What changed in this filing

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Item 1. Financial Statements

2022-11-14 compared with 2022-08-16 · 833 added, 697 removed, 337 unchanged (82% of the section changed)

3 unchanged sentences

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

September 30,

Current assets

12 unchanged sentences

Accounts payable and accrued expenses

Line of credit, including unamortized debt issuance costs of $ 165 and $ 0 , respectively (see Note 5)

Current portion of deferred consideration on purchase of business

1 unchanged sentence

Operating lease liabilities

Current portion of deferred revenue

Deferred revenue

Total current liabilities

9 unchanged sentences

20 shares authorized;

7 shares issued and outstanding at June 30, 2022 and March 31, 2022.

7 shares issued and 7 shares outstanding at September 30, 2022 and March 31, 2022.

Liquidation preference of $ 3,648

Common stock, $ 0.001 par value;

Class A stock 275,000,000 and 275,000,000 shares authorized at June 30, 2022 and March 31, 2022, respectively, 176,737,459 and 176,629,435 shares issued and 175,421,608 and 175,313,584 shares outstanding at June 30, 2022 and March 31, 2022, respectively.

Class A stock 275,000,000 and 275,000,000 shares authorized at September 30, 2022 and March 31, 2022, respectively, 179,316,947 and 176,629,435 shares issued and 178,001,096 and 175,313,584 shares outstanding at September 30, 2022 and March 31, 2022, respectively

Additional paid-in capital

Treasury stock, at cost;

1,315,851 and 1,315,851 Class A common shares at June 30, 2022 and March 31, 2022, respectively.

1,315,851 and 1,315,851 Class A common shares at September 30, 2022 and March 31, 2022, respectively

Accumulated deficit

9 unchanged sentences

Three Months Ended

September 30,

Six Months Ended

September 30,

Costs and expenses:

1 unchanged sentence

Selling, general and administrative

Bad debt expense

Provision (recovery) for doubtful accounts

Depreciation and amortization of property and equipment

3 unchanged sentences

Interest expense, net

Gain on forgiveness of PPP loan and extinguishment of note payable

Change in fair value of equity investment in A Metaverse Company, a related party

Other expense, net

Gain on forgiveness of PPP loan

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

Other (income) expense, net

Income (loss) before income taxes

Income tax benefit

Income tax benefit (expense)

Net income (loss)

Net loss attributable to noncontrolling interest

Net (income) loss attributable to noncontrolling interest

Net income (loss) attributable to controlling interests

12 unchanged sentences

Three Months Ended

September 30,

Six Months Ended

September 30,

Net income (loss)

2 unchanged sentences

Comprehensive income (loss)

comprehensive income attributable to noncontrolling interest

comprehensive income (loss) attributable to noncontrolling interest

Comprehensive income (loss) attributable to controlling interests

2 unchanged sentences

CINEDIGM CORP.

CONSDENSED CONSOLIDATED STATEMENTS OF (DEFICIT)

CONDENSED CONSOLIDATED STATEMENTS OF

(In thousands, except share data)

Series A Preferred Stock

Additional Paid-In

Accumulated Other Comprehensive

Total Stockholders’

A Preferred Stock

Comprehensive

Stockholders’

Non-Controlling

3 unchanged sentences

Stock-based compensation

Issuance of common stock in connection with a business combination

Preferred stock dividends paid with common stock

Issuance of common stock

in connection with a business combination

Preferred stock dividends

paid with common stock

Balances as of June

Foreign exchange translation

Stock-based compensation

Issuance of common stock

in connection with business combinations

Treasury stock in connection

with taxes withheld from employees

Preferred stock dividends

Balances as of September

See accompanying & Notes

1 unchanged sentence

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF (DEFICIT)

CONDENSED CONSOLIDATED STATEMENTS OF

(In thousands, except share data)

Series A Preferred Stock

Additional Paid-In

Accumulated Other Comprehensive

Total Stockholders’

A Preferred Stock

Comprehensive

Stockholders’

Non-Controlling

Balances as of March 31, 2022

$ ( 472,310 )

Foreign exchange translation

Stock-based compensation

Preferred stock dividends paid with common stock

Preferred stock dividends accrued

Net income (loss)

Balances as of June 30, 2022

$ ( 478,403 )

as of March 31, 2022

exchange translation

stock dividends paid with common stock

stock dividends accrued

income (loss)

as of June 30, 2022

exchange translation

stock dividends paid with common stock

of common stock in connection with performance stock units and annual incentive awards, net of employee payroll taxes

of common stock for BD Earnout commitment

stock dividends accrued

income (loss)

as of September 30, 2022

See accompanying Notes to Condensed Consolidated

Financial Statements

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Three Months Ended

Six Months Ended

September 30,

Cash flows from operating activities:

Net income (loss)

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

Net (loss) income

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

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

Impairment of prepaid advances

Changes in fair value of equity investment in A Metaverse Company

Changes in fair value of equity investment in Metaverse

Gain from forgiveness of PPP loan

Impairment of advances

Provision for doubtful accounts

Stock-based compensation

Amortization of debt issuance costs included in interest expense

Stock-based compensation, inclusive of $ 551 withheld for employee payroll taxes for shares not issued

Interest expense for deferred consideration

9 unchanged sentences

Purchases of property and equipment

Purchase of a business

Purchase of businesses

Sale of equity investment in Metaverse

Net cash used in investing activities

Cash flows from financing activities:

Payment of notes payable

Payment under revolving credit agreement, net

Net cash used in by financing activities

Net change in cash, cash equivalents, and restricted cash

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

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

Payments of notes payable

Proceeds (payments) from line of credit, net of debt issuance cost

Net cash provided by (used in) financing activities

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

See accompanying Notes to Condensed Consolidated

Financial Statements

CINEDIGM CORP.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

NATURE OF OPERATIONS AND

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NATURE OF OPERATIONS AND LIQUIDITY

Cinedigm Corp.

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

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

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

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

We report our financial results

in two primary segments as follows:

(“Cinedigm,” the “Company,”

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

We are (i) a distributor

and aggregator of independent movie, television and other short form content managing a library of distribution rights to thousands of

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

(ii) a servicer of digital cinema assets for movie screens in both North America and several international countries.

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

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

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

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

It also provides

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

billing, collection and verification services.

Our Content & Entertainment segment operates in:

(1) ancillary market aggregation and

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

entertainment channels and applications.

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.

It also provides fee-based support to music and movie screens as well as directly

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

Our Content &

Entertainment segment operates in:

(1) ancillary market aggregation and distribution of entertainment content and (2) branded and curated

over-the-top (“OTT”) digital network business providing entertainment channels and applications.

Risks and Uncertainties

The COVID-19 pandemic and related

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

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

We have incurred net losses historically

and have net loss of $ 6.0 million for the

three months ended June 30, 2022.

We also have an accumulated deficit of $ 478.4 million and

negative working capital of $ 7.6 million as of June 30, 2022.

Net cash used by

operating activities for the three months ended June 30, 2022 was $ 1.2 million.

continue to generate net losses for the foreseeable future.

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

described below:

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.

The COVID-19 pandemic and the related economic impact are likely

to result in sustained volatility and uncertainty, which could have an adverse effect on our business, financial condition and results

of operations.

We have incurred net losses historically and have net loss of

$ 11.6 million for the six months ended September 30, 2022.

We also have an accumulated deficit of $ 484.2 million and negative

working capital of $ 10.1 million as of September 30, 2022.

Net cash used in operating activities for the six months ended

September 30, 2022 was $ 6.3 million.

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

We believe the combination of:

(i) our cash and cash equivalent balances at June 30, 2022 and (ii) expected cash flow from operations, will be sufficient for our operations

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

Our capital requirements will depend on many factors, and

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

Failure to generate additional revenues, obtain additional capital

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

SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

BASIS OF PRESENTATION AND

CONSOLIDATION

Our consolidated financial statements include the accounts of Cinedigm and its wholly-owned and majority-owned subsidiaries.

All intercompany

transactions and balances have been eliminated in consolidation.

in which we do not have a controlling interest or are not the primary beneficiary, but have the ability to exert significant influence,

are accounted for under the equity method of accounting.

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

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

See Note 3 - Other Interests to

the Consolidated Financial Statements for a discussion of our noncontrolling interests.

(i) our cash and cash equivalent balances

at September 30, 2022 and (ii) expected cash flow from operations, will be sufficient for our operations and capital needs, for at least

twelve months from the filing of this report.

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

and obtain additional capital.

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

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND CONSOLIDATION

Our consolidated financial statements include the accounts of Cinedigm

and its wholly-owned and majority-owned subsidiaries.

All intercompany transactions and balances have been eliminated in consolidation.

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

the primary beneficiary, but have the ability to exert significant influence, are accounted for under the equity method of accounting.

Noncontrolling interests for which we have been determined to be the primary beneficiary are consolidated and recorded as net loss attributable

to noncontrolling interest.

See Note 3 - Other Interests to the Consolidated Financial Statements for a discussion of

our noncontrolling interests.

USE OF ESTIMATES

The preparation of consolidated

financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”)

requires us to make estimates and assumptions that affect the assets and liabilities, disclosures of contingent assets and liabilities

at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

estimates include the accrual of digital revenue, accounts receivable reserves, return reserves, inventory reserves, recovery of advances,

assessment of goodwill impairment, intangible asset impairment and estimated amortization lives, fair value for asset acquisitions and

business combinations, valuation allowances for income taxes and stock awards.

The preparation of consolidated financial statements in conformity

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

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

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

Such estimates include the accrual of digital revenue, accounts

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

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

stock based compensation awards.

Actual results could differ from these estimates.

CASH AND CASH EQUIVALENTS

We consider all highly liquid

investments with an original maturity of three months or less to be “cash equivalents.” We maintain bank accounts with major

banks, which from time to time may exceed the Federal Deposit Insurance Corporation’s insured limits.

We periodically assess the

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

Cash and cash equivalents consisted

of the following:

We consider all highly liquid investments with an original maturity

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

exceed the Federal Deposit Insurance Corporation’s insured limits.

We periodically assess the financial condition of the institutions

and believe that the risk of any loss is minimal.

Cash and cash equivalents consisted of the following:

(in thousands)

September 30,

Cash and Cash Equivalents

EQUITY INVESTMENT IN A METAVERSE

COMPANY, A RELATED PARTY

On February 14, 2020, the Company

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

company, formerly Starrise Media Holdings Limited, whose ordinary shares are listed on the Stock Exchange of Hong Kong.

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

to our major shareholder.

Our major shareholder also maintains a significant beneficial interest ownership in Metaverse.

Upon consummation

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

fair market value of the Metaverse shares on the transaction date on the Stock Exchange of Hong Kong, in exchange for the Company’s

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

The difference in value

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

On April 10, 2020, the Company

purchased an additional 15 % interest in Metaverse in a private transaction from shareholders of Metaverse that are affiliated with

the major shareholder of the Company.

The Company recorded an additional equity investment of approximately $ 28.2 million, which

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

common stock of $ 11.0 million, valued at the date of the issuance of the Common Stock of the Company.

The difference in the value

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

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

The Company has accounted for

these investments under the equity method of accounting as the Company can exert significant influence over Metaverse with its direct

ownership and affiliation with the Company’s majority shareholders.

The Company has made an irrevocable election to apply the fair

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

April 1, 2022, trading of Metaverse’s ordinary shares was halted on the Hong Kong Stock Exchange.

investment was previously a level 1 investment as the shares were being actively traded in a marketplace, but with the trading of the

shares being halted, the Company needed to reassess the fair value level of the investment.

Without an active market where the shares

are being traded, the investment no longer qualifies as a level 1.

As of June 30, 2022, Metaverse’s

stock valuation is based on an evaluated offer received from an independent third party to purchase our shares and trending assessment

of market pricing and is categorized as Level 3 based on unobservable inputs.

EQUITY INVESTMENT IN A METAVERSE COMPANY, A RELATED PARTY

On February 14, 2020, the Company acquired an approximately 11.5 % interest

in A Metaverse Company (“Metaverse”), a leading publicly traded Chinese entertainment company, formerly Starrise Media Holdings

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

The Company acquired such interest as a strategic investment

and in a private transaction from a shareholder of Metaverse that is related to our major shareholder.

Our major shareholder also maintains

a significant beneficial interest ownership in Metaverse.

Upon consummation of the transaction on February 14, 2020, the Company recorded

an initial investment of approximately $ 25.1 million, which is the fair market value of the Metaverse shares on the transaction date on

the Stock Exchange of Hong Kong, in exchange for the Company’s Class A common stock, par value of $ 0.001 per share (the “Common

Stock”) of $ 11.2 million, valued as of the date of the issuance of the Common Stock of the Company.

The difference in value of shares

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

On April 10, 2020, the Company purchased an additional 15 % interest

in Metaverse in a private transaction from shareholders of Metaverse that are affiliated with the major shareholder of the Company.

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

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

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

The difference in the value of shares received in Metaverse and shares

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

This transaction was also recorded

as an equity investment in Metaverse.

The Company has accounted for these investments under the equity method

of accounting as the Company can exert significant influence over Metaverse with its direct ownership and affiliation with the Company’s

majority shareholders.

The Company has made an irrevocable election to apply the fair value option under ASC 825-10, Financial Instruments,

as it relates to its equity investment in Metaverse.

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

halted on the Hong Kong Stock Exchange.

This investment was previously a Level 1 investment as the shares were being actively traded in

a marketplace.

The investment is recorded at fair value as a Level 3 as there is not an active market or observable inputs.

As of September

30, 2022, Metaverse’s stock valuation is based on an independent valuation based on the market approach is categorized as Level

3 based on unobservable inputs.

ACCOUNTS RECEIVABLE

We maintain reserves for potential

credit losses on accounts receivable.

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

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

Reserves are recorded primarily on a specific identification basis.

We record accounts receivable,

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

Such accounts

receivable are discounted to their present value at prevailing market rate.

Advances, which are recorded

within prepaid and other current assets on the consolidated balance sheets, represent amounts prepaid to studios or content producers

for which we provide content distribution services.

We evaluate advances regularly for recoverability and record impairment charges for

amounts that we expect may not be recoverable as of the consolidated balance sheet date.

Impairments and accelerated amortization related

to advances were $ 32 thousand and $ 0.2 million, for the three months ended June 30, 2022 and 2021, respectively.

We maintain reserves for potential credit losses on accounts receivable.

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

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

Reserves are recorded primarily

on a specific identification basis.

Advances, which are recorded within prepaid and other current assets

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

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

as of the consolidated balance sheet date.

Impairments related to advances were $ 0.6 million and $ 0.2 million, for the three

months ended September 30, 2022 and 2021, respectively.

Impairments related to advances were $ 0.6 million and $ 0.4 million, for

the six months ended September 30, 2022 and 2021, respectively.

PROPERTY AND EQUIPMENT

Property and equipment are stated

at cost, less accumulated depreciation and amortization.

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

useful lives of the respective assets as follows:

Property and equipment are stated at cost, less accumulated depreciation

and amortization.

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

Computer equipment and software

3 unchanged sentences

Furniture and fixtures

We capitalize costs associated

with software developed or obtained for internal use when the preliminary project stage is completed, and it is determined that the software

will provide significantly enhanced capabilities and modifications.

These capitalized costs are included in property and equipment and

include external direct cost of services procured in developing or obtaining internal-use software and personnel and related expenses

for employees who are directly associated with, and who devote time to internal-use software projects.

Capitalization of these costs ceases

once the project is substantially complete and the software is ready for its intended use.

Once the software is ready for its intended

use, the costs are amortized over the useful life of the software.

We capitalize costs associated with software developed or obtained

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

capabilities and modifications.

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

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

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

Capitalization of these costs ceases once the project is substantially complete

and the software is ready for its intended use.

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

life of the software.

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

Leasehold improvements are amortized

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

Repair and maintenance costs are charged

to expense as incurred.

Major renewals, improvements and additions are capitalized.

Upon the sale or other disposition of any property

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

is included in the consolidated statements of operations.

IMPAIRMENT OF LONG-LIVED AND

FINITE-LIVED ASSETS

We review the recoverability

of our long-lived assets and finite-lived intangible assets, when events or conditions occur that indicate a possible impairment exists.

The assessment for recoverability is based primarily on our ability to recover the carrying value of our long-lived and finite-lived assets

from expected future undiscounted net cash flows.

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

value of the asset, the asset is deemed not to be recoverable and possibly impaired.

We then estimate the fair value of the asset

to determine whether an impairment loss should be recognized.

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

is determined to be less than its carrying value.

Leasehold improvements are amortized over the shorter of the lease

term or the estimated useful life of the leasehold improvements.

Repair and maintenance costs are charged to expense as incurred.

renewals, improvements and additions are capitalized.

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

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

statements of operations.

IMPAIRMENT OF LONG-LIVED AND FINITE-LIVED ASSETS

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

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

The assessment for recoverability is based

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

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

is deemed not to be recoverable and possibly impaired.

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

loss should be recognized.

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

carrying value.

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

the three months ended June 30, 2022 and 2021, no impairment charge was recorded from operations for long-lived assets or finite-lived

During the three and six months

ended September 30, 2022 and 2021, no impairment charge was recorded from operations for long-lived assets or finite-lived assets.

INTANGIBLE ASSETS

Intangible assets are stated

at cost less accumulated amortization.

For intangible assets that have finite lives, the assets are amortized using the straight-line

method over the estimated useful lives of the related assets.

For intangible assets with indefinite lives, the assets are tested annually

for impairment or sooner if a triggering event occurs.

During the three months ended June 30, 2022 and 2021, no impairment charge was

recorded from operations for intangible assets.

Amortization expense is recorded

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

Intangible assets are stated at cost less accumulated amortization.

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

of the related assets.

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

event occurs.

During the three and six months ended September 30, 2022 and 2021, no impairment charge was recorded for intangible assets.

During the three months ended September 30, 2022 and 2021, the Company had an amortization expense of $ 0.7 million and $ 0.7 million, respectively.

During the six months ended September 30, 2022 and 2021, the Company had an amortization expense of $ 1.5 million and $ 1.5 million, respectively.

Amortization lives of the respective assets as follows:

Content Library

2 unchanged sentences

Advertiser relationships and Channel

The Company’s intangible

assets included the following on June 30, 2022:

The Company’s intangible assets included the following on September

Content Library

4 unchanged sentences

Total Intangible Assets

The Company’s

intangible assets included the following on March 31, 2022:

The Company’s intangible assets included

the following on March 31, 2022:

Content Library

4 unchanged sentences

Total Intangible Assets

Below is the amortization expense

per year for the intangible assets:

Below is the amortization expense per year for the intangible assets:

FAIR VALUE MEASUREMENTS

The fair value measurement disclosures

are grouped into three levels based on valuation factors:

The fair value measurement disclosures are grouped into three levels

based on valuation factors:

● Level 1 – quoted prices in active markets for identical investments

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

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

Assets and liabilities measured

at fa ir value on a recurring basis use the market approach, where prices and other relevant information are generated by market

transactions involving identical or comparable assets or liabilities.

investment in Metaverse is in Hong Kong dollars and was translated into US dollars as of June 30, 2022 and 2021 at an exchange rate of 7.8 and 7.8 Hong

Kong Dollars to 1 US Dollar, respectively.

The fair value of this equity investment was measured by the quoted market price

of Metaverse on the Stock Exchange of Hong Kong at June 30, 2021.

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

halted on the Hong Kong Stock Exchange and as of June 30, 2022, Metaverse’s stock valuation is based on a preliminary evaluated

offer received from an independent third party to purchase our shares and trending assessment of market pricing and is categorized as

Level 3 based on unobservable inputs.

The adjustment to fair value of this investment resulted in a loss of $ 1.3 million and

gain of $ 0.3 million for the three months ended June 30, 2022 and 2021, respectively.

As the value of the investment in Metaverse is being determined by an offer to purchase the shares from an independent

third party, the value of the investment may need to be reduced or fully written off should the offer be rescinded.

● Level 2 – other significant observable inputs (including quoted

prices for similar investments and market corroborated inputs)

● Level 3 – significant unobservable inputs (including our own

assumptions in determining the fair value of investments)

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

translated into US dollars as of September 30, 2022 and March 31, 2022 at an exchange rate of 7.8 and 7.8 Hong Kong Dollars to 1 US Dollar,

respectively.

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

Kong as of March 31, 2022.

On April 1, 2022, trading of Metaverse’s ordinary shares was halted on the Hong Kong Stock Exchange and

as of September 30, 2022, Metaverse’s stock valuation is based on an independent valuation based on the market approach and is categorized

as Level 3 based on unobservable inputs.

The Company estimated the fair value based on the market approach based on the last known enterprise

value adjusting for trends in value from comparable companies.

The adjustment to fair value of this investment resulted in a loss of $ 1.8

million and gain of $ 1.0 million for the six months ended September 30, 2022 and 2021, respectively.

As the value of the investment in

Metaverse is determined based on unobservable inputs, company and industry fluctuations, as well as general economic, political, regulatory

and market conditions such as recessions, interest rate changes or international currency fluctuations, changes to these assumptions may

have a significant impact on the fair value of our investment in Metaverse.

The following tables summarize the levels of fair value measurements

of our financial assets and liabilities as of June 30, 2022 and March 31, 2022:

As of June 30, 2022

of our financial assets and liabilities as of September 30, 2022 and March 31, 2022:

As of September 30, 2022

(in thousands)

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Long term portion of earnout consideration on purchase of a business

Our cash and cash equivalents,

accounts receivable, unbilled revenue and accounts payable and accrued expenses are financial instruments and are recorded at cost in

the consolidated balance sheets.

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

their short-term nature.

Our cash and cash equivalents, accounts receivable, unbilled revenue

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

The estimated

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

ASSET ACQUISITIONS

An asset acquisition is an acquisition

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

Asset acquisitions are accounted for by using the

cost accumulation model whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired

on the basis of relative fair values.

Goodwill is the excess of the

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

Goodwill is tested for impairment on an annual basis

or more often if warranted by events or changes in circumstances indicating that the carrying value may exceed fair value, also known

as impairment indicators.

Inherent in the fair value determination

for each reporting unit are certain judgments and estimates relating to future cash flows, including management’s interpretation

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

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

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

on our consolidated financial position or results of operations.

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

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

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

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

No goodwill impairment charge

was recorded in the three months ended June 30, 2022 and 2021.

PAYABLE AND ACCRUED EXPENSES

payable and accrued expenses consisted of the following:

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

that does not meet the definition of a business.

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

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

Goodwill is the excess of the purchase price paid over the fair value

of the net assets of an acquired business.

Goodwill is tested for impairment on an annual basis or more often if warranted by events or

changes in circumstances indicating that the carrying value may exceed fair value, also known as impairment indicators.

Inherent in the fair value determination for each reporting unit are

certain judgments and estimates relating to future cash flows, including management’s interpretation of current economic indicators

and market conditions, and assumptions about our strategic plans with regard to its operations.

To the extent additional information arises,

market conditions change, or our strategies change, it is possible that the conclusion regarding whether our remaining goodwill is impaired

could change and result in future goodwill impairment charges that will have a material effect on our consolidated financial position

or results of operations.

The Company has the option to assess goodwill

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

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

The Company reassessed goodwill impairment on its

annual measurement date of March 31, 2022 by performing a qualitative analysis and determined that it was not more likely than not that

the fair value of its reporting unit is less than its carrying amount.

impairment charge was recorded in the three and six months ended September 30, 2022 and 2021.

During the six months ended September 30,

2022, the Company recorded a $ 59 thousand reduction in goodwill as a result from working capital true-up related to DMR.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted

of the following:

(In thousands)

September 30,

Accounts payable

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Accrued compensation and benefits

Accrued taxes (refund) payable

Accrued other expenses

Total accounts payable and accrued expenses

AND OTHER CURRENT ASSETS

and other current assets consisted of the following:

PREPAID AND OTHER CURRENT ASSETS

Prepaid and other current assets consisted of

the following:

(In thousands)

Non-trade accounts receivable

September 30,

Other receivables

Due from producers

Prepaid insurance

Other prepaid expenses

Total prepaid and other current assets

and accelerated amortization related to advances were $ 32 thousand and $ 0.2 million, for the three months ended June 30, 2022

and 2021, respectively.

Prepaid and other assets increased by $ 2.3 million primarily related

to a $ 1.5 million increase in advances paid to Hallmark and digital streaming TV partners and a $ 0.5 increase in distribution related

expenses to be reimbursed by the licensors.

REVENUE RECOGNITION

Payment terms and conditions

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

We do not adjust the promised amount of consideration for the effects of

a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or

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

We have in the past entered into arrangements

in connection with activation fees due from our System deployments that had extended payment terms.

The outstanding balances on these

arrangements are insignificant and hence the impact of significant financing would be insignificant.

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.

Revenues from our Cinema Equipment Business 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.

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

The unexpected emergence of

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

The timing of movie releases can have a significant effect on our results

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

Content Entertainment & Business 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.

Cinema Equipment Business

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

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

deployment phase (“Phase II Deployment”).

We retain ownership of our Systems

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

For certain Phase II Deployment

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

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

The Cinema Equipment Business

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

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

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

(collectively, “Services”).

VPFs are earned, net of administrative

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

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

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

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

The amount of VPF revenue is dependent on the number of movie titles

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

VPF revenue is recognized in the period the title first plays

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

The Phase 1 Deployment’s and Phase 2 Deployments performance

obligations for revenue recognition are met at this time.

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

date each system is installed;

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

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

Cost recoupment will occur once the cumulative VPFs and other cash

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

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

amounts during the three-year rollout period and thereafter.

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

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

to the variable consideration, that it is not probable to conclude at this point in time that a significant reversal in the amount of

cumulative revenue recognized will occur when the uncertainty associated with the variable consideration is subsequently resolved.

Under the terms of our standard

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

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

Our Cinema Equipment Business consists of financing

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

exhibitors and for Systems installed domestically and internationally in our second deployment phase (“Phase II Deployment”).

We retain ownership of our Systems and the residual cash flows related

to the Systems in Phase I Deployment after the end of the 10 -year deployment payment period.

For certain Phase II Deployment Systems, we do not retain ownership

of the residual cash flows and digital cinema equipment in Phase II Deployment after the completion of cost recoupment and at the expiration

of the exhibitor master license agreements.

The Cinema Equipment 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 distributors and Alternative Content Fees (“ACFs”) from alternative

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

VPFs are earned, net of administrative fees, pursuant to contracts

with distributors, whereby amounts are payable by a distributor to Phase I Deployment and to Phase II Deployment when distributor's movies

are displayed on screens utilizing our Systems installed in movie theatres.

VPFs are earned and payable to us with respect 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

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

accounting period.

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

movie theatre.

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

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 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.

Company evaluated the constraining estimates related to the variable consideration, that it is not probable to conclude at this point

in time that a significant reversal in the amount of cumulative revenue recognized will occur when the uncertainty associated with the

variable consideration is subsequently resolved.

Under the terms of our standard cinema equipment licensing agreements,

exhibitors will continue to have the right to use our Systems through the end of the term of the licensing agreement, after which time,

they have the option to:

(1) return the Systems to us;

(2) renew their license agreement for successive

one-year terms;

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

As permitted by these agreements, we typically pursue the sale

of the Systems to such exhibitors.

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

the sale proceeds.

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

Total system revenue

was $ 1.2 million and $ 5.6 million, during the three months ended June 30, 2022 and 2021, 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 Phase II of the Cinema Equipment Business paid us an upfront activation fee of approximately

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

Upfront activation fees were recognized in the period in

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

was reasonably assured.

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

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

and such fees are generally collected upfront upon installation.

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

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

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 DC.

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

obligation is satisfied at that time the related VPF fees are due which is at the time the movies are displayed on screens utilizing our

Systems installed in movie theatres.

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

from the movie studios and distributors.

Content & Entertainment

CEG earns fees for the distribution

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

or (3) purchase

the Systems from us at fair market value.

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

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

Such sales were

originally contemplated as the conclusion of the digital cinema deployment plan.

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 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.

fees are recognized as a point in time revenue when the corresponding VPF fees are due from the distributors.

A limited number of systems from our Phase I deployment remain eligible

for VPFs from certain distributors where Phase I exhibitors have renewed their term on an annual basis.

We continue to pursue system sales

for these remaining exhibitors.

Our Phase II deployment currently consists of a limited number of exhibitors who purchased their own systems

and have not yet reached recoupment or the end of their contractual term.

We continue to administer VPFs for these limited systems from

certain distributors.

Content & Entertainment Business

Content & Entertainment Business earns fees for the distribution

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

13 unchanged sentences

are accounted for as variable consideration.

Reserves for potential sales

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

If actual future returns and allowances

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

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 are 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.

The Company follows the five-step

model established by ASC 606 when preparing its assessment of revenue recognition

Reserves for potential sales returns of physical goods and other allowances

are recorded based upon historical experience.

If actual future returns and allowances differ from past experience, adjustments to our

allowances may be required.

Content & Entertainment Business also has contracts for the theatrical

distribution of third party feature movies and alternative content.

Content & Entertainment Business’s distribution fee revenue

and Content & Entertainment Business’s participation in box office receipts are recognized at the time a feature movie and alternative

content are viewed.

Content & Entertainment Business has the right to receive or bill a portion of the theatrical distribution fee

in advance of the exhibition date, and therefore such amount is recorded as a receivable at the time of execution, and all related distribution

revenue is deferred until the third party feature movies’ or alternative content’s theatrical release date.

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

preparing its assessment of revenue recognition

We have omitted disclosure on the transaction price allocated to remaining

performance obligations and estimated timing of revenue recognition as our contracts with customers that have a duration of more than

one year are immaterial.

Principal Agent Considerations

Revenue earned by our CEG business

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

Revenue earned by our Content & Entertainment Business from the

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

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

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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.

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.

Credit Losses

We maintain reserves for potential

credit losses on accounts receivable.

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

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

Reserves are recorded primarily on a specific identification basis.

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

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

If actual future returns

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

We record accounts receivable,

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

Such accounts receivable

are discounted to their present value at prevailing market rates.

We maintain reserves for potential credit losses on accounts receivable.

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

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

Reserves are recorded primarily

on a specific identification basis.

Our Content & Entertainment Business recognizes accounts receivable,

net of an estimated allowance for product returns and customer chargebacks, at the time that it recognizes revenue from a sale.

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

If actual future returns and allowances

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

During the three and six months ended September 30, 2021 and 2022,

we did not recognize any credit losses or reversals of previously recorded provisions, and did not have any write-offs charged against

the allowance.

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.

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.

ending deferred revenue balance, including current and non-current balances, as of June 30, 2022 was $ 0.4 million.

For the three months

ended June 30, 2022, the additions to our deferred revenue balance were primarily due to cash payments received or due in advance of satisfying

performance obligations, while the reductions to our deferred revenue balance were primarily due to the recognition of revenue upon fulfillment

of our performance obligations, both of which were in the ordinary course of business.

For the three months ended June 30, 2022 and 2021,

there was $ 12.0 million and $ 14.6 million ,

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

upon completion of audit periods.

Participations and royalties

When we use third parties to

distribute company owned content, we record participations payable, which represent amounts owed to the distributor under revenue-sharing

arrangements.

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

for royalties owed under licensing arrangements.

We identify and record as a reduction to the liability any expenses that are to be reimbursed

to us by such studios or content producers.

We generally record a receivable related to revenue when we have an

unconditional right to invoice and receive payment, and we record deferred revenue (contract liability) when cash payments are received

or due in advance of our performance, even if amounts are refundable.

Deferred revenue pertaining to our Content & Entertainment 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

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

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

balances, as of September 30, 2022 was $ 0.3 million.

For the three and six months ended September 30, 2022, the additions to our

deferred revenue balance were primarily due to cash payments received or due in advance of satisfying performance obligations, while the

reductions to our deferred revenue balance were primarily due to the recognition of revenue upon fulfillment of our performance obligations,

both of which were in the ordinary course of business.

recognized as of the six months ended September 30, 2022 and 2021 that was included in deferred revenue at the beginning of the year was

$ 0.2 million and $ 0.8 million, respectively.

Revenue recognized as of the three months ended September 30, 2022 and 2021 that was included

in deferred revenue at the beginning of the quarter was $ 0.4 million and $ 0.3 million, respectively.

We expect to recognize substantially

all of the deferred revenue as of September 30, 2022 as revenue in the next three months ending December 31, 2022.

During the quarter

ended September 30, 2022, $ 1.7 million of revenue was recognized that was included in the accounts payable balance as constrained variable

consideration at the beginning of the year.

The Company recognized the revenue related once the uncertainty associated with the variable

consideration was resolved .

Participations and royalties payable

When we use third parties to distribute company owned content, we record

participations payable, which represent amounts owed to the distributor under revenue-sharing arrangements.

When we provide content distribution

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

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

Disaggregation of Revenue

The Company disaggregates revenue

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

The Company disaggregates revenue into different revenue categories

for the Cinema Equipment and Content & Entertainment Businesses.

The Cinema Equipment Business revenue categories are:

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

categories are:

Phase I Deployment

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

Base Distribution Business and OTT Streaming and Digital.

The following tables present

the Company’s revenue categories for the three months ended June 30, 2022 and 2021 (in thousands):

The following tables present the Company’s revenue categories

for the three and six months ended September 30, 2022 and 2021 (in thousands):

Three Months Ended

September 30,

Cinema Equipment Business:

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Content & Entertainment Business:

Physical Revenue

Base Distribution Business

OTT Streaming and Digital

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Concentrations

the three months ended June 30, 2022, three customers,

Amazon.com, Inc., Distribution Solutions , a division of Alliance Entertainment and

Roku, Inc., represented 2 2 % and 1 4% ,

and 10 % respectively , of Content & Entertainment

Business revenues , and approximately 19 %,

and 13 % and 9 % , respectively, of our consolidated revenues.

For the three months ended June

30, 2021, Amazon.com, Inc.

Distribution Solutions , a division of Alliance Entertainment

and Roku, Inc., represented 23 % , 11 % and 11 % ,

respectively , of Content & Entertainment

Business revenues and approximately 14 % ,

6 % and 6 %, respectively, of our consolidated Revenues.

OPERATING COSTS

Direct operating costs consist

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

impairments of advances, and marketing and direct personnel costs.

For the three months ended September 30, 2022, three customers, Amazon.com,

Inc., Distribution Solutions, a division of Alliance Entertainment, and Tubi, represented 35 % and 11 %, and 10 % respectively, of Content

& Entertainment Business revenues, and approximately 19 %, and 2 % and 11 %, respectively, of our consolidated

For the six months ended September 30, 2022, three customers, Amazon.com, Inc., Distribution Solutions,

a division of Alliance Entertainment, and Tubi, represented 35 % and 20 %, and 16 % respectively, of Content

& Entertainment Business revenues, and approximately 15 %, and 5 % and 9 %, respectively, of our consolidated

For the three months ended September 30, 2021, Amazon.com, Inc.

Solutions, a division of Alliance Entertainment and Tubi, represented 39 %, 5 % and 12 %, respectively, of Content

& Entertainment Business revenues and approximately 26 %, 3 % and 8 %, respectively, of our consolidated revenues.

the six months ended September 30, 2021, Amazon.com, Inc.

Distribution Solutions, a division of Alliance Entertainment and Roku,

Inc., represented 30 %, 8 % and 12 %, respectively, of Content & Entertainment Business revenues

and approximately 19 %, 5 % and 7 %, respectively, of our consolidated revenues.

DIRECT OPERATING COSTS

Direct operating costs consist of operating costs such as cost of revenue,

fulfillment expenses, shipping costs, property taxes and insurance on Systems, royalty expenses, impairments of advances, and marketing

and direct personnel costs.

STOCK-BASED COMPENSATION

The Company issues stock-based

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

performance stock units.

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

Compensation (“ASC 718”).

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

units and modifications to existing stock options, to be recognized in the consolidated statements of operations and comprehensive loss

based on their fair values.

The Company measures the compensation expense of employee and nonemployee services received in exchange for

an award of equity instruments based on the fair value of the award on the grant date.

That cost is recognized on a straight-line basis

over the period during which the employee and nonemployee is required to provide service in exchange for the award.

The fair values of

options and stock appreciation rights are calculated as of the date of grant using the Black-Scholes option pricing model based on key

assumptions such as stock price, expected volatility and expected term.

The Company’s estimates of these assumptions are primarily

based on the trading price of the Company’s stock, historical data, peer company data and judgment regarding future trends and factors.

The Company accounts for income taxes using the

asset and liability method.

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

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

their respective tax bases.

Valuation allowances are established when management

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

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

The Company accounts for uncertain tax positions

in accordance with an amendment to ASC Topic 740-10, Income Taxes (Accounting for Uncertainty in Income Taxes) , which clarified

the accounting for uncertainty in tax positions.

This amendment provides that the tax effects from an uncertain tax position can be recognized

in the financial statements only if the position is “more-likely-than-not” to be sustained were it to be challenged by a taxing

The assessment of the tax position is based solely on the technical merits of the position, without regard to the likelihood

that the tax position may be challenged.

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

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

Company has no uncertain tax positions.

NET LOSS PER SHARE ATTRIBUTABLE

TO COMMON SHAREHOLDERS

Basic and diluted net loss

per common share has been calculated as follows:

The Company issues stock-based awards to employees and non-employees,

generally in the form of restricted stock, restricted stock units, stock appreciation rights and performance stock units.

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

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

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

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

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

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

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

The fair values of options and stock appreciation

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

expected volatility and expected term.

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

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

Forfeitures are recognized

as they occur.

The Company accounts for income taxes using the asset and liability

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

loss and tax credit carryforwards and for differences between the carrying amounts of existing assets and liabilities and their respective

Valuation allowances are established when management is unable to conclude

that it is more likely than not that some portion, or all, of the deferred tax asset will ultimately be realized.

The Company is primarily

subject to income taxes in the United States.

The Company accounts for uncertain tax positions in accordance with

an amendment to ASC Topic 740-10, Income Taxes (Accounting for Uncertainty in Income Taxes) , which clarified the accounting for

uncertainty in tax positions.

This amendment provides that the tax effects from an uncertain tax position can be recognized in the financial

statements only if the position is “more-likely-than-not” to be sustained were it to be challenged by a taxing authority.

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

tax position may be challenged.

If an uncertain tax position meets the “more-likely-than-not” threshold, the largest amount

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

has no uncertain tax positions as of September 30, 2022.

NET LOSS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS

Basic and diluted net loss per common share has been calculated

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

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outstanding during the period plus potential dilutive shares

Stock issued and treasury stock

repurchased or reacquired during the period are weighted for the portion of the period that they are outstanding.

incurred a net loss for the three months ended June 30, 2022, and therefore the impact of potentially dilutive common shares from outstanding

stock options and warrants, totaling 8,506,098 shares

as of June 30, 2022, were excluded from the computations of loss per share as their impact would have been anti-dilutive.

had a net income for the three months ended June 30, 2021, and therefore the impact of potentially dilutive common shares from outstanding

stock options, stock appreciation rights, and warrants, totaling 2,003,235 shares

for the three months ended June 30, 2021, respectively, were included in the computations of diluted earnings per share.

The calculation

of diluted net income per share for the three months ended June 30, 2021 does not include the impact of 9,616,429 potentially

dilutive shares relating to stock options, stock appreciation rights, and warrants as their impact would have been anti-dilutive.

Stock issued and treasury stock repurchased or reacquired during the

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

We incurred net loss for the three and six months ended September 30,

2022, and therefore the impact of potentially dilutive common shares from outstanding stock options and warrants, totaling 9,664,050 shares

as of September 30, 2022, was excluded from the computations of loss per share as their impact would have been anti-dilutive.

We had net income for the six months ended September 30, 2021, and

therefore the impact of potentially dilutive common shares from outstanding stock options, stock appreciation rights, and warrants, totaling

3,219,141 shares for the six months ended September 30, 2021, respectively, was included in the computations of diluted earnings per share.

For the three months ended September 30, 2021, 11,937,243 potentially dilutive shares have been excluded from the diluted loss per share

as their impact would have been antidilutive.

We had a net loss for the three months ended September 30, 2021 and therefore no dilution

as basic and diluted loss per share are the same for the period.

The calculation of diluted net income per share for the six months ended

September 30, 2021 does not include the impact of 8,718,102 potentially dilutive shares relating to stock options, stock appreciation

rights, and warrants as their impact would have been anti-dilutive as their exercise prices are above the Company’s average Common

Stock price during the period.

COMPREHENSIVE LOSS

For the three months ended June

30, 2022 and 2021, comprehensive loss consisted of net loss and foreign currency translation adjustments.

RECENTLY ISSUED ACCOUNTING

PRONOUNCEMENTS

In June 2016, the FASB issued

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

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”),

which provides new guidance regarding the measurement and recognition of credit impairment for certain financial assets.

Such guidance

will impact how the Company determines its allowance for estimated uncollectible receivables and evaluates its available-for-sale investments

For the three and six months ended September 30, 2022 and 2021, comprehensive

loss consisted of net loss and foreign currency translation adjustments.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2016, the FASB issued ASU 2016-13, Financial Instruments

– Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which

provides new guidance regarding the measurement and recognition of credit impairment for certain financial assets.

Such guidance will

impact how the Company determines its allowance for estimated uncollectible receivables and evaluates its available-for-sale investments

for impairment.

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Investment in CDF2 Holdings

We indirectly own 100 % of

the common equity of CDF2 Holdings, LLC (“CDF2 Holdings”), which was created for the purpose of capitalizing on the conversion

of the exhibition industry from film to digital technology.

CDF2 Holdings assists its customers in procuring the equipment necessary to

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

CDF2 Holdings is a Variable Interest

Entity (“VIE”), as defined in Accounting Standards Codification Topic 810 (“ASC 810”), “Consolidation.”

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

as the primary beneficiary of the VIE.

To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that

most significantly impact the VIE’s economic performance, among other factors.

Although we indirectly, wholly own CDF2 Holdings,

we, a third party that also has a variable interest in CDF2 Holdings, and an independent third party manager must mutually approve all

business activities and transactions that significantly impact CDF2 Holdings’ economic performance.

We have therefore assessed our

variable interests in CDF2 Holdings and determined that we are not the primary beneficiary of CDF2 Holdings.

As a result, CDF2 Holdings’

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

In completing our

assessment, we identified the activities that we consider most significant to the economic performance of CDF2 Holdings and determined

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

method of accounting.

As of June 30, 2022 and March

31, 2022, our maximum exposure to loss, as it relates to the non-consolidated CDF2 Holdings entity, represents accounts receivable for

service fees under a master service agreement with CDF2 Holdings.

Such accounts receivable was $ 0.7 million and $ 0.8 million

as of June 30, 2022 and March 31, 2022, respectively, which are included in accounts receivable, net on the accompanying consolidated

balance sheets.

The accompanying Consolidated

Statements of Operations include $( 104 ) thousand and $ 77 thousand of digital cinema servicing revenue from CDF2 Holdings for the

three months ended June 30, 2022 and 2021, respectively.

Total Stockholders’ Deficit

of CDF2 Holdings at June 30, 2022 and March 31, 2022 was $ 57.3 million and $ 55.6 million, respectively.

We have no obligation

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

investment in CDF2 Holdings as of June 30, 2022 and March 31, 2022 is carried at $ 0 .

We indirectly own 100 % of the common equity of CDF2 Holdings,

LLC (“CDF2 Holdings”), which was created for the purpose of capitalizing on the conversion of the exhibition industry from

film to digital technology.

CDF2 Holdings assists its customers in procuring the equipment necessary to convert their systems to digital

technology by providing financing, equipment, installation and related ongoing services.

CDF2 Holdings is a Variable Interest Entity (“VIE”), as

defined in Accounting Standards Codification Topic 810 (“ASC 810”), “Consolidation.” ASC 810 requires the consolidation

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

To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that most significantly impact the

VIE’s economic performance, among other factors.

Although we indirectly, wholly own CDF2 Holdings, we, a third party that also has

a variable interest in CDF2 Holdings, and an independent third party manager must mutually approve all business activities and transactions

that significantly impact CDF2 Holdings’ economic performance.

We have therefore assessed our variable interests in CDF2 Holdings

and determined that we are not the primary beneficiary of CDF2 Holdings.

As a result, CDF2 Holdings’ financial position and results

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

In completing our assessment, we identified the

activities that we consider most significant to the economic performance of CDF2 Holdings and determined that we do not have the power

to direct those activities, and therefore we account for our investment in CDF2 Holdings under the equity method of accounting.

As of September 30, 2022 and March 31, 2022, our maximum exposure to

loss, as it relates to the non-consolidated CDF2 Holdings entity, represents accounts receivable for service fees under a master service

agreement with CDF2 Holdings.

Such accounts receivable was $ 0.4 million and $ 0.8 million as of September 30, 2022 and

March 31, 2022, respectively, which are included in accounts receivable, net on the accompanying consolidated balance sheets.

The accompanying Consolidated Statements of Operations include $ 0.0

million and $ 0.3 million of digital cinema servicing revenue from CDF2 Holdings for the three months ended September 30, 2022

and 2021, respectively.

The accompanying Consolidated Statements of Operations include($ 104 ) thousand and $ 0.2 million

of digital cinema servicing revenue from CDF2 Holdings for the six months ended September 30, 2022 and 2021, respectively.

Total Stockholders’ Deficit of CDF2 Holdings at September 30,

2022 and March 31, 2022 was $ 57.5 million and $ 55.6 million, respectively.

We have no obligation to fund the operating

loss or the stockholders’ deficit beyond our initial investment of $ 2.0 million and, accordingly, our investment in CDF2 Holdings

as of September 30, 2022 and March 31, 2022 is carried at $ 0 .

Majority Interest in CONtv

We own an 85 % interest in

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

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

We own an 85 % interest in CON TV, LLC, a worldwide digital network

that creates original content, and sells and distributes on-demand digital content on the Internet and other consumer digital distribution

platforms, such as gaming consoles, set-top boxes, handsets, and tablets.

We evaluated the investment under the voting interest entity

(“VOE”) model and determined that the entity should be consolidated as we have a controlling financial interest in the entity

through our ownership of outstanding voting shares, and that other equity holders do not have substantive voting, participating or liquidation

We recorded net loss attributable to noncontrolling interest in our condensed consolidated statement of operations equal to 11 %

of outstanding profit interest units retained by the noncontrolling interests.

Investment in Roundtable

On March 15, 2022, the Company

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

(“Roundtable”) pursuant to which the

Company purchased 500 shares of Roundtable Series A Preferred Stock and warrants to purchase 100 shares of Roundtable

Common Stock (together, the “Roundtable Securities”).

The Company paid the purchase price for the Roundtable Securities by

issuing to Roundtable 316,937 shares of Common Stock is based on the closing price of the company on the date of the purchase.

The Company recorded $ 0.2 million for the purchase of the Roundtable Securities which is included in other long-term assets on the

consolidated balance sheet.

The investment in the Roundtable Securities was made in connection with a proposed collaboration with Roundtable

regarding production and distribution of streaming content including the launch of high profile branded enthusiast streaming channels.

Roundtable investment was accounted for using the cost method.

STOCKHOLDERS’ EQUITY (DEFICIT)

As of June 30, 2022 the number of

shares of Common Stock authorized for issuance was 275,000,000 shares.

During the three months ended

June 30, 2022, the Company issued 108,024 shares of Common Stock which consist the issuance of Common Stock in payment of preferred

stock dividends.

Cumulative dividends in arrears

on preferred stock were $ 0.1 million and $ 0.1 million as of June 30, 2022 and 2021, respectively.

In May 2022 and 2021, we paid

preferred stock dividends in arrears in the form of 108,024 and 53,278 shares of Common

Stock, respectively.

We have treasury stock, at cost,

consisting of 1,315,851 and 1,315,851 shares of Common Stock at June 30, 2022 and March 31, 2022, respectively.

EQUITY INCENTIVE PLANS

Based Compensation Awards

Awards issued under our 2000

Equity Incentive Plan (the “2000 Plan”) may be in any of the following forms (or a combination thereof) (i) stock option awards;

On March 15, 2022, the Company entered into a stock purchase agreement

with Roundtable Entertainment Holdings, Inc.

(“Roundtable”) pursuant to which the Company purchased 500 shares

of Roundtable Series A Preferred Stock and warrants to purchase 100 shares of Roundtable Common Stock (together, the “Roundtable

Securities”).

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

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

The Company recorded $ 0.2 million for

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

The investment

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

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

The Roundtable investment was accounted

for using the cost method and is included within other long term assets.

STOCKHOLDERS’ EQUITY

Authorized Common Stock

As of September 30, 2022 the number of shares of Common Stock authorized

for issuance was 275,000,000 shares.

During the three months ended September 30, 2022, the Company issued 2,579,488 shares

of Common Stock .

This is comprised of 178,572 shares in payment of preferred stock dividends, 2,066,879 shares issued on August 18,2022

in connection with the vesting of grants pursuant to the 2017 Equity Incentive Plan, and 334,037 shares issued in payment of the Bloody

Disgusting earnout commitment.

During the six months ended September 30, 2022, the Company issued 2,687,512 shares

of Common Stock .

This is comprised of 286,596 shares in payment of preferred stock dividends, 2,066,879 shares issued on August 18, 2022

in connection with the vesting of grants pursuant to the 2017 Equity Incentive Plan, and 334,037 shares issued in payment of the Bloody

Disgusting earnout commitment.

PREFERRED STOCK

Cumulative dividends in arrears on preferred stock were $ 0.1 million

and $ 0.2 million as of September 30, 2022 and 2021, respectively.

In May and July 2022 and 2021, we paid preferred stock dividends

in arrears in the form of 286,596 and 53,278 shares of Common Stock, respectively.

TREASURY STOCK

We have treasury stock, at cost, consisting of 1,315,851 and 1,315,851 shares

of Common Stock at September 30, 2022 and March 31, 2022, respectively.

CINEDIGM’S EQUITY INCENTIVE PLANS

Stock Based Compensation Awards

Awards issued under our 2000 Equity Incentive Plan (the “2000

Plan”) may be in any of the following forms (or a combination thereof) (i) stock option awards;

(ii) stock appreciation rights;

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or (iv) performance awards.

The 2000 Plan provides

for the granting of incentive stock options (“ISOs”) with exercise prices not less than the fair market value of our Common

Stock on the date of grant.

ISOs granted to shareholders having more than 10 % of the total combined voting power of the Company must

have exercise prices of at least 110 % of the fair market value of our Common Stock on the date of grant.

ISOs and non-statutory stock

options granted under the 2000 Plan are subject to vesting provisions, and exercise is subject to the continuous service of the participant.

The exercise prices and vesting periods (if any) for non-statutory options are set at the discretion of our compensation committee.

November 1, 2017, upon the consummation of the initial equity investment in Cinedigm by Bison, as a result of which there was a change

of control of the Company, all stock options (incentive and non-statutory) and shares of restricted stock were vested immediately and

the options became fully exercisable.

In connection with the grants

of stock options and shares of restricted stock under the 2000 Plan, we and the participants have executed stock option agreements and

notices of restricted stock awards setting forth the terms of the grants.

The 2000 Plan provided for the issuance of up to 2,380,000 shares

of Common Stock to employees, outside directors and consultants.

of June 30, 2022, there were 212,037 stock options outstanding in the 2000 Plan with weighted average exercise price of

$ 14.46 and a weighted

average contract life of 1.32 years.

As of March 31, 2022, there were 217,337 shares pursuant to stock options

outstanding in the Plan with weighted average exercise price of $ 14.49 and a weighted average contract life

of 1.54 years.

A total of 5,300 options expired and zero options were forfeited during the three months

ended June 30, 2022.

outstanding under the 2000 Plan as of June 30, 2022 is as follows:

As of June 30, 2022

The 2000 Plan provides for the granting of incentive

stock options (“ISOs”) with exercise prices not less than the fair market value of our Common Stock on the date of grant.

ISOs granted to shareholders having more than 10 % of the total combined voting power of the Company must have exercise prices of

at least 110 % of the fair market value of our Common Stock on the date of grant.

ISOs and non-statutory stock options granted under

the 2000 Plan are subject to vesting provisions, and exercise is subject to the continuous service of the participant.

The exercise prices

and vesting periods (if any) for non-statutory options are set at the discretion of our compensation committee.

On November 1, 2017, upon

the consummation of the initial equity investment in Cinedigm by Bison, as a result of which there was a change of control of the Company,

all stock options (incentive and non-statutory) and shares of restricted stock were vested immediately and the options became fully exercisable.

In connection with the grants of stock options and shares of restricted

stock under the 2000 Plan, we and the participants have executed stock option agreements and notices of restricted stock awards setting

forth the terms of the grants.

The 2000 Plan provided for the issuance of up to 2,380,000 shares of Common Stock to employees,

outside directors and consultants.

As of September 30, 2022, there were 212,037 stock options

outstanding in the 2000 Plan with weighted average exercise price of $ 14.46 and a weighted average contract life of 1.07 years.

As of March 31, 2022, there were 217,337 shares pursuant to stock options outstanding in the Plan with weighted average exercise

price of $ 14.49 and a weighted average contract life of 1.54 years.

A total of 5,300 options expired during the

six months ended September 30, 2022.

Options outstanding under the 2000 Plan as of

September 30, 2022 is as follows:

As of September 30, 2022

Range of Prices

Options Outstanding

Weighted Average Remaining Life in Years

Weighted Average Remaining Life in

Weighted Average Exercise Price

Aggregate Intrinsic Value

Aggregate Intrinsic

(In thousands)

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$ 13.70 - $ 24.40

of all options exercisable under the 2000 Plan as of June 30, 2022 is presented below:

An analysis of all options exercisable under the

2000 Plan as of September 30, 2022 is presented below:

Options Exercisable

Weighted Average

Remaining Life in Years

Remaining Life in

Weighted Average

Exercise Price

Aggregate Intrinsic Value

Aggregate Intrinsic

(In thousands)

In August 2017, the Company adopted

the 2017 Equity Incentive Plan (the “2017 Plan).

The 2017 Plan replaced the 2000 Plan, and applies to employees and directors of,

and consultants to, the Company.

The 2017 Plan provided for the issuance of up to 2,108,270 shares of Common Stock, in the form

of various awards, including stock options, stock appreciation rights, stock, restricted stock, restricted stock units, performance awards

and cash awards.

In August 2017, the Company adopted the 2017 Equity Incentive Plan

(the “2017 Plan).

The 2017 Plan replaced the 2000 Plan, and applies to employees and directors of, and consultants to, the Company.

The 2017 Plan provided for the issuance of up to 2,108,270 shares of Common Stock, in the form of various awards, including

stock options, stock appreciation rights (“SARs”), stock, restricted stock, restricted stock units, performance awards and

The Compensation Committee of the Company’s Board of Directors (the “Board”) is authorized to administer

3 unchanged sentences

for issuance thereunder from 2,108,270 shares to 4,098,270 .

On October 23, 2020, the Company

amended its 2017 Plan to increase the number of shares authorized for issuance thereunder from 4,098,270 to 14,098,270 .

On October 11, 2021, the Company

amended its 2017 Plan to increase the number of shares authorized for issuance thereunder from 14,098,270 to 18,098,270 .

Stock appreciation rights outstanding

under the 2017 Plan as of June 30, 2022 is as follows:

As of June 30, 2022

On October 23, 2020, the Company amended its 2017 Plan to increase

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

On October 11, 2021, the Company amended its 2017 Plan to increase

the number of shares authorized for issuance thereunder from 14,098,270 to 18,098,270 .

Stock appreciation rights outstanding under the 2017 Plan as of September

30, 2022 is as follows:

As of September 30, 2022

Range of Prices

SARs Outstanding

Weighted Average Remaining Life in Years

Weighted Average Remaining Life in

Weighted Average Exercise Price

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$ 2.23 - $ 2.56

of all stock appreciation rights exercisable under the 2017 Plan as of June 30, 2022 is presented below:

An analysis of all stock appreciation rights exercisable

under the 2017 Plan as of September 30, 2022 is presented below:

SAR Exercisable

Weighted Average

Remaining Life in Years

Remaining Life in

Weighted Average

Exercise Price

Aggregate Intrinsic Value

Aggregate Intrinsic

(In thousands)

outstanding are as follows:

Total SARs outstanding are as follows:

September 30,

SARs Outstanding March 31, 2022

Total SARs Outstanding June 30, 2022

Following is the activity for

performance stock unit awards:

Weighted Average Grant Date Fair Value

Total SARs Outstanding September 30, 2022

Total performance stock units (“PSUs”)

outstanding are as follows:

September 30,

PSUs Outstanding March 31, 2022

Total PSUs Outstanding September 30, 2022

Following is the activity for performance stock unit awards:

Unvested balance at March 31, 2022

Unvested balance at June 30, 2022

the three months ended June 30, 2022, zero shares were issued for vested awards and 255,219 shares are

to be issued as of June 30, 2022.

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

Unvested balance at September 30, 2022

During the six months ended September 30, 2022, zero shares

were issued for vested awards and 696,280 shares are to be issued as of September 30, 2022.

Employee and director stock-based compensation

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

Three Months Ended

September 30,

Six Months Ended

September 30,

(In thousands)

Selling, general and administrative

was $ 875 thousand and $ 1 thousand

of stock-based compensation recorded for the three months ended June 30, 2022 and 2021, respectively, related to employees’ restricted

stock awards.

was $ 105 thousand and $ 126 thousand

of stock-based compensation for the three months ended June 30, 2022 and 2021, respectively, related to board of directors.

three months ended June 30, 2022, the Company issued zero restricted shares to non-employee directors.

OPTIONS GRANTED OUTSIDE CINEDIGM’S

EQUITY INCENTIVE PLAN

October 2013, we issued options outside of the 2000 Plan to 10 individuals who became employees as a result of a business combination.

The employees received options to purchase an aggregate of 62,000 shares of our Common Stock at an exercise price of $ 17.50 per

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

30, 2022, 12,500 of such

options remained outstanding.

The following table presents

information about outstanding warrants to purchase shares of our Common Stock as of June 30, 2022.

All of the outstanding warrants are

fully vested and exercisable.

There was $ 2.1 million and $ 0.8 million of stock-based compensation

recorded for the three months ended September 30, 2022 and 2021, respectively, related to employees’ restricted stock awards inclusive

of $ 551 thousand employee payroll taxes withheld for shares not issued.

There was $ 3.0 million and $ 1.7 million

of stock-based compensation recorded for the six months ended September 30, 2022 and 2021, respectively, related to employees’

restricted stock awards inclusive of $ 551 employee payroll taxes withheld for shares not issued.

There was $ 0.1 million and $ 0.1 million of stock-based compensation

for the three months ended September 30, 2022 and 2021, respectively, related to board of directors.

There was $0.2 million and

$ 0.2 million of stock-based compensation for the six months ended September 30, 2022 and 2021, respectively, related to board of directors.

During the six months ended September 30, 2022, the Company issued zero restricted shares to non-employee directors.

OPTIONS GRANTED OUTSIDE CINEDIGM’S EQUITY INCENTIVE PLAN

In October 2013, we issued options outside of the 2000 Plan to 10 individuals

who became employees as a result of a business combination.

The employees received options to purchase an aggregate of 62,000 shares

of our Common Stock at an exercise price of $ 17.50 per share.

The options were fully vested as of October 2017 and expire 10 years

from the date of grant, if unexercised.

As of September 30, 2022, 12,500 of such options remained outstanding.

the year ended March 31, 2022, the Company granted 2,025,250 stock appreciation rights (“SARs”).

The SARs were granted under

the 2017 Plan, except for 600,000 SARs granted to an officer of the Company as an inducement grant.

All SARs issued have an exercise price

equal to the fair value of the Company’s Common Stock on the date of grant and a maturity date of 10 years.

The following table presents information about outstanding warrants

to purchase shares of our Common Stock as of September 30, 2022.

All of the outstanding warrants are fully vested and exercisable.

Exercise price

1 unchanged sentence

December 2022

On September 15, 2022, the Company entered into a Loan, Guaranty, and

Security Agreement with East West Bank (“EWB”).

The agreement provided for a revolving line of credit (“the Line of

Credit Facility”) of $ 5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all

of our and such subsidiaries’ assets.

The Line of Credit Facility bears interest at a rate equal to 1.5 % above the prime rate.

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

As of September 30,

2022, $ 3.8 million remained outstanding on this line of credit.

The interest rates as of September 30, 2022 were approximately 7.75 %.

Under the Line of Credit Facility, The Company is subject to certain financial and nonfinancial covenants including terms which require

the Company to maintain certain metrics and ratios, maintain certain minimum cash on hand, and to report financial information to our

lender on a periodic basis.

During the three months and six months ended September 30, 2022 the company had interest expense of $ 19 thousand

related to this note.

COMMITMENTS AND CONTINGENCIES

We operate from leased properties

under non-cancelable operating lease agreements, certain of which contain escalating lease clauses.

The Company leases office space

under an operating lease.

The Company’s portfolio of leases is primarily related to real estate and since most of our leases do

not provide a readily determinable implicit rate, the Company estimated its incremental borrowing rate to discount the lease payments

based on information available at either the implementation date of Topic 842 or at lease commencement for leases entered into thereafter.

The table below presents the

lease-related assets and liabilities recorded on the balance sheet as of June 30, 2022 and March 31, 2022:

We operate from leased properties under non-cancelable operating lease

agreements, certain of which contain escalating lease clauses.

The Company leases office space under an operating lease.

The Company’s

portfolio of leases is primarily related to real estate and since most of our leases do not provide a readily determinable implicit rate,

the Company estimated its incremental borrowing rate to discount the lease payments based on information available at either the implementation

date of Topic 842 or at lease commencement for leases entered into thereafter.

The table below presents the lease-related assets and liabilities recorded

on the balance sheet as of September 30, 2022 and March 31, 2022:

(In thousands)

Classification on the Balance Sheet

June 30, 2022

Operating lease right-of-use asset

September 30,

Operating lease right-of-use asset, net

Operating leases – current portion

1 unchanged sentence

Total operating lease liabilities

The table below presents certain

information related to lease costs for leases:

Three Months Ended

The table below presents certain information related to lease costs

(In thousands)

September 30,

Operating lease cost

Total lease cost

Six Months Ended

(In thousands)

September 30,

Operating lease cost

Total lease cost

Other Information

below presents supplemental cash flow information related to leases:

Three Months Ended

The table below presents supplemental cash flow

information related to leases:

Six Months Ended

(In thousands)

September 30,

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows used for operating leases Hyde Park Agreement

On January 5, 2022, the Company

entered into a letter agreement with Hyde Park Entertainment, Inc.

(“Hyde Park”), pursuant to which the Company and Hyde Park

are collaborating on the development, production and/or distribution of a project based on the novel Audition by Ryu

Murakami (the “Audition Project”).

Each of the Company and Hyde Park owns 50 % of the rights in connection with the Audition

The Company paid $ 100 thousand to Hyde Park plus $ 26 thousand in legal fees to counsel for the Audition project.

Amritraj, a director of the Company, is the Chairman and CEO of Hyde Park and has an interest in 100 % of the revenues of Hyde Park.

Ashok Amritraj is a current board member and related party to the Company.

SUPPLEMENTAL CASH FLOW

INFORMATION AND DISCLOSURE OF NON-CASH INVESTMENTING AN FINANCING ACTIVITY

Three Months Ended

On January 5, 2022, the Company entered into a letter agreement with

Hyde Park Entertainment, Inc.

(“Hyde Park”), pursuant to which the Company and Hyde Park are collaborating on the development,

production and/or distribution of a project based on the novel Audition by Ryu Murakami (the “Audition Project”).

Each of the Company and Hyde Park owns 50 % of the rights in connection with the Audition Project.

The Company paid $ 100 thousand

to Hyde Park plus $ 26 thousand in legal fees to counsel for the Audition project.

Ashok Amritraj, a director of the Company, is the

Chairman and CEO of Hyde Park and has an interest in 100 % of the revenues of Hyde Park.

Ashok Amritraj is a current board member

and related party to the Company.

SUPPLEMENTAL CASH FLOW INFORMATION AND DISCLOSURE OF NON-CASH

INVESTING AND FINANCING ACTIVITY

Six Months Ended

September 30,

(In thousands)

1 unchanged sentence

Income taxes paid

Noncash investing and financing activities:

Accrued dividends on preferred stock

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

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

Issuance of Class A common stock for business combination

Earnout consideration paid with common shares of Company

Earnout consideration adjustment

Treasury shares acquired for withholding taxes

Deferred consideration in purchase of a business

Earnout consideration in purchase of a business

SEGMENT INFORMATION

We operate in two reportable

Cinema Equipment Business and Content & Entertainment Business.

Our segments were determined based on the economic characteristics

of our products and services, our internal organizational structure, the manner in which our operations are managed and the criteria used

by our CODM to evaluate performance, which is generally the segment’s operating income (loss) before depreciation and amortization.

We operate in two reportable segments:

Cinema Equipment Business

and Content & Entertainment Business.

Our segments were determined based on the economic characteristics of our products and services,

our internal organizational structure, the manner in which our operations are managed and the criteria used by our CODM to evaluate performance,

which is generally the segment’s operating income (loss) before depreciation and amortization.

Operations of:

Products and services provided:

Cinema Equipment Business Financing vehicles and administrators for 434 Systems installed nationwide in our first deployment phase (“Phase I Deployment”) to theatrical exhibitors and for 648 Systems installed domestically and internationally in our second deployment phase (“Phase II Deployment”).

We retain ownership of the Systems and the residual cash flows related to the Systems in Phase I Deployment after the repayment of all non-recourse debt at the expiration of exhibitor master license agreements.

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 segment also provides monitoring, collection, verification and management services to this segment, as well as to exhibitors who purchase their own equipment, and also collects and disburses VPFs from motion picture studios, distributors and ACFs from alternative content providers, movie exhibitors and theatrical exhibitors (collectively, “Services”).

Cinema Equipment Business

Financing vehicles and administrators for 355 Systems installed

nationwide in our first deployment phase (“Phase I Deployment”) to theatrical exhibitors and for 320 Systems installed

domestically and internationally in our second deployment phase (“Phase II Deployment”).

We retain ownership of the Systems and the residual cash flows related

to the Systems in Phase I Deployment after the repayment of all non-recourse debt at the expiration of exhibitor master license agreements.

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 segment also provides monitoring, collection,

verification and management services to this segment, as well as to exhibitors who purchase their own equipment, and also collects and

disburses VPFs from motion picture studios, distributors and ACFs from alternative content providers, movie exhibitors and theatrical

exhibitors (collectively, “Services”).

Content & Entertainment Business

1 unchanged sentence

We collaborate with producers and other content owners to market, source, curate and distribute independent content to targeted and under-served audiences in theatres and homes, and via mobile and emerging platforms.

The following

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

As of June 30, 2022

The following tables present certain financial

information related to our reportable segments and Corporate:

As of September 30, 2022

(In thousands)

6 unchanged sentences

Statements of Operations

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

(in thousands)

3 unchanged sentences

Allocation of corporate overhead

Provision of doubtful accounts

Depreciation and amortization of property and equipment

Amortization of intangible assets

Total operating expenses

Income (loss) from operations

The following employee and director stock-based compensation expense

related to our stock-based awards is included in the above amounts as follows:

(In thousands)

Content & Entertainment

Direct operating

Selling, general and administrative

Total stock-based compensation

Statements of Operations

Three Months Ended

September 30,

(in thousands)

Content & Entertainment

Direct operating (exclusive of depreciation and amortization shown below)

Selling, general and administrative

Allocation of corporate overhead

Provision for (recovery of) doubtful accounts

11 unchanged sentences

Statements of Operations

Three Months Ended June 30, 2021

Six Months Ended September 30, 2022

(in thousands)

3 unchanged sentences

Allocation of corporate overhead

Provision for doubtful accounts

Provision for (recovery of) doubtful accounts

Depreciation and amortization of property and equipment

2 unchanged sentences

Income (loss) from operations

The following employee and director stock-based compensation expense

related to our stock-based awards is included in the above amounts as follows:

(In thousands)

Content & Entertainment

Direct operating

Selling, general and administrative

Total stock-based compensation

Statements of Operations

Six Months Ended September 30, 2021

(in thousands)

Content & Entertainment

Direct operating (exclusive of depreciation and amortization shown below)

Selling, general and administrative

Allocation of corporate overhead

(Recovery of) provision for doubtful accounts

Depreciation and amortization of property and equipment

Amortization of intangible assets

Total operating expenses

Income (loss) from operations

The following

5 unchanged sentences

Total stock-based compensation

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

We recorded an income

tax benefit (expense) of approximately zero and $ 63 thousand

for the three months ended June 30, 2022 and 2021, respectively.

We have not recorded tax benefits on our loss before income taxes because

we have provided for a full valuation allowance that offsets potential deferred tax assets resulting from net operating loss carry forwards,

reflecting our inability to use such loss carry forwards.

effective tax rate for the three months ended June 30, 2022 and 2021 was zero and

negative 1.2 %, respectively.

We calculate income tax expense based upon an annual effective tax

rate forecast, including estimates and assumptions.

We recorded an income tax benefit (expense) of zero for the three and six months ended

September 30, 2022.

We recorded an income tax benefit of approximately $ 487 thousand and $ 550 thousand for the three and six months ended

September 30, 2021.

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

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

carry forwards.

Our effective tax rate for the six months ended September 30, 2022

and 2021 was zero and negative 12.4 %, respectively.

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

What changed 10-Q

Item 1. Financial Statements