What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-16 · 689 added, 574 removed, 140 unchanged (90% of the section changed)

1 unchanged sentence

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should

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

This report contains forward-looking statements

within the meaning of the federal securities laws.

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

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

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

Forward-looking statements

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

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

These forward-looking statements are not guarantees

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

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

Since our inception, we have played a significant

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

In addition to our pioneering role in transitioning

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

independent content, both through organic growth and acquisitions.

We distribute products for major brands such as Hallmark, Televisa,

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

producers and other short-form digital content producers.

We collaborate with producers, major brands and other content owners to market,

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

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

and free ad-supported television (“FAST”) streaming platforms, as well as (ii) physical goods, including DVD and Blu-ray Discs.

We report our financial results in two primary

segments as follows:

The following discussion and analysis should be read in conjunction

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

This report contains forward-looking statements within the meaning

of the federal securities laws.

These include statements about our expectations, beliefs, intentions or strategies for the future, which

are indicated by words or phrases such as “believes,” “anticipates,” “expects,” “intends,”

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

Forward-looking statements represent, as of the date

of this report, our judgment relating to, among other things, future results of operations, growth plans, sales, capital requirements

and general industry and business conditions applicable to us.

These forward-looking statements are not guarantees of future performance

and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our control that could cause actual results

to differ materially from those expressed or implied by such forward-looking statements.

Since our inception, we have played a significant role in the digital

distribution revolution that continues to transform the media landscape.

In addition to our pioneering role in transitioning approximately

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

content, both through organic growth and acquisitions.

We distribute products for major brands such as Hallmark, Televisa, ITV, Nelvana,

ZDF, Konami, NFL, and Scholastic, as well as leading international and domestic content creators, movie producers, television producers

and other short-form digital content producers.

We collaborate with producers, major brands and other content owners to market, source,

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

but not limited to Apple iTunes, Amazon Prime, Netflix, Hulu, Xbox, Pluto, Tubi and most video-on-demand (“VOD”) and free

ad-supported television (“FAST”) streaming platforms, as well as (ii) physical goods, including DVD and Blu-ray Discs.

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

(1) cinema equipment business and (2) 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 over 1,082 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.

Beginning in December 2015, certain of our

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

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

Furthermore, because the

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

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

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

the reduced VPF revenue since November 2017.

Under the terms of our standard cinema equipment

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

after which time they have the option to:

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 over 675 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.

Beginning in December 2015, certain of our cinema equipment began to

reach the conclusion of their 10-year deployment payment period with certain distributors and, therefore, Virtual Print Fee (“VPF”)

revenues ceased to be recognized on such Systems, related to such distributors.

Furthermore, because the Phase I Deployment installation

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

The reduction in

VPF revenue on cinema equipment business systems approximately coincided with the conclusion of certain of our non-recourse debt obligations

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

November 2017.

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.

or (3) purchase

the Systems from us at fair market value.

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

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

We are structured so that our cinema equipment

business segment operates independently from our Content & Entertainment business.

As of June 30, 2022, we had approximately $0.0

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

We have approximately

$0.0 million of outstanding debt principal, as of June 30, 2022 that is attributable to our Content & Entertainment and Corporate

We are structured so that our cinema equipment business segment operates

independently from our Content & Entertainment business.

As of September 30, 2022, we had approximately $0.0 million of non-recourse

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

We have approximately $0.0 million of outstanding

debt principal and $3.8 million due on the outstanding credit line, as of September 30, 2022 that is attributable to our Content &

Entertainment and Corporate segments.

Risks and Uncertainties

The COVID-19 pandemic and related economic

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

As part of our Content

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

We have incurred net losses historically and net

loss for the three months ended June 30, 2022 of $6.0 million.

As of June 30, 2022, we had an accumulated deficit of $478.4 million

and negative working capital of $7.6 million.

Net cash used in operating activities for the three months ended June 30, 2022 was $1.2

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 net loss for the six months

ended September 30, 2022 of $11.6 million.

As of September 30, 2022, we had an accumulated deficit of $484.2 million and negative

working capital of $10.1 million.

Net cash used in operating activities for the six months ended September 30, 2022 was $6.3 million.

Based on these and prior conditions, the Company entered into the following transactions described below.

Capital Raises

On May 20, 2020, the Company entered into

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

for the purchase and sale of 10,666,666 shares of the Common Stock, at a purchase price of $0.75 per share, in a registered direct offering,

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

on May 14, 2020 (File No.

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

with certain investors for the purchase and sale of 10,666,666 shares of the Common Stock, at a purchase price of $0.75 per share, in

a registered direct offering, pursuant to an effective shelf registration statement on Form S-3 which was declared effective by the Securities

and Exchange Commission on May 14, 2020 (File No.

333-238183) and an applicable prospectus supplement.

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

The closing of the sale occurred

on May 22, 2020.

The aggregate gross proceeds for the sale was $8.0 million.

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

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

In July 2020, we entered into an At-the-Market

sales agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”) and B.

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

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

of such shares.

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

Any sales of shares made under the ATM

Sales Agreement will be made pursuant the 2020 Shelf Registration Statement, for an aggregate offering price of up to $30 million.

proceeds from such sales totaled $18.6 million.

No sales under the ATM Sales Agreement were made during the three months ended June 30,

On July 16, 2020, the Company entered into

a securities purchase agreement with certain investors for the purchase and sale of 7,213,334 shares of Common Stock, par value $0.001

per share, at a purchase price of $1.50 per share, in a registered direct offering, pursuant to the 2020 Shelf Registration Statement

The net proceeds to the Company from the sale, after deducting

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

In July 2020, we entered into an At-the-Market sales agreement (the

“ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”) and B.

Riley FBR, Inc.

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

the Sales Agents, shares of Common Stock at the market prices prevailing on Nasdaq at the time of the sale of such shares.

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

Any sales of shares made under the ATM Sales Agreement will be made

pursuant the 2020 Shelf Registration Statement, for an aggregate offering price of up to $30 million.

Net proceeds from such sales totaled

$18.6 million.

No sales under the ATM Sales Agreement were made during the six months ended September 30, 2022.

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

with certain investors for the purchase and sale of 7,213,334 shares of Common Stock, at a purchase price of $1.50 per share, in a registered

direct offering, pursuant to the 2020 Shelf Registration Statement and an applicable prospectus supplement.

The closing of the sale occurred

on July 20, 2020.

The aggregate gross proceeds for the sale was approximately $10.8 million.

The net proceeds to the Company from the

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

$10.1 million.

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

agreement with a single institutional investor for the purchase and sale of 5,600,000 shares of Common Stock at a purchase price of $1.25

per share, in a registered direct offering, pursuant to an effective shelf registration statement on Form S-3 which was declared effective

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

333-239710) (the “2020 Shelf Registration Statement”)

and an applicable prospectus supplement.

The closing of the sale occurred on July 20, 2020.

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

The aggregate gross proceeds for the sale

was approximately $7.0 million.

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

paying the Company’s estimated offering expenses, is approximately $10.1 million.

On February 2, 2021, the Company entered into

a Securities Purchase Agreement with a single institutional investor for the purchase and sale of 5,600,000 shares of Common Stock at

a purchase price of $1.25 per share, in a registered direct offering, pursuant to an effective shelf registration statement on Form S-3

which was declared effective by the Securities and Exchange Commission on July 10, 2020 (File No.

333-239710) (the “2020 Shelf Registration

Statement”) and an applicable prospectus supplement.

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

The aggregate gross proceeds

for the sale was approximately $7.0 million.

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

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

In October 2021, we entered into a Common

Stock Purchase Agreement (the “Equity Line Purchase Agreement”) and a Registration Rights Agreement (the “Registration

Rights Agreement”) with B.

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

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

In October 2021, we entered into a Common Stock Purchase Agreement

(the “Equity Line Purchase Agreement”) and a Registration Rights Agreement (the “Registration Rights Agreement”)

Riley Principal Capital, LLC (“B.

Riley Principal Capital”).

Pursuant to the Equity Line

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

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

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

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

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

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

Riley Principal

Capital under the Equity Line Purchase Agreement.

Pursuant to the Equity Line Purchase Agreement, the Company

has the right to sell to B.

Riley Principal Capital up to the lesser of (i) $50,000,000 of newly issued shares of Common Stock and

(ii) the Exchange Cap (as defined in the Equity Line Purchase Agreement), from time to time during the 24-month period from and after

the October 21, 2021.

Sales of Common Stock pursuant to the Equity Line Purchase Agreement, and the timing of any sales, are solely at

the option of the Company, and the Company is under no obligation to sell any securities to B.

Riley Principal Capital under the Equity

Line Purchase Agreement.

As consideration for B.

Riley Principal Capital’s commitment to purchase shares

of Common Stock at the Company’s direction upon the terms and subject to the conditions set forth in the Equity Line Purchase Agreement,

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

Riley Principal Capital

(the “Commitment Shares”).

Riley Principal Capital’s commitment to purchase shares of Common Stock at the

Company’s direction upon the terms and subject to the conditions set forth in the Equity Line Purchase Agreement, upon execution

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

Riley Principal Capital (the “Commitment

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

Riley Principal Capital

pursuant to the Equity Line Purchase Agreement will be determined by reference to the volume weighted average price of the Common Stock

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

Pursuant to the Registration Rights Agreement,

the Company filed a Registration Statement on Form S-1 that was declared effective by the Securities and Exchange Commission on October

21, 2021 (File No.

Riley Principal Capital pursuant to the Equity

Line Purchase Agreement will be determined by reference to the volume weighted average price of the Common Stock (“VWAP”)

during the applicable purchase date, less a fixed 5% discount to such VWAP.

Pursuant to the Registration Rights Agreement, the Company

filed a Registration Statement on Form S-1 that was declared effective by the Securities and Exchange Commission on October 21, 2021 (File

333-260210) for the resale by B.

Riley Principal Capital of up to 25,210,084 shares of Common Stock (including the

Commitment Shares) acquired pursuant to the Equity Line Purchase Agreement.

During the year ended March 31, 2022, we sold 5,300,000 shares

of Common Stock under the Equity Line Purchase Agreement.

Riley Principal Capital of up to 25,210,084 shares of Common Stock (including the Commitment Shares)

acquired pursuant to the Equity Line Purchase Agreement.

During the year ended March 31, 2022, we sold 5,300,000 shares of Common Stock

under the Equity Line Purchase Agreement.

Net proceeds from such sales totaled $12.4 million.

No sales under the Equity

Line Purchase Agreement were made during the three months ended June 30, 2022.

As of June 30, 2022, there is still approximately

$38.0 million available under the 2020 Shelf Registration Statement, and $37.6 million available under the Equity Line Purchase Agreement,

to raise additional capital.

No sales under the Equity Line Purchase

Agreement were made during the six months ended September 30, 2022.

As of September 30, 2022, there is still approximately $38.0 million

available under the 2020 Shelf Registration Statement, and $37.6 million available under the Equity Line Purchase Agreement, to raise

additional capital.

Sale of Cinematic Equipment

On March 17, 2021, the Company entered into

two separate agreements (the “AMC Equipment Purcahse Agreements”) for the sale of cinematic equipment to American Multi-Cinema,

The agreement included the sale in tranches of a total of 2,369 cinematic projectors starting in March 2021

throughout January 2023 for a total cash consideration of $10.8 million.

As of June 30, 2022, the Company recognized revenue for $10.3

A portion of the total proceeds was utilized to pay off the remaining Prospect note payable.

Equity Investment in 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.

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 March 17, 2021, the Company entered into two separate agreements

(the “AMC Equipment Purcahse Agreements”) for the sale of cinematic equipment to American Multi-Cinema, Inc.

The agreement included the sale in tranches of a total of 2,369 cinematic projectors starting in March 2021 throughout January 2023 for

a total cash consideration of $10.8 million.

As of September 30, 2022, the Company recognized revenue for $10.3 million.

the total proceeds was utilized to pay off the remaining Prospect note payable.

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 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.

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

3 unchanged sentences

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.

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, 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 a 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.

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.

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.

We believe the combination of:

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.

(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.

Critical Accounting Policies and Estimates

Our consolidated financial statements are

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

In connection

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

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

We base our assumptions, estimates

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

financial statements are prepared.

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

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

However, because future events and their effects

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

Our consolidated financial statements are prepared in accordance with

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

In connection with the preparation of our

financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported

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

We base our assumptions, estimates and judgments on historical

experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements

are prepared.

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

financial statements are presented fairly and in accordance with GAAP.

However, because future events and their effects cannot be determined

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

Our significant accounting policies are discussed in Note 2 – Summary

6 unchanged sentences

FAIR VALUE ESTIMATES

Goodwill, Intangible and Long-Lived

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

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.

We review the recoverability of our long-lived

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

Determining whether

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

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

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

assets from expected future undiscounted net cash flows.

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

total carrying value of the assets the asset is deemed not to be recoverable and possibly impaired.

We then estimate the fair value of

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

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

value is determined to be less than its carrying value.

Goodwill, Intangible and Long-Lived Assets

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

of the net assets of an acquired business.

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

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

Inherent in the fair value determination for each reporting unit are

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

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

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

Determining whether impairment has occurred

typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired

asset, the useful life over which cash flows will occur, their amount and the asset’s residual value, if any.

The assessment for

recoverability is based primarily on our ability to recover the carrying value of its long-lived and finite-lived assets from expected

future undiscounted net cash flows.

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

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

We then estimate the fair value of the asset to determine

whether an impairment loss should be recognized.

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

be less than its carrying value.

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

During the three months ended June 30, 2022

and 2021, no impairment charge was recorded to intangible assets.

During the six months ended September 30, 2022 and 2021, no impairment

charge was recorded to goodwill, intangible, and long-lived assets.

Investment in Metaverse

The fair value measurement disclosures are

grouped into three levels based on valuation factors:

1 – quoted prices in active markets for identical investments

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

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

Fair Value Hierarchy

The fair value measurement disclosures are grouped into three levels

based on valuation factors:

Level 1 – quoted prices in active markets for identical investments

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

Level 3 – significant unobservable inputs (including our own

assumptions in determining the fair value of investments)

Assets and liabilities measured at fair value on a recurring basis

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assets or liabilities.

the three months ended June 30, 2022 and 2021, the company recorded a charge of

$1,256 and ($334) in the company’s investment in Metaverse.

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

recorded a charge of $1.8 million and $1 million in the company’s investment in Metaverse.

REVENUE RECOGNITION

Adoption of ASU Topic 606, “Revenue

from Contracts with Customers”

We determine revenue recognition by:

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

We recognize revenue in the amount that reflects

the consideration we expect to receive in exchange for the services provided, sales of physical products (DVD’s and Blu-ray Discs)

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

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

obligations under the contract have been satisfied.

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

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

Payment terms and conditions vary by customer

and typically provide net 30 to 90 day terms.

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

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

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

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

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

The outstanding balances on these arrangements are insignificant

and hence the impact of significant financing would be insignificant.

We recognize revenue in the amount that reflects the consideration

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

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

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

the contract have been satisfied.

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

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

Payment terms and conditions vary by customer and typically provide

net 30 to 90 day terms.

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

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

that product or service will be one year or less.

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

from our System deployments that had extended payment terms.

The outstanding balances on these arrangements are insignificant and hence

the impact of significant financing would be insignificant.

Cinema Equipment Business

Our Cinema Equipment Business consists of financing vehicles and administrators for 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 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,

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.

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

One VPF is payable for every digital

title initially displayed per System.

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

the Systems in any given accounting period.

VPF revenue is recognized in the period the title first plays for general audience viewing

in a digital projector equipped movie theatre.

The Phase 1 Deployment’s and Phase 2 Deployments performance obligations for revenue

recognition are met at this time.

Phase II Deployment’s agreements with

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

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

distributors, is achieved.

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

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

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

and thereafter.

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

recoupment bonus.” The Company evaluated the constraining estimates related to the variable consideration, i.e., the one-time bonus

and determined that it is not probable to conclude at this point in time that a significant reversal in the amount of cumulative revenue

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

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 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 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 Phase I Deployment based

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

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

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

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

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

Phase II Deployment’s agreements with distributors require the

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

however, Phase II Deployment

may no longer collect VPFs once “cost recoupment,” as defined in the contracts with 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.

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.

or (3) purchase

the Systems from us at fair market value.

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

Such sales were 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 VPFs 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.

Cinedigm recognizes revenue once the

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

Total system revenue was $0.7 million and $2.2 million,

during the three months ended September 30, 2022 and 2021, respectively.

Total system revenue was $1.9 million and $7.8 million, during

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

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 VPFs 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 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

CEG earns fees for the distribution of content

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

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

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”

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

Distribution Business”).

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

Depending upon the nature

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

The Company’s performance obligations

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

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

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

The Company’s performance

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

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

Revenue is recognized at the point in time when the performance obligation

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

Physical goods reserved for sales returns

and other allowances are recorded based upon historical experience.

If actual future returns and allowances differ from past experience,

adjustments to our allowances may be required.

CEG also has contracts for the theatrical

Physical goods reserved for sales returns and other allowances are

recorded based upon historical experience.

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

may be required.

Content & Entertainment Business 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.

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.

Principal Agent Considerations

We determine whether revenue should be reported

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

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

are not limited to, the following:

We determine whether revenue should be reported on a gross or net basis

based on each revenue stream.

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

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

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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,

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.

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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.

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.

The 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.

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 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.

Participations and royalties payable

When we use third parties to distribute company

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

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

owed under licensing arrangements.

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

by such studios or content producers.

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.

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 as substantially all of the fair value of the gross assets

acquired are concentrated in a single or group of similar, identifiable assets.

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 a

relative fair value basis.

Determining and valuing intangible assets requires judgment.

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

that does not meet the definition of a business as substantially all of the fair value of the gross assets acquired are concentrated in

a single or group of similar, identifiable assets.

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 a relative fair value basis.

and valuing intangible assets requires judgment.

BUSINESS COMBINATIONS

The Company accounts for acquisitions in accordance

with FASB ASC 805, “Business Combinations” (“ASC 805”), and goodwill in accordance with ASC 350, “ Intangibles

— Goodwill and Other” (“ASC 350”).

The excess of the purchase price over the estimated fair value of

net assets acquired in a business combination is recorded as goodwill.

ASC 805 specifies criteria to be used in determining whether intangible

assets acquired in a business combination must be recognized and reported separately from goodwill.

Amounts assigned to goodwill and other

identifiable intangible assets are based on independent appraisals or internal estimates.

ASC 805 defines the acquirer in a business

combination as the entity that obtains control of one or more businesses in a business combination and establishes the acquisition date

as the date the acquirer achieves control.

ASC 805 requires an acquirer to recognize the assets acquired, the liabilities assumed, and

any noncontrolling interest in the acquirer (if any) at the acquisition date, measured at their fair values as of that date.

requires the acquirer to recognize contingent consideration (if any) at the acquisition date, measured at its fair value at that date.

Results of Operations for the Fiscal Three

Months Ended June 30, 2022 and 2021

For the Three Months Ended June 30,

The Company accounts for acquisitions in accordance with FASB ASC 805,

“Business Combinations” (“ASC 805”), and goodwill in accordance with ASC 350, “ Intangibles — Goodwill

and Other” (“ASC 350”).

The excess of the purchase price over the estimated fair value of net assets acquired

in a business combination is recorded as goodwill.

ASC 805 specifies criteria to be used in determining whether intangible assets acquired

in a business combination must be recognized and reported separately from goodwill.

Amounts assigned to goodwill and other identifiable

intangible assets are based on independent appraisals or internal estimates.

ASC 805 defines the acquirer in a business combination as the entity

that obtains control of one or more businesses in a business combination and establishes the acquisition date as the date the acquirer

achieves control.

ASC 805 requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest

in the acquirer (if any) at the acquisition date, measured at their fair values as of that date.

ASC 805 also requires the acquirer to

recognize contingent consideration (if any) at the acquisition date, measured at its fair value at that date.

Results of Operations for the Fiscal Three Months Ended September

30, 2022 and 2021

For the Three Months Ended September 30,

($ in thousands)

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Content & Entertainment Business

generated by our Cinema Equipment Business segment decreased as a result of the lower system revenue and eligible VPF systems.

system revenue recognized was $1.2 million and $5.6 million, during the quarter ended June 30, 2022 and 2021, respectively.

increase in Blockbuster content released during the period ending June 30, 2022 showed a return to pre-pandemic results;

this was offset by an 80% decrease in eligible VPF systems

for the same period last year.

Revenue in the Content & Entertainment Business segment increased by 38% for the quarter ended June

30, 2022 compared to the quarter ended June 30, 2021.

The increase is consistent with the addition of seven new streaming channels related

to Bloody Disgusting and DMR business acquisitions and four managed channel additions of The Country Network, Real Madrid TV, El Rey and

The Only Way is Essex as well as an increase in the number of advertising partners

generated by our Cinema Equipment Business segment decreased as a result of the lower system revenue and eligible VPF systems offset

by an increase in Ph2 variable consideration of $1.7 million Total

system revenue recognized was $0.7 million and $2.2 million, during the quarter ended September 30, 2022 and 2021, respectively.

content released during the period ending September 30, 2022 was consistent with Studio output from the prior period, however VPF eligible

theatres decreased significantly for the same period last year.

Revenue in the Content & Entertainment Business segment increased

by 66% for the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

The increase is consistent

with the addition of seven new streaming channels related to Bloody Disgusting and DMR business acquisitions and five managed channel

additions of The Country Network, Real Madrid TV, El Rey, The Elvis Presley Channel and The Only Way is Essex as well as an increase

in the number of advertising partners.

Additionally, the segment experienced triple-digit growth related to “FAST” and

TV-VOD revenue, bolstered by top performing titles and new releases, such as the Yu-Gi-Oh, Demon Slayer, Boon, The Ravine, The Mulligan,

Chesapeake Shores, When Calls the Heart, and the classics, Short Circuit and Highlander.

Direct Operating Expenses

For the Three Months Ended June 30,

For the Three Months Ended September 30,

($ in thousands)

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Content & Entertainment Business

in direct operating expenses in the quarter ended June 30, 2022 for the Cinema Equipment Business compared to the prior period was primarily

due to a decrease in property taxes as a result of system sales.

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

30, 2022 for the Content & Entertainment Business compared to the prior year was primarily due to $0.2 million

higher license and royalty costs, $0.3 million increase related to DVD manufacturing and fulfillment, $0.7 million

higher content and production costs related to continued growth in revenue and distribution, $0.3 million

higher personnel and contractors, and $0.2 million related

to the film restoration, conversion and website content production costs.

Additionally, $0.8 million

in Software as a service (“SaaS”) expense resulted from the DMR acquisition was realized during the three months ended June

The decrease in direct operating expenses in the quarter ended September

30, 2022 for the Cinema Equipment Business compared to the prior period was primarily due to a decrease in property taxes as a result

of system sales.

The increase in direct operating expenses in the three months ended September 30, 2022 for the Content & Entertainment

Business compared to the prior year was primarily due to $0.8 million increase related to DVD manufacturing and fulfillment, $2.7 million

higher content and production costs including royalties related to continued growth in revenue and distribution, $0.5 million increase

related to Software as a service (“SaaS”) expense primarily as the result of the DMR acquisition and $0.4 million higher

related to the film restoration, conversion and website content production costs.

Selling, General and Administrative Expenses

For the Three Months Ended June 30,

For the Three Months Ended September 30,

($ in thousands)

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Content & Entertainment Business

general and administrative expenses for the quarter ended June 30, 2022 increased by $3.7 million primarily due to $2.2 million

increase in personnel costs from the acquisitions of Screambox, DMR and Bloody Disguising, $0.7 million

in legal expenses primarily related to a legal settlement ,

and $0.5 million in professional consulting services.

Selling, general and administrative expenses for the three months ended

September 30, 2022 increased by $2.4 million primarily due to $1.5 million increase in personnel costs from the acquisitions of Fandor,

DMR, and Bloody Disgusting, $1.3 million increase related to stock-based compensation to management and employees, offset by $0.3 million

decrease in professional consulting services.

Recovery of Doubtful Accounts

of doubtful accounts was $3 thousand and $0.1 million

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

Depreciation and Amortization Expense on

Property and Equipment

For the Three Months Ended June 30,

Recovery of doubtful accounts was $0.0 and $0.1 million for the fiscal

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

Depreciation and Amortization Expense on Property and Equipment

For the Three Months Ended September 30,

($ in thousands)

1 unchanged sentence

Content & Entertainment Business

Depreciation and amortization expense decreased

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

useful lives during the quarter ended June 30, 2022 and 2021

Depreciation and amortization expense decreased in our Cinema Equipment

Business segment as the majority of our digital cinema projection systems reached the conclusion of their ten-year useful lives during

the quarter ended September 30, 2022 and 2021.

Amortization of intangible assets

For the Three Months Ended June 30,

For the Three Months Ended September 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

and Content & Entertainment Business amortization expense on intangible assets is $111 thousand lower due Customer Contracts asset

being fully amortized, saving $0.4 million, partially offset

by $0.2 million higher amortization expense related to the

DMR acquisition and Cinedigm India.

Amortization of intangible assets decreased in our Cinema Equipment

Business Segment as the intangibles held by that segment were fully amortized and offset by new intangibles added due to recent acquisitions

Interest expense, net

For the Three Months Ended June 30,

For the Three Months Ended September 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

Interest expense in our Corporate segment

increased as a result of deferred and earnout consideration accretion related to the acquisition of Bloody Disgusting, FoundationTV and

Interest expense in our Corporate segment increased as a result of

deferred and earnout consideration accretion related to the acquisition of Bloody Disgusting, FoundationTV and DMR.

Changes in fair value 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.

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, 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 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.

The changes in the valuation resulted in a loss of $0.6 million during the three months ended September 30, 2022.

Income Tax Benefit

recorded income tax expense of $0 for the three months ended

June 30, 2022.

We recorded an income tax benefit of approximately $63 thousand for the three months ended June 30, 2021.

effective tax rate for the three months ended June 30, 2022 and 2021 was zero and negative 1.2%, respectively.

Net Income/Loss attributable

to common shareholders

For the Three Months Ended June 30,

We recorded income tax expense of zero for the three months ended September

We recorded an income tax benefit of approximately $487 thousand for the three months ended September 30, 2021.

Our effective tax rate for the three months ended

September 30, 2022 and 2021 was zero and negative 71.4%, respectively.

Net Income/Loss attributable to common shareholders

For the Three Months Ended September 30,

($ in thousands)

2 unchanged sentences

Adjusted EBITDA

We define Adjusted EBITDA to be earnings before

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

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

Consolidated Adjusted

EBITDA (including the results of Cinema Equipment Business segment) for the three months ended June 30, 2022 decreased by $7.7 million

compared to the three months ended June 30, 2021.

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

a decrease in systems sales and eligible VPF systems.

Adjusted EBITDA from the Content & Entertainment Business and Corporate decreased

by $2.3 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, due to an increase of

$2.8 million in direct operating expense and $3.1 million higher selling, general and administrative expenses, versus previous year

despite a $3.4 million increase in Streaming digital revenue, adding channels, and acquisitions, and $0.4 million in

one-time acquisition cost adjustments.

Adjusted EBITDA is not a measurement of financial

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

We use Adjusted EBITDA as a financial

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

to the performance of its fundamental business activities.

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

including its stockholders, as a valuable financial metric.

We present Adjusted EBITDA because we believe

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

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

and comparing our performance with that of our competitors.

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

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

that we believe are not indicative of our ongoing operating performance.

We believe that Adjusted EBITDA is a performance

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

been provided in the financial results.

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

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

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

In addition, Adjusted EBITDA does not

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

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

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

Following is the reconciliation

of our consolidated net loss to Adjusted EBITDA:

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

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

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

Consolidated Adjusted EBITDA (including the results of Cinema Equipment

Business segment) for the three months ended September 30, 2022 decreased by $2.0 million compared to the three months ended September

Adjusted EBITDA from our Cinema Equipment Business segment decreased primarily due to a decrease in systems sales and eligible

Adjusted EBITDA from the Content & Entertainment Business and Corporate decreased by $1.3 million for the three months

ended September 30, 2022 compared to the three months ended September 30, 2021, due to an increase of $4.8 million in direct operating

expense and $2.4 million higher selling, general and administrative expenses, versus previous year despite a $4.6 million increase

in Streaming digital revenue, adding channels, and acquisitions.

Adjusted EBITDA is not a measurement of financial performance under

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

We use Adjusted EBITDA as a financial metric to

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

of its fundamental business activities.

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

as a valuable financial metric.

We present Adjusted EBITDA because we believe that Adjusted EBITDA

is a useful supplement to net income (loss) from continuing operations as an indicator of operating performance.

We also believe that

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

performance with that of our competitors.

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

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

are not indicative of our ongoing operating performance.

We believe that Adjusted EBITDA is a performance measure and not a

liquidity measure, and therefore a reconciliation between net loss from continuing operations and Adjusted EBITDA has been provided in

the financial results.

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

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

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

In addition, Adjusted EBITDA does not take into account

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

We do not intend the presentation

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

These non-GAAP

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

Following is the reconciliation of our consolidated

net loss to Adjusted EBITDA:

For the Three Months Ended

September 30,

($ in thousands)

Net income (loss)

Income tax (income) expense

Income tax expense (benefit)

Depreciation and amortization of property and equipment

Amortization of intangible assets

(Gain) Loss on extinguishment of note payable

Interest expense, net

Intangible impairment

Change in fair value on equity investment in Metaverse

Other expense, net

Recovery of doubtful accounts

Stock-based compensation and expenses

Net income (loss) attributable to noncontrolling interest

Severance and other expense

Recovery benefit of doubtful accounts

Stock-based compensation

Net income attributable to noncontrolling interest

Adjusted EBITDA

1 unchanged sentence

Depreciation and amortization of property and equipment

Amortization of intangible assets

Stock-based compensation and expenses

Other expense

Acquisition, integration and other expense

Provision for doubtful accounts

Income from operations

Adjusted EBITDA from non-cinema equipment business

Results of Operations for the Fiscal Six Months Ended September

30, 2022 and 2021

For the Six Months Ended September 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

Revenues generated by our Cinema Equipment Business segment decreased

as a result of the lower system revenue and eligible VPF systems offset by an increase in Ph2 variable consideration of $1.7 million.

Total system revenue recognized was $1.9 million and $7.8 million, during the six months ended September 30, 2022 and 2021, respectively.

Blockbuster content released during the six months ending September 30, 2022 remained consistent with Studio output from the prior period,

however, VPF eligible theatres decreased significantly for the same period last year.

Revenue in the Content & Entertainment Business

segment increased by 51% for the six months ended September 30, 2022 compared to the six months ended September 30, 2021.

is consistent with the addition of seven new streaming channels related to Bloody Disgusting and DMR business acquisitions and five managed

channel additions of The Country Network, Real Madrid TV, El Rey, The Elvis Presley Channel and The Only Way is Essex as well as an increase

in the number of advertising partners.

Additionally, revenue growth is due utilizing deal structures that maximize upfronts and creating

greater long term value, as well as the results of top performing titles, including new releases, such as the Yu-Gi-Oh, Demon Slayer,

Boon, The Ravine, The Mulligan, Incarnation, 7 Days, Chesapeake Shores, When Calls the Heart and the classics, Short Circuit and Highlander.

Direct Operating Expenses

For the Six Months Ended September 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

The decrease in direct operating expenses in the six months ended

September 30, 2022 for the Cinema Equipment Business compared to the prior period was primarily due to a decrease in property taxes as

a result of system sales.

The increase in direct operating expenses in the six months ended September 30, 2022 for the Content &

Entertainment Business compared to the prior year was primarily due to $1.2 million increase related to DVD manufacturing and fulfillment,

$3.8 million higher content and production costs including royalties related to continued growth in revenue and distribution, $0.3

million higher personnel and contractors spend, $0.8 million higher related to Software as a service (“SaaS”) expense primarily

as the result of the DMR acquisition, and $0.6 million related to the film restoration, conversion and website content production

Selling, General and Administrative Expenses

For the Six Months Ended September 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

Selling, general and administrative expenses for the six months ended

September 30, 2022 increased by $6.2 million primarily due to $3.7 million increase in personnel costs from the acquisitions of Fandor,

DMR and Bloody Disgusting, $1.3 million increase related to stock-based compensation to management and employees, $0.5 million in legal

expenses primarily related to a legal settlement, and $0.3 million in professional consulting services.

Recovery of Doubtful Accounts

Recovery of doubtful accounts was $0.0 and $0.0 for the fiscal six months

ended September 30, 2022 and 2021, respectively.

Depreciation and Amortization Expense on Property and Equipment

For the Six Months Ended September 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

Depreciation and amortization expense decreased in our Cinema Equipment

Business segment as the majority of our digital cinema projection systems reached the conclusion of their ten-year useful lives during

the quarter ended September 30, 2022 and 2021.

Amortization of intangible assets

For the Six Months Ended September 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

Amortization of intangible assets decrease in our Cinema Equipment

Business Segment as the intangibles held by that segment were fully amortized and offset by new intangibles added due to recent acquisitions

Interest expense, net

For the Six Months Ended September 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

Interest expense in our Corporate segment increased as a result of

deferred and earnout consideration accretion related to the acquisition of Bloody Disgusting, FoundationTV and DMR.

Changes in fair value 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, 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 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.

The changes in the valuation resulted in a loss of $1.8 million during the six months ended September 30, 2022.

Income Tax Benefit

We recorded income tax expense of zero for the six months ended September

We recorded an income tax benefit of approximately $550 thousand for the six months ended September 30, 2021.

Our effective tax rate for the six months ended

September 30, 2022 and 2021 was zero and negative 12.4%, respectively

Net Income/Loss attributable to common shareholders

For the Six Months Ended September 30,

($ in thousands)

Cinema Equipment Business

Content & Entertainment Business

Adjusted EBITDA

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

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

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

Consolidated Adjusted EBITDA (including the results of Cinema Equipment

Business segment) for the six months ended September 30, 2022 decreased by $9.7 million compared to the six months ended September 30,

Adjusted EBITDA from our Cinema Equipment Business segment decreased primarily due to a decrease in systems sales and eligible VPF

Adjusted EBITDA from the Content & Entertainment Business and Corporate decreased by $3.5 million for the six months ended

September 30, 2022 compared to the six months ended September 30, 2021, due to an increase of $7.6 million in direct operating expense

and $5.5 million higher selling, general and administrative expenses, versus previous year despite a $7.9 million increase in Streaming

digital revenue, adding channels, and acquisitions.

Adjusted EBITDA is not a measurement of financial performance under

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

We use Adjusted EBITDA as a financial metric to

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

of its fundamental business activities.

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

as a valuable financial metric.

We present Adjusted EBITDA because we believe that Adjusted EBITDA

is a useful supplement to net income (loss) from continuing operations as an indicator of operating performance.

We also believe that

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

performance with that of our competitors.

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

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

are not indicative of our ongoing operating performance.

We believe that Adjusted EBITDA is a performance measure and not a

liquidity measure, and therefore a reconciliation between net loss from continuing operations and Adjusted EBITDA has been provided in

the financial results.

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

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

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

In addition, Adjusted EBITDA does not take into account

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

We do not intend the presentation

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

These non-GAAP

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

Following is the reconciliation of our consolidated

net loss to Adjusted EBITDA:

For the Six Months Ended

September 30,

($ in thousands)

Net income (loss)

Income tax benefit

Depreciation and amortization of property and equipment

Amortization of intangible assets

(Gain) loss on forgiveness of PPP loan and extinguishment of note payable

Interest expense, net

Change in fair value on equity investment in Metaverse

Acquisition, integration, severance and other expense

Recovery benefit of doubtful accounts

Stock-based compensation

Net income attributable to noncontrolling interest

Adjusted EBITDA

Adjustments related to the Cinema Equipment Business

Depreciation and amortization of property and equipment

Acquisition, integration and other expense

Provision for doubtful accounts

Income from operations

Adjusted (negative EBITDA) from Content & Entertainment Business and Corporate

Recent Accounting

Pronouncements

See Note 2 - Summary of Significant

Accounting Policies to our consolidated financial statements included herein.

Adjusted EBITDA from non-cinema equipment business

Recent Accounting Pronouncements

See Note 2 - Summary of Significant Accounting Policies to

our consolidated financial statements included herein.

Changes in our cash flows were as follows:

For the Three Months Ended

For the Six Months Ended

September 30,

($ in thousands)

3 unchanged sentences

Net decrease in cash and cash equivalents

As of June 30, 2022, we had cash and cash

equivalents balances of $11.5 million.

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

and restricted cash balances of $14.4 million.

For the three months ended June 30, 2022, net cash provided by operating

activities is primarily driven by income from operations, excluding non-cash expenses such as depreciation, amortization, recovery for

doubtful accounts and stock-based compensation, gain on extinguishment of note payable, including other changes in working capital.

Additionally,

during the three months ended June 30, 2022, the Company increased accounts payable by $5.4 million to vendors.

Accounts receivable

increased due to growth in streaming and acquisitions of Bloody Disgusting, Screambox and DMR.

Cash received from VPFs decreased from

the previous period in alignment with the decrease in eligible VPF systems.

Changes in accounts receivable from our studio customers

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

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

the holiday season, and seasonally lower in the other two quarters.

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

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

For the three months ended June 30, 2021,

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

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

Additionally,

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

Cash received from

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

deployment payment periods with certain major studios.

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

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

This was further impacted

by the decrease in eligible VPF systems.

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

reduction of eligible VPF systems resulted in reduced revenues.

Operating cash flows from CEG are typically higher during our fiscal third

and fourth quarters, resulting from revenues earned during the holiday season, and lower in the other two quarters as we pay royalties

on such revenues.

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

initial expenditures are generally recovered within six to twelve months.

For the three months ended June 30, 2022 revenues from the sale

of digital projections Systems was $1.2 million.

For the three months ended June 30, 2022,

cash flows used in investing activities consisted of purchases of property and equipment of $0.1 million.

For the three months ended June 30, 2021,

cash flows used in investing activities consisted of purchases of property and equipment of $40 thousand and the purchase of a business

of $1.0 million related to the business combination for FoundationTV.

For the three months ended June 30, 2022,

cash flows provided by financing activities consisted of payments of approximately $0.3 million in notes payable.

For the three months ended June 30, 2021,

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

Facility repayments.

As of September 30, 2022, we had cash and cash equivalents balances

of $9.7 million.

As of September 30, 2021, we had cash, cash equivalents, and restricted

cash balances of $12.6 million.

months ended September 30, 2022, net cash provided by operating activities is primarily driven by income from operations, excluding non-cash

expenses such as depreciation, amortization, recovery for doubtful accounts and stock-based compensation, gain on extinguishment of note

payable, including other changes in working capital.

Additionally, during the six months ended September 30, 2022, the Company decreased

accounts payable by $5.5 million to vendors.

Cash received from VPFs decreased from the previous period in alignment with the decrease

in eligible VPF systems.

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

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

Prepaid and other current assets increased by $2.9

Operating cash flows from Content & Entertainment Business are typically seasonally lower during the first two fiscal quarters,

and higher during our fiscal third and fourth quarters, resulting from revenues earned during the holiday season.

In addition, we made

$1.0 million advances for the six months ended September 30, 2022, we make advances on theatrical releases and to certain home entertainment

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

For the six months ended September 30, 2021, net cash provided by operating

activities was primarily driven by income from operations, excluding non-cash expenses such as depreciation, amortization, provision for

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

Additionally, during the six months ended

September 30, 2021, the Company paid down $18.3 million to vendors at both Content & Entertainment and Corporate.

Operating cash flows

from Content & Entertainment are typically higher during our fiscal third and fourth quarters, resulting from revenues earned during

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

In addition, we make advances on theatrical

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

For the six months ended September 30, 2021 revenues from the sale of digital projections Systems was $7.8 million.

For the six months ended September 30, 2022, cash flows used in investing

activities consisted of purchases of property and equipment of $0.3 million.

For the six months ended September 30, 2021, cash flows used in investing

activities consisted of purchases of property and equipment of $81 thousand and the purchase of two businesses of $4.8 million related

to the business combination for FoundationTV and the asset acquisition for Bloody Disgusting.

For the six months ended September 30, 2022, cash flows provided by

financing activities consisted of $0.4 million in payment of notes payable and $3.6 million in proceeds from the revolving credit agreement.

For the six months ended

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

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

Contractual Obligations

The following table summarizes our significant

contractual obligations as of June 30, 2022:

The following table summarizes our significant contractual obligations

as of September 30, 2022:

Contractual Obligations (in thousands)

Operating lease obligations

We may continue to generate net losses for

the foreseeable future primarily due to depreciation and amortization, marketing and promotional activities and content acquisition and

marketing costs.

Certain of these costs, including costs of content acquisition, marketing and promotional activities, could be reduced

if necessary.

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

however, we may need to raise additional capital

for working capital as deemed necessary.

Failure to generate additional revenues, raise additional capital or manage discretionary spending

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

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

due to depreciation and amortization, marketing and promotional activities and content acquisition and marketing costs.

Certain of these

costs, including costs of content acquisition, marketing and promotional activities, could be reduced if necessary.

We feel we are adequately

financed for at least the next twelve months;

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

Failure to generate additional revenues, raise additional capital or manage discretionary spending could have an adverse effect on our

financial position, results of operations or liquidity.

Revenues from our Cinema Equipment Business derived from the collection

5 unchanged sentences

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

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

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

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.

Off-balance sheet arrangements

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

as discussed in Note 2 – Summary of Significant Accounting Policies, Basis of Presentation and Consolidation and Note

3 - Other Interests to the Condensed Consolidated Financial Statements (Unaudited) included in Item 1 of this Quarterly

as discussed in Note 2 – Summary of Significant Accounting Policies, Basis of Presentation and Consolidation and

Note 3 - Other Interests to the Condensed Consolidated Financial Statements (Unaudited) included in Item 1 of this Quarterly

Report on Form 10-Q, we hold a 100% equity interest in CDF2 Holdings, which is an unconsolidated variable interest entity (“VIE”),

2 unchanged sentences

Impact of Inflation

The impact of inflation on our operations

has not been significant to date.

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

impact on our operating results.

The impact of inflation on our operations has not been significant

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis