What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-09-09 compared with 2021-02-22 · 700 added, 580 removed, 38 unchanged (97% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion and analysis should be read in conjunction with our historical consolidated financial statements and the

related notes included elsewhere in this document.

report contains forward-looking statements within the meaning of the federal securities laws.

These include statements about our

expectations, beliefs, intentions or strategies for the future, which are indicated by words or phrases such as “believes,”

“anticipates,” “expects,” “intends,” “plans,” “will,” “estimates,”

and similar words.

Forward-looking statements represent, as of the date of this report, our judgment relating to, among other

things, future results of operations, growth plans, sales, capital requirements and general industry and business conditions applicable

These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions

and other factors, some of which are beyond our control that could cause actual results to differ materially from those expressed

or implied by such forward-looking statements.

our inception, we have played a significant role in the digital distribution revolution that continues to transform the media

In addition to our pioneering role in transitioning approximately 12,000 movie screens from traditional analog film

prints to digital distribution, we have become a leading distributor of independent content, both through organic growth and acquisitions.

We distribute products for major brands such as the NFL, Hallmark and Scholastic, as well as leading international and domestic

content creators, movie producers, television producers and other short form digital content producers.

We collaborate with producers,

major brands and other content owners to market, source, curate and distribute quality content to targeted audiences through (i)

existing and emerging digital home entertainment platforms, including but not limited to, iTunes, Amazon Prime, Netflix, Hulu,

Xbox, Sony PlayStation, Tubi and cable video-on-demand (“VOD”), and (ii) physical goods, including DVD and Blu-ray

report our financial results in two primary segments as follows:

(1) cinema equipment business and (2) media content and entertainment

business (“Content & Entertainment” or “CEG”).

The cinema equipment business segment consists of the

non-recourse, financing vehicles and administrators for our digital cinema equipment (the “Systems”) installed in

movie theatres throughout North America and several international countries.

It also provides fee-based support to over 12,000

movie screens as well as directly to exhibitors and other third party customers in the form of monitoring, billing, collection

and verification services.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should

be read in conjunction with our historical consolidated financial statements and the related notes included elsewhere in this report.

This report contains forward-looking statements

within the meaning of the federal securities laws.

These include statements about our expectations, beliefs, intentions or strategies

for the future, which are indicated by words or phrases such as “believes,” “anticipates,” “expects,”

“intends,” “plans,” “will,” “estimates,” and similar words.

Forward-looking statements

represent, as of the date of this report, our judgment relating to, among other things, future results of operations, growth plans, sales,

capital requirements and general industry and business conditions applicable to us.

These forward-looking statements are not guarantees

of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our control that

could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

Since our inception, we have played a significant

role in the digital distribution revolution that continues to transform the media landscape.

In addition to our pioneering role in transitioning

approximately 12,000 movie screens from traditional analog film prints to digital distribution, we have become a leading distributor of

independent content, both through organic growth and acquisitions.

We distribute products for major brands such as the Hallmark Channel,

Televisa, ITV, Nelvana, ZDF, Konami, NFL, NHL and Scholastic, as well as leading international and domestic content creators, movie producers,

television producers and other short form digital content producers.

We collaborate with producers, major brands and other content owners

to market, source, curate and distribute quality content to targeted audiences through (i) existing and emerging digital home entertainment

platforms, including but not limited to, iTunes, Amazon Prime, Netflix, Hulu, Xbox, Tubi, Roku, Pluto TV, and cable video-on-demand (“VOD”),

and (ii) physical goods, including DVD and Blu-ray Discs.

We report our financial results in two primary

segments as follows:

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

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

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

It also provides fee-based support to over 6,200 movie screens as well as directly to exhibitors and other third-party customers in the

form of monitoring, billing, collection and verification services.

Our Content & Entertainment segment is a market leader in:

(1) ancillary market aggregation

and distribution of entertainment content and;

(2) branded and curated over-the-top (“OTT”) digital network business

providing entertainment channels and applications.

Beginning in December 2015, certain of our cinema equipment

began to reach the conclusion of their 10-year deployment payment period with certain distributors and, therefore, Virtual Print

(1) ancillary market aggregation and distribution of entertainment content and (2) branded and curated over-the-top (“OTT”)

digital network business providing entertainment channels and applications.

Beginning in December 2015, certain of our cinema

equipment began to reach the conclusion of their 10-year deployment payment period with certain distributors and, therefore, Virtual Print

Fees (“VPF”) revenues ceased to be recognized on such Systems, related to such distributors.

Furthermore, because

the Phase I Deployment installation period ended in November 2007, a majority of the VPF revenue associated with the Phase I Deployment

Systems has ended.

The reduction in VPF revenue on cinema equipment business systems approximately coincided with the conclusion

of certain of our non-recourse debt obligations and, therefore, the reduced cash outflows related to such non-recourse debt obligations

partially offset the reduced VPF revenue since November 2017.

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:

Furthermore, because the Phase

I Deployment installation period ended in November 2007, a majority of the VPF revenue associated with the Phase I Deployment Systems

The reduction in VPF revenue on cinema equipment business systems approximately coincided with the conclusion of certain of

our non-recourse debt obligations and, therefore, the reduced cash outflows related to such non-recourse debt obligations partially offset

the reduced VPF revenue since November 2017.

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;

1 unchanged sentence

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

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 plan.

We are structured so that our cinema equipment business segment

operates independently from our Content & Entertainment business.

As of December 31, 2020, we had approximately $11.9 million

of non-recourse outstanding debt principal that relates to, and is serviced by, our cinema equipment business.

We also have approximately

$13.3 million of outstanding debt principal, as of December 31, 2020 that is attributable to our Content & Entertainment and

Corporate segments.

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.

events have negatively affected, and are expected to continue to negatively affect, our business and results of operations.

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

Results of Operations for the Three Months Ended December

31, 2020 and 2019

Three Months Ended December

($ in thousands)

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.

We are structured so that our cinema equipment

business segment operates independently from our Content & Entertainment business.

As of June 30, 2021, we had approximately $3.0

million of non-recourse outstanding debt principal that relates to, and is serviced by, our cinema equipment business.

We had approximately

$3.0 million of outstanding debt principal, as of June 30, 2021 that is attributable to our Content & Entertainment and Corporate

Risks and Uncertainties

The COVID-19 pandemic and related economic

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

As part of our

Content & Entertainment business, the Company sells DVDs and Blu-ray discs at brick-and-mortar stores.

With the closure of

non-essential retail stores beginning in the spring of 2020, the sale of physical discs through our retail partners declined

although this was partially offset by digital purchases of physical product.

As part of 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.

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 (“SVOD”).

To the extent films are

not shown in theatres, we do not earn revenue.

Longer term, there may be a shift in consumer

preference towards digital consumption over theatrical viewing.

Studios may reduce their theatrical slates to tentpoles and certain genres

releasing other content directly on their own streaming services.

If fewer movies are released theatrically, this shift to digital viewing

reduces revenue opportunities for virtual print fees and sales of digital cinema equipment.

While the Company has been encouraged by the

pace of mass vaccinations, spikes or the emergence of new variants could require future closures, which impact the Cinema Equipment business.

In connection to the CEG business, if larger

branded companies choose to make their content available earlier on their own streaming platforms, this could limit our ability monetize

this content on a transactional digital basis, as consumers can access it via the company’s streaming platform.

However, most content

suppliers including filmmakers and producers, do not have their own streaming platforms and rely on us for distribution through our digital

home entertainment business and OTT digital networks.

As a result, this risk is limited, and our digital distribution capabilities

and digital networks provide us with the opportunity to take advantage of this consumer shift towards digital consumption.

Over the last year and a half, the COVD-19 pandemic

resulted in a film and TV production slow-down.

Independent producers and filmmakers had to either suspend or delay their productions

due to rising infection rates and the high costs of appropriate COVID-19 production protocols.

As a result, there are fewer available

films to acquire, so our pipeline for content could be negatively impacted.

As well, with the rise of new variants, productions

may be at risk again of shutting down or being delayed, which would further limit available content.

The COVID-19 pandemic has also resulted in an

acceleration of cord-cutting, and, as more consumers move away from cable, this could lead to a decrease in cable TV VOD revenues, as

well as a decrease in licensing fees as Pay One window budgets get shifted from licensing and towards originals.

However, given

the overall shift towards digital consumption, these risks may be offset by increased revenues from transactional, subscription and ad

supported/FAST platforms, including our own owned and operated digital network business.

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.

We may continue to generate

net losses for the foreseeable future.

In addition, we have debt-related contractual obligations as of June 30, 2021 and beyond.

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

Capital Raises

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 of Class A common stock

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

The closing of the sale occurred on February 5, 2021.

The aggregate gross proceeds for the sale was approximately $7.0 million.

The net proceeds to the Company from the sale, after deducting the fees of the placement agent but before paying the Company’s estimated

offering expenses, was approximately $6.5 million.

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” and, together with A.G.P., the “Sales Agents”), pursuant to which the Company may offer and sell,

from time to time, through the Sales Agents, shares of Common Stock at the market prices prevailing on Nasdaq at the time of the sale

of such shares.

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

Any sales of shares made under the ATM

Sales Agreement will be made pursuant to an effective registration statement on Form S-3 which was declared effective by the Securities

and Exchange Commission on July 10, 2020 (File No.

333-239710), for an aggregate offering price of up to $30 million.

During the quarter

ended June 30, 2021, we did not sell any shares of Common Stock under the ATM Sales Agreement.

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

purchase agreement with certain investors for the purchase and sale of 7,213,334 shares of Class A common stock, par value $0.001 per

share, 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 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 occurred on July 20, 2020.

The aggregate gross proceeds for the sale was approximately

$10.8 million.

The net proceeds to the Company from the sale, after deducting the fees of the placement agents but before paying the Company’s

estimated offering expenses, is 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 of the 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 which was declared effective by the Securities and Exchange Commission on May

14, 2020 (File No.

333-238183) and an applicable prospectus supplement.

The closing of the sale occurred on May 22, 2020.

The aggregate

gross proceeds for the sale was $8.0 million.

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

agents but before paying the Company’s estimated offering expenses, were approximately $7.1 million.

As of June 30, 2021, there is still approximately

$38.0 million remaining unsold under our shelf registration.

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 for $5.6 million.

portion 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 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.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared

in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

In connection with the

preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that

affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures.

We base our assumptions, estimates

and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated

financial statements are prepared.

On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments

to ensure that our financial statements are presented fairly and in accordance with GAAP.

However, because future events and their effects

cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Our significant accounting policies are discussed

in Note 2 - Summary of Significant Accounting Policies , of the Notes to Consolidated Financial Statements, Financial Statements

and Supplementary Data , of this Quarterly Report on Form 10-Q.

Management believes that the following accounting policies are the

most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult,

subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.

Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our board of directors.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, less

accumulated depreciation and amortization.

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

of the respective assets as follows:

Computer equipment and software

Internal use software

Digital cinema projection systems

Machinery and equipment

Furniture and fixtures

Leasehold improvements are being amortized over

the shorter of the lease term or the estimated useful life of the improvement.

Maintenance and repair costs are charged to expense as

Major renewals, improvements and additions are capitalized.

Software developed or purchased for internal use

by the Company is capitalized and amortized over its estimated useful life.

Changes in these estimates could result in impairment in the

value of the asset.

Useful lives are determined based on an estimate

of either physical or economic obsolescence, or both.

During the three months ended June 30, 2021 and 2020, we have neither made any revisions

to estimated useful lives, nor recorded any impairment charges on our property, equipment and internal use software.

FAIR VALUE ESTIMATES

Goodwill, Finite-Lived Assets and Long-Lived

We evaluate our goodwill for impairment in the

fourth quarter of each fiscal year (as of March 31), or whenever events or changes in circumstances indicate the fair value of a reporting

unit is below its carrying amount.

The determination of whether or not goodwill has become impaired involves a significant level of judgment

in the assumptions underlying the approach used to determine the value of our reporting units.

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 our operations.

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

whether goodwill is impaired could change and result in future goodwill impairment charges that could have a material adverse effect on

our consolidated financial position or results of operations.

The Company has the option to assess goodwill

for possible impairment by performing a qualitative analysis to determine if it is more likely than not that the fair value of a reporting

unit is less than its carrying amount or to perform the quantitative impairment test.

The quantitative test involves comparing the estimated

fair value of a reporting unit with its respective book value, including goodwill.

If the estimated fair value exceeds book value, goodwill

is considered not to be impaired.

If, however, the fair value of the reporting unit is less than book value, an impairment loss is recognized

in an amount equal to the excess.

The Company tests for goodwill impairment annually

During the three months ended June 30, 2021 and 2020, there were no impairment charges recorded on goodwill.

elected to conduct a qualitative goodwill assessment and in 2020 we conducted a quantitative goodwill assessment.

In determining fair

value, we used various assumptions, including expectations of future cash flows based on projections or forecasts derived from analysis

of business prospects, economic or market trends and any regulatory changes that may occur.

We estimated the fair value of the reporting

unit using a net present value methodology, which is dependent on significant assumptions related to estimated future discounted cash

flows, discount rates and tax rates.

Certain of the estimates and assumptions that we used in determining the value of our CEG reporting

unit are discussed in Note 2 - Summary of Significant Accounting Policies .

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.

Determining whether

impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related

to the potentially impaired asset, the useful life over which cash flows will occur, their amount and the asset’s residual value,

The assessment for recoverability is based primarily on our ability to recover the carrying value of its 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 assets the asset is deemed not to be recoverable and possibly impaired.

We then estimate the fair value of

the asset to determine whether an impairment loss should be recognized.

An impairment loss will be recognized if the asset’s fair

value is determined to be less than its carrying value.

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

REVENUE RECOGNITION

We determine revenue recognition by:

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

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.

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

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

and payment for that product or service will be one year or less.

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

fees due from our System deployments that had extended payment terms.

The outstanding balances on these arrangements are insignificant

and hence the impact of significant financing would be insignificant.

Cinema Equipment Business

Our Cinema Equipment Business consists of financing

vehicles and administrators for 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.

The 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 ACFs from alternative content

providers, and to distribute those fees to theatrical exhibitors (collectively, “Services”).

VPFs are earned, net of administrative fees, pursuant

to contracts with movie studios and distributors, whereby amounts are payable by a studio to Phase I Deployment and to Phase II Deployment

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

VPFs are earned and

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

One VPF is payable for every digital title

initially displayed per System.

The amount of VPF revenue is dependent on the number of movie titles released and displayed using the

Systems in any given accounting period.

VPF revenue is recognized in the period in which the digital title first plays on a System for

general audience viewing in a digitally equipped movie theatre, as Phase I Deployment’s and Phase II Deployment’s performance

obligations have been substantially met at that 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 terms;

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

As permitted by these agreements, we typically pursue the sale of the Systems

to such exhibitors.

Cinedigm recognizes revenue once the customer takes possession of the systems and 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

Revenues generated by our Cinema Equipment Business segment

decreased primarily as a result of the reduced number of Systems earning VPF revenue and commissions for Phase II Deployment Systems.

In addition, as a result of COVID-19, during the three months ended December 31, 2020, theatres in many major markets remained

closed throughout the third quarter causing the majority of major studios to move wide releases scheduled for the three months

ended December 31, 2020 to future dates.

Only two major studios had wide theatrical releases in November/December, however,

the theatrical window before the streaming debut was shortened or eliminated to accommodate the lack of theatrical venues.

our digital cinema business earns a VPF when a movie is first played on a system, the temporary theatre closures resulting from

the COVID-19 pandemic resulted in reduced revenues.

The revenues in the Content & Entertainment Business segment increased

by 8% for the three months ended December 31, 2020 compared to the three months ended December 31, 2019.

The increase is due to

the addition of five new third-party OTT channels and an increase in the number of advertising partners.

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

Fees earned 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/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 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., 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

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.

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.

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

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 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 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.

BUSINESS COMBINATIONS

business combination is an acquisition of business.

Business combination are accounted by allocating the purchase price of the business

across the assets acquired from the business and assumed liabilities.

Results of Operations for the Three Months

Ended June 30, 2021 and 2020

For the Three Months Ended June 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment

The revenues in the Content & Entertainment

Business segment increased by 62% for the three months ended June 30, 2021 compared to the three months ended June 30, 2020.

is attributed to continued growth in new release transactional sales, the addition of several new streaming channels, and an expansion

of the Company's distribution with new and existing Smart TV platforms.

In addition, the Company deployed new advertising technology from

our streaming partner Amagi, which had a material impact on the Company's advertising fill and CPM rates.

The revenues in the Cinema

Equipment Business segment increased by 930% for the three months ended June 30, 2021 compared to the three months ended June 30, 2020.

Cinema Equipment Business segment increased primarily due to contractually standard terms of digital projector sales to related exhibitors

in the Cinedigm deployments.

Direct Operating Expenses

Three Months Ended December

For the Three Months Ended June 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

The decrease in direct operating expenses in the three months

ended December 31, 2020 for the Content & Entertainment Business compared to the prior period was primarily due to transition

credits received related to a new third-party DVD distributor.

These credits mainly offset fulfillment and freight expenses.

addition, there was a significant decrease in manufacturing costs between the distributor in place in the prior period and the

inventory reserve has decreased.

The decrease in direct operating expenses in the three months ended December 31, 2020 for the

Cinema Equipment Business compared to the prior period was primarily due to a reduction in head count and shifting of certain

employees from full time to part time as a result of the negative impact of the Covid 19 pandemic.

Content & Entertainment

The increase in direct operating expenses in the

three months ended June 30, 2021 for the Cinema Equipment Business compared to the prior period was primarily due to an increase in property

tax obligations for the Cinedigm owned projector assets.

The increase in direct operating expenses in the three months ended June 30,

2021 for the Content & Entertainment Business compared to the prior period was primarily due to higher royalty expenses and an increase

in infrastructure and personnel costs offset by a decrease in manufacturing and fulfillment of physical sales.

Selling, General and Administrative Expenses

Three Months Ended December

For the Three Months Ended June 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

Selling, general and administrative expenses for the three

month ended December 31, 2020 increase by $2.4 million, primarily due to increase in share based compensation expense of $0.8

million and a bonus expense of $1.4 million.

and Amortization Expense on Property and Equipment

Three Months Ended December

Content & Entertainment

Selling, general and administrative expenses for

the three months ended June 30, 2021 increased by $2.2 million primarily due to a $1.3 million increase in bonus incentive expense and

stock-based compensation to management and employees, $0.3 million for additional personnel, $0.4 million for legal and accounting fees

related to securities reporting and consulting, and $0.2 for remote-working equipment and computer expense.

Bad Debt expense

The bad debt expense was $71 thousand and $0 for

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

These amounts are related to Cinema Equipment Business and Content &

Entertainment accounts that are uncollectable.

Depreciation and Amortization Expense on Property

and Equipment

For the Three Months Ended June 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

and amortization expense decreased in our Cinema Equipment Business segment as additional digital cinema projection Systems reached

the conclusion of their ten-year useful lives during fiscal year 2020.

Three Months Ended December

Content & Entertainment

Depreciation and amortization expense decreased

in our Cinema Equipment Business Segment as the majority of our digital cinema projection systems reached the conclusion of their ten-year

useful lives during the year ended March 31, 2021 leading to a lower fixed asset balance to be depreciated in the three months ended June

Corporate and Content & Entertainment depreciation and amortization expense is lower due to the write off of leasehold improvements

with the closing of the Los Angeles office.

Interest expense, net

For the Three Months Ended June 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

Interest expense in the Cinema Equipment Business segment decreased

primarily as a result of reduced note payable balances compared to the prior period, solely on the Prospect Term Loan.

expense in our Corporate Segment decreased as a result of lower loan balances from our Credit Facility and Second Lien Loans settled

with Class A common stock and the conversion of the Bison Convertible Note and the Mingtai Convertible Note into shares of Class

A Common Stock.

Change in fair value of equity investment in Starrise, a

related party

Our investment in Starrise is accounted for at fair value with

changes in fair value recognized in the statement of operations.

The loss of $6.8 million during the three months ended December

31, 2020 reflects the decrease during the period in the market price of Starrise’s stock.

Income Tax Expense

We recorded an income tax benefit of $0 for the three months

ended December 31, 2020.

We recorded income tax expense of approximately $0.1 million for the three months ended December

Our effective tax rate for the three months ended December

31, 2020 and 2019 was 0% and negative 2.0%, respectively.

Adjusted EBITDA

We define Adjusted EBITDA to be earnings before interest, taxes,

depreciation and amortization, other income, net, stock-based compensation and expenses, merger and acquisition costs, restructuring,

transition and acquisitions expense, net, goodwill impairment and certain other items.

Consolidated Adjusted EBITDA (including the results of Cinema

Equipment Business segment) for the three months ended December 31, 2020 decreased by $1.8 million compared to the three months

ended December 31, 2019.

Adjusted EBITDA from our Cinema Equipment Business segment decreased primarily due to state mandated

theater closures due to COVID-19, the temporary halt of distribution of major studio releases and the expected decline of the

Cinema Equipment Business.

Adjusted EBITDA from our Content & Entertainment Business and corporate increased for the three

months ended December 31, 2020 compared to the three months ended December 31, 2019 by $0.2 million due to the addition of five

new third-party OTT channels and an increase in the number of advertising partners.

EBITDA is not a measurement of financial performance under GAAP and may not be comparable to other similarly titled measures of

other companies.

We use Adjusted EBITDA as a financial metric to measure the financial performance of the business because management

believes it provides additional information with respect to the performance of its fundamental business activities.

For this reason,

we believe Adjusted EBITDA will also be useful to others, including its stockholders, as a valuable financial metric.

present Adjusted EBITDA because we believe that Adjusted EBITDA is a useful supplement to net loss from continuing operations

as an indicator of operating performance.

We also believe that Adjusted EBITDA is a financial measure that is useful both to management

and investors when evaluating our performance and comparing our performance with that of our competitors.

We also use Adjusted

EBITDA for planning purposes and to evaluate our financial performance because Adjusted EBITDA excludes certain incremental expenses

or non-cash items, such as stock-based compensation charges, that we believe are not indicative of our ongoing operating performance.

believe that Adjusted EBITDA is a performance measure and not a liquidity measure, and therefore a reconciliation between net

loss from continuing operations and Adjusted EBITDA has been provided in the financial results.

Adjusted EBITDA should not be

considered as an alternative to income from operations or net loss from continuing operations as an indicator of performance or

as an alternative to cash flows from operating activities as an indicator of cash flows, in each case as determined in accordance

with GAAP, or as a measure of liquidity.

In addition, Adjusted EBITDA does not take into account changes in certain assets and

liabilities as well as interest and income taxes that can affect cash flows.

We do not intend the presentation of these non-GAAP

measures to be considered in isolation or as a substitute for results prepared in accordance with GAAP.

These non-GAAP measures

should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

is the reconciliation of our consolidated net loss to Adjusted EBITDA:

Three Months Ended

($ in thousands)

Content & Entertainment

Interest expense in the Cinema Equipment Business

segment decreased primarily as a result of reduced debt balances compared to the prior period on the Prospect Term Loan.

Interest expense

in our Corporate segment decreased as a result of lower loan balances from our Credit Facility, Second Lien Loans and the conversion of

the Bison Convertible Note and the Mingtai Convertible Note into shares of Class A common stock in the prior period.

Income Tax Expense

Depreciation and amortization of property and equipment

Amortization of intangible assets

Loss on extinguishment of notes payable

Interest expense, net

Changes in fair value on equity investment in Starrise

Other (income) expense, net

Stock-based compensation and expenses

Net income (loss) attributable to noncontrolling interest

We recorded an income

tax benefit of $63 thousand for the three months ended June 30, 2021.

We recorded income tax expense of approximately $0 for the three

months ended June 30, 2020.

Our effective tax rate

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

Adjusted EBITDA

Adjustments related to the Cinema Equipment Business

Depreciation and amortization of property and equipment

Amortization of intangible assets

Other income and expense

Income (loss) from operations

Adjusted EBITDA from Content & Entertainment business and corporate

of Operations for the Nine Months Ended Months Ended December 31, 2020 and 2019

Nine Months Ended December

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

Revenues generated by our Cinema Equipment Business segment

decreased primarily as a result of the reduced number of Systems earning VPF revenue and commissions for Phase II Deployment Systems.

In addition, as a result of COVID-19, during the nine months ended December 31, 2020, theatres in many major markets remained

closed throughout the third quarter causing the majority of major studios to move wide releases scheduled for the three months

ended December 31, 2020 to future dates.

Only two major studios had wide theatrical releases in November/December, however,

the theatrical window before the streaming debut was shortened or eliminated to accommodate the lack of theatrical venues.

our digital cinema business earns a VPF when a movie is first played on a system, the temporary theatre closures resulting from

the COVID-19 pandemic resulted in reduced revenues.

The revenues in the Content & Entertainment Business segment increased

by 1% for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019.

The increase is due to

the addition of five new OTT third-party channels and an increase in the number of advertising partners.

Operating Expenses

Nine Months Ended December

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

The decrease in direct operating expenses in the nine months

ended December 31, 2020 for the Content & Entertainment Business compared to the prior period was primarily due to a decrease

in overall revenue partially offset by an increase due to transition expenses related to a new third party DVD distributor.

costs were mainly fulfillment and freight expenses.

The decrease in direct operating expenses in the nine months ended December

31, 2020 for the Cinema Equipment Business compared to the prior period was primarily due to a reduction in head count and shifting

of certain employees from full time to part time as a result of the negative impact of the Covid 19 pandemic.

General and Administrative Expenses

Nine Months Ended December

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

Selling, general and administrative expenses for the nine months

ended December 31, 2020 increased by $1.5 million primarily due to a $1.2 million increase in bonus expense and a $1.7 million

increase in stock based compensation, for Corporate, partially offset by decreases of $650 thousand related to personnel expenses

as a result of the company-wide downsizing program and $660 thousand related to occupancy costs as a result of the company-wide

program to downsize office space and move to a more remote workforce, in the Content & Entertainment Business segment.

and Amortization Expense on Property and Equipment

Nine Months Ended December

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

and amortization expense decreased in our Cinema Equipment Business segment as additional digital cinema projection Systems reached

the conclusion of their ten-year useful lives during the nine months ended December 31, 2020.

Nine Months Ended December

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

Interest expense in the Cinema Equipment Business segment decreased

primarily as a result of reduced debt balances compared to the prior period on the Prospect Term Loan.

Interest expense in our

Corporate Segment decreased as a result of lower loan balances from our Credit Facility and Second Lien Loans settled for Class

A common stock and the conversion of the Bison Convertible Note and the Mingtai Convertible Note into shares of Class A Common

Change in fair value of equity investment in Starrise, a

related party

Our investment in Starrise is accounted for at fair value with

changes in fair value recognized in the statement of operations.

The loss of $42.4 million during the nine months ended December

31, 2020 reflects the decrease during the period in the market price of Starrise’s stock.

recorded an income tax benefit of approximately $181 thousand for the nine months ended December 31, 2020.

recorded income tax expense of approximately $0.2 million nine months ended December 31, 2019.

define Adjusted EBITDA to be earnings before interest, taxes, depreciation and amortization, other income, net, stock-based compensation

and expenses, merger and acquisition costs, restructuring, transition and acquisitions expense, net, goodwill impairment and certain

Consolidated Adjusted EBITDA (including the results of Cinema

Equipment Business segment) for the nine months ended December 31, 2020 decreased by $5.1 million compared to the nine months

ended December 31, 2019.

Adjusted EBITDA from our Cinema Equipment Business segment decreased primarily due to state mandated

theater closures due to COVID-19, the temporary halt of distribution of major studio releases and the expected decline of the

Cinema Equipment Business.

Negative Adjusted EBITDA from the Content & Entertainment business and corporate segment increased

by $2.6 million for the nine months ended December 31, 2020 compared to the nine months ended December 31, 2019, due to growth

of OTT Streaming & Digital revenues based on higher volume for streaming due to the pandemic and adding additional channels

and content compared to the prior period.

EBITDA is not a measurement of financial performance under GAAP and may not be comparable to other similarly titled measures of

other companies.

We use Adjusted EBITDA as a financial metric to measure the financial performance of the business because management

believes it provides additional information with respect to the performance of its fundamental business activities.

For this reason,

we believe Adjusted EBITDA will also be useful to others, including its stockholders, as a valuable financial metric.

present Adjusted EBITDA because we believe that Adjusted EBITDA is a useful supplement to net loss from continuing operations

as an indicator of operating performance.

We also believe that Adjusted EBITDA is a financial measure that is useful both to management

and investors when evaluating our performance and comparing our performance with that of our competitors.

We also use Adjusted

EBITDA for planning purposes and to evaluate our financial performance because Adjusted EBITDA excludes certain incremental expenses

or non-cash items, such as stock-based compensation charges, that we believe are not indicative of our ongoing operating performance.

believe that Adjusted EBITDA is a performance measure and not a liquidity measure, and therefore a reconciliation between net

loss from continuing operations and Adjusted EBITDA has been provided in the financial results.

Adjusted EBITDA should not be

considered as an alternative to income from operations or net loss from continuing operations as an indicator of performance or

as an alternative to cash flows from operating activities as an indicator of cash flows, in each case as determined in accordance

with GAAP, or as a measure of liquidity.

In addition, Adjusted EBITDA does not take into account changes in certain assets and

liabilities as well as interest and income taxes that can affect cash flows.

We do not intend the presentation of these non-GAAP

measures to be considered in isolation or as a substitute for results prepared in accordance with GAAP.

These non-GAAP measures

should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

is the reconciliation of our consolidated net loss to Adjusted EBITDA:

Nine Months Ended

We define Adjusted EBITDA to be earnings before

interest, taxes, depreciation and amortization, other income, net, stock-based compensation and expenses, merger and acquisition costs,

restructuring, transition and acquisitions expense, net, goodwill impairment, change in fair value on equity investment in Starrise and

certain other items.

Adjusted EBITDA (including the results of Cinema Equipment Business segment) for the three months ended June 30, 2021 increased by $5.7

million compared to the three months ended June 30, 2020.

Adjusted EBITDA from our Cinema Equipment Business segment increased primarily

due to contractually standard terms of digital projector sales to related exhibitors in the Cinedigm deployments.

Adjusted EBITDA from

the Content & Entertainment business and Corporate segment decreased by $46 thousand for the three months ended June 30, 2021 compared

to the three months ended June 30, 2020, due to the growth of Streaming & Digital expenses based on higher volume for streaming

due to the pandemic and adding additional channels and content compared to the prior period.

Adjusted EBITDA is not a measurement of financial

performance under GAAP and may not be comparable to other similarly titled measures of other companies.

We use Adjusted EBITDA as a financial

metric to measure the financial performance of the business because management believes it provides additional information with respect

to the performance of its fundamental business activities.

For this reason, we believe Adjusted EBITDA will also be useful to others,

including its stockholders, as a valuable financial metric.

We present Adjusted EBITDA because we believe

that Adjusted EBITDA is a useful supplement to net loss from continuing operations as an indicator of operating performance.

We also believe

that Adjusted EBITDA is a financial measure that is useful both to management and investors when evaluating our performance and comparing

our performance with that of our competitors.

We also use Adjusted EBITDA for planning purposes and to evaluate our financial performance

because Adjusted EBITDA excludes certain incremental expenses or non-cash items, such as stock-based compensation charges, that we believe

are not indicative of our ongoing operating performance.

We believe that Adjusted EBITDA is a performance

measure and not a liquidity measure, and therefore a reconciliation between net loss from continuing operations and Adjusted EBITDA has

been provided in the financial results.

Adjusted EBITDA should not be considered as an alternative to income from operations or net loss

from continuing operations as an indicator of performance or as an alternative to cash flows from operating activities as an indicator

of cash flows, in each case as determined in accordance with GAAP, or as a measure of liquidity.

In addition, Adjusted EBITDA does not

take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows.

intend the presentation of these non-GAAP measures to be considered in isolation or as a substitute for results prepared in accordance

These non-GAAP measures should be read only in conjunction with our consolidated financial statements prepared in accordance

Following is the reconciliation of our consolidated

net loss to Adjusted EBITDA:

For the Three Months

Ended June 30,

($ in thousands)

Income tax (benefit) expense

Net income (loss)

Income tax benefit

Depreciation and amortization of property and equipment

Amortization of intangible assets

Loss on extinguishment of notes payable

Gain on forgiveness of PPP loan and extinguishment of note payable

Interest expense, net

Changes in fair value on equity investment in Starrise

Other expense, net

Change in fair value on equity investment in Starrise

integration and other expense

Provision for doubtful accounts

Stock-based compensation

Net loss (income) attributable to noncontrolling interest

Net income (loss) attributable to noncontrolling interest

Adjusted EBITDA

3 unchanged sentences

Stock-based compensation and expenses

Other income and expense

Income (loss) from operations

Adjusted EBITDA from Content & Entertainment business and corporate

Accounting Policies and Estimates

consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States

of America (“GAAP”).

In connection with the preparation of our consolidated financial statements, we are required

to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities,

revenue, expenses and the related disclosures.

We base our assumptions, estimates and judgments on historical experience, current

trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared.

On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial

statements are presented fairly and in accordance with GAAP.

However, because future events and their effects cannot be determined

with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

have been no material changes to the critical accounting policies previously disclosed in our Annual Report on Form 10-K for the

fiscal year ended March 31, 2020, filed with the SEC on July 6, 2020.

Accounting Pronouncements

Note 2 - Summary of Significant Accounting Policies to our condensed consolidated financial statements included herein.

and Capital Resources

incurred consolidated net loss of $56.3 million and $10.3 million for the nine months ended December 31, 2020 and 2019, respectively.

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.

Based on these conditions, the Company entered into the

following transactions described below:

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.

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

purchase agreement (the “Securities Purchase Agreements”) 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.

(see Note 11 –

Subsequent events ).

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.

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, 2020, we sold 28,405,840

shares of Common Stock under the ATM Sales Agreement.

Net proceeds from such sales totaled $18.6 million.

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.

registration statement covers offerings of up to an aggregate offering price of $75.0 million.

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.

May 20, 2020, the Company entered into a securities purchase agreement (the “May Securities Purchase Agreement”) with

certain investors for the purchase and sale of 10,666,666 shares (the “May Shares”) of 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

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

The net proceeds to the Company from the sale of the

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

were approximately $7.1 million.

Investment in Starrise, a related party transaction

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”).

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 Class A common stock as consideration.

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 No.

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

LP 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.

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.

accrued during the initial six-month period is due and payable, together with the principal, on the PPP Maturity Date.

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.

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

The exchange was consummated on June 24, 2020.

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.

On September 21, 2020, the Company extended the maturity date to March

31, 2021 upon payment of a fee of $50,000.

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.

The exchange was consummated on December 4, 2020.

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,

(see Note 11 – Subsequent events )

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 of Common Stock

in exchange for $500,000 and $600,000 principal amount, respectively, of Second Lien Notes.

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, dated as

of July 14, 2016 (as amended, amended and restated, supplemented or otherwise modified, 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 April 15, 2020, the Company executed a letter amendment

to the Bison Convertible Note (as defined in Note 6 - Notes Payable ), which 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 Ming Tai 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 Mingtai, both of which are affiliates of Peixin Xu, the Chairman

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

integration and other expense

Provision for doubtful accounts

Income from operations

Adjusted EBITDA from non-cinema equipment business

Recent Accounting Pronouncements

See Note 2 - Summary of Significant Accounting

Policies to our consolidated financial statements included herein.

Changes in our cash flows were as follows:

Nine Months Ended

For the Three Months Ended June 30,

($ in thousands)

Net cash (used) provided by operating activities

Net cash provided (used in) by operating activities

Net cash used in investing activities

Net cash provided (used) in financing activities

Net cash (used in) provided by financing activities

Net change in cash, cash equivalents, and restricted cash

As of December 31, 2020, we had cash and

restricted cash balances of $27.2 million.

As of December 31, 2019, we had cash and

restricted cash balances of $15.5 million.

For the nine months ended December 31, 2020, net cash provided

by operating activities is primarily driven by loss from operations, excluding non-cash expenses such as depreciation, amortization,

recovery for doubtful accounts and stock-based compensation, offset by changes in working capital.

Additionally, during the nine

months ended December 31, 2020, the Company paid down $22.0 million to vendors at both CEG and Corporate.

Cash received from VPFs

declined from the previous period as Phase I Deployment Systems in our Cinema Equipment Business reached the conclusion of their

deployment payment period with certain major studios.

Changes in accounts receivable from our studio customers largely impact

cash flows from operating activities and vary based on the seasonality of movie release schedules by the major studios.

cash flows from CEG are typically higher during our fiscal third and fourth quarters, resulting from revenues earned during the

holiday season, and lower in the other two quarters as we pay royalties on such revenues.

In addition, we make advances on theatrical

releases and to certain home entertainment distribution clients for which initial expenditures are generally recovered within

six to twelve months.

Cash flows were also impacted as a result of COVID-19, during the nine months ended December 31, 2020, theatres

in many major markets remained closed throughout the third quarter causing the majority of major studios to move wide releases

scheduled for the three months ended December 31, 2020 to future dates.

Only two major studios had wide theatrical releases

in November/December, however, the theatrical window before the streaming debut was shortened or eliminated to accommodate the

lack of theatrical venues.

Because our digital cinema business earns a VPF when a movie is first played on a system, the temporary

theatre closures resulting from the COVID-19 pandemic resulted in reduced revenues.

For the nine months ended December 31, 2019, net cash provided

by operating activities is primarily driven by loss from operations, excluding non-cash expenses such as depreciation, amortization,

provision for doubtful accounts and stock-based compensation, offset by changes in working capital.

Cash received from VPFs

declined from the previous period as Phase I and Phase II Deployment Systems in our Cinema Equipment Business reached the conclusion

of their deployment payment period with certain major studios.

Changes in accounts receivable from our studio customers largely

impact cash flows from operating activities and vary based on the seasonality of movie release schedules by the major studios.

Operating cash flows from CEG are typically higher during our fiscal third and fourth quarters, resulting from revenues earned

during the holiday season, and lower in the other two quarters as we pay royalties on such revenues.

In addition, we make advances

on theatrical releases and to certain home entertainment distribution clients for which initial expenditures are generally recovered

As of June 30, 2021, we had cash, cash equivalents,

and restricted cash balances of $14.4 million.

As of June 30, 2020, we had cash, cash equivalents,

and restricted cash balances of $17.3 million.

For the three months ended June 30, 2021, net

cash provided by operating activities is primarily driven by income from operations, excluding non-cash expenses such as depreciation,

amortization, provision for doubtful accounts and stock-based compensation, including other changes in working capital.

Additionally,

during the three months ended June 30, 2021, the Company paid down $8.1 million to vendors at both CEG and Corporate.

Cash received from

VPFs declined from the previous period as Phase I Deployment Systems in our Cinema Equipment Business reached the conclusion of their

deployment payment periods with certain major studios.

Changes in accounts receivable from our studio customers largely impact cash flows

from operating activities and vary based on the seasonality of movie release schedules by the major studios.

As vaccines became readily

available and COVID cases decreased Major Studios began to schedule tentpole releases in theatres to test consumer confidence during the

three months ended June 30, 2021.

During this test period, box office revenue remained below pre-COVID pandemic results due to limited

seat capacities and the shortening of theatrical window before the streaming debut on streaming platforms.

Because our digital cinema

business earns a VPF when a movie is first played on a system, the temporary theatre closures resulting from the COVID-19 pandemic resulted

in reduced revenues.

Operating cash flows from CEG are typically higher during our fiscal third and fourth quarters, resulting from

revenues earned during the holiday season, and lower in the other two quarters as we pay royalties on such revenues.

In addition, we make

advances on theatrical releases and to certain home entertainment distribution clients for which initial expenditures are generally recovered

within six to twelve months.

For the nine months ended December 31, 2020, cash flows used

in investing activities consisted of proceeds from the sale of Starrise shares of $0.8 million, purchases of property and equipment

of $0.3 million, the sale of property and equipment of $0.2 million, and the purchase of intangible assets of $0.7 million related

to the asset acquisition.

For the nine months ended December 31, 2019, cash flows used

in investing activities mainly consisted of purchases of property and equipment of $0.3 million.

For the nine months ended December 31, 2020, cash flows provided

by financing activities consisted of payments of approximately $22.4 million in notes payable, offset by $12.8 million from Credit

Facility draws, $36.2 million received in connection with the issuance Class A common stock and the exercise of warrants, and

$2.2 million received pursuant to the Payment Protection Program of the Coronavirus Aid, Relief and Economic Security Act.

For the nine months ended December 31, 2019,

cash flows used in financing activities reflects payments of $8.1 million for the 2013 Prospect Loan, net payments of approximately

$2.7 million for the Credit Facility, and $3.3 million for the Second Lien Loans offset by $5.8 million received in connection

with the sale of 3,900,000 shares of our Common Stock.

We have contractual obligations that primarily consist of term

notes payable, credit facilities, and non-cancelable operating leases related to office space.

We may continue to generate net losses for the foreseeable

future primarily due to depreciation and amortization, interest on our debt obligations, marketing and promotional activities

For the three months ended June 30, 2021 revenues from the sale of digital projections Systems was $5.6 million.

For the three months ended June 30, 2020, net

cash provided by operating activities is primarily driven by loss from operations, excluding non-cash expenses such as depreciation, amortization,

provision for doubtful accounts and stock-based compensation, offset by changes in working capital.

Cash received from VPFs declined from

the previous period as Phase I Deployment Systems in our Cinema Equipment Business reached the conclusion of their deployment payment

period with certain major studios.

Changes in accounts receivable from our studio customers largely impact cash flows from operating activities

and vary based on the seasonality of movie release schedules by the major studios.

Operating cash flows from CEG are typically higher

during our fiscal third and fourth quarters, resulting from revenues earned during the holiday season, and lower in the other two quarters

as we pay royalties on such revenues.

In addition, we make advances on theatrical releases and to certain home entertainment distribution

clients for which initial expenditures are generally recovered within six to twelve months.

For the three months ended June 30, 2021, cash

flows used in investing activities consisted of purchases of property and equipment of $0.04 million and the purchase of a business of

$1.0 million related to the business combination for FoundationTV.

For the three months ended June 30, 2020, Cash

flows provided by investing activities consisted of proceeds from the sale of Starrise shares of $0.6 million and purchases of property,

equipment and internal use software.

For the three months ended June 30, 2021, cash

flows used in financing activities consisted of payments of approximately $4.8 million in notes payable and $1.6 million in Credit Facility

For the three months ended June 30, 2020, cash

flows provided by financing activities reflects payments of approximately $7.8 million for the Credit Facility and Prospect Loan, offset

by $3.4 million from Credit Facility draw, $7.5 million received in connection with the sale of 10,666,666 shares of Class A common stock

and exercise of warrants, and $2.2 million received pursuant to the Payment Protection Program of the Coronavirus Aid, Relief and Economic

Security Act.

We may continue to generate net losses for the

foreseeable future primarily due to depreciation and amortization, interest on our debt obligations, marketing and promotional activities

and content acquisition and marketing costs.

1 unchanged sentence

activities, could be reduced if necessary.

The restrictions imposed by the terms of our debt obligations may limit our ability

to obtain financing, make it more difficult to satisfy our debt obligations or require us to dedicate a substantial portion of

our cash flow to payments on our existing debt obligations.

The restrictions imposed by the terms of our debt obligations may limit our ability to obtain

financing, make it more difficult to satisfy our debt obligations or require us to dedicate a substantial portion of our cash flow to

payments on our existing debt obligations.

We feel we are adequately financed for at least the next twelve months;

however, we may need to raise additional capital for working capital as deemed necessary.

Failure to generate additional revenues,

raise additional capital or manage discretionary spending could have an adverse effect on our financial position, results of operations

or liquidity.

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 of maturity dates 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.

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.

Revenues from our Cinema Equipment Business segment derived

from the collection of VPFs from motion picture studios are seasonal, coinciding with the timing of releases of movies by the

motion picture studios.

Generally, motion picture studios release the most marketable movies during the summer and the winter

holiday season.

The unexpected emergence of a hit movie during other periods can alter the traditional trend.

The timing of movie

releases can have a significant effect on our results of operations, and the results of one quarter are not necessarily indicative

of results for the next quarter or any other quarter.

Our CEG segment benefits from the winter holiday season, and as a result,

revenues in the segment are typically highest in our fiscal third quarter;

however, we believe the seasonality of motion picture

exhibition is becoming less pronounced as the motion picture studios are releasing movies more evenly throughout the year.

the nine months ended December 31, 2020, the pandemic caused theaters to close and distributors to move their theatrical releases

to future dates or release their content on streaming platforms.

Therefore, the normal seasonality for the Cinema Equipment Business

was not an impact for this period.

sheet arrangements

are not a party to any off-balance sheet arrangements, other than operating leases in the ordinary course of business, which are

disclosed above in the table of our significant contractual obligations, and CDF2 Holdings, LLC (“CDF2 Holdings”),

our wholly-owned unconsolidated subsidiary.

As discussed further in Note 3 - Other Interests to the Condensed Consolidated Financial

Statements included in Item 1 of this Report on Form 10-Q, we hold a 100% equity interest in CDF2 Holdings, which is an unconsolidated

variable interest entity (“VIE”), which wholly owns Cinedigm Digital Funding 2, LLC;

however, we are not the primary

beneficiary of the VIE.

impact of inflation on our operations has not been significant to date.

However, there can be no assurance that a high

rate of inflation in the future would not have an adverse impact on our operating results.

however, we may need

to raise additional capital for working capital as deemed necessary.

Failure to generate additional revenues, raise additional capital

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

Revenues from our Cinema Equipment segment derived

from the collection of VPFs from motion picture studios are seasonal, coinciding with the timing of releases of movies by the motion picture

Generally, motion picture studios release the most marketable movies during the summer and the winter holiday season.

The unexpected

emergence of a hit movie during other periods can alter the traditional trend.

The timing of movie releases can have a significant effect

on our results of operations, and the results of one quarter are not necessarily indicative of results for the next quarter or any other

While CEG benefits from the winter holiday season, we believe the seasonality of motion picture exhibition, is becoming less

pronounced as the motion picture studios are releasing movies somewhat more evenly throughout the year.

Off-balance sheet arrangements

We are not a party to any off-balance sheet arrangements,

other than operating leases in the ordinary course of business, which are disclosed above in the table of our significant contractual

obligations, and CDF2 Holdings, LLC ("CDF2 Holdings"), our wholly-owned unconsolidated subsidiary.

As discussed further in Note

3 - Other Interests to the Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q,

we hold a 100% equity interest in CDF2 Holdings, which is an unconsolidated variable interest entity (“VIE”), which wholly

owns Cinedigm Digital Funding 2, LLC;

however, we are not the primary beneficiary of the VIE.

Impact of Inflation

The impact of inflation on our operations has

not been significant to date.

However, there can be no assurance that a high rate of inflation in the future would not have an adverse

impact on our operating results.

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 2. Management’s Discussion and Analysis