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Item 1. Financial Statements

2021-09-09 compared with 2021-02-22 · 897 added, 1331 removed, 300 unchanged (88% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per

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

Current assets

3 unchanged sentences

Unbilled revenue

Prepaid and other current

Prepaid and other current assets

Total current assets

Restricted cash

Equity investment in Starrise, a related party,

at fair value

Equity investment in Starrise, a related party, at fair value

Property and equipment, net

2 unchanged sentences

Other long-term assets

LIABILITIES AND EQUITY (DEFICIT)

LIABILITIES AND EQUITY

Current liabilities

Accounts payable and accrued expenses

Current portion of notes payable, including unamortized debt discount of $ 146 and $ 460 respectively

Current portion of notes payable, non - recourse including unamortized debt discount of $— and $ 763 , respectively (see Note 6)

Current portion of notes payable

Current portion of notes payable, non-recourse (see Note 6)

Current portion of deferred consideration on purchase of a business

Operating lease liabilities

Current portion of deferred

Current portion of deferred revenue

Total current liabilities

Notes payable

Deferred consideration on purchase of a business - net of current portion

Operating lease liabilities, noncurrent

Deferred revenue, net of current portion

Other long-term liabilities

1 unchanged sentence

Commitments and contingencies (see Note 8)

Stockholders’ equity (deficit)

Stockholders’ equity

Preferred stock, 15,000,000 shares authorized;

1 unchanged sentence

20 shares authorized;

and 7 shares issued and outstanding at December 31, 2020 and March 31, 2020.

and 7 shares issued and outstanding at June 30, 2021 and March 31, 2021.

Liquidation preference of $ 3,648

Common stock, $ 0.001 par value;

Class A stock 200,000,000 and 150,000,000 shares authorized at December 31, 2020 and March 31, 2020, respectively;

155,487,934 and 63,251,429 shares issued and 154,174,098 and 61,937,593 shares outstanding at December 31, 2020 and March 31, 2020, respectively

Class A stock 200,000,000 and 200,000,000 shares authorized at June 30, 2021 and March 31, 2021, respectively;

169,114,525 and 167,542,404 shares issued and 167,800,689 and 166,228,568 shares outstanding at June 30, 2021 and March 31, 2021, respectively

Additional paid-in capital

Treasury stock, at cost;

1,313,836 Class A common shares at December 31, 2020 and March 31, 2020

1,313,836 Class A common shares at June 30, 2021 and March 31, 2021

Accumulated deficit

Accumulated other comprehensive

(loss) income

Total stockholders’ equity (deficit) of Cinedigm

Deficit attributable to

noncontrolling interest

Total equity (deficit)

Accumulated other comprehensive loss

Total stockholders’ equity of Cinedigm Corp.

Deficit attributable to noncontrolling interest

Total liabilities and equity

2 unchanged sentences

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF

(In thousands, except for share and per

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three Months Ended

Nine Months Ended

Costs and expenses:

1 unchanged sentence

Selling, general and administrative

(Recovery) provision for doubtful accounts

Provision for doubtful accounts

Depreciation and amortization of property and equipment

1 unchanged sentence

Total operating expenses

(Loss) income operations

Income (loss) from operations

Interest expense, net

Loss on extinguishment of notes payable

Gain on forgiveness of PPP loan and extinguishment of note payable

Change in fair value of equity investment in Starrise, a related party

Other expense, net

Loss from operations before income taxes

Income tax benefit (expense)

Income (loss) before income taxes

Income tax benefit

Net income (loss)

Net (income) loss attributable to noncontrolling interest

Net loss attributable to controlling interests

Net income (loss) attributable to controlling interests

Preferred stock dividends

Net loss attributable to common stockholders

Net loss per Class A common stock attributable to common stockholders -

basic and diluted:

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:

basic and diluted

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 Condensed Consolidated

Financial Statements

CONDENSED CONSOLIDATED

STATEMENTS OF COMPREHENSIVE LOSS

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

INCOME (LOSS)

(In thousands)

Three Months Ended

Nine Months Ended

Other comprehensive (loss) income:

Net income (loss)

Other comprehensive loss:

foreign exchange translation

Comprehensive loss

Comprehensive income (loss)

attributable to noncontrolling interest

Comprehensive loss attributable

to controlling interests

comprehensive (income) loss attributable to noncontrolling interest

Comprehensive income (loss) attributable to controlling interests

See accompanying Notes to Condensed Consolidated

Financial Statements

CONSOLIDATED STATEMENTS

OF EQUITY (DEFICIT)

(In thousands, except

A Preferred Stock

Other Comprehensive

Stockholders’

CINEDIGM CORP.

CONSOLIDATED STATEMENTS OF (DEFICIT) EQUITY

(In thousands, except share data)

Preferred Stock

Additional Paid-In

Accumulated Other Comprehensive

Total Stockholders’

Non-Controlling

as of March 31, 2019

$ ( 395,814 )

exchange translation

stock dividends paid with common stock

as of June 30, 2019

exchange translation

of Class A common stock

stock dividends paid with common stock

value of conversion feature in connection with convertible note

(loss) income

as of September 30, 2019

$ ( 404,120 )

exchange translation

stock dividends paid with common stock

(loss) income

as of December 31, 2019

Balances as of March 31, 2020

$ ( 410,904 )

Foreign exchange translation

Stock issued in connection with the SPA with certain investors, net

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

Contributed capital under the Starrise transaction, a related party

Issuance of stock in connection with settlement of second lien loan

Exercise of warrants for Class A common stock

Stock-based compensation

Preferred stock dividends paid with common stock

Balances as of June 30, 2020

See accompanying Notes to Condensed Consolidated

1 unchanged sentence

CINEDIGM CORP.

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF (DEFICIT) EQUITY

(In thousands, except share data)

Series A Preferred

Additional Paid-In

Preferred Stock

Accumulated Other Comprehensive

4 unchanged sentences

Foreign exchange translation

Stock issued in connection

with the SPA with certain investors, net

Issuance of Class

A common stock in connection with the Starrise transaction, a related party

Contributed capital

under the Starrise transaction, a related party

Issuance of stock

in connection with settlement of second lien loan

Exercise of warrants

for Class A common stock

Stock-based compensation

Preferred stock dividends

paid with common stock

Balances as of

June 30, 2020

Foreign exchange translation

July 2020 issuance of Class A common stock, net of $ 695 in issuance costs

Common stock issued

in connection with conversion of Convertible Notes

Issuance of common

stock for third party professional service

Issuance of Class

A common stock to management and employees

Issuance of common

stock in connection with performance stock units

Common stock issued

to settle second lien loan

Stock-based compensation

Preferred stock dividends

paid with common stock

Balances as of

September 30, 2020

$ ( 457,481 )

Foreign exchange translation

Common stock issued

to settle second lien loan

Preferred stock dividends

paid with common stock

Stock compensation

Issuance of Class

A common stock to management

Issuance of common

stock in connection with performance stock units

Issuance of common

stock in connection with ATM raises, net

Class A common stock

to be issued in connection with asset acquisition

Balances as of

December 31, 2020

$ ( 467,214 )

Issuance of common stock in connection with a business combination

Preferred stock dividends paid with common stock

Balances as of June 30, 2021

See accompanying Notes to Condensed Consolidated

Financial Statements

CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Three Months Ended

Cash flows from operating activities:

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

Depreciation and amortization of property

and equipment and amortization of intangible assets

Net income (loss)

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

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

Changes in fair value of equity investment in Starrise

Loss on extinguishment of notes payable

Gain from forgiveness of PPP loan and extinguishment of note payable

Loss from sale of property and equipment

Amortization of debt issuance costs included in interest expense

(Recovery) provision for doubtful accounts

Provision for doubtful accounts

Recovery for inventory reserve

1 unchanged sentence

Accretion and PIK interest expense added to note payable

Changes in operating assets and liabilities;

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

Unbilled revenue

Prepaids and other current assets

Accounts payable and accrued expenses

Prepaids and other current assets, and other long-term assets

Accounts payable, accrued expenses, and other liabilities

Deferred revenue

Net cash (used in) provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Purchases of property and equipment

Sale of equipment

Purchase of a business

Sale of equity investment in Starrise

Purchases of intangible assets

Net cash used in investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Payment of notes payable

Proceeds under revolving credit agreement, net

(Payment) proceeds under revolving credit agreement, net

Proceeds from PPP Loan

Proceeds from issuance of Class A common stock, net

Net cash provided by (used in) in financing activities

Net change in cash and cash equivalents

Net cash (used in) provided by financing activities

Net change in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of period

3 unchanged sentences

CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share information)

NATURE OF OPERATIONS

AND LIQUIDITY

NATURE OF OPERATIONS AND LIQUIDITY

Cinedigm Corp.

1 unchanged sentence

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

We 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 and (ii) a servicer

of digital cinema assets for over 12,000 movie screens in both North America and several international countries.

We 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 over 6,200 movie screens in both North America and several international

Risks and Uncertainties

The COVID-19 pandemic and related economic repercussions have

created significant volatility, uncertainty, and turmoil in certain industries.

Closures of certain entertainment facilities and

retail locations have significantly impacted consumers’ behaviors as a result of the virus outbreak and corresponding preventative

measures taken around the world to mitigate the spread of the virus.

As part of our Content & Entertainment business, we sell

physical goods, including DVDs and Blu-ray discs, at brick-and-mortar stores.

Many of such stores in the United States closed

during the spring of 2020 due to COVID-19 restrictions, and many of those have not yet re-opened, or have re-opened on a limited

We expect that we will experience a loss of sales of such physical goods due to such closures, and we cannot predict the

extent of such losses, or how long the closures or limited openings of the stores may last.

As part of our Cinema Equipment business,

we earn revenues that are generated when movies are exhibited by theatres.

Many movie theatres in the United States closed during

the spring of 2020 due to COVID-19 restrictions and many of those have not yet re-opened, or have re-opened on a limited basis.

The majority of major studios moved releases originally scheduled for the three months ended December 31, 2020 to future dates

with the exception of two Studios that had theatrical releases that opened in theatres on the same day as becoming available on

a streaming channel.

To the extent movies are not shown in movie theatres due to the closures, we have not received, and will

not receive, related revenue.

The studios that produce movies may elect to delay the release of movies until theatres re-open,

or to bypass exhibiting movies in theatres at all and distribute the movies through other means, such as on streaming platforms,

in which case we would not earn revenues at all from such movies.

The East West Bank (“EWB”) credit facility has

a maturity date of June 30, 2021.

The Company intends to negotiate another extension of the EWB maturity date but in the event

it is unable to do so successfully, the Company has the funds to pay the debt in full when due.

The Prospect Loan matures on March 31, 2021.

The Company and

Prospect are negotiating to extend the maturity date to March 31, 2022 which may include a prepayment amount on the principal upon

execution of an amendment.

These events have negatively affected, and are expected to

continue to negatively affect, our business and results of operations.

Given the dynamic nature of these events, we cannot reasonably

estimate the period of time that the COVID-19 pandemic and related closures and market conditions will persist, or the extent

of the impact they will have on our business or results of operations and financial condition.

We have incurred net losses historically and have an accumulated

deficit of $ 467.2 million and negative working capital of $ 16.6 million as of December 31, 2020.

We may continue to generate

net losses for the foreseeable future.

In addition, we have significant debt-related contractual obligations as of December 31,

2020 and beyond.

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 quarter ended June 30, 2021, 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.

our Cinema Equipment business, the Company earns revenue when movies are exhibited in theatres.

As vaccines became readily available

and COVID cases decreased, major studios began to test consumer confidence by releasing blockbusters in the theatrical venues

during the quarter ended June 30, 2021.

This test period encouraged theatre re-openings and proved commercial viability for theatrical distribution

of tentpole films.

Films released during this period saw an uptick in box office revenue compared to the previous 12 months;

however, box office results remained below pre-Covid expectations due to limited seating capacities and shortened windows for

release on streaming platforms such as premium video on demand (“PVOD”) and subscription video on demand

To the extent films are not shown in theatres, we do not earn revenue.

We have incurred net losses historically and have

an accumulated deficit of $ 469.0 million and negative working capital of $ 9.5 million as of June 30, 2021.

Net cash provided by operating

activities for the three months ended June 30, 2021 was $ 3.6 million.

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

In addition, we had debt-related contractual obligations as of 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 debt amount by paying an aggregate principal

amount of $ 7.8 million.

Based on these conditions, the Company entered into the following transactions described below:

Capital Raise

On February 2, 2021, the Company entered into a securities

purchase agreement (the “Securities Purchase Agreement”) with a single institutional investor for the purchase and

sale of 5,600,000 shares (the “February Shares”) of the Company’s Class A common stock for net proceeds of $ 6.5

(see Note 11 – Subsequent events ).

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 The Nasdaq Global Market at

the time of the sale of such shares.

The Company is not obligated to sell any shares under the Sales Agreement.

Any sales of shares

made under the Sales Agreement will be made pursuant to an effective registration statement on Form S-3 filed by the Company with

the Securities and Exchange Commission (“SEC”) on July 6, 2020, for an aggregate offering price of up to $ 30 million.

During the three months ended December 31, 2020, we sold 28,405,840

shares of Common Stock under the ATM Sales Agreement.

Net proceeds from such sales totaled $ 18.6 million.

On July 16, 2020, the Company entered into a securities purchase

agreement (the “July Securities Purchase Agreement”) for the sale of 7,213,334 shares (the “July Shares”)

of Class A common stock at a purchase price of $ 1.50 per share, in a registered direct offering, pursuant to an effective shelf

registration statement on Form S-3 (Reg.

333-239710) which was declared effective by the Securities and Exchange Commission

on July 10, 2020 and an applicable prospectus supplement.

This registration statement covers offerings of up to an aggregate offering

price of $ 75.0 million.

The Company closed the transaction on July 20, 2020.

The aggregated

gross proceeds from the sale of the July Shares were approximately $ 10.8 million.

The net proceeds to the Company from the

sale of the July Shares, after deducting the fees of the placement agents but before paying the Company’s estimated offering

expenses, was approximately $ 10.1 million.

On May 20, 2020, the Company entered into a securities purchase

agreement (the “Securities Purchase Agreement”) with certain investors (the “Investors”) for the purchase

and sale of 10,666,666 shares (the “Shares”) of the Company’s Class A common stock, par value $ 0.001 per share,

(the “Common Stock” or “Class A common stock”), at a purchase price of $ 0.75 per share, in a registered

direct offering, pursuant to an effective shelf registration statement on Form S-3 (Reg.

333-238183) which was declared effective

by the Securities and Exchange Commission on May 14, 2020 and an applicable prospectus supplement.

The Company closed the transaction on May 22, 2020.

The aggregate

gross proceeds for the sale of the Shares was $ 8.0 million.

The net proceeds to the Company from the sale of the Shares,

after deducting the fees of the placement agents but before paying the Company’s estimated offering expenses, were approximately

$ 7.1 million.

Equity Investment in Starrise, 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 “Starrise

Stock Purchase Agreement”) with BeiTai Investment LP (“BeiTai”) and Aim Right Ventures Limited (“Aim Right”),

two shareholders of Starrise Media Holdings Limited, a leading Chinese entertainment company (“Starrise”), to buy

from them an aggregate of 410,901,000 outstanding Starrise ordinary shares (the “Share Acquisition”).

14, 2020, the Company purchased 162,162,162 of the Starrise ordinary shares from BeiTai and issued BeiTai 21,646,604 shares of

Class A common stock as consideration.

On April 10, 2020, the Company, in accordance with the terms

of the Starrise Stock Purchase Agreement, terminated its obligation to purchase Starrise ordinary shares from Aim Right under

the December 27, 2019 stock purchase agreement.

On April 10, 2020, the Company entered into another stock purchase agreement (the

“April Stock Purchase Agreement”) with five (5) shareholders of Starrise - Bison Global Investment SPC - Bison Global

1 SP (“Bison Global”), Huatai Investment LP, Antai Investment LP, Mingtai Investment LP (“Mingtai”)

and Shangtai Asset Management LP - to buy an aggregate of 223,380,000 outstanding Starrise ordinary shares from them and for the

Company to issue to them an aggregate of 29,855,081 shares of its Class A common stock in consideration therefore (the “April

Share Acquisition”).

On April 15, 2020, the April Share Acquisition was consummated and recorded as an equity investment

in Starrise and is a related party transaction.

Starrise’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 HKD 0.163 per share on February 19, 2021,

calculated at an exchange rate of $ 7.75 Hong Kong Dollars to 1 US dollar, the market value of Cinedigm’s ownership in Starrise

ordinary shares was approximately $ 7.6 million.

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 are intended to be eligible for forgiveness, subject to the provisions of the CARES Act and could be subject

to repayment.

On June 24, 2020, the Company entered into an exchange agreement

(the “Exchange Agreement”) pursuant to which the Company issued 329,501 shares of its Class A common stock, in exchange

for $ 842 thousand principal amount and accrued and unpaid interest of outstanding Second Lien Loans (as defined in Note 6

- Notes Payable ).

The surrendered Second Lien Loans were immediately canceled.

The exchange was consummated on June 24,

On June 26, 2020, the Company signed a consent agreement with

the holders of the Second Lien loans to extend the maturity date to September 30, 2020 and grant the Company options to extend

further to March 31, 2021 and then to June 30, 2021.

A consent fee of $ 100,000 was paid in connection with this extension.

September 21, 2020, the Company exercised its option to extend to March 31, 2021.

In a separate exchange with another holder of Second Lien Notes,

on November 19, 2020, the Company issued 452,499 shares of Common Stock in exchange for $ 247,108 principal amount of Second Lien

The exchanged Second Lien Notes were immediately cancelled.

On December 4, 2020, the Company entered into exchange agreements

(the “December Exchange Agreements”) with certain holders of notes under its Second Lien Loan Agreement dated as of

July 14, 2016 among the Company, the lenders party thereto, and Cortland Capital Market Services LLC, as Agent (“Second

Lien Notes”).

Pursuant to the December Exchange Agreements, the Company issued an aggregate of 2,776,284 shares of its Class

A common stock, par value $ 0.001 per share Common Stock in exchange for an aggregate of $ 1,386,106 of principal amount of Second

The exchanged Second Lien Notes were immediately cancelled.

In January 2021, the Company entered into exchange agreements

with holders of the Second Lien Loan to exchange $ 2,389,650 of Second Lien Loans for 2,517,574 of Class A Common Stock.

11 – Subsequent events ).

On February 9, 2021, the Company prepaid substantially all

of the outstanding Second Lien Loans (see Note 11 – Subsequent Events ).

On April 15, 2020, the Company executed a letter amendment

(the “Letter Amendment”) to the Bison Convertible Note (as defined in Note 6 - Notes Payable ).

things, the Letter Amendment amended the Note, effective as of March 4, 2020, to extend the maturity date of the Bison Convertible

note to March 4, 2021.

On October 9, 2019, the Company signed an extension to the

Ming Tai Note of $5.0 million for the first of two (2) permitted additional (1) year extensions at the Company’s option

from the original maturity date to October 9, 2020.

This note will continue in full force and effect in accordance with its terms,

including the Company’s reservation of its right to further extend the maturity date of this note, if it so elects.

On June 25, 2020, the Company signed an amendment to extend

the maturity date of the East West Credit Facility (as defined in Note 6 - Notes Payable) with East West Bank from March

30, 2021 to June 30, 2021.

On September 11.

2020, the Bison and Mingtai Notes, having

an aggregate of $15 million principal amount (the “Notes”) were converted in full into an aggregate of 10,000,000

shares of Common Stock at a conversion price of $1.50 per share in accordance with the terms of the Notes.

Accordingly, the Notes

have been extinguished.

The Notes were held by Bison Global and, both of which are affiliates of Peixin Xu, the Chairman of Bison

Capital Holding Company Limited, which is indirectly Cinedigm’s largest stockholder.

See Note 6 - Notes Payable .

Sale 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.

(“AMC”), the agreements included the

sale in tranches of a total of 2,369 cinematic projectors starting in March 2021 throughout January 2023 for a total cash consideration

of $ 10.8 million.

As of June 30, 2021, the Company executed the sale of the second tranche and recognized revenue of $ 5.6 million.

of the total proceeds has been utilized to eliminate the remaining Prospect notes payable.

Equity Investment in a Related Party

As previously announced, 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 “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 Starrise Media

Holdings Limited, a leading Chinese entertainment company (“Starrise”), to buy from them an aggregate of 410,901,000 outstanding

Starrise ordinary shares (the “Share Acquisition”).

On February 14, 2020, the Company purchased 162,162,162 of the Starrise

ordinary shares from BeiTai and issued BeiTai 21,646,604 shares of its Class A common stock in consideration.

The Starrise shares received

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

On April 10, 2020,

the Company, in accordance with the terms of the Stock Purchase Agreement, terminated its obligation to purchase Starrise ordinary shares

from Aim Right under the December 27, 2019 stock purchase agreement.

On April 10, 2020, the Company entered into another

stock purchase agreement (the “April Stock Purchase Agreement”) with five (5) shareholders of Starrise-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 Starrise ordinary shares from them and for the

Company to issue to them an aggregate of 29,855,081 shares of its Class A common stock as consideration therefor (the “April Share

Acquisition”).

On April 15, 2020, the April Share Acquisition was consummated and this transaction was also recorded as an equity

investment in Starrise.

Starrise’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 HKD 0.13 per share on August 26, 2021,

calculated at an exchange rate of 7.8 Hong Kong Dollars to 1 US dollar, the market value of Cinedigm’s ownership in Starrise ordinary

shares was approximately $6.1 million.

On June 22, 2021, the maturity date of the East

West Credit Facility (as defined in Note 6 - Notes Payable) with East West Bank was extended from June 30, 2021 to September 28,

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 are 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 ending 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 debt amount by paying an aggregate

principal amount of $ 7.8 million.

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

We believe the combination of:

(i) our cash and cash equivalent

balances as of December 31, 2020, (ii) expected cash flows from operations, (iii) cost cutting measures including payroll expense

reduction and real estate occupancy cost reductions, and (iv) the extension or extinguishment of our borrowings, the Starrise

equity investment, the capital raises during and the support or availability of funding from other capital resources and financings

will be sufficient to satisfy our contractual obligations, as well as liquidity for our operational and capital requirements,

for twelve months from the filing of this document.

Our capital requirements will depend on many factors, and we may need to use

capital resources and obtain additional capital.

(i) our cash and

cash equivalent balances at June 30, 2021, (ii) expected cash flows from operations, and (iii) the capacity under existing arrangements

and access to new sources of capital will be sufficient to satisfy our contractual obligations, as well as liquidity for our operational

and capital needs, for twelve months from the filing of this document.

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND CONSOLIDATION

The accompanying condensed consolidated financial statements

are unaudited and include the accounts of the Company, its wholly owned and majority owned subsidiaries, and reflect all normal

and recurring adjustments necessary for the fair presentation of its consolidated financial position, results of operations and

All material inter-company accounts and transactions have been eliminated in 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 of accounting.

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

and recorded as net loss attributable to noncontrolling interest.

interest or are not the primary beneficiary, but have the ability to exert significant influence, are accounted for under the equity method

of accounting.

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 4 - Other Interests to the Consolidated Financial Statements

for a discussion of our noncontrolling interests.

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

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

intangible asset impairment, fair value for asset acquisition, and estimated amortization lives and valuation allowances for income

Such estimates include the adequacy

of accounts receivable reserves, return reserves, inventory reserves, recovery of advances, assessment of goodwill impairment, long-lived

and finite-lived assets 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.

Certain information and footnote disclosures

normally included in consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to the rules

and regulations of the Securities and Exchange Commission (“SEC”), although we believe that the disclosures are adequate

to make the information presented not misleading.

The results of operations for the respective interim periods are not necessarily

indicative of the results expected for the full year.

These Condensed Consolidated Financial Statements and accompanying notes

should be read in conjunction with our annual consolidated financial statements and the notes thereto, included in our Annual

Report on Form 10-K for the fiscal year ended March 31, 2020.

SIGNIFICANT ACCOUNTING POLICES

The significant accounting policies used

in the preparation of these condensed consolidated financial statements for the three and nine months ended December 31, 2020

are consistent with those disclosed in Note 2 to the consolidated financial statements in the Company’s Annual Report on

Form 10-K for the year ended March 31, 2020.

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

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 (as defined below) requires

that we maintain specified cash balances that are restricted to repayment of interest thereunder.

See Note 6 - Notes Payable

for information about our restricted cash balances.

Cash, cash equivalents, and restricted cash consisted of the

We periodically assess the financial condition

of the institutions and believe that the risk of any loss is minimal.

Our Prospect Loan (as defined below) requires that we maintain specified

cash balances that are restricted to repayment of interest thereunder.

See Note 6- Notes Payable for information about our restricted

cash balances.

Cash, cash equivalents, and restricted cash consisted

of the following:

(in thousands)

1 unchanged sentence

Restricted Cash

EQUITY INVESTMENT IN STARRISE, A RELATED

On February 14, 2020, the Company acquired an approximately

11.5 % interest in Starrise Media Holdings Limited (“Starrise”), a leading publicly traded Chinese entertainment company

whose ordinary shares are listed on the Stock Exchange of Hong Kong.

EQUITY INVESTMENT IN STARRISE, A RELATED PARTY

On February 14, 2020, the Company acquired an

approximately 11.5 % interest in Starrise Media Holdings Limited (“Starrise”), a leading publicly traded Chinese entertainment

company 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 Starrise that is related to our major shareholders.

Our major shareholders

also maintain a significant beneficial interest ownership in Starrise.

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 Starrise 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 Class A common stock of the Company.

The difference in value of shares received in

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

When we acquired the Starrise stock,

our then-majority affiliated stockholders also maintained a significant beneficial interest in Starrise.

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

Starrise 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 Class A common stock of the Company.

The difference in value of shares received

in Starrise 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

interest in Starrise in a private transaction from shareholders of Starrise that are affiliated with the major shareholder of

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

value of the Starrise 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 Class A common stock of the Company.

The difference in

the value of shares received in Starrise 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 Starrise.

The Company has accounted for these investments under the equity

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

the Company’s majority shareholders.

15 % interest in Starrise in a private transaction from shareholders of Starrise 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

Starrise 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 Class A common stock of the Company.

The difference in the value of shares received in Starrise

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 Starrise.

The Company has accounted for these investments

under the equity method of accounting as the Company can exert significant influence over Starrise 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 Starrise.

During the nine months ended December 31, 2020, the Company

sold 8,370,000 of Starrise shares for net proceeds of approximately $ 0.8 million which resulted in a loss on sale of approximately

$ 73 thousand.

As of December 31, 2020 and March, 31, 2020, the value of our

equity investment in Starrise, using the readily determinable fair value method from the quoted trading price of the Stock Exchange

of Hong Kong, was approximately $ 7.6 million and $ 23.4 million, respectively, resulting in a change in fair value of approximately

$ 42.4 million for the nine months ended December 31, 2020, on our condensed consolidated statement of operations.

The Company’s investment in Starrise is

marked to market and recorded at fair value.

The stock is traded on the Hong Kong Stock exchange with readily available pricing

that is classified as Level 1 in the fair value hierarchy.

The Company has established a policy that consistently uses either the closing

price of last active trades or the latest bid price when there is no active trades, unadjusted at the last day of each reporting period,

as the most relevant and representative input to the Level 1 fair value measures of its investment holdings.

As of June 30, 2021 and March 31, 2021, the value

of our equity investment in Starrise, using the readily determinable fair value inputs from the market pricing of the Stock Exchange of

Hong Kong, was approximately $ 6.7 million and $ 6.4 million, respectively, resulting in a change in fair value of approximately $ 0.3 million

and $ 15.8 million for the three months ended June 30, 2021 and 2020 respectively, on our consolidated statement of operations.

30, 2021 and March 31, 2021, the Company owned 362,307,397 shares or 26 % of Starrise.

NON-MONETARY TRANSACTIONS

During the three and nine months ended December 31, 2020, respectively,

the Company entered into agreements with certain vendors to transfer 5,139,762 and 14,184,765 Starrise shares to satisfy outstanding

During the three months ended June 30, 2020,

the Company entered into agreements with certain vendors to transfer 9,006,215 Starrise shares to satisfy outstanding

liabilities with these vendors.

Upon the sale of the Starrise shares by the vendors, with certain restrictions on sales unless

the Company gives consent to sell, if the proceeds do not satisfy the amount due to the vendor, the Company is liable for the

balance owed.

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

There was no gain or loss resulting from

these transactions for the three and nine months ended December 31, 2020.

Upon the sale of the Starrise shares by the vendors, with certain restrictions on sales unless the

Company gives consent to sell, if the proceeds do not satisfy the amount due to the vendor, the Company is liable for the balance

There were no such transactions during the three months ended June 30, 2021.

There was no gain or loss resulting from these

transactions for the three months ended June 30, 2020.

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 digital cinema equipment (the “Systems”) deployments that have extended payment

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 digital cinema equipment (the “Systems”) deployments that have extended payment

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

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.

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 $ 0.3 million and $ 0.3 million, for the three months ended December 31, 2020 and 2019.

Impairments and

accelerated amortization related to advances were $ 0.3 million and $ 0.7 million, respectively, for nine months ended

December 31, 2020 and 2019.

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 $ 0.2 million

and $ 0.2 million, respectively, for the three months ended June 30, 2021 and 2020.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, less accumulated

depreciation and amortization.

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

5 unchanged sentences

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

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

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 as incurred.

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 condensed consolidated statements of operations.

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.

FAIR VALUE MEASUREMENTS

The fair value measurement disclosures

are grouped into three levels based on valuation factors:

The fair value measurement disclosures are grouped

into three levels based on valuation factors:

1 – quoted prices in active markets for identical investments

2 – other significant observable inputs (including quoted prices for similar investments

and market corroborated inputs)

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 Starrise is in Hong

Kong dollars and was translated into US dollars as of December 31, 2020 and March 31, 2020 at an exchange rate of 7.75 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 Starrise on the Stock Exchange of Hong Kong.

The following tables summarize the levels

of fair value measurements of our financial assets and liabilities as of December 31, 2020 and March 31, 2020:

As of December 31, 2020

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

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 Starrise is in Hong Kong

dollars and was translated into US dollars as of June 30, 2021 and March 31, 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 unadjusted market pricing of Starrise on the

Stock Exchange of Hong Kong.

The following tables summarize the levels of fair

value measurements of our financial assets and liabilities as of June 30, 2021 and March 31, 2021:

As of June 30, 2021

(in thousands)

6 unchanged sentences

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 condensed

consolidated balance sheets.

The estimated fair values of these financial instruments approximate their carrying amounts because

of their short-term nature.

At December 31, 2020 and March 31, 2020, the estimated fair value of our fixed rate debt

approximated its carrying amounts.

We estimated the fair value of debt based upon current interest rates available to us at the

respective balance sheet dates for arrangements with similar terms and conditions.

Based on borrowing rates currently available

to us for loans with similar terms, the fair value of the variable rate debt is $ 11.8 million and lease obligations approximates

unbilled revenue and accounts payable and accrued expenses are financial instruments and are recorded at cost in the consolidated balance

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

At June 30, 2021 and March 31, 2021, the estimated fair value of our fixed rate debt approximated its carrying amounts.

We estimated the

fair value of debt based upon current interest rates available to us at the respective consolidated balance sheet dates for arrangements

with similar terms and conditions.

Based on borrowing rates currently available to us for loans with similar terms, the fair value of

the variable rate debt is $ 3.0 million and lease obligations approximates fair value.

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 cash flows.

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 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

During the three months and nine months ended December 31, 2020 and 2019, no impairment charge was recorded from

operations for long-lived assets or finite-lived assets.

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.

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 three

months ended June 30, 2021 and 2020, no impairment charge was recorded from operations for long-lived assets or finite-lived assets.

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

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.

No goodwill impairment charge was recorded in the three and

nine months ended December 31, 2020 and 2019.

Gross amounts of goodwill and accumulated impairment charges

that we have recorded are as follows:

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.

No goodwill impairment charge was recorded in

the three months ended June 30, 2021 and 2020.

Gross amounts of goodwill and accumulated impairment

charges that we have recorded are as follows:

(In thousands)

Accumulated impairment charges

Goodwill at December 31, 2020 and March 31, 2020

Goodwill, net at March 31, 2021

Goodwill from business combination – see Note 5

Goodwill , net at June 30, 2021

REVENUE RECOGNITION

We determine revenue recognition by:

● identifying the contract, or contracts,

with the customer;

● identifying the performance obligations

in the contract;

identifying the contract, or contracts, with the customer;

identifying the performance obligations in the contract;

determining the transaction price;

● allocating the transaction price to performance

obligations in the contract;

● recognizing revenue when, or as, we satisfy

performance obligations by transferring the promised goods or services.

We recognize revenue in the amount that reflects the consideration

we expect to receive in exchange for the services provided, sales of physical products (DVDs and Blu-ray Discs) or when the content

is available for subscription on the digital platform or available on the point-of-sale for transactional and video on demand

allocating the transaction price to performance obligations in the contract;

recognizing revenue when, or as, we satisfy performance obligations by transferring the promised goods or services.

We recognize revenue in the amount that reflects

the consideration we expect to receive in exchange for the services provided, sales of physical products (DVDs and Blu-ray Discs) or when

the content is available for subscription on the digital platform or available on the point-of-sale for transactional and video on demand

services which is when the control of the promised products and services is transferred to our customers and our performance obligations

under the contract have been satisfied.

Revenues that might be subject to various taxes are recorded net of transaction taxes

assessed by governmental authorities such as sales value-added taxes and other similar taxes.

Payment terms and conditions vary by customer and typically

provide net 30 to 90 day terms.

Revenues that might be subject to various taxes are recorded net of transaction taxes assessed

by governmental authorities such as sales value-added taxes and other similar taxes.

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.

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.

Cinema Equipment Business

Virtual print fees (“VPFs”) are earned, net of

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

Digital Funding I, LLC.

(“Phase 1 DC”) and to Access Digital Cinema Phase 2 Corp.

(“Phase 2 DC”) when

movies distributed by the studio are displayed on screens utilizing our Systems installed in movie theatres.

Our Cinema Equipment Business consists of financing

vehicles and administrators for 2,519 Systems installed nationwide in our first deployment phase (“Phase I Deployment”) to

theatrical exhibitors and for 3,025 Systems installed domestically and internationally in our second deployment phase (“Phase II

Deployment”).

We retain ownership of our digital cinema equipment

(the “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.

Cinema 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”).

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 1 DC based on a defined fee schedule until the end of the VPF term.

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 in which the digital title first plays on

a System for general audience viewing in a digitally equipped movie theatre, as Phase 1 DC’s and Phase 2 DC’s performance

obligations have been substantially met at that time.

Phase 2 DC’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 2 DC

may no longer collect VPFs once “cost recoupment,” as defined in the contracts with movie studios and distributors,

Cost recoupment will occur once the cumulative VPFs and other cash receipts collected by Phase 2 DC 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, i.e.,

the one-time bonus and determined 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

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,

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,

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.

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, i.e., the one-time bonus and determined 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

(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.

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

Cinedigm completed the sale of 15 and 24 digital projection Systems, respectively, for an aggregate sales price of approximately

$ 150 thousand and $ 240 thousand, and recognized revenue of $ 66 thousand and $ 240 thousand, during the three months ended

December 31, 2020 and 2019, respectively.

Cinedigm completed the sale of 45 and 136 digital projection Systems, respectively,

for an aggregate sales price of approximately $ 345 thousand and $ 1.5 million, and recognized revenue of $ 157 thousand

and $ 1.3 million, during the nine months ended December 31, 2020 and 2019, respectively.

Revenues earned in connection with up front exhibitor contributions

are deferred and recognized over the expected cost recoupment period.

Exhibitors who purchased and own Systems using their own financing

in the Cinema Equipment Business paid us an upfront activation fee of approximately $ 2.0 thousand per screen (the “Exhibitor-Buyer

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 2 DC 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 segment manages and collects VPFs on behalf of exhibitors, for which it earns an administrative fee equal to 10 %

of the VPFs collected.

The Cinema 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

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.

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 is predicated on Cinedigm’s

receipt of sale proceeds.

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

completed the sale of 650 and 30 digital projection Systems, respectively, for an aggregate sales price of approximately $ 5.6 million

and $ 195.0 thousand, and recognized revenue of $ 5.6 million and $ 76.2 thousand, during the three months ended June 30, 2021 and 2020,

respectively.

Revenues earned in connection with up front exhibitor

contributions are deferred and recognized over the expected cost recoupment period.

Exhibitors who purchased and own Systems using

their own financing in 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.

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 4 - 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.

The Cinema 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

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”), and physical

goods (e.g., DVD and Blu-ray Discs).

Fees earned are typically based on the gross amounts billed to our customers less the amounts

owed to the media studios or content producers under distribution agreements, and gross media sales of owned or licensed content.

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 subscription on the digital platform, shipment of DVD and Blu-ray

Discs, or make available at point-of-sale for transactional and VOD services.

Revenue is recognized at the point in time when

the performance obligation is satisfied which is when the content is available for subscription on the digital platform, 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.

Revenue is recognized after deducting the reserves for product returns and other allowances,

which are accounted for as variable consideration.

Reserves for product 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.

CEG also 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 is recognized at the time a feature movie and alternative content are viewed.

CEG 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.

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”).

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

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 performance obligation is satisfied

which is when the content is available for subscription on the digital platform, 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 is recognized after

deducting the reserves for sales returns and other allowances, which are accounted for as variable consideration.

Physical goods reserves for 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.

CEG also 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 is recognized at the time a feature movie and alternative content are viewed.

CEG 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.

Principal Agent Considerations

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.

We determine whether revenue should be reported

on a gross or net basis for each revenue stream based on the transfer of control of goods and services.

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., DVD 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.

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.

Contract Liabilities

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

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.

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 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.

Our CEG 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.

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.

The outstanding balances on these arrangements are insignificant and hence

the impact of significant financing would be insignificant.

Deferred revenue pertaining to our Content & Entertainment

Business includes amounts related to the sale of DVDs with future release dates.

Deferred 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

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.

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.

Deferred revenue pertaining to our Content &

Entertainment Business includes amounts related to the sale of DVDs with future release dates.

Deferred 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 December 31, 2020 was $ 1.3 million.

For the three months ended December 31, 2020, 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 three and nine months ended December 31, 2020, $ 1.2

million and $ 2.5 million, respectively of revenue was recognized that was included in the deferred revenue balance at the beginning

of the period.

As of December 31, 2020, the aggregate amount of contract revenue allocated to unsatisfied performance obligations

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 June 30, 2021 was $ 0.4 million.

For the three months ended June 30, 2021 and 2020, respectively,

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 three months ended June 30, 2021 and

2020, $ 0.5 million and $ 0.6 million, respectively, of revenue was recognized that was included in the deferred revenue balance at the

beginning of the period.

As of June 30, 2021, the aggregate amount of contract revenue allocated to unsatisfied performance obligations

was $ 0.4 million.

We expect to recognize approximately $ 1.3 million of this balance over the next 12 months, and the remainder

We expect to recognize this balance in full by September 30, 2021.

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.

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

The Company disaggregates revenue into different revenue categories

for the Cinema Equipment and CEG Businesses.

The Company 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

Phase I Deployment

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

Base Distribution Business and OTT Streaming and Digital.

The following tables present the Company’s revenue categories

for the three and nine months ended December 31, 2020 and 2019:

(in thousands):

The following tables present the Company’s

revenue categories for the three months ended June 30, 2021 and 2020 (in thousands):

Three Months Ended

Nine Months Ended

Cinema Equipment Business:

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Total Content & Entertainment Business revenue

DIRECT OPERATING COSTS

Direct operating costs consist of operating costs

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

of advances, and marketing and direct personnel costs.

STOCK-BASED COMPENSATION

Employee and director stock-based compensation

expense related to our stock-based awards was as follows:

Three Months Ended

Nine Months Ended

(In thousands)

Selling, general and administrative

During the three and nine months ended December 31, 2020 and

2019, the Company granted 5,550,000 stock appreciation rights (“SARs”).

The SARs were granted under the Company’s

2017 Equity Incentive Plan (the “2017 Plan.

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:

November 19, 2020 – December 23, 2020

Maturity Date:

November 19, 2030 – December 31, 2030

Fair value of class A common stock on grant date:

$ 0.54 - $ 0.74

91.05 % - 91.71 %

Discount rate:

0.88 % - 0.96 %

There was $ 739 thousand and $ 111 thousand, of stock-based

compensation recorded for the three months ended December 31, 2020 and 2019, respectively and $ 961 thousand and $ 332 thousand

for the nine months ended December 31, 2020 and 2019 respectively, relating to these SARs.

Total SARs outstanding are as follows:

Months Ended December 31,

SARs Outstanding March 31, 2020

Total SARs Outstanding December 31, 2020

There are 696,050 units of performance stock units (“PSU”)

which were granted on July 26, 2018 fully vested but not paid yet.

There was no stock-based compensation recorded related to these

units for the nine months ended December 31, 2020 and there was a cumulative adjustment of $ 166 thousand of stock-based compensation

recorded for the nine months ended December 31, 2019.

During the nine months ended December 31, 2020, the vested PSU’s were

settled for 693,647 shares of Class A Common Stock.

In addition, the Company issued 689,364 shares of Class A Common Stock as

a bonus to employees.

The Company recorded $ 786 thousand as stock compensation expense related to the bonus awards based

on the $ 1.14 Class A common share value on the date of grant during the nine months ended December 31, 2020.

In addition, during the three months ended December 31, 2020,

the Company granted and issued 320,000 shares of Class A common stock to the Company’s Chief Executive Officer as a compensatory

The shares were valued on the date of grant utilizing the fair value of the Company’s class A common stock.

recognized stock compensation of $ 166 thousand for the issuance.

There was $ 1 thousand and $ 4 thousand of stock-based

compensation recorded for both the three and nine months ended December 31, 2020 and 2019, respectively, related to employees’

restricted stock awards.

There was $ 54 thousand and $ 0 of stock-based compensation recorded

for the three months ended December 31, 2020 and 2019 respectively related to the board of directors.

There was $ 188 thousand

and $ 0 of stock-based compensation for the nine months ended December 31, 2020 and 2019 related to board of directors.

On September 1, 2020, we issued 80,000

shares of Class A common stock to Ronald L.

Chez as a bonus payable to him under the Strategic Investor Agreement between the

Company and him dated as of April 3, 2017.

During the nine months ended December 31, 2020, we recognized an expense of $ 71 thousand

based on the stock price of the Class A common stock on the date of grant.

The Company accounts for income taxes using the asset and liability

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 be realized.

The Company issues stock-based awards to employees

and non-employees, generally in the form of restricted stock units 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”).

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 value of options on the date of grant is calculated 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.

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.

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.

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.

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 has no uncertain tax positions.

NET LOSS PER SHARE ATTRIBUTABLE TO

COMMON SHAREHOLDERS

Basic and diluted net loss per common

share has been calculated as follows:

and diluted net loss per common share

attributable to common stockholders =

loss attributable to common stockholders

average number of common stock

outstanding during the period

Stock issued and treasury stock repurchased during the period

are weighted for the portion of the period that they are outstanding.

NET INCOME/LOSS PER SHARE ATTRIBUTABLE TO COMMON

Basic and diluted net loss per common share has

been calculated as follows:

Basic and diluted net loss per common share attributable to common stockholders

Net loss attributable to common stockholders

Weighted average number of common stock outstanding during the period

Stock issued 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.

We incurred net losses for the three and nine months ended

December 31, 2020 and 2019, and therefore the impact of potentially dilutive common shares from outstanding stock options and

warrants, totaling 9,040,138 shares and 4,066,172 shares as of December 31, 2020 and 2019, respectively, were excluded from the

computations of loss per share as their impact would have been anti-dilutive.

We incurred net income for the three months ended

June 30, 2021, and therefore the impact of potentially dilutive common shares from outstanding stock options, stock appreciation rights,

and warrants, totaling 2,003,235 shares for the three months ended June 30, 2021, respectively, were included in the computations of diluted

earnings per share.

The calculation of diluted net income per share for the three months ended June 30, 2021 does not include the impact

of 9,616,429 potentially dilutive shares relating to stock options, stock appreciation rights, and warrants as their impact would have

been anti-dilutive.

We incurred net losses for the three months ended

June 30, 2020, and therefore the impact of potentially dilutive common shares from outstanding stock options and warrants, totaling 3,940,138

shares as of June 30, 2020, respectively, were excluded from the computations of loss per share as their impact would have been anti-dilutive.

COMPREHENSIVE LOSS

As of the three and nine months ended December 31, 2020 and

As of the three months ended June 30, 2021 and

2020, comprehensive loss consisted of net loss and foreign currency translation adjustments.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Not yet adopted

In June 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.

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 2023.

The Company is currently

evaluating the effect that ASU 2016-13 will have on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No.

2018-13, “ Fair

Value Measurement (Topic 820):

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement ”.

The amendments in ASU 2018-13 modify the disclosure requirements associated with fair value measurements based on the concepts

in the Concepts Statement, including the consideration of costs and benefits.

The amendments on changes in unrealized gains and

losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and

the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual

period presented in the initial fiscal year of adoption.

All other amendments should be applied retrospectively to all periods

presented upon their effective date.

The amendments are effective for all entities for fiscal years beginning after December 15,

2019, and interim periods within those fiscal years.

Early adoption is permitted, including adoption in an interim period.

are currently assessing the impact this pronouncement may have on our consolidated financial statements

On December 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.

On December 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.

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.

are currently assessing the impact this pronouncement may have on our consolidated financial statements.

In March 2020, the FASB issued ASU No.

“ Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .”

ASU 2020-04 provides optional expedients and exceptions to account for contracts, hedging relationships and other transactions

that reference LIBOR or another reference rate if certain criteria are met.

The amendments of ASU No.

2020-04 are effective immediately,

as of March 12, 2020, and may be applied prospectively to contract modifications made and hedging relationships entered into on

or before December 31, 2022.

We are currently assessing the impact this pronouncement may have on our consolidated financial statements

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

Not yet adopted

In June 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.

OTHER INTERESTS

Investment 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.

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

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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.

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.

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 December 31, 2020 and March 31, 2020, 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 $ 0.2 million and $ 0.4 million as of December

31, 2020 and March 31, 2020 which are included in accounts receivable, net on the accompanying condensed consolidated balance

The accompanying Condensed Consolidated Statements of Operations

include $ 47 thousand and $ 83 thousand of digital cinema servicing revenue from CDF2 Holdings for each of the three months

and nine months ended December 31, 2020, respectively.

The accompanying Condensed Consolidated Statements of Operations include

$ 0.3 million and $ 0.9 million of digital cinema servicing revenue from CDF2 Holdings for each of three months and nine

months ended December 31, 2019.

Total Stockholders’ Deficit of CDF2 Holdings at December

31, 2020 and March 31, 2020 was $ 43.3 million and $ 31.8 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 December 31, 2020 and March 31, 2020 is carried at $ 0 .

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

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.

As of June 30, 2021 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 $ 0.4 million and $ 0.3 million as of June 30, 2021 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 $ 77 thousand and $ 9 thousand of digital cinema servicing revenue from CDF2 Holdings for the three months ended June 30, 2021

and 2020, respectively.

Total Stockholders’ Deficit of CDF2 Holdings

at June 30, 2021 and March 31, 2021 was $ 49.6 million and $ 46.3 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 June 30, 2021 and March 31, 2021 is carried at $ 0 .

Majority 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

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.

ASSET ACQUISTION

On December 21, 2020, the Company acquired substantially all

of the assets of The Film Detective, LLC (“TFD”), a leading content distributor and streaming channel company focused

on classic film and television programming.

The purchase price for the TFD acquisition was $ 750,000 in cash and 2,504,592 shares

of the Company’s class A common stock at $ 0.74 per share or $ 1,853,000 , as of the acquisition date (physical stock certificates

were issued by the Company’s transfer agent subsequently on January 11, 2021).

In addition, TFD may be entitled to receive

earnout amounts of up to an aggregate of $ 1,600,000 for the four years beginning on April 1, 2021, payable in cash or with

respect to a portion thereof, at the Company’s discretion and subject to certain conditions, in shares of Common Stock.

acquisition is accounted for as an asset acquisition as substantially all of the value acquired resides in a single group of assets.

Accordingly, the acquisition cost related to the transaction is capitalized and the potential earnout will only be recognized when

the contingency is probable and estimable in the future.

Acquired intangible assets include TFD’s content library, distribution

contracts, trade name and other and the final fair value allocation was as follows:

Content Library

Distribution Contracts

We calculate income tax expense based upon an annual effective

tax rate forecast, including estimates and assumptions.

We recorded an income tax benefit (expense) of approximately $ 0 and $ 181

for the three and nine months ended December 31, 2020.

We recorded income tax expense of approximately $ 136 thousand and $ 210

thousand, respectively, for the three and nine months ended December 31, 2019.

We have not recorded tax benefits on our loss before

income taxes because we have provided for a full valuation allowance that offsets potential deferred tax assets resulting from

net operating loss carry forwards, reflecting our inability to use such loss carry forwards.

Our effective tax rate for the nine months

ended December 31, 2020 and 2019 was 0.3 % and negative 2.09 %, respectively.

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:

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.

BUSINESS COMBINATION

Stock Purchase Agreement

On May 12, 2021, the Company entered into a stock

purchase agreement (the “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 Class A 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 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

cost $ 36 thousand during the three months ended June 30, 2021.

As of June 30, 2021, the deferred consideration is presented according

to the agreed-upon cash payments, including a $ 0.5 million short-term payable and a long-term payable for $ 1.5 million.

Purchase Price

Total purchase price

Allocation of purchase price

Developed technology

Total allocation of purchase price

The developed technology acquired in this transaction

has a useful life of 10 years.

Due to proximately of the closing date to the end of the quarter, the Company did not record any amortization

expense during the three months ended June 30, 2021 related to the developed technology acquired in the business combination.

Below is the amortization expense per year for the developed technology

acquired in the business combination:

2022 (remaining)

NOTES PAYABLE

payable consisted of the following:

December 31, 2020

Notes payable consisted of the following:

June 30, 2021

March 31, 2021

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Total non-recourse notes payable

Unamortized debt issuance costs and debt discounts

Total non-recourse notes payable,

net of unamortized debt issuance costs and debt discounts

Bison Note Payable

Second Lien Loans

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

Credit Facility

Mingtai Convertible Note

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 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.

February 2013, our DC Holdings, AccessDM and Phase 2 DC subsidiaries entered into a term loan agreement (the “Prospect Loan”)

Non-recourse 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.

Prospect Loan

In February 2013, our DC Holdings, AccessDM and

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

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

Loan bears interest at LIBOR plus 9.0 % (with a 2.0 % LIBOR floor), which is payable in cash, and at an additional 2.50 % to be accrued

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

interest will be payable in cash.

of DC Holdings accounts receivable are 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 is excess cash flow, it is used for prepayment

of the Prospect Loan.

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

As of December 31, 2020, and March 31, 2020, the debt service fund had a balance of $ 1.0 million, which is classified as

part of restricted cash on our Condensed Consolidated Balance Sheets.

Prospect Loan matures on March 31, 2021 and may be accelerated upon a change in control (as defined in the agreement) or other

events of default as set forth therein and would be subject to mandatory acceleration upon insolvency of DC Holdings.

We are permitted

to pay the full outstanding balance of the Prospect Loan at any time after the second anniversary of the initial borrowing, subject

to the following prepayment penalties:

The Prospect Loan bears

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

to the aggregate principal amount of the Prospect Loan until the Prospect Loan is paid off, at which time all accrued interest will be

payable in cash.

Collections of DC Holdings accounts receivable

are 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 is excess cash flow, it is used for prepayment of the Prospect Loan.

We also maintain a

debt service fund under the Prospect Loan for future principal and interest payments.

As of June 30, 2021, and March 31, 2021, the debt

service fund had a balance of $ 1.0 million, which is classified as part of restricted cash on our Consolidated Balance Sheets.

On March 4, 2021, Cinedigm DC Holdings, LLC (“CDCH”),

Access Digital Media, Inc., Access Digital Cinema Phase 2, Corp., 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 “Amendment”)

to the Term Loan Agreement dated February 28, 2013.

Under the 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.

The Prospect Loan matures on March 31, 2022 and

may be accelerated upon a change in control (as defined in the agreement) or other events of default as set forth therein and would be

subject to mandatory acceleration upon insolvency of DC Holdings.

We are permitted to pay the full outstanding balance of the Prospect

Loan at any time after the second anniversary of the initial borrowing, subject to the following prepayment penalties:

● 5.0 % of the principal amount prepaid between the second and third anniversaries of issuance;

3 unchanged sentences

● 1.0 % of the principal amount prepaid between the sixth and seventh anniversaries of issuance;

penalty if the balance of the Prospect Loan, including accrued interest, is prepaid thereafter.

Prospect Loan is 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 is also guaranteed by

AccessDM and Phase 2 DC.

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

event financial performance does not meet certain defined benchmarks.

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

following table summarizes the activity related to the Prospect Loan:

No penalty if the balance of the Prospect Loan, including accrued interest, is prepaid thereafter.

The Prospect Loan is 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 is also guaranteed by AccessDM and Phase 2 DC.

We provide limited financial

support to the Prospect Loan not to exceed $ 1.5 million per year in the event financial performance does not meet certain defined benchmarks.

The Prospect Loan contains customary representations,

warranties, affirmative covenants, negative covenants and events of default.

With a series of payments between April 30 and

July 9, 2021, the Company paid in full the Prospect Loan non-recourse debt amount by paying an aggregate principal amount of $7.8 million.

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

See Note 11 – Subsequent Events.

The following table summarizes the activity related

to the Prospect Loan:

(In thousands)

6 unchanged sentences

Total long term portion

December 2017, the Company entered into a loan with Bison for $ 10.0 million (the “Bison Loan”) and issued Warrants

to purchase 1,400,000 shares of the Company’s Class A common stock.

See Note 7 - Stockholders’ Deficit for

further discussion of the warrants.

loan was made in accordance with the Stock Purchase Agreement between the Company and Bison Entertainment Investment Limited,

another affiliate of Bison, entered into on June 29, 2017.

July 20, 2018, the Company entered into a term loan agreement (the “2018 Loan Agreement”) with Bison Global, pursuant

to which the Company borrowed from Bison Global $ 10.0 million (the “2018 Loan”), the proceeds of which were used to

pay off the Bison Loan.

The 2018 Loan has a one (1) year term that may be extended by mutual agreement of Bison Global and the

Company and bears interest at 5 % per annum, payable quarterly in cash.

On July 12, 2019, we entered into a Termination Agreement

for the 2018 Loan and at the same time entered into a $ 10.0 million convertible note with Bison Global (the “Bison Convertible

Convertible Note

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

The principal is 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.

Convertible Note is 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 stock.

The Bison Convertible Note is Convertible into 6,666,666 shares of Company’s Class A common stock,

based on initial conversion price of $ 1.50 per share.

Bison Convertible Note is unsecured and may be prepaid without premium or penalty, and contains customary covenants, representations

and warranties.

The proceeds of the Bison Convertible Note were used to repay the 2018 Loan.

On April 15, 2020, the Company executed

a letter amendment to the Bison Convertible Note dated July 12, 2019, amending the Bison Convertible Note, effective as of March

4, 2020, to change the maturity date of the note to March 4, 2021.

Bison Convertible Note, offset by the concurrent payoff and termination of the 2018 Loan, did not result in any increase to the

Company’s outstanding debt balance.

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.

Secured Lien Loans

July 14, 2016, we entered into a Second Lien Loan Agreement (the “Second Lien Loan Agreement”), under which we may

borrow up to $ 15.0 million (the “Second Lien Loans”), subject to certain limitations imposed on us regarding the number

of shares that we may issue in connection with the loans.

As of December 31, 2020 we have an outstanding balance of $ 6.0 million

which includes $ 4.7 million borrowed from Ronald L.

Chez, at that time a member of the Board of Directors.

Chez resigned from

the Board of Directors in April 2017, and became a strategic advisor to the Company through September 2020.

The Second Lien Loans

bear interest at 12.75 %, payable 7.5 % in cash and 5.25 % in cash or in kind at our option.

Before the June 30, 2019 maturity date,

on June 28, 2019, the Company entered into a consent agreement with lenders of the Second Lien Loans to an extension of the Second

Lien Loans pursuant to which (i) the Company paid down a portion of the outstanding principal amount plus accrued interest to

date, and (ii) the maturity date of the remaining outstanding principal amount of the Second Lien Loans was extended to September

addition, under the terms of the Second Lien Loan Agreement, we are required to issue 98,000 shares of our Class A common stock

for every $ 1.0 million borrowed, subject to pro rata adjustments.

As of December 31, 2020, we have issued 906,450 shares

of Class A common stock cumulatively under the Second Lien Loan Agreement.

The Second Lien Loans may be prepaid without premium

or penalty and contain customary covenants, representations and warranties.

The obligations under the Second Lien Loans are guaranteed

by certain of our existing and future subsidiaries.

We have pledged substantially all of our assets, except those assets related

to our digital cinema deployment business, to secure payment on the Second Lien Loans.

June 24, 2020, the Company entered into an exchange agreement (the “Exchange Agreement”) pursuant to which the Company

issued 329,501 shares of its Class A common stock in exchange for $ 842 thousand principal amount and accrued and unpaid interest

of Second Lien Loans with the holders of such notes.

The surrendered notes were immediately canceled and the Company recognized

a gain on extinguishment of $ 23 thousand.

Exchange Agreement included a true-up clause.

The true-up clause stated that if the gross proceeds from the sale of the Company’s

Class A common stock are less than $ 758 thousand, the Company shall pay up to an aggregate maximum of $ 50 thousand of such shortfall

in cash, and, with respect to any balance of the shortfall remaining after the cash payment, shall issue such additional number

of shares of common stock not to exceed, together with the Shares, 1,000,000 shares equal in value, based on the closing price

of the common stock.

On July 2, 2020, in accordance with the true-up clause, an

additional 33,465 shares of Class A common stock ($ 61 thousand based on the stock price of the Company’s Class A common

stock on the date of issue) were issued as a true-up adjustment pursuant to the Exchange Agreement.

In addition, the Company paid

an additional $ 50 thousand in July 2020.

June 26, 2020, the Company entered into a consent agreement to extend the maturity date to September 30, 2020 and grant the Company

options to extend further to March 31, 2021 and then to June 30, 2021.There was a consent fee of $ 100,000 paid in connection with

this extension.

On September 21, 2020, the Company extended the maturity date to March 31, 2021 upon payment of a fee of $ 50,000 .

On November 19, 2020, the Company issued 452,500 shares of

Common Stock in exchange for $ 250 thousand of principal and interest of Second Lien Notes.

The exchanged Second Lien Notes were

immediately cancelled and the Company recorded a gain on extinguishment of $ 5 thousand.

On December 4, 2020, the Company entered into exchange agreements

(the “December Exchange Agreements”) with certain holders of notes under its Second Lien Loan Agreement dated as of

July 14, 2016 among the Company, the lenders party thereto, and Cortland Capital Market Services LLC, as Agent (“Second

Lien Notes”).

Pursuant to the December Exchange Agreements, the Company issued an aggregate of 2,776,283 shares of its Class

A common stock, par value $ 0.001 per share Common Stock in exchange for an aggregate of $ 1,400 thousand of principal and interest

of Second Lien Notes.

The exchanged Second Lien Notes were immediately cancelled and the Company recorded a loss on extinguishment

of $ 545 thousand.

See Note 11 – Subsequent Events for exchange agreements

subsequent to December 31, 2020.

Facility and Cinedigm Revolving Loans

March 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.

of December 31, 2020 and March 31, 2020, there was $ 5.1 million and $ 14.5 million outstanding, respectively, and there

was $ 4.0 million available, under the Credit Facility based on the Company’s borrowing base as of December 31, 2020.

On July 3, 2019, the Company entered into the EWB Amendment to the Credit Facility.

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 signed

amendment No.

4 with East West Bank to extend the maturity of the Credit Facility to June 30, 2021 and waive events of default

This amendment also includes a financial covenant that began on August 31, 2020.

For the three months ended December

31, 2020, the Company was in compliance with this financial covenant.

Convertible Note

October 9, 2018, the Company issued a subordinated convertible note (the “Mingtai Convertible Note”) to Mingtai for

$ 5.0 million.

All proceeds from the Mingtai Convertible Note were used to pay the then-outstanding $ 5.0 million 2013 Notes.

$ 5.0 million in aggregate principal bears interest at 8 % maturing on October 9, 2019 with two one year extensions at the Company’s

The Mingtai Convertible Note is convertible into 3,333,333 shares of the Company’s Class A common stock, based on

initial conversion price of $ 1.50 per share.

On October 9, 2019, the Company signed an extension, for one additional year from

the original maturity date to be due on October 9, 2020.

Mingtai Convertible Note is convertible at the option of the Lender, or the Company, at any time prior to payment in full of the

principal balance, and all accrued interest of this Convertible Note in whole, or in part, into fully paid and non-assessable

shares of Company’s Class A common stock at the conversion rate of $ 1.50 .

conversion prior to maturity by Mingtai, or the Company, we may elect to settle such conversion in shares of our Class A common

stock, cash or a combination thereof.

Upon the maturity date, the Company has the option to pay in Class A common shares convertible

at the greater of the closing price of the Class A common stock or $ 1.10 .

As a result of our cash conversion option, we separately

accounted for the value of the embedded conversion option as a debt discount (with an offset to additional paid-in capital) of

$ 270 thousand.

The value of the embedded conversion option was determined based on the estimated fair value of the debt without

the conversion feature, which was determined using market comparables to estimate the fair value similar nonconvertible debt;

the debt discount is being amortized to interest expense using the effective interest method over the one year term of the Mingtai

Convertible Note.

September 11, 2020, Mingtai converted the Notes in full into an aggregate of 3,333,333 shares of Common Stock at a conversion

price of $ 1.50 per share.

Accordingly, the Note has been extinguished.

In accordance with ASC 470, the Mingtai Convertible Note

was analyzed for potential debt extinguishment.

The discount on the note had been fully accreted prior to conversion, resulting

in no gain or loss from extinguishment.

April 15, 2020, the Company received $ 2.2 million from East West Bank, the Company’s existing lender.

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 are intended to be eligible for forgiveness, subject to the provisions of the CARES Act and

could be subject to repayment.

STOCKHOLDERS’ DEFICIT

the nine months ended December 31, 2020, we issued 92,236,505 shares of Class A common stock which consists of the sale of 28,405,840

shares of our Class A common stock, 29,855,081 in connection with the Starrise transaction, settlement of a portion of the outstanding

second lien loan, issuance of restricted shares to employees and consultants, and the issuances of Class A common stock for warrants

exercised and preferred stock dividends.

See Note - 9 Supplemental Cash Flow Disclosure .

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 The Nasdaq Global Market at

the time of the sale of such shares.

The Company is not obligated to sell any shares under the Sales Agreement.

Any sales of shares

made under the Sales Agreement will be made pursuant to an effective registration statement on Form S-3 filed by the Company with

the SEC on July 6, 2020, for an aggregate offering price of up to $ 30 million.

During the quarter ended December 31, 2020, we sold 28,405,840

shares of Common Stock under the ATM Sales Agreement.

Net proceeds from such sales totaled $ 18.6 million.

Proceeds were used to

strengthen our liquidity and working capital position.

On September 1, 2020, we issued 80,000

shares of Class A common stock to Ronald L.

Chez as a bonus payable to him under the Strategic Investor Agreement between the

Company and him dated as of April 3, 2017.

We recognized an expense of $ 71 thousand based on the stock price of the Class A common

stock on the date of grant.

On October 23, 2020, the Company filed a Certificate of Amendment

to the Fifth Amended and Restated Certificate of Incorporation, pursuant to which the number of shares of Class A common stock

authorized for issuance was increased to 200,000,000 shares.

On November 19, 2020, the Company issued 452,499 shares of

Common Stock in exchange for $ 247,108 of principal amount of Second Lien Notes.

The exchanged Second Lien Notes were immediately

On December 4, 2020, the Company entered into Exchange Agreements

with certain holders of the Second Lien Loans.

Pursuant to the Exchange Agreements, the Company issued an aggregate of 2,776,284

shares of its Class A common stock, par value $ 0.001 per share Common Stock in exchange for an aggregate of $ 1,386,106 of principal

amount of Second Lien Notes.

The exchanged Second Lien Notes were immediately cancelled.

The exchange was consummated on December

dividends in arrears on preferred stock were $ 0.1 million as of December 31, 2020 and 2019.

In January 2021, we paid the preferred

stock dividends in arrears in the form of 171,933 shares of Class A common stock.

have treasury stock, at a cost, consisting of 1,313,836 shares of Class A common stock at December 31, 2020 and March 31, 2020.

EQUITY INCENTIVE PLANS

Based Compensation 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;

(ii) stock appreciation rights;

Credit Facility and Cinedigm Revolving Loans

On March 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

Interest 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.

As of June 30, 2021 and March 31, 2021, there was

$ 0.4 million and $ 2.0 million outstanding, respectively, and there was $ 8.1 million available, under the Credit Facility

based on the Company’s borrowing base as of June 30, 2021.

On July 3, 2019, the Company entered into the EWB Amendment to the Credit

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.

25, 2020, the Company signed amendment No.

4 with East West Bank 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.

extension period, until an amendment is entered into, we are not able to access any additional borrowings under the Credit Facility.

On April 15, 2020, the Company received $ 2.2 million

from East West Bank, the Company’s existing lender.

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 are 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 June 30, 2021.

STOCKHOLDERS’ EQUITY

During the three months ended June 30, 2021, we

issued 1,536,407 shares of Class A common stock which consists of the issuance of Class A common stock for business combination, the issuances

of Class A common stock preferred stock dividends, and SARs awards.

PREFERRED STOCK

Cumulative dividends in arrears on preferred stock

were $ 0.1 million and $ 0.1 million as of June 30, 2021 and March 31, 2021.

In May 2021, we paid the preferred stock dividends in arrears

in the form of 53,278 shares of Class A common stock.

TREASURY STOCK

We have treasury stock, at cost, consisting of

1,313,836 shares of Class A common stock at June 30, 2021 and March 31, 2021.

CINEDIGM’S EQUITY INCENTIVE PLANS

Stock 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;

appreciation rights;

(iii) stock or restricted stock or restricted stock units;

(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 Class A 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 Class A 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 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

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 Class A Common Stock to employees, outside directors and consultants.

of December 31, 2020, there were 265,887 stock options outstanding in the Plan with weighted average exercise price of $ 15.02

and a weighted average contract life of 2.36 years.

As of March 31, 2020, there were 272,766 shares pursuant to stock options

outstanding in the Plan with weighted average exercise price of $ 15.00 and a weighted average contract life of 3.11 years.

August 2017, the Company adopted 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 Class A 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.

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 does not affect awards already

granted under the 2000 Plan.

On December 4, 2019, upon shareholder approval, the 2017 Plan was amended to increase the maximum

number of shares of Class A common stock authorized for issuance thereunder from 2,108,270 shares to 4,098,270 .

October 23, 2020, the Company amended its 2017 Equity Incentive Plan to increase the number of shares authorized for issuance

thereunder from 4,098,270 to 14,098,270 .

analysis of all options outstanding under the 2000 Plan as of December 31, 2020 is as follows:

As of December 31, 2020

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 Class A 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 Class A 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 are set at the discretion of our compensation committee.

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 Class A Common

Stock to employees, outside directors and consultants.

As of June 30, 2021, there were 261,587 stock

options outstanding in the 2000 Plan with weighted average exercise price of $ 14.99 and a weighted average contract life of 1.86 years.

As 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.

In August 2017, the Company adopted 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 Class A 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.

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.

On December 4, 2019, upon shareholder approval, the 2017 Plan was

amended to increase the maximum number of shares of Class A common stock authorized for issuance thereunder from 2,108,270 shares to 4,098,270 .

On October 23, 2020, the Company amended its 2017

Equity Incentive Plan to increase the number of shares authorized for issuance thereunder from 4,098,270 to 14,098,270 .

The analysis of all options outstanding under

the 2000 Plan as of June 30, 2021 is as follows:

As of June 30, 2021

Range of Prices

Options Outstanding

Weighted Average Remaining

Life in Years

Weighted Average Exercise

Weighted Average Remaining Life in Years

Weighted Average Exercise Price

Aggregate Intrinsic Value (In thousands)

$ 7.40 - $ 13.69

$ 13.70 - $ 24.40

$ 24.41 - 30.00

An analysis of all options exercisable under the

2000 Plan as of June 30, 2021 is presented below:

Options Exercisable

Weighted Average Remaining Life in Years

Weighted Average

Exercise Price

Aggregate Intrinsic Value

(In thousands)

Employee and director stock-based compensation

expense related to our stock-based awards was as follows:

Three Months Ended

(In thousands)

Selling, general and administrative

During the three months ended June 30, 2021, the

Company granted 584,000 stock appreciation rights (“SARs”).

The SARs were granted under the Company’s 2017 Equity

Incentive Plan (the “2017 Plan).

All SARs issued have an exercise price equal to the fair value of the Company’s Class A 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,

May 23, 2021 – June 21, 2021

Maturity Date:

May 23, 2031 – June 21, 2031

Fair value of class A common stock on grant date:

$ 1.29 - $ 1.37

94.56 % - 94.63 %

Discount rate:

1.50 % - 1.63 %

GRANTED OUTSIDE CINEDIGM’S EQUITY INCENTIVE PLAN

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 Class A Common Stock at an exercise price of $ 17.50

The options were fully vested as of October 2017 and expire 10 years from the date of grant, if unexercised.

December 31, 2020, 12,500 of such options remained outstanding.

December 2010, we issued options to purchase 450,000 shares of Class A Common Stock outside of the 2000 Plan as part of our Chief

Executive Officer’s initial employment agreement with the Company.

Such options have exercise prices per share between $ 15.00

and $ 50.00 , were vested as of December 2013 and expired in December 2020.

As of December 31, 2020, none of such options remained

following table presents information about outstanding warrants to purchase shares of our Class A common stock as of December

All of the outstanding warrants are fully vested and exercisable.

Amount outstanding

Exercise price per share

There was $ 856 thousand and $ 110 thousand

of stock-based compensation recorded for the three months ended June 30, 2021 and 2020, respectively, relating to these SARs.

Total SARs outstanding are as follows:

SARs Outstanding March 31, 2021

Total SARs Outstanding June 30, 2021

There was $ 1 thousand and $ 1 thousand of

stock-based compensation recorded for the three months ended June 30, 2021 and 2020, respectively, related to employees’ restricted

stock awards.

was $ 126 thousand and $ 66 thousand of stock-based compensation for the three months ended June 30, 2021 and 2020, respectively, related

to board of directors.

During the three months ended June

30, 2021 the company issued 35,714 shares to the board of 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 Class A 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 June 30, 2021, 12,500 of such options remained outstanding.

The following table presents information about

outstanding warrants to purchase shares of our Class A common stock as of June 30, 2021.

All of the outstanding warrants are fully vested

and exercisable.

Exercise price

Strategic management service provider

4 unchanged sentences

December 2022

warrants issued in connection with the Second Lien Loans (See Note 6 - Notes Payable ) to Ronald L.

Chez, at the time a

member of our Board of Directors, contain a cashless exercise provision and customary anti-dilution rights.

On June 4, 2020, Ronald

Chez exercised all such warrants to purchase 236,899 shares of Class A common stock in connection with the Second Lien Loans,

resulting in gross proceeds of $ 301 thousand.

COMMITMENTS AND CONTINGENCIES

operate from leased properties under non-cancelable operating lease agreements, certain of which contain escalating lease clauses.

the first quarter of 2019, the Company adopted ASU No.

2016-02, “Leases (Topic 842),” which requires leases with durations

greater than twelve months to be recognized on the balance sheet.

The Company adopted the standard using the modified retrospective

approach with an effective date as of April 1, 2019.

The Company did not apply the new standard to comparative periods and therefore,

those amounts are not presented below.

Company elected the package of three practical expedients.

As such, the Company did not reassess whether expired or existing contracts

are or contain a lease and did not need to reassess the lease classifications or reassess the initial direct costs associated

with expired or existing leases.

The Company did not elect the hindsight practical expedient.

The land easement practical expedient

was not applicable to the Company.

Also, the Company has elected to take the practical expedient to not separate lease and non-lease

components for all asset classes.

The Company made an accounting policy election to continue not to recognize leases with durations

of twelve months or less on the consolidated balance sheet.

Company leases office space under operating leases.

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.

table below presents the lease-related assets and liabilities recorded on the balance sheet as of December 31, 2020

From time to time, the Company may be subject to various legal proceedings

and claims that arise in the ordinary course of its business activities.

Although the results of litigation and claims cannot be predicted

with certainty, the Company does not believe it is party to any other claim or litigation the outcome of which, if determined adversely

to the Company, would individually or in the aggregate be reasonably expected to have a material adverse effect on its business.

of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management

resources and other factors.

We operate from leased properties under non-cancelable

operating lease agreements, certain of which contain escalating lease clauses.

The Company leases office space under operating

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 June 30, 2021

(In thousands)

4 unchanged sentences

Total operating lease liabilities

Weighted-average discount rate (1)

(1) Upon adoption of

the new lease standard, discount rates used for existing leases were established at April

The table below presents certain information related to lease

costs for leases:

Three Months Ended

Nine Months Ended

The table below presents certain information related

to lease costs for leases:

(In thousands)

December 31, 2020

Operating lease cost

1 unchanged sentence

Other Information

The table below presents supplemental cash flow information

related to leases:

Three Months Ended

Nine Months Ended

The table below presents supplemental cash flow

information related to leases:

(In thousands)

December 31, 2020

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows used for operating leases

The Company terminated an office lease in Los Angeles in April

2020 and a lease for office equipment was terminated in June 2020.

The Company removed the right-of-use assets of $ 927 thousand

and the lease liabilities of $ 1.0 million as of June 30, 2020.

The estimated future lease liabilities are not expected to be material

for the remaining outstanding office and equipment leases.

SUPPLEMENTAL CASH FLOW INFORMATION

Three Months Ended

(In thousands)

Cash interest paid

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 to Starrise,

a related party

Contributed capital under the Starrise transaction,

a related party

Settlement of second lien loan with Class A

Conversion of note payable

Class A common stock to be issued in connection with the asset acquisition

Right-of-use assets and operating lease liability

recorded upon adoption of ASU 842, net

Amounts accrued in connection with addition

of property and equipment

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

Issuance of Class A common stock to Starrise, a related party

Contributed capital under the Starrise transaction, a related party

Settlement of second lien loan with Class A common stock

Issuance of Class A common stock for business combination

Starrise shares used to pay down vendors

Forgiveness of PPP loan

Deferred consideration in purchase of a business

Preferred stock dividends paid with common stock

SEGMENT INFORMATION

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.

We operate in two reportable segments:

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.

Operations of:

3 unchanged sentences

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 Business 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 distributor of independent content, and collaborates with producers and other content owners to market, source, curate and distribute independent content to targeted and profitable audiences in theatres and homes, and via mobile and emerging platforms.

following tables present certain financial information related to our reportable segments and Corporate:

As of December

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.

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:

As of June 30, 2021

(In thousands)

Intangible Assets,

Notes Payable,

Notes Payable

Operating lease

Cinema Equipment Business

2 unchanged sentences

(In thousands)

Intangible Assets, net

Notes Payable, Non-Recourse

Notes Payable

Operating lease liabilities

Cinema Equipment Business

1 unchanged sentence

Statements of Operations

Three Months Ended December 31, 2020

(Unaudited, in thousands)

Cinema Equipment Business

Content & Entertainment

Direct operating (exclusive of depreciation and

amortization shown below)

Selling, general and administrative

Allocation of corporate overhead

Provision for doubtful accounts

Depreciation and amortization of property and equipment

Amortization of intangible

Total operating expenses

Loss from operations

Employee and director stock-based compensation expense related

to the Company’s stock-based awards was negative $ 1.0 million for the three months ended December 31, 2020.

(In thousands)

Cinema Equipment Business

Content & Entertainment

Direct operating

Selling, general and administrative

Total stock-based compensation

of Operations

Months Ended December 31, 2019

Three Months Ended June 30, 2021

(in thousands)

Cinema Equipment Business

Content & Entertainment

Direct operating (exclusive of depreciation and

amortization shown below)

Direct operating (exclusive of depreciation and amortization shown below)

Selling, general and administrative

Allocation of corporate overhead

Provision (recovery) for doubtful accounts

Provision for doubtful accounts

Depreciation and amortization of property and equipment

2 unchanged sentences

Income (loss) from operations

and director stock-based compensation expense related to the Company’s stock-based awards was $ 0.2 million for the

three months ended December 31, 2019.

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)

Cinema Equipment Business

Content & Entertainment

3 unchanged sentences

Statements of Operations

Nine Months Ended December 31, 2020

(Unaudited, in thousands)

Cinema Equipment Business

Content & Entertainment

Direct operating (exclusive of depreciation and amortization

Selling, general and administrative

Allocation of corporate overhead

Recovery for doubtful accounts

Depreciation and amortization of property and equipment

Amortization of intangible assets

Total operating expenses

Loss from operations

Employee and director stock-based compensation expense related

to the Company’s stock-based awards was $ 2.1 million for the nine months ended December 31, 2020.

Three Months Ended June 30, 2020

(in thousands)

Cinema Equipment Business

Content & Entertainment

Direct operating

Selling, general and administrative

Total stock-based compensation

Statements of Operations

Nine Months Ended December 31, 2019

(Unaudited, in thousands)

Cinema Equipment Business

Content & Entertainment

Direct operating (exclusive of depreciation and amortization

Direct operating (exclusive of depreciation and amortization shown below)

Selling, general and administrative

Allocation of corporate overhead

Provision (recovery) for doubtful accounts

Depreciation and amortization of property and equipment

1 unchanged sentence

Total operating expenses

Loss from operations

and director stock-based compensation expense related to the Company’s stock-based awards was $ 0.4 million for the

nine months ended December 31, 2019.

(In thousands)

Cinema Equipment Business

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:

Content & Entertainment

2 unchanged sentences

Total stock-based compensation

SUBSEQUENT EVENTS

On January 21, 2021, the Company entered into an exchange

agreement (the “Exchange Agreement”) with a holder of notes under its Second Lien Loan Agreement dated as of July 14,

2016 among the Company, the lenders party thereto, and Cortland Capital Market Services LLC, as Agent (“Second Lien Notes”).

Pursuant to the Exchange Agreement, the Company issued an aggregate of 1,247,626 shares of its Class A common stock, par

value $ 0.001 per share Common Stock in exchange for an aggregate of $ 1,289,650 of principal amount of Second Lien Notes.

The exchanged

Second Lien Notes were immediately cancelled.

In two separate exchanges with another holder of Second Lien

Notes, on January 14, 2021 and January 21, 2021, the Company issued 689,500 shares and 580,448 shares (an aggregate of 1,269,948

shares) of Class A Common Stock in exchange for $ 500,000 and $ 600,000 (an aggregate of $ 1,100,000 ) principal amount of Second

The exchanged Second Lien Notes were immediately cancelled.

On February 9, 2021, the Company prepaid substantially all of

the outstanding obligations in respect of principal, interest, fees and expenses under the Second Lien Loan Agreement, among the

Company, certain lenders and Cortland Capital Market Services LLC.

The payoff amount of approximately $ 3.18 million was comprised

of (i) $ 3.1 million of principal, (2) accrued payment-in-kind interest of $.

018 million, (3) accrued current interest of $ 0.007

million, and (4) fees and expenses of $ 0.004 million.

Upon such prepayment, the Second Lien Loan Agreement was terminated effective

February 9, 2021.

On February 2, 2021, the Company entered into a Securities

Purchase Agreement with a single institutional investor for the purchase and sale of 5,600,000 shares the Company’s Class

A common stock, par value $ 0.001 per share, at a purchase price of $ 1.25 per share, in a registered direct offering, pursuant

to an effective shelf registration statement on Form S-3 which was declared effective by the Securities and Exchange Commission

on July 10, 2020 (File No.

333-239710) and an applicable prospectus supplement.

The closing of the sale of the February Shares under the Securities

Purchase Agreement occurred on February 5, 2021.

The aggregate gross proceeds for the sale of the February Shares was approximately

$ 7.0 million.

The net proceeds to the Company from the sale of the Shares, after deducting the fees of the placement agent but

before paying the Company’s estimated offering expenses, was approximately $ 6.5 million.

calculate income tax expense based upon an annual effective tax rate forecast, including estimates and assumptions.

We recorded an

income tax benefit (expense) of approximately $ 63 thousand and zero for the three months ended June 30, 2021 and 2020,

respectively.

We have not recorded tax benefits on our loss before income taxes because we have provided for a full valuation

allowance that offsets potential deferred tax assets resulting from net operating loss carry forwards, reflecting our inability to

use such loss carry forwards.

Our effective

tax rate for the three months ended June 30, 2021 and 2020 was negative 1.2 % and zero , respectively.

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:

increased limitation threshold for determining deductible interest

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.

SUBSEQUENT EVENT

a series of payments between April 30 and July 9, 2021 ,

the Company paid in full the Prospect loan non-recourse debt amount by paying an aggregate principal amount of $ 7.8 million, with

$ 3.1 million having been paid subsequent to the period.

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

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements