March 31, 2022

March 31, 2023

In addition, the Company grants performance stock unit ("PSU") awards under the 2017 Plan to employees of the Company that vest upon certain performance goals being achieved over a two year period.

Upon vesting, the award may be settled in shares or cas h at the Company's discretion.

In fiscal year 2023, 31 thousand PSU shares were issued.

No PSU shares were issued during the year ended March 31, 2022.

During the year ended March 31, 2023, there were 6 thousand additional PSU awards granted, and the Company issued 24 thousand shares of Common Stock (net of 10 thousand shares withheld to pay taxes).

Based on performance for the year ended March 31, 2023, the Company has accrued for 16 thousand unvested PSU awards.

A total of $ 4.5 million and $ 5.5 million of stock based compensation was included within Selling, General and Administrative expenses for the years ended March 31, 2023 and 2022, respectively.

There was $ 0.4 million of stock-based compensation expense for the year ended March 31, 2023 and 2022, respectively, related to Board of Director fees.

During the years ended March 31, 2023 and 2022, the Company issued 34 thousand and 14 thousand restricted shares to non-employee directors, respectively.

OPTIONS GRANTED OUTSIDE CINEVERSE’S EQUITY INCENTIVE PLAN

In October 2013, we issued options outside of the 2000 Plan to 10 individuals who became employees as a result of a business combination.

The employees received options to purchase an aggregate of 3 thousand shares of our Common Stock at an exercise price of $ 350 per share.

The options were fully vested as of October 2017 and expire 10 years from the date of grant, if unexercised.

As of March 31, 2023 , 0.6 thousand of such options remained outstanding.

Line of Credit Facility

The Company is party to a Loan, Guaranty, and Security Agreement with East West Bank ("EWB") providing for a revolving line of credit (the "Line of Credit Facility") of $ 5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries' assets.

The Line of Credit bears an interest rate equal to 1.5 % above the prime rate, and was 9.0 % as of March 31, 2023.

The Line of Credit expires on September 15, 2023 with a one-year extension available at EWB's discretion.

As of March 31, 2023, a balance of $ 5.0 million was outstanding on the line of the Credit Facility.

Under the Line of Credit Facility, the Company is subject to certain financial and nonfinancial covenants which require the Company to maintain certain metrics and ratios, maintain certain minimum cash on hand, and to report financial information to our lender on a periodic basis.

For the year ended March 31, 2023, the Company had interest expense of $ 0.2 million related to the Line of Credit Facility.

On June 28, 2023, the Company was notified in writing by EWB that it intends to extend the maturity date of the Line of Credit Facility to September 15, 2024 , subject to definitive documentation.

On April 15, 2020, the Company received $ 2.2 million from EWB, the Company’s existing lender, pursuant to the Paycheck Protection Program (the “PPP Loan”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The Company used all proceeds from the PPP Loan to retain employees, maintain payroll and make lease and utility payments to support business continuity throughout the COVID-19 pandemic, which amounts were intended to be eligible for forgiveness, subject to the provisions of the CARES Act, and could be subject to repayment.

The PPP Loan would have matured on April 10, 2022 and accrued interest at 1 % per annum.

The interest accrued during the initial six-month period would have been due and payable, together with the principal, on the PPP maturity date.

On July 7, 2021, the Company received notification from EWB that the U.S.

Small Business Administration had approved the Company’s PPP Loan forgiveness application for the entire PPP Loan amount and accrued interest effective June 30, 2021.

For the year ended March 31, 2022, the Company recognized a gain on extinguishment of note payable of $ 2.2 million in the Consolidated Statement of Operations for the forgiveness of PPP loan principal and interest.

COMMITMENTS AND CONTINGENCIES

We operate from leased properties under non-cancelable

operating lease agreements, certain of which contain escalating lease clauses.

The Company leases office space under an operating lease.

The Company’s

portfolio of leases is primarily related to real estate and since most of our leases do not provide a readily determinable implicit rate,

the Company estimated its incremental borrowing rate to discount the lease payments based on information available at either the implementation

date of Topic 842 or at lease commencement for leases entered into thereafter.

The table below presents the lease-related assets and liabilities recorded on the balance sheet as of March 31, 2022 and March 31,

(In thousands)

Operating Leases

Cineverse is a virtual company with one domestic operating lease, acquired through the acquisition of Digital Media Rights ("DMR") and subleased to a third party.

The Company has not been relieved of the its original lease obligation and therefore recognizes both a lease liability and right-of-use asset as part of the arrangement.

The end of both the original lease and sublease's term is January 2025 .

The Company has recognized $ 115 thousand of sublease income related to its subleasing arrangement.

In addition, during the year ended March 31, 2023, the Company entered into two operating leases for its India operations, with expiration dates in July 2027 .

The table below presents the lease-related assets and liabilities recorded on our Consolidated Balance Sheets (in thousands):

Classification on the Balance Sheet

March 31, 2022

Operating lease right-of-use asset

Operating leases – current portion

Operating leases – long-term portion

Other long-term assets

Operating leases –

current portion

Operating leases –

long-term portion

Total operating lease liabilities

The weighted average life remaining is 35 months and

the weighted average interest rate 3.38 %.

The table below presents certain information related to lease costs

(In thousands)

Operating lease cost

Total lease cost

Other Information

The table below presents supplemental cash flow

information related to leases:

(In thousands)

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows used for operating leases

Distribution arrangement minimum guaranty

On September 1, 2021 the Company extended a video

works distribution arrangement providing a non-refundable and fully-recoupable advance minimum participation guaranty for a total amount

of $ 3.5 million, where $ 1.5 million is payable no later than November 1, 2021, $ 1.0 million at the first year anniversary

of the arrangement and $ 0.9 million on the second-year anniversary of the arrangement.

These payments are subject to the selection

of video works released by the Company whose initial commercial date occurs during the arrangement year.

The Company paid the first advance

on October 22, 2021.

Hyde Park Agreement

On January 5, 2022, the Company entered into a letter agreement with Hyde

Park Entertainment, Inc.

(“Hyde Park”), pursuant to which the Company and Hyde Park are collaborating on the development,

production and/or distribution of a project based on the novel Audition by Ryu Murakami (the “Audition Project”).

of the Company and Hyde Park owns 50 % of the rights in connection with the Audition Project.

The Company paid $ 100 thousand to Hyde Park

plus $ 26 thousand in legal fees to counsel for the Audition project.

Ashok Amritraj, a director of the Company, is the Chairman and CEO

of Hyde Park and has an interest in 100 % of the revenues of Hyde Park.

Ashok Amritraj is a current board member and related party to the Company.

SUPPLEMENTAL CASH FLOW INFORMATION AND DISCLOSURE OF NON-CASH

INVESTMENTING AN FINANCING ACTIVITY

(In thousands)

Cash interest paid

Income taxes paid

Accrued dividends on preferred stock

Issuance of Class A common stock for payment of preferred stock dividends

Issuance of Class A common stock to Metaverse, a related party

Contributed capital under the Metaverse transaction, a related party

Settlement of second lien loan with Class A common stock

Conversion of note payable

Class A common stock to be issued in connection with the asset acquisition

Metaverse shares used to pay down vendors

Issuance of Class A common stock for business combination

Deferred consideration in purchase of a business

Earnout consideration in purchase of a business

Treasury shares acquired for withholding taxes

The table below presents the annual gross undiscounted cash flows related to the Company's operating lease commitments and subleasing arrangements (in thousands):

Year ending March 31,

Operating Lease Commitments

Sublease Payments

Since our operating leases do not provide a readily determinable implicit rate, the Company estimated its incremental borrowing rate to discount the lease payments based on information available at Cineverse's lease commencement date.

The average discount rate utilized was 3.34 %.

The Company incurred $ 441 thousand and $ 125 thousand in rental expense associated with its operating leases during the years ended March 31, 2023 and 2022, respectively.

In the ordinary course of business, the Company enters into contractual arrangements, from time to time, under which it agrees to commitments with content providers for certain rights which are in production or have not yet been completed, delivered to, and accepted by the Company.

Based on the nature of these agreements, which may be subject to delay or project abandonment, there is uncertainty with the amounts and timing of its commitments.

Certain of these advances are eligible to be recouped through future revenue sharing arrangements.

Based on the stage of the Company's projects, the table presented below represents an estimate of the Company's gross project commitments over the next five fiscal years (in thousands).

Fiscal Year Ended March 31,

Total Project Commitments

SEGMENT INFORMATION

We operate in two reportable segments:

Cinema Equipment Business and Content & Entertainment Business.

Our segments were determined based on the economic characteristics

of our products and services, our internal organizational structure, the manner in which our operations are managed and the criteria

used by our CODM to evaluate performance, which is generally the segment’s operating income (loss) before depreciation and amortization.

Cinema Equipment and Content & Entertainment.

Our segments were determined based on the economic characteristics of our products and services, our internal organizational structure, the manner in which our operations are managed and the criteria used by our Chief Operating Decision Maker ("CODM") to evaluate performance, which is generally the segment’s operating income (loss) before depreciation and amortization.

Operations of:

Products and services provided:

Cinema Equipment Business Financing vehicles and administrators for 696 Systems installed

nationwide in our first deployment phase (“Phase I Deployment”) to theatrical exhibitors and for 2,147 Systems installed

domestically and internationally in our second deployment phase (“Phase II Deployment”).

Cinema Equipment

Financing vehicles and administrators for Systems installed nationwide in our first deployment phase (“Phase I Deployment”) to theatrical exhibitors and for Systems installed domestically and internationally in our second deployment phase (“Phase II Deployment”).

We retain ownership of the Systems and the residual cash flows related to the Systems in Phase I Deployment after the repayment of all non-recourse debt at the expiration of exhibitor master license agreements.

The Cinema Equipment Business segment also provides monitoring, collection, verification and management services to this segment, as well as to exhibitors who purchase their own equipment, and also collects and disburses VPFs from motion picture studios, distributors and ACFs from alternative content providers, movie exhibitors and theatrical exhibitors (collectively, “Services”).

Content & Entertainment Business Leading independent streaming company of content and channels.

For certain Phase II Deployment Systems, we do not retain ownership of the residual cash flows and digital cinema equipment after the completion of cost recoupment and at the expiration of the exhibitor master license agreements.

Provides monitoring, collection, verification, and management services to this segment, as well as to exhibitors who purchase their own equipment, and also collects and disburses VPFs from motion picture studios, distributors and ACFs from alternative content providers, movie exhibitors and theatrical exhibitors (collectively, “Services”).

Content & Entertainment

Leading independent streaming company of content and channels.

We collaborate with producers and other content owners to market, source, curate and distribute independent content to targeted and under-served audiences in theatres and homes, and via mobile and emerging platforms.

The following tables present certain financial

information related to our reportable segments and Corporate:

The following tables present certain financial information related to our reportable segments and Corporate (in thousands):

As of March 31, 2023

(In thousands)

Cinema Equipment Business

Content & Entertainment Business

Line of Credit, Net

Cinema Equipment

Content & Entertainment

As of March 31, 2022

(In thousands)

Cinema Equipment Business

Content & Entertainment Business

Line of Credit, Net

Cinema Equipment

Content & Entertainment

Statements of Operations

Year Ended March 31, 2022

(in thousands)

For the Year Ended March 31, 2023

Content & Entertainment

Direct operating (exclusive of depreciation and amortization shown below)

Direct operating

Selling, general and administrative

Allocation of corporate overhead

Provision for (recovery of) doubtful accounts

Intangible Impairment

Depreciation and amortization of property and equipment

Amortization of intangible assets

Depreciation and amortization

Total operating expenses

Income (loss) from operations

The following employee and director stock-based

compensation expense related to our stock-based awards is included in the above amounts as follows:

(In thousands)

Content & Entertainment

Direct operating

Selling, general and administrative

Total stock-based compensation

Operating income (loss)

Statements of Operations

Year Ended March 31, 2021

(in thousands)

For the Year Ended March 31, 2022

Content & Entertainment

Direct operating (exclusive of depreciation and amortization shown below)

Direct operating

Selling, general and administrative

Depreciation and amortization

Impairment of intangible assets

Allocation of corporate overhead

Provision for (recovery of) doubtful accounts

Depreciation and amortization of property and equipment

Amortization and impairment of intangible assets

Total operating expenses

Income (loss) from operations

The following employee and director stock-based compensation expense

related to our stock-based awards is included in the above amounts as follows:

Entertainment

Direct operating

Selling, general and administrative

Total stock-based compensation

We recorded income tax (benefit)

of $( 0.8 ) million from operations and an income tax (benefit) of $( 0.3 ) million for the years ended March 31,

2022 and 2021, respectively.

For the year ended March 31, 2022, the $( 0.8 ) income tax benefit primarily related to a net change of deferred

tax liability resulted from the finalization of the acquisition of Foundation TV.

The deferred tax liability was offset by a release of

the Company’s valuation allowance.

The Company also recorded income tax expense of $ 0.1 , which was mainly related to taxable income

at the state level and timing differences related to fixed asset depreciation.

The income tax benefit for the year ended March 31, 2021

was mainly related to changes in estimates from the timing of the income tax provision to the income tax return filings, related to state

income tax expense.

The following table presents

the components of income tax benefit (expense):

Operating income (loss)

For the year ended March 31, 2023, stock-based compensation cost of $ 4,470 was incurred by the Corporate segment.

For the year ended March 31, 2022, stock based compensation costs of $ 1,034 thousand was incurred by the Content & Entertainment segment and $ 4,453 thousand was incurred by Corporate.

We recorded income tax expense of $ 0.1 million from operations and an income tax (benefit) of $( 0.8 ) million for the years ended March 31, 2023 and 2022, respectively.

For the year ended March 31, 2023, the income tax expense of $ 0.1 million was mainly related to foreign income taxes.

The income tax (benefit) of $( 0.8 ) million for the year ended March 31, 2022 was related to a $( 0.9 ) million tax benefit release of the valuation allowance resulting from the acquisition of Foundation TV, offset by $ 0.1 million of state income taxes due to taxable income at the state level and timing differences related to fixed asset depreciation.

The following table presents the components of income tax expense (benefit) (in thousands):

For the Fiscal Year

Ended March 31,

(In thousands)

Total federal

Income tax benefit (expense)

taxes consisted of the following:

Total foreign

Income tax expense (benefit)

Net deferred taxes consisted of the following (in thousands):

As of March 31,

(In thousands)

Deferred tax assets:

11 unchanged sentences

Net deferred tax

We have provided a valuation

allowance equal to our net deferred tax assets for the years ended March 31, 2022 and 2021.

We are required to recognize

all or a portion of our deferred tax assets if we believe that it is more likely than not that such assets will be realized, given the

weight of all available evidence.

We have provided a valuation allowance equal to our net deferred tax assets as of March 31, 2023 and 2022.

We are required to recognize all or a portion of our deferred tax assets if we believe that it is more likely than not that such assets will be realized, given the weight of all available evidence.

We assess the realizability of the deferred tax assets at each interim and annual balance sheet date.

In assessing the need for a valuation allowance, we considered both positive and negative evidence, including recent financial performance,

projections of future taxable income and scheduled reversals of deferred tax liabilities.

The net change in the valuation allowance of

$ 2.2 million during the fiscal year ended March 31, 2022 was mainly due to increases in the deferred tax asset related to the net operating

loss carryfoward and other timing differences.

The net change in the valuation allowance of $ 13.4 million during the fiscal

year ended March 31, 2021 was mainly due to increases in the deferred tax asset related to our investment in Starrise, a related

party, and increases in the net operating loss carryforward.

We will continue to assess the realizability of the deferred tax assets at

each interim and annual balance sheet date based upon actual and forecasted operating results.

As of March 31, 2022,

we had federal and state net operating loss carryforwards of approximately $ 55.2 million available in the United States

of America (“U.S.”) to reduce future taxable income.

federal and state net operating loss carryforwards of approximately

$ 22.6 and $ 55.2 million, respectively, generally begin to expire in 2026.

federal net operating loss carryforwards that

were generated during the years ended March 31, 2020, 2021, and 2022 of approximately $ 32.6 million, do not expire.

Under the provisions of the Internal

Revenue Code, certain substantial changes in our ownership may result in a limitation on the amount of net operating losses that may be

utilized in future years.

During the year ended March 31, 2018, approximately $ 233.5 million of our net operating losses

became subject to limitation under Internal Revenue Code Section 382 in connection with the consummation in November 2017 of the transactions

under the Stock Purchase Agreement with Bison.

Approximately $ 209.0 million of our net operating losses will not be able

to be utilized because of the ownership change.

Future significant ownership changes could cause a portion or all of our remaining net

operating losses to expire before utilization.

On March 27, 2020, the Coronavirus

Aid, Relief, and Economic Security (CARES) Act was signed into law.

The Act contains several new or changed income tax provisions, including

but not limited to the following:

In assessing the need for a valuation allowance, we considered both positive and negative evidence, including recent financial performance, projections of future taxable income and scheduled reversals of deferred tax liabilities.

The net changes in the valuation allowance of $ 2.5 million and $ 2.2 million during the fiscal years ended March 31, 2023 and 2022, respectively, were mainly due to increases in

the deferred tax asset related to the net operating loss carryforward and other temporary differences.

We will continue to assess the realizability of the deferred tax assets at each interim and annual balance sheet date based upon actual and forecasted operating results.

As of March 31, 2023, we had utilizable federal and state net operating loss carryforwards of approximately $ 63.7 million available in the United States of America (“U.S.”) to reduce future taxable income.

federal and state net operating loss carryforwards of approximately $ 22.6 and $ 63.7 million, respectively, generally begin to expire in 2026.

federal net operating loss carryforwards that were generated during the years ended March 31, 2020, 2021, 2022, and 2023 of approximately $ 41.1 million, do not expire.

Under the provisions of the Internal Revenue Code, certain substantial changes in our ownership may result in a limitation on the amount of net operating losses that may be utilized in future years.

During the year ended March 31, 2018, approximately $ 233.5 million of our net operating losses became subject to limitation under Internal Revenue Code Section 382 in connection with the consummation in November 2017 of the transactions under the Stock Purchase Agreement with Bison.

Approximately $ 209.0 million of our net operating losses became unusable because of the ownership change.

Future significant ownership changes could cause a portion or all of our remaining net operating losses to expire before utilization.

On March 27, 2020, the CARES Act was signed into law.

The Act contains several new or changed income tax provisions, including but not limited to the following:

increased limitation threshold for determining deductible interest expense;

class life changes to qualified

improvements (in general, from 39 years to 15 years);

and the ability to carry back net operating losses incurred from tax years 2018

through 2020 up to the five preceding tax years.

The Company has evaluated the new tax provisions of the CARES Act and determined the

impact to be either immaterial or not applicable.

The differences between the United

States statutory federal tax rate and our effective tax rate are as follows:

For the fiscal years

class life changes to qualified improvements (in general, from 39 years to 15 years);

and the ability to carry back net operating losses incurred from tax years 2018 through 2020 up to the five preceding tax years.

The Company has evaluated the new tax provisions of the CARES Act and determined the impact to be either immaterial or not applicable.

The differences between the U.S.

statutory federal tax rate and our effective tax rate are as follows:

Ended March 31,

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Non-deductible expenses

Executive officer compensation limitation – Section 162(m)

Executive officer compensation limitation –

Section 162(m)

PPP loan forgiveness

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Income tax benefit (expense)

We file income tax returns in

We file income tax returns in the U.S.

federal jurisdiction, various U.S.

states, and Australia.

For federal income tax purposes, our fiscal 2019 through 2022 tax years

remain open for examination by the tax authorities under the normal three-year statute of limitations.

state and Australian

tax purposes, our fiscal 2018 through 2022 tax years generally remain open for examination by most of the tax authorities under a four-year

statute of limitations.

states, and India.

For federal income tax purposes, our fiscal 2020 through 2023 tax years remain open for examination by the tax authorities under the normal three-year statute of limitations.

state tax purposes, our fiscal 2019 through 2023 tax years generally remain open for examination by most of the tax authorities under a four-year statute of limitations.

For Indian income tax purposes, our fiscal 2022 and 2023 tax years remain open for examination by the tax authorities.

SUBSEQUENT EVENTS

On April 1, 2022, trading of Metaverse’s ordinary shares was

halted on the Hong Kong Stock Exchange.

Unless and until trading is reinstated, the Company will not be able to obtain any readily available

information or observable inputs on the quoted market prices of Metaverse’s stock and therefore will need to change the valuation

methodology of its investments in Metaverse.

Series B Preferred Share Issuance

On April 4, 2023, Christopher McGurk, the Company’s Chief Executive Officer and Chairman of the Board, purchased 1 share of the Company’s Series B Preferred Stock ("Series B Preferred"), $ .001 par value, for $ 10,000 which entitled the holder to 1,800,000,000 votes (not adjusted for Reverse Stock Split) only on a reverse stock split proposal of the Company under certain conditions.

The Series B Preferred has no right to vote on any other matter except as may be required by the General Corporation Law of the State of Delaware.

The share of Series B Preferred is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company and may not be transferred at any time prior to stockholder approval of the reverse stock split matter without the prior written consent of the Company's Board of Directors.

On June 9, 2023, the single outstanding share of Series B Preferred was redeemed by the Company for $ 10,000 .

Sid & Marty Krofft Pictures

On May 5, 2023, the Company entered into a Channel Development, Management and Distribution Agreement with Sid & Marty Krofft Pictures, which provides the Company with content distribution and advertising rights in exchange for an initial $ 1.3 million advance commitment, which is recoupable against future revenue sharing provisions.

Reverse Stock Split

On May 30, 2023, a Special Meeting of Stockholders of Cineverse was held to approve an amendment to the Company's Certificate of Incorporation to effect a reverse stock split of the Company's Class A Common Stock, subject to the Board's discretion and to reduce the total number of Class A Common Stock authorized for issuance in connection with the reverse stock split.

On June 1, 2023, the Company's Board of Directors authorized a 1 -for-20 reverse stock split of its Class A Common Stock and all related outstanding awards.

The authorized shares remained unchanged from 275 million shares.

The par value of the Class A Common Stock was unchanged.

As a result, each shareholder’s percentage ownership interest in the Company and proportional voting power remained unchanged.

In accordance with ASC Topic 505, Equity, the Company has retroactively reflected this change within the share and per-share amounts disclosed throughout this document.

Refer to the Shareholders' Equity footnote within these financial statements for additional information.

On June 12, 2023, the Company announced that it had acquired the North American rights to Terrifier 3.

At contract signing, $ 1.5 million was owed and based on the success of the project, the Company's commitment can reach $ 5.2 million.

By the terms of the agreement, these commitments are recoupable based on the revenue generated by the project.

On June 14, 2023, under its Securities Purchase Agreement pursuant a prospectus supplement which was part of an effective registration statement, the Company agreed to sell in a public offering an aggregate of 2,150,000 shares Common Stock, pre-funded warrants to purchase up to 516,667 shares of Common Stock, and common warrants to purchase up to 2,666,667 shares of Common Stock at an effective combined purchase price of $ 3.00 per share and related common warrant, for aggregate gross proceeds of approximately $ 8.0 million, before deducting placement agents fees and offering expenses payable by the Company.

The shares or pre-funded warrants and related common warrants are immediately exercisable and separable.

Each pre-funded warrant is exercisable for one share of Common Stock.

The pre-funded warrants have a nominal exercise price of $ 0.001 per share, after the remainder of the full exercise cost was pre-funded to the Company at the closing of the offering and will expire when exercised in full.

The Common Warrants have an exercise price of $ 3.00 per share and expire on the five year anniversary of the date of issuance.

The closing of the offering occurred on June 16, 2023.

Line of Credit Extension

On June 28, 2023, the Company was notified in writing by EWB that it intends to extend the maturity date of the Line of Credit Facility to September 15, 2024 , subject to definitive documentation.

OTHER INFORMATION

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What changed 10-K

Item 8. Financial Statements and Supplementary Data