What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-15 compared with 2021-09-09 · 730 added, 690 removed, 48 unchanged (97% of the section changed)

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

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

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:

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 report.

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.

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

digital and physical products for major brands such as the Hallmark Channel, Televisa, ITV, Nelvana, ZDF, Konami, NFL, NHL and Aniplex.,

We collaborate with producers, international and domestic content creators of movies, television series and short form content 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, Apple, 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 to Walmart, Target, Amazon and others.

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 4,822 movie screens as well as directly

to exhibitors and other third-party customers in the form of monitoring, billing, collection and verification services.

& 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.

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:

(1) return the Systems to us;

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

(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.

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

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.

are structured so that our cinema equipment business segment operates independently from our Content & Entertainment business.

of September 30, 2021, we had no non-recourse outstanding debt principal that relates to, and is serviced by, our cinema equipment business.

We had no outstanding debt principal, as of September 30, 2021 that is attributable to our Content & Entertainment and Corporate

and Uncertainties

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 rentals and purchases.

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

As vaccines became readily available

and COVID-19 cases decreased, major studios resumed releasing blockbusters in the theatrical venues during the quarter ended June 30,

Films released during the summer 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.

To the extent films are not

shown in theatres, we do not earn revenue.

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.

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

own streaming platform such as Hallmark Movie Now.

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.

the first year and a half of the COVD-19 pandemic, film and TV production slowed-down and 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 from completed films and co-productions has been

negatively impacted.

As well, with the rise of new variants, productions may be at risk again of shutting down, being delayed or

having prohibitive COVID-compliant costs which would further limit available content to acquire.

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.

an accumulated deficit of $469.3 million and negative working capital of $11.1 million as of September 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

In addition, we have contractual obligations related to our business acquisitions as of September

30, 2021 and beyond.

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

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 our Class A common stock, par value $0.001 per share (the “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) (the “2020 Shelf Registration Statement”)

and an applicable prospectus supplement.

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 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.

July 2020, we entered into an At-the-Market sales agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners

(“A.G.P.”) and B.

Riley FBR, Inc.

Riley” and, together with A.G.P., the “Sales Agents”), pursuant

to which the Company may offer and sell, from time to time, through the Sales Agents, shares of Common Stock at the market prices prevailing

on Nasdaq at the time of the sale of such shares.

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

Any sales of shares made under the ATM

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

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

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), the 2020 Shelf Registration Statement

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.

During the quarter ended September 30, 2021, we did not sell any shares of Common

Stock under the ATM Sales Agreement.

The 2020 Shelf Registration Statement is unavailable to us, and accordingly we cannot sell any shares

of Common Stock under the ATM Sales Agreement, until September 1, 2022.

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 the 2020 Shelf Registration Statement and an applicable prospectus supplement.

The closing of the sale occurred on July 20,

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.

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

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.

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.

of September 30, 2021, there is still approximately $38.0 million remaining unsold under the 2020 Shelf Registration Statement.

of Cinematic Equipment

March 17, 2021, the Company entered into two separate agreements for the sale of cinematic equipment to American Multi-Cinema, Inc.

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

2023 for total cash consideration of $10.8 million.

As of September 30, 2021, the Company executed the sale of the first two tranches

and recognized aggregate revenue for $7.8 million.

A portion of the total proceeds has been utilized to eliminate the remaining Prospect

Loan notes payable balance.

Investment in a Related Party

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”),

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 “Starrise 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 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.

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 Starrise Stock Purchase Agreement.

April 10, 2020, the Company entered into another stock purchase agreement (the “April Starrise 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 Common Stock

as consideration therefor (the “April Starrise Share Acquisition”).

On April 15, 2020, the April Starrise 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

Based on the closing price of HKD 0.159 per share on November 11,

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 $7.4 million.

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

extended from June 30, 2021 to September 28, 2021.

The September 28, 2021 expiration date has passed and no amendment has been entered

into as of the date of filing of this Quarterly Report on Form 10-Q.

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.

a series of payments between April 30 and July 9, 2021, the Company paid in full the Prospect Loan (as defined in Note 5 – Notes

Payable ) outstanding non-recourse debt amount by paying an aggregate principal amount of $7.8 million.

Pre-payment of the Prospect

Loan was permissible without penalty.

believe the combination of:

(i) our cash and cash equivalent balances at September 30, 2021, and (ii) expected cash flows from operations

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 report.

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

additional capital.

Failure to generate additional revenues, obtain additional capital or manage discretionary spending could have an

adverse effect on our financial position, results of operations and liquidity.

Accounting Policies and Estimates

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

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.

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.

AND EQUIPMENT

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:

equipment and software

cinema projection systems

and equipment

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 incurred.

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:

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.

lives are determined based on an estimate of either physical or economic obsolescence, or both.

During the three and six months ended

September 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.

VALUE ESTIMATES

Finite-Lived Assets and Long-Lived Assets

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.

To the 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.

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.

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 three and six months ended September 30, 2021 and 2020, there were no impairment charges recorded on goodwill.

In 2021, we 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 .

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, if any.

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.

determine revenue recognition by:

identifying the contract,

or contracts, with the customer;

identifying the performance

obligations in the contract;

determining the transaction

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.

recognize revenue in the amount that reflects the consideration we expect to receive in exchange for the services provided, sales of

physical products (e.g., 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

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.

Equipment Business

Cinema Equipment Business consists of financing vehicles and administrators for 1,813 Systems installed nationwide in our first deployment

phase (“Phase I Deployment”) to theatrical exhibitors and for 3,009 Systems installed domestically and internationally in

our second deployment phase (“Phase II Deployment”).

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.

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

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

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

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

studios and distributors and ACFs from alternative content providers, and to distribute those fees to theatrical exhibitors (collectively,

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

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.

II Deployment’s agreements with distributors require the payment of VPFs, according to a defined fee schedule, for ten years from

the date each system is installed;

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

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

Cost recoupment will occur once the cumulative VPFs and other cash

receipts collected by Phase II Deployment have equaled the total of all cash outflows, including the purchase price of all Systems, all

financing costs, all “overhead and ongoing costs”, as defined, and including service fees, subject to maximum agreed upon

amounts during the three-year rollout period and thereafter.

Further, if cost recoupment occurs before the end of the eighth contract

year, the studios will pay us a one-time “cost recoupment bonus.” The Company evaluated the constraining estimates related

to the variable consideration, 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.

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;

(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

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.

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.

Total system sales revenue recognized were $2.2 million and $15 thousand, during the three months

ended September 30, 2021 and 2020, respectively.

Total system sales revenue recognized were $7.8 million and $91 thousand, during the

six months ended September 30, 2021 and 2020, respectively.

earned in connection with up front exhibitor contributions are deferred and recognized over the expected cost recoupment period.

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

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

Upfront activation fees were recognized in the period in which

these Systems were delivered and ready for content, as we had no further obligations to the customer after that time and collection was

reasonably assured.

In addition, we recognize activation fee revenue of between $1.0 thousand and $2.0 thousand on Phase II Deployment

Systems and for Systems installed by CDF2 Holdings, a related party, (See Note 3 - Other Interests ) upon installation and such

fees are generally collected upfront upon installation.

Our services division manages and collects VPFs on behalf of exhibitors, for

which it earns an administrative fee equal to 10% of the VPFs collected.

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 DC.

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

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

screens utilizing our Systems installed in movie theatres.

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

VPF fees are due from the movie studios and distributors.

& Entertainment Business

earns fees for the distribution of content in the home entertainment markets via several distribution channels, including digital, video

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

Revenue” or “Base Distribution Business”).

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.

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.

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

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.

Agent Considerations

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.

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.

maintain reserves for potential credit losses on accounts receivable.

We review the composition of accounts receivable and analyze historical

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

the adequacy of these reserves.

Reserves are recorded primarily on a specific identification basis.

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

it recognizes revenue from a sale.

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

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

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

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.

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.

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

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

are deferred and recognized over the expected cost recoupment period.

It also includes unamortized balances in connection with activation

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

ending deferred revenue balance, as of September 30, 2021 was $0.2 million.

For the three and six months ended September 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 September 30, 2021 and 2020, $0.3 million

and $0.7 million, respectively, of revenue was recognized that was included in the deferred revenue balance at the beginning of the period.

During the six months ended September 30, 2021 and 2020, $0.8 million and $1.3 million, respectively, of revenue was recognized that was

included in the deferred revenue balance at the beginning of the period.

As of September 30, 2021, the aggregate amount of contract revenue

allocated to unsatisfied performance obligations was $0.2 million.

We recognized this balance in full by October 31, 2021.

Participations

and royalties payable

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

under revenue-sharing arrangements.

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

studios or content producers for royalties owed under licensing arrangements.

We identify and record as a reduction to the liability

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

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,

Business combinations are accounted by allocating the fair value of the purchase

price of the assets acquired and liabilities assumed.

of Operations for the Three Months Ended September 30, 2021 and 2020

the Three Months Ended September 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment

Equipment Business

& 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

Business segment increased by 5% for the three months ended September 30, 2021 compared to the three months ended September 30, 2020.

The increase is attributed to continued growth in new release transactional sales, the addition of 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

For the Three Months Ended June 30,

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 click-per-thousand impression

(“CPM”) rates.

The revenues in the Cinema Equipment Business segment increased by 406% for the three months ended September

30, 2021 compared to the three months ended September 30, 2020.

Cinema Equipment Business segment increased primarily due to contractually

standard terms of digital projector sales to exhibitors in the Cinedigm Equipment Business deployments.

Operating Expenses

the Three Months Ended September 30,

($ in thousands)

Cinema Equipment Business

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

For the Three Months Ended June 30,

Equipment Business

& Entertainment

decrease in direct operating expenses in the three months ended September 30, 2021 for the Cinema Equipment Business compared to the

prior period was primarily due to a decrease in headcount.

The decrease in direct operating expenses in the three months ended September

30, 2021 for the Content & Entertainment Business compared to the prior period was primarily due to lower freight and fulfillment

costs related to the decrease in physical DVD sales replaced by digital distribution sales, and a slight decrease in royalty expense

and streaming delivery and personnel costs.

General and Administrative Expenses

the Three Months Ended September 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment

Equipment Business

& 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,

the three months ended September 30, 2021 increased by $1.0 million primarily due to a $1.2 million increase in bonus incentive expense,

additional personnel and stock-based compensation to management and employees, partially offset by $0.1 million less legal expense and

$0.1 million less computer expense.

bad debt benefit recovery was $111 thousand and $193 thousand for the three months ended September 30, 2021 and 2020, respectively.

amounts are related to Cinema Equipment Business and Content & Entertainment accounts that are uncollectable.

and Amortization Expense on Property and Equipment

the Three Months Ended September 30,

($ in thousands)

Cinema Equipment Business

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,

Equipment Business

& Entertainment

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 September 30, 2021.

Content & Entertainment depreciation and amortization expense is higher

due to newly developed internal software programs placed in service and an increase in streaming-related content acquisitions.

the Three Months Ended September 30,

($ in thousands)

Cinema Equipment Business

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

Equipment Business

& Entertainment

expense in the Cinema Equipment Business segment decreased primarily as a result of satisfying debt balances compared to the prior period

on the Prospect Loan.

Interest expense in our Corporate segment decreased as a result of satisfying the loan balances from our Credit

Tax (Benefit) Expense

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.

tax benefit of $487 thousand for the three months ended September 30, 2021.

We recorded income tax benefit of approximately $181 thousand

for the three months ended September 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

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 September 30, 2021 and 2020 was negative 71.4% and 0.7%, respectively.

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.

Consolidated Adjusted EBITDA (including the results

of Cinema Equipment Business segment) for the three months ended September 30, 2021 increased by $1.8 million compared to the three months

ended September 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 $879 thousand for the three months ended September 30, 2021 compared to the three months ended

September 30, 2020, due to the bonus incentive expense.

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

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

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:

For the Three Months

Ended June 30,

Ended September 30,

($ in thousands)

Net income (loss)

Income tax benefit

Income tax expense (benefit)

Depreciation and amortization of property and equipment

Amortization of intangible assets

Gain on forgiveness of PPP loan and extinguishment of note payable

Loss on extinguishment of note payable

Interest expense, net

Change in fair value on equity investment in Starrise

integration and other expense

Provision for doubtful accounts

Acquisition, integration and other expense

Recovery benefit of doubtful accounts

Stock-based compensation

Net income (loss) attributable to noncontrolling interest

Net income attributable to noncontrolling interest

Adjusted EBITDA

3 unchanged sentences

Stock-based compensation and expenses

integration and other expense

Acquisition, integration and other expense

Provision for doubtful accounts

1 unchanged sentence

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:

For the Three Months Ended June 30,

of Operations for the Six Months Ended September 30, 2021 and 2020

the Six Months Ended September 30,

($ in thousands)

Net cash provided (used in) by operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

Net change in cash, cash equivalents, and restricted cash

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,

Equipment Business

& Entertainment

revenues in the Content & Entertainment Business segment increased by 31% for the six months ended September 30, 2021 compared to

the six months ended September 30, 2020.

The increase 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.

addition, the Company deployed new advertising technology from our streaming partner Amagi, which had a material impact on the Company’s

advertising fill and click-per-thousand impression (“CPM”) rates.

The revenues in the Cinema Equipment Business segment

increased by 660% for the six months ended September 30, 2021 compared to the six months ended September 30, 2020.

Cinema Equipment Business

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

Operating Expenses

the Six Months Ended

September 30,

($ in thousands)

Equipment Business

& Entertainment

increase in direct operating expenses in the six months ended September 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 six months ended September 30, 2021 for the Content & Entertainment Business compared to the prior period was primarily

due to higher royalty expenses, streaming delivery and personnel costs offset by a decrease in manufacturing and fulfillment of physical

General and Administrative Expenses

the Six Months Ended

September 30,

($ in thousands)

Equipment Business

& Entertainment

Selling, general and administrative expenses for

the six months ended September 30, 2021 increased by $3.2 million primarily due to a $2.4 million increase in bonus incentive expense,

additional personnel and stock-based compensation to management and employees, $0.5 million for legal and accounting fees related to securities

reporting and consulting, and $0.2 million for remote-working equipment and computer expense.

Bad Debt expense

The bad debt benefit recovery was $40 thousand

and $193 thousand for the six months ended September 30, 2021 and 2020, respectively.

These amounts are related to Cinema Equipment Business

and Content & Entertainment accounts that are deemed uncollectable.

and Amortization Expense on Property and Equipment

the Six Months Ended

September 30,

($ in thousands)

Equipment Business

& 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 six months ended September

Content & Entertainment depreciation and amortization expense is higher for the newly developed internal software programs

placed in service this year and an increase in streaming-related content acquisitions.

the Six Months Ended

September 30,

($ in thousands)

Equipment Business

& Entertainment

expense in the Cinema Equipment Business segment decreased primarily as a result of satisfying debt balances compared to the prior period

on the Prospect Loan.

Interest expense in our Corporate segment decreased as a result of satisfying the loan balance from our Credit

Facility, and other loans, in addition to the conversion of certain notes into shares of Class A common stock in the prior period.

We recorded income tax

benefits of $550 thousand and $181 thousand for the six months ended September 30, 2021 and 2020, respectively.

Our effective

tax rate for the six months ended September 30, 2021 and 2020 was negative 12.4% and 0.4%, respectively.

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.

Consolidated Adjusted EBITDA (including the results

of Cinema Equipment Business segment) for the six months ended September 30, 2021 increased by $7.5 million compared to the six months

ended September 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 increased by $554 thousand for the six months ended September 30, 2021 compared to the six months ended

September 30, 2020, due to the growth of Streaming & Digital business 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

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

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:

the Six Months

Ended September 30,

($ in thousands)

income (loss)

and amortization of property and equipment

of intangible assets

loss on forgiveness of PPP loan and extinguishment of note payable

in fair value on equity investment in Starrise

integration and other expense

benefit of doubtful accounts

income attributable to noncontrolling interest

related to the Cinema Equipment Business

and amortization of property and equipment

of intangible assets

compensation and expenses

integration and other expense

for doubtful accounts

from operations

EBITDA from non-cinema equipment business

Accounting Pronouncements

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

in our cash flows were as follows:

the Six Months

Ended September 30,

($ in thousands)

cash provided (used in) by operating activities

(used in) provided by investing activities

cash (used in) provided by financing activities

change in cash, cash equivalents, and restricted cash

of September 30, 2021, we had cash and cash equivalents of $12.6 million.

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

and restricted cash balances of $17.5 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

the six months ended September 30, 2021, net cash provided by operating activities was 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 six months ended September 30, 2021, the Company paid down $18.3 million to vendors at both

Content & Entertainment and Corporate.

Operating cash flows from Content& Entertainment 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 twenty four months.

For the six months ended September 30, 2021 revenues from

the sale of digital projections Systems was $7.8 million.

the six months ended September 30, 2020, net cash provided by operating activities was 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.

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 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.

Certain of these costs, including costs of content acquisition, marketing and promotional

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 six months ended September 30, 2021, cash flows used in investing activities consisted of purchases of property and equipment of

$81 thousand and the purchase of two businesses of $4.8 million related to the business combination for FoundationTV and the asset acquisition

for Bloody Disgusting (as defined below).

the six months ended September 30, 2020, cash flows provided by investing activities consisted of proceeds from the sale of Starrise

shares of $0.8 million.

the six months ended September 30, 2021, cash flows used in financing activities consisted of payments of the remaining outstanding balances

of approximately $7.8 million in notes payable and $2.0 million in Credit Facility.

the six months ended September 30, 2020, cash flows provided by financing activities reflects payments of approximately $14.0 million

for the Credit Facility and Prospect Loan, offset by $17.6 million from Credit Facility draw, $8.5 million received in connection with

the sale of 10,666,666 shares of 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.

may continue to generate net losses for the foreseeable future primarily due to depreciation and amortization, marketing and promotional

activities and content acquisition and marketing costs.

Certain of these costs, including costs of content acquisition, marketing and

promotional activities, could be reduced if necessary.

The restrictions imposed by the terms of one of our credit lines may limit our

ability to obtain financing 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.

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.

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.

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

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.

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.

sheet arrangements

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

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