What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-11-16 compared with 2020-08-14 · 257 added, 148 removed, 685 unchanged (37% of the section changed)

3 unchanged sentences

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

June 30, 2020 March 31, 2020

September 30, 2020 March 31, 2020

ASSETS (Unaudited)

34 unchanged sentences

20 shares authorized;

and 7 shares issued and outstanding at June 30, 2020 and March 31, 2020.

and 7 shares issued and outstanding at September 30, 2020 and March 31, 2020.

Liquidation preference of $ 3,648

Common stock, $ 0.001 par value;

Class A stock 150,000,000 shares authorized at June 30, 2020 and March 31, 2020;

104,606,655 and 63,251,429 shares issued and 103,292,819 and 61,937,593 shares outstanding at June 30, 2020 and March 31, 2020, respectively

Class A stock 200,000,000 shares authorized at September 30, 2020 and March 31, 2020;

123,041,378 and 63,251,429 shares issued and 121,727,542 and 61,937,593 shares outstanding at September 30, 2020 and March 31, 2020, respectively

Additional paid-in capital

1 unchanged sentence

Treasury stock, at cost;

1,313,836 Class A common shares at June 30, 2020 and March 31, 2020

1,313,836 Class A common shares at September 30, 2020 and March 31, 2020

( 11,603 ) ( 11,603 )

1 unchanged sentence

( 457,481 ) ( 410,904 )

Accumulated other comprehensive income 12 92

Accumulated other comprehensive (loss) income ( 18 ) 92

Total stockholders’ deficit of Cinedigm Corp.

7 unchanged sentences

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

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

2020 2019 2020 2019

Revenues $ 7,182 $ 10,241 $ 13,200 $ 20,044

1 unchanged sentence

Direct operating (excludes depreciation and amortization shown below)

4,330 4,087 7,009 7,699

Selling, general and administrative 6,168 4,988 10,008 10,837

Provision for doubtful accounts — 270

(Recovery) provision for doubtful accounts ( 193 ) 56 ( 193 ) 326

Depreciation and amortization of property and equipment

1,345 1,609 2,869 3,383

Amortization of intangible assets 591 594 1,181 1,589

2 unchanged sentences

Interest expense, net ( 1,194 ) ( 1,813 ) ( 2,484 ) ( 4,095 )

Gain on extinguishment of notes payable 23 —

Loss on extinguishment of notes payable ( 335 ) — ( 312 ) —

Changes in fair value of equity investment in Starrise, a related party ( 19,832 ) — ( 35,626 ) —

1 unchanged sentence

Loss from operations before income taxes ( 26,747 ) ( 3,061 ) ( 46,617 ) ( 8,053 )

Income tax expense — ( 47 )

Income tax benefit (expense) 181 ( 27 ) 181 ( 74 )

Net loss ( 26,566 ) ( 3,088 ) ( 46,436 ) ( 8,127 )

Net loss attributable to noncontrolling interest 14 6

Net income (loss) attributable to noncontrolling interest 23 ( 7 ) 37 ( 1 )

Net loss attributable to controlling interests ( 26,543 ) ( 3,095 ) ( 46,399 ) ( 8,128 )

11 unchanged sentences

Three Months Ended

September 30,

Six Months Ended September 30,

2020 2019 2020 2019

Net loss $ ( 26,566 ) $ ( 3,088 ) $ ( 46,436 ) $ ( 8,127 )

Other comprehensive income:

Other comprehensive (loss) income:

foreign exchange translation ( 30 ) 22 ( 110 ) 28

Comprehensive loss ( 26,596 ) ( 3,066 ) ( 46,546 ) ( 8,099 )

comprehensive income attributable to noncontrolling interest 14 6

comprehensive income (loss) attributable to noncontrolling interest 23 ( 7 ) 37 ( 1 )

Comprehensive loss attributable to controlling interests $ ( 26,573 ) $ ( 3,073 ) $ ( 46,509 ) $ ( 8,100 )

12 unchanged sentences

Balances as of June 30, 2019 7 3,559 35,723,987 36 1,313,836 ( 11,603 ) 368,631 ( 400,936 ) 16 ( 40,297 ) ( 1,293 ) ( 41,590 )

Foreign exchange translation — — — — — — — — 22 22 — 22

Stock-based compensation — — — — — — 178 — — 178 — 178

Issuance of Class A common stock — — 3,900,000 4 — — 5,846 — — 5,850 — 5,850

Preferred stock dividends paid with common stock — — 65,749 — — — 89 ( 89 ) — — — —

Fair value of conversion feature in connection with convertible note — — — — — — 478 — — 478 — 478

Net (loss) income — — — — — — — ( 3,095 ) — ( 3,095 ) 7 ( 3,088 )

Balances as of September 30, 2019 7 $ 3,559 39,689,736 $ 40 1,313,836 $ ( 11,603 ) $ 375,222 $ ( 404,120 ) $ 38 $ ( 36,864 ) $ ( 1,286 ) $ ( 38,150 )

See accompanying Notes to Condensed Consolidated Financial Statements

16 unchanged sentences

Balances as of June 30, 2020 7 3,559 103,292,819 103 1,313,836 ( 11,603 ) 437,450 ( 430,849 ) 12 ( 1,328 ) ( 1,291 ) ( 2,619 )

Foreign exchange translation — — — — — — — — ( 30 ) ( 30 ) — ( 30 )

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

— — 7,213,334 7 — — 10,118 — 10,125 — 10,125

Common stock issued in connection with conversion of Convertible Notes — — 10,000,000 10 — — 14,990 — — 15,000 — 15,000

Issuance of common stock for third party professional service — — 80,000 — — — 71 — — 71 — 71

Issuance of Class A common stock to management and employees — — 689,364 1 — — 785 — — 786 — 786

Issuance of common stock in connection with performance stock units — — 373,647 — — — — — — — — —

Common stock issued to settle second lien loan — — 33,465 — — — 61 — — 61 — 61

Stock-based compensation — — — — — — 178 — — 178 — 178

Preferred stock dividends paid with common stock — — 44,913 — — — 89 ( 89 ) — — — —

Net loss — — — — — — — ( 26,543 ) — ( 26,543 ) ( 23 ) ( 26,566 )

Balances as of September 30, 2020 7 $ 3,559 121,727,542 $ 121 1,313,836 $ ( 11,603 ) $ 463,742 $ ( 457,481 ) $ ( 18 ) $ ( 1,680 ) $ ( 1,314 ) $ ( 2,994 )

See accompanying Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(In thousands)

Three Months Ended June 30,

Six Months Ended

September 30,

Cash flows from operating activities:

3 unchanged sentences

Changes in fair value of equity investment in Starrise 35,626 —

Gain on extinguishment of note payable

Gain from sale of property and equipment ( 16 ) —

Loss on extinguishment of notes payable

Loss from sale of property and equipment 44 —

Amortization of debt issuance costs included in interest expense 139 772

Provision for doubtful accounts — 270

(Recovery) provision for doubtful accounts ( 193 ) 326

Recovery for inventory reserve ( 909 ) ( 434 )

Stock-based compensation and expenses 177 11

Stock-based compensation 1,212 189

Issuance of common stock for third party professional service

Accretion and PIK interest expense added to note payable 199 827

8 unchanged sentences

Purchases of property and equipment ( 111 ) —

Sale of equipment 91 —

Sale of equity investment in Starrise

Net cash provided by (used in) in investing activities 508 ( 252 )

Net cash provided by investing activities 789 —

Cash flows from financing activities:

21 unchanged sentences

We expect that we will experience a loss of sales of such physical goods due to such closures, and we cannot predict the extent of such losses, or how long the closures or limited openings of the stores may last.

As a result of COVID-19, studios have temporarily halted distribution of new content to movie theatres due to mandatory theatre shutdown.

Because our digital cinema business earns a Virtual Print Fee when a movie is first played on a system, the temporary theatre closures resulting from the COVID-19 pandemic will result in reduced revenues that service the Prospect Loan.

We do not yet know the full impact of such reduced revenues or whether our ability to service the Prospect Loan will be materially affected.

We expect the studios to reschedule, once the theatres reopen, the release of those movies originally scheduled during the temporary movie theatre closure.

Management believes the cash flows from the Digital Cinema business, including the revenue from the sale of digital cinema projection systems, will be sufficient to pay the Prospect Loan.

The Borrower on the Prospect Loan is Cinedigm DC Holdings, LLC and the Prospect Loan is only guaranteed by the digital cinema subsidiaries.

Prospect has a security interest in certain digital cinema projection equipment and has no recourse to Cinedigm Corp., Cinedigm Entertainment Corp., Cinedigm Home Entertainment, LLC, OTT Holdings, LLC or any other non-digital cinema legal entity;

provided, however, Cinedigm Corp.

has provided a limited recourse guaranty pursuant to which it agreed to become a primary obligor of such indebtedness in certain specified circumstances, none of which have occurred as of the date hereof.

As part of our Cinema Equipment business, we earn revenues that are generated when movies are exhibited by theatres.

Many movie theatres in the United States closed during the spring of 2020 due to COVID-19 restrictions and many of those have not yet re-opened, or have re-opened on a limited basis.

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

The studios that produce movies may elect to delay the release of movies until theatres re-open, or to bypass exhibiting movies in theatres at all and distribute the movies through other means, such as on streaming platforms, in which case we would not earn revenues at all from such movies.

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

Given the dynamic nature of these events, we cannot reasonably estimate the period of time that the COVID-19 pandemic and related closures and market conditions will persist, or the extent of the impact they will have on our business or results of operations and financial condition.

We have incurred net losses historically and have an accumulated deficit of $ 430.8 million and negative working capital of $ 57.7 million as of June 30, 2020.

We have incurred net losses historically and have an accumulated deficit of $ 457.5 million and negative working capital of $ 35.9 million as of September 30, 2020.

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

In addition, we have significant debt-related contractual obligations as of June 30, 2020 and beyond.

In addition, we have significant debt-related contractual obligations as of September 30, 2020 and beyond.

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

Capital Raise

On May 20, 2020, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain investors (the “Investors”) for the purchase and sale of 10,666,666 shares (the “Shares”) of the Company’s Class A common stock, par value $ 0.001 per share, (the "Common Stock" or "Class A common stock"), at a purchase price of $ 0.75 per share, in a registered direct offering, pursuant to an effective shelf registration statement on Form S-3 (Reg.

333-238183) which was declared effective by the Securities and Exchange Commission on May 14, 2020 and an applicable prospectus supplement.

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

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

approximately $ 7.1 million.

The Company intends to use the net proceeds for working capital and other general corporate purposes, which may include, among other things, product development, acquisitions, capital expenditures, and other business opportunities.

On July 16, 2020, the Company entered into a securities purchase agreement (the “July Securities Purchase Agreement” ) with the Investors for the purchase and sale of 7,213,334 shares (the “July Shares”) of Class A common stock at a purchase price of $ 1.50 per share, in a registered direct offering, pursuant to an effective shelf registration statement on Form S-3 (Reg.

On July 16, 2020, the Company entered into a securities purchase agreement (the “July Securities Purchase Agreement” ) for the sale of 7,213,334 shares (the “July Shares”) of Class A common stock at a purchase price of $ 1.50 per share, in a registered direct offering, pursuant to an effective shelf registration statement on Form S-3 (Reg.

333-239710) which was declared effective by the Securities and Exchange Commission on July 10, 2020 and an applicable prospectus supplement.

3 unchanged sentences

The net proceeds to the Company from the sale of the July Shares, after deducting the fees of the placement agents but before paying the Company’s estimated offering expenses, was approximately $ 10.1 million.

The Company intends to use the net proceeds from the transaction for working capital and for other general corporate purposes, which may include, among other things, product development, acquisitions, capital expenditures, and other business opportunities.

Equity Investment

On December 27, 2019, the Company entered into, and on February 14, 2020 amended, (see Note 2 - Summary of Significant Accounting Policies), a stock purchase agreement (as so amended, the “Stock Purchase Agreement”) with BeiTai Investment LP (“BeiTai”) and Aim Right Ventures Limited (“Aim Right”), two shareholders of Starrise Media Holdings Limited, a leading Chinese entertainment company (“Starrise”), to buy from them an aggregate of 410,901,000 outstanding Starrise ordinary shares (the “Share Acquisition”).

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

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

The net proceeds to the Company from the sale of the Shares, after deducting the fees of the placement agents but before paying the Company’s estimated offering expenses, were approximately $ 7.1 million.

Equity Investment in Starrise, a related party transaction

On December 27, 2019, the Company entered into, and on February 14, 2020 amended, (see Note 2 - Summary of Significant Accounting Policies), a stock purchase agreement (as so amended, the “ Starrise Stock Purchase Agreement”) with BeiTai Investment LP (“BeiTai”) and Aim Right Ventures Limited (“Aim Right”), two shareholders of Starrise Media Holdings Limited, a leading Chinese entertainment company (“Starrise”), to buy from them an aggregate of 410,901,000 outstanding Starrise ordinary shares (the “Share Acquisition”).

On February 14, 2020, the Company purchased 162,162,162 of the Starrise ordinary shares from BeiTai and issued BeiTai 21,646,604 shares of Class A common stock as consideration.

On April 10, 2020, the Company, in accordance with the terms of the Stock Purchase Agreement, terminated its obligation to purchase Starrise ordinary shares from Aim Right under the December 27, 2019 stock purchase agreement.

On April 10, 2020, the Company, in accordance with the terms of the Starrise Stock Purchase Agreement, terminated its obligation to purchase Starrise ordinary shares from Aim Right under the December 27, 2019 stock purchase agreement.

On April 10, 2020, the Company entered into another stock purchase agreement (the “April Stock Purchase Agreement”) with five ( 5 ) shareholders of Starrise-Bison Global Investment SPC - Bison Global No.

1 SP, Huatai Investment LP, Antai Investment LP, Mingtai Investment LP and Shangtai Asset Management LP, to buy an aggregate of 223,380,000 outstanding Starrise ordinary shares from them and for the Company to issue to them an aggregate of 29,855,081 shares of its Class A common stock in consideration therefo (the “April Share Acquisition”).

On April 15, 2020, the April Share Acquisition was consummated and recorded as an equity investment in Starrise and is a related party transaction.

Starrise's ordinary shares (HK 1616) are listed on the main board of the Stock Exchange of Hong Kong Limited.

Based on the closing price of HKD 0.38 per share on August 13, 2020, calculated at an exchange rate of 7.8 Hong Kong Dollars to 1 US dollar, the market value of Cinedigm’s ownership in Starrise ordinary shares was approximately $ 17.8 million.

Based on the closing price of HKD 0.16 per share on November 13, 2020, calculated at an exchange rate of $ 7.75 Hong Kong Dollars to 1 US dollar, the market value of Cinedigm’s ownership in Starrise ordinary shares was approximately $ 7.3 million.

On April 15, 2020, the Company received $ 2.2 million from East West Bank, the Company’s existing lender, pursuant to the Paycheck Protection Program (the “PPP Loan”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

3 unchanged sentences

The Company used all proceeds from the PPP Loan to retain employees, maintain payroll and make lease and utility payments to support business continuity throughout the COVID-19 pandemic, which amounts are intended to be eligible for forgiveness, subject to the provisions of the CARES Act and could be subject to repayment.

On June 24, 2020, the Company entered into an exchange agreement (the “Exchange Agreement”) pursuant to which the Company issued 329,501 shares of its Class A common stock, in exchange for $ 842 thousand principal amount and accrued and unpaid interest of outstanding Second Lien Loans.

The surrendered Second Lien Loans were immediately canceled.

3 unchanged sentences

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

On April 15, 2020, the Company executed a letter amendment (the “Letter Amendment”) to the Bison Convertible Note.

On April 15, 2020, the Company executed a letter amendment (the “Letter Amendment”) to the Bison Convertible Note (as defined in Note 5 - Notes Payable ).

Among other things, the Letter Amendment amended the Note, effective as of March 4, 2020, to extend the maturity date of the Bison Convertible note to March 4, 2021.

The Bison Convertible note due 2021 is also convertible into Common Stock at our election.

See Note 5 - Notes Payable.

On October 9, 2019, the Company signed an extension to the Ming Tai Note of $ 5.0 million for the first of two (2) permitted additional (1) year extensions at the Company’s option from the original maturity date to October 9, 2020.

This note will continue in full force and effect in accordance with its terms, including the Company’s reservation of its right to further extend the maturity date of this note, if it so elects.

On June 25, 2020, the Company signed an amendment to extend the maturity date of the East West credit facility from March 30, 2021 to June 30, 2021.

On June 25, 2020, the Company signed an amendment to extend the maturity date of the East West Credit Facility (as defined in Note 5 - Notes Payable) with East West Bank from March 30, 2021 to June 30, 2021.

On September 11.

2020, the Bison and Mingtai Notes, having an aggregate of $ 15 million principal amount (the "Notes") were converted in full into an aggregate of 10,000,000 shares of Common Stock at a conversion price of $ 1.50 per share in accordance with the terms of the Notes.

Accordingly, the Notes have been extinguished.

The Notes were held by Global Investment SPC-Bison Global No.

1 SP and Mingtai Investment LP, both of which are affiliates of Peixin Xu, the Chairman of Bison Capital Holding Company Limited, which is indirectly Cinedigm's largest stockholder.

See Note 5 - Notes Payable .

We believe the combination of:

(i) our cash and cash equivalent balances as of June 30, 2020, (ii) expected cash flows from operations, (iii) cost cutting measures including payroll expense reduction and real estate occupancy cost reductions, and (iv) the extension of maturity dates of our borrowings, the ability to convert the convertible debt into Class A common stock, the Starrise equity investment, the capital raises during and subsequent to June 30, 2020, and the support or availability of funding from other capital resources and financings will be sufficient to satisfy our contractual obligations, as well as liquidity for our operational and capital requirements, for twelve months from the filing of this document.

(i) our cash and cash equivalent balances as of September 30, 2020, (ii) expected cash flows from operations, (iii) cost cutting measures including payroll expense reduction and real estate occupancy cost reductions, and (iv) the extension of maturity dates of our borrowings, the Starrise equity investment, the capital raises during and the support or availability of funding from other capital resources and financings will be sufficient to satisfy our contractual obligations, as well as liquidity for our operational and capital requirements, for twelve months from the filing of this document.

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

14 unchanged sentences

SIGNIFICANT ACCOUNTING POLICES

The significant accounting policies used in the preparation of these condensed consolidated financial statements for the three months ended June 30, 2020 are consistent with those disclosed in Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended March 31, 2020.

The significant accounting policies used in the preparation of these condensed consolidated financial statements for the three and six months ended September 30, 2020 are consistent with those disclosed in Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended March 31, 2020.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

5 unchanged sentences

(in thousands )

June 30, 2020 March 31, 2020

September 30, 2020 March 31, 2020

Cash and Cash Equivalents $ 16,503 $ 14,294

2 unchanged sentences

EQUITY INVESTMENT IN STARRISE, A RELATED PARTY

On February 14, 2020, the Company acquired an approximately 11.5 % interest in Starrise Media Holdings Limited (“Starrise”) a leading Chinese entertainment publicly traded company on the Stock Exchange of Hong Kong.

On February 14, 2020, the Company acquired an approximately 11.5 % interest in Starrise Media Holdings Limited (“Starrise”) a leading publicly traded Chinese entertainment whose ordinary shares are listed on the Stock Exchange of Hong Kong.

The Company acquired such interest as a strategic investment and in a private transaction from a shareholder of Starrise that is related to our major shareholders.

8 unchanged sentences

The Company has made an irrevocable election to apply the fair value option under ASC 825-10, Financial Instruments , as it relates to its equity investment in Starrise.

During the three months ended June 30, 2020, the Company sold 5,384,000 of Starrise shares for net proceeds of approximately $ 0.6 million which resulted in a loss on sale of approximately $ 50 thousand.

As of June 30, 2020 and March, 31, 2020, the value of our equity investment in Starrise, using the readily determinable fair value method from the quoted trading price of the Stock Exchange of Hong Kong, was approximately $ 35.0 million and $ 23.4 million, respectively, resulting in an unrealized loss for the change in fair value of approximately $ 15.8 million for the three months ended June 30, 2020, on our consolidated statement of operations.

During the six months ended September 30, 2020, the Company sold 8,168,000 of Starrise shares for net proceeds of approximately $ 0.8 million which resulted in a loss on sale of approximately $ 71 thousand.

As of September 30, 2020 and March, 31, 2020, the value of our equity investment in Starrise, using the readily determinable fair value method from the quoted trading price of the Stock Exchange of Hong Kong, was approximately $ 14.5 million and $ 23.4 million, respectively, resulting in an unrealized loss for the change in fair value of approximately $ 19.7 million for the six months ended September 30, 2020, on our consolidated statement of operations.

NON-MONETARY TRANSACTIONS

During the three months ended June 30, 2020, the Company entered in agreements with certain vendors to transfer 9,006,215 Starrise shares to satisfy outstanding liabilities with these vendors.

During the three and six months ended September 30, 2020, respectively, the Company entered in agreements with certain vendors to transfer 7,116,100 and 16,122,315 Starrise shares to satisfy outstanding liabilities with these vendors.

Upon the sale of the Starrise shares by the vendors, with certain restrictions on sales unless the Company gives consent to sell, if the proceeds do not satisfy the amount due to the vendor, the Company is liable for the balance owed.

Pursuant to such agreements, the Company reduced the amount payable to its vendors by $ 0.3 million for the three months ended June 30, 2020 or 3,408,000 Starrise shares.

Subsequent to June 30, 2020, the Company transferred 2,010,000 shares in Starrise amounting to approximately $ 0.1 million related to such vendor liabilities.

There was no gain or loss resulting from these transactions.

Pursuant to such agreements, the Company reduced the amount payable to its vendors by $ 0.7 million for the six months ended September 30, 2020 or 8,635,467 Starrise shares.

There was no gain or loss resulting from these transactions for the three and six months ended September 30, 2020.

ACCOUNTS RECEIVABLE

8 unchanged sentences

We evaluate advances regularly for recoverability and record impairment charges for amounts that we expect may not be recoverable as of the consolidated balance sheet date.

Impairments and accelerated amortization related to advances was $ 0.2 million, for each of the three months ended June 30, 2020 and 2019.

Impairments and accelerated amortization related to advances were $ 0 million and $ 0.2 million, for the three months ended September 30, 2020 and 2019.

Impairments and accelerated amortization related to advances were $ 0.04 million and $ 0.4 million, respectively, for six months ended September 30, 2020 and 2019.

PROPERTY AND EQUIPMENT

21 unchanged sentences

Assets and liabilities measured at fair value on a recurring basis use the market approach, where prices and other relevant information are generated by market transactions involving identical or comparable assets or liabilities.

The equity investment in Starrise is in Hong Kong dollars and was translated into US dollars as of June 30, 2020 and March 31, 2020 at an exchange rate of 7.8 and 7.8 Hong Kong Dollars to 1 US Dollar, respectively.

The equity investment in Starrise is in Hong Kong dollars and was translated into US dollars as of September 30, 2020 and March 31, 2020 at an exchange rate of 7.75 and 7.8 Hong Kong Dollars to 1 US Dollar, respectively.

The fair value of this equity investment is measured by the quoted market price of Starrise on the Stock Exchange of Hong Kong.

The following tables summarize the levels of fair value measurements of our financial assets and liabilities as of June 30, 2020 and March 31, 2020:

As of June 30, 2020

The following tables summarize the levels of fair value measurements of our financial assets and liabilities as of September 30, 2020 and March 31, 2020:

As of September 30, 2020

(in thousands) Level 1 Level 2 Level 3 Total

9 unchanged sentences

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

At June 30, 2020 and March 31, 2020, the estimated fair value of our fixed rate debt approximated its carrying amounts.

At September 30, 2020 and March 31, 2020, the estimated fair value of our fixed rate debt approximated its carrying amounts.

We estimated the fair value of debt based upon current interest rates available to us at the respective balance sheet dates for arrangements with similar terms and conditions.

7 unchanged sentences

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

During the three months June 30, 2020 and 2019 no impairment charge was recorded from operations for long-lived assets or finite-lived assets.

During the three months and six months ended September 30, 2020 and 2019, no impairment charge was recorded from operations for long-lived assets or finite-lived assets.

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

2 unchanged sentences

To the extent additional information arises, market conditions change, or our strategies change, it is possible that the conclusion regarding whether our remaining goodwill is impaired could change and result in future goodwill impairment charges that will have a material effect on our consolidated financial position or results of operations.

No goodwill impairment charge was recorded in the three months ended June 30, 2020 and 2019.

No goodwill impairment charge was recorded in the three and six months ended September 30, 2020 and 2019.

Gross amounts of goodwill and accumulated impairment charges that we have recorded are as follows:

2 unchanged sentences

Accumulated impairment charges ( 24,000 )

Goodwill at June 30, 2020 and March 31, 2020 $ 8,701

Goodwill at September 30, 2020 and March 31, 2020

REVENUE RECOGNITION

29 unchanged sentences

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.

Cinedigm completed the sale of 30 and 35 digital projection Systems, respectively, for an aggregate sales price of approximately $ 195.0 thousand and $ 0.4 million, and recognized revenue of $ 76.2 thousand and $ 0.4 million, during the three months ended June 30, 2020 and 2019, respectively.

Such sales were

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

Cinedigm completed the sale of 0 and 35 digital projection Systems, respectively, for an aggregate sales price of approximately $ 0 and $ 0.9 million, and recognized revenue of $ 15 thousand and $ 0.7 million, during the three months ended September 30, 2020 and 2019, respectively.

Cinedigm completed the sale of 30 and 112 digital projection Systems, respectively, for an aggregate sales price of approximately $ 195 thousand and $ 1.0 million, and recognized revenue of $ 91 thousand and $ 1.0 million, during the six months ended September 30, 2020 and 2019, respectively.

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

44 unchanged sentences

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, 2020 was $ 2.1 million.

For the three months ended June 30, 2020, the additions to our deferred revenue balance were primarily due to cash payments received or due in advance of satisfying performance obligations, while the reductions to our deferred revenue balance were primarily due to the recognition of revenue upon fulfillment of our performance obligations, both of which were in the ordinary course of business.

During the three months ended June 30, 2020 and 2019, $ 0.6 million and $ 0.8 million, respectively of revenue was recognized that was included in the deferred revenue balance at the beginning of the period.

As of June 30, 2020, the aggregate amount of contract revenue allocated to unsatisfied performance obligations was $ 2.1 million.

The ending deferred revenue balance, including current and non-current balances, as of September 30, 2020 was $ 1.8 million.

For the three months ended September 30, 2020, the additions to our deferred revenue balance were primarily due to cash payments received or due in advance of satisfying performance obligations, while the reductions to our deferred revenue balance were primarily due to the recognition of revenue upon fulfillment of our performance obligations, both of which were in the ordinary course of business.

During the three and six months ended September 30, 2020, $ 0.7 million and $ 1.3 million, respectively of revenue was recognized that was included in the deferred revenue balance at the beginning of the period.

As of September 30, 2020, the aggregate amount of contract revenue allocated to unsatisfied performance obligations was $ 1.8 million.

We expect to recognize approximately $ 1.8 million of this balance over the next 12 months, and the remainder thereafter.

2 unchanged sentences

The Cinema Equipment Business revenue categories are:

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

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

Base Distribution Business and OTT Streaming and Digital.

The following tables present the Company's revenue categories for the three months ended June 30, 2020:

The following tables present the Company's revenue categories for the three and six months ended September 30, 2020 and 2019:

(in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

2020 2019 2020 2019

Cinema Equipment Business:

10 unchanged sentences

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

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended

September 30,

(In thousands) 2020 2019 2020 2019

Selling, general and administrative $ 1,035 $ 178 $ 1,212 $ 189

During the three months ended June 30, 2020 and 2019, the Company did not grant stock appreciation rights ("SARs").The SARs were granted under the Company's 2017 Equity Incentive Plan (the "2017 Plan").

There was $ 110 thousand, of stock-based compensation recorded for the three months ended June 30, 2020 and 2019, respectively relating to these SARs.

$ 1,035 $ 178 $ 1,212 $ 189

During the three and six months ended September 30, 2020 and 2019, the Company did not grant stock appreciation rights ("SARs").The SARs were granted under the Company's 2017 Equity Incentive Plan (the "2017 Plan").

There was $ 112 thousand and $ 112 thousand, of stock-based compensation recorded for the three months ended September 30, 2020 and 2019, respectively and $ 222 thousand and $ 221 thousand for the six months ended September 30, 2020 and 2019 respectively, relating to these SARs.

Total SARs outstanding are as follows:

Three Months Ended

June 30, 2020

Six Months Ended

September 30, 2020

SARs Outstanding March 31, 2020 1,462,610

Total SARs Outstanding June 30, 2020 1,462,610

Total SARs Outstanding September 30, 2020

There are 696,050 units of performance stock units ("PSU") which were granted on July 26, 2018 fully vested but not paid yet.

There was no stock-based compensation recorded related to these units for the three months ended June 30, 2020 and there was a cumulative adjustment of $ 166 thousand of stock-based compensation recorded for the three months ended June 30, 2019.

There was $ 1 thousand of stock-based compensation recorded in the three months ended June 30, 2020 and 2019, respectively, related to employees' restricted stock awards.

There was $ 66 thousand of stock-based compensation recorded for the three months ended June 30, 2020 and 2019 respectively, related to board of directors.

There was no stock-based compensation recorded related to these units for the six months ended September 30, 2020 and there was a cumulative adjustment of $ 166 thousand of stock-based compensation recorded for the six months ended September 30, 2019.

On August 18, 2020, the vested PSU’s were settled for 373,647 shares of Class A Common Stock.

In addition, the Company issued 689,364 shares of Class A Common Stock as a bonus to employees.

The Company recorded $ 786 thousand as stock compensation expense related to the bonus awards based on the $ 1.14 Class A common share value on the date of grant.

There was $ 1 thousand and $2 thousand of stock-based compensation recorded for the three and six months ended September 30, 2020 and 2019, respectively, related to employees' restricted stock awards.

There was $ 65 thousand and $ 0 of stock-based compensation recorded for the three months ended September 30, 2020 and 2019 respectively related to the board of directors.

There was $ 131 thousand and $ 0 of stock-based compensation for the six months ended September 30, 2020 and 2019 related to board of directors.

On September 1, 2020, we issued 80,000 shares of Class A common stock to Ronald L.

Chez as a bonus payable to him under the Strategic Investor Agreement between the Company and him dated as of April 3, 2017.

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

The Company accounts for income taxes using the asset and liability method.

14 unchanged sentences

Shares issued and any shares that are reacquired during the period are weighted for the portion of the period that they are outstanding.

We incurred net losses for the three months ended June 30, 2020 and 2019, and therefore the impact of potentially dilutive common shares from outstanding stock options and warrants, totaling 3,940,138 shares and 4,155,921 shares as of June 30, 2020 and 2019, respectively, and 9,999,999 shares from the convertible notes issued on October 9, 2018 and on July 12, 2019, were excluded from the computations of loss per share, as their impact would have been anti-dilutive.

We incurred net losses for the three and six months ended September 30, 2020 and 2019, and therefore the impact of potentially dilutive common shares from outstanding stock options and warrants, totaling 3,940,138 shares and 4,076,921 shares as of September 30, 2020 and 2019, respectively, were excluded from the computations of loss per share as their impact would have been anti-dilutive.

COMPREHENSIVE LOSS

As of the three months ended June 30, 2020 and 2019, comprehensive loss consisted of net loss and foreign currency translation adjustments.

As of the three and six months ended September 30, 2020 and 2019, comprehensive loss consisted of net loss and foreign currency translation adjustments.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

21 unchanged sentences

In completing our assessment, we identified the activities that we consider most significant to the economic performance of CDF2 Holdings and determined that we do not have the power to direct those activities, and therefore we account for our investment in CDF2 Holdings under the equity method of accounting.

As of June 30, 2020 and March 31, 2020, our maximum exposure to loss, as it relates to the non-consolidated CDF2 Holdings entity, represents accounts receivable for service fees under a master service agreement with CDF2 Holdings.

Such accounts receivable was $ 0.2 million and $ 0.4 million as of June 30, 2020 and March 31, 2020 which are included in accounts receivable, net on the accompanying condensed consolidated balance sheets.

The accompanying Condensed Consolidated Statements of Operations include $ 9 thousand and $ 0.3 million of digital cinema servicing revenue from CDF2 Holdings for each of the three months ended June 30, 2020 and 2019, respectively.

Total Stockholders' Deficit of CDF2 Holdings at June 30, 2020 and March 31, 2020 was $ 35.9 million and $ 31.8 million, respectively.

We have no obligation to fund the operating loss or the stockholders' deficit beyond our initial investment of $ 2.0 million and, accordingly, our investment in CDF2 Holdings as of June 30, 2020 and March 31, 2020 is carried at $ 0 .

As of September 30, 2020 and March 31, 2020, our maximum exposure to loss, as it relates to the non-consolidated CDF2 Holdings entity, represents accounts receivable for service fees under a master service agreement with CDF2 Holdings.

Such accounts receivable was $ 0.2 million and $ 0.4 million as of September 30, 2020 and March 31, 2020 which are included in accounts receivable, net on the accompanying condensed consolidated balance sheets.

The accompanying Condensed Consolidated Statements of Operations include $ 27 thousand and $ 36 thousand of digital cinema servicing revenue from CDF2 Holdings for each of the three months and six months ended September 30, 2020, respectively.

The accompanying Condensed Consolidated Statements of Operations include $ 0.3 million and $ 0.6 million of digital cinema servicing revenue from CDF2 Holdings for each of three months and six months ended September 30, 2019.

Total Stockholders' Deficit of CDF2 Holdings at September 30, 2020 and March 31, 2020 was $ 39.7 million and $ 31.8 million, respectively.

We have no obligation to fund the operating loss or the stockholders' deficit beyond our initial investment of $ 2.0 million and, accordingly, our investment in CDF2 Holdings as of September 30, 2020 and March 31, 2020 is carried at $ 0 .

Majority Interest in CONtv

1 unchanged sentence

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

For each of the three months ended June 30, 2020 and June 30, 2019, we recorded income tax expense of approximately zero and $ 47 thousand, respectively.

We have not recorded tax benefits on our loss before income taxes because we have provided for a full valuation allowance that offsets potential deferred tax assets resulting from net operating loss carry forwards, reflecting our inability to use such loss carry forwards.

Our effective tax rate for the three months ended June 30, 2020 and 2019 was zero and negative 0.9 %, respectively.

We recorded an income tax benefit of approximately $ 181 thousand for the three and six months ended September 30, 2020.

We recorded income tax expense of approximately $ 27 thousand and $ 74 thousand, respectively, for the three and six months ended September 30, 2019.

Our effective tax rate for the six months ended September 30, 2020 and 2019 was 0.4 % and negative 0.9 %, respectively.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law.

6 unchanged sentences

Notes payable consisted of the following:

June 30, 2020 March 31, 2020

September 30, 2020 March 31, 2020

(In thousands) Current Portion Long Term Portion Current Portion Long Term Portion

22 unchanged sentences

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

As of June 30, 2020, and March 31, 2020, the debt service fund had a balance of $ 1.0 million, which is classified as part of restricted cash on our Condensed Consolidated Balance Sheets.

As of September 30, 2020, and March 31, 2020, the debt service fund had a balance of $ 1.0 million, which is classified as part of restricted cash on our Condensed Consolidated Balance Sheets.

The Prospect Loan matures on March 31, 2021 and may be accelerated upon a change in control (as defined in the agreement) or other events of default as set forth therein and would be subject to mandatory acceleration upon insolvency of DC Holdings.

10 unchanged sentences

The following table summarizes the activity related to the Prospect Loan:

(In thousands) June 30, 2020 March 31, 2020

(In thousands) September 30, 2020 March 31, 2020

Prospect Loan, at issuance $ 70,000 $ 70,000

1 unchanged sentence

Payments to date ( 62,671 ) ( 62,573 )

Prospect Loan, gross $ 12,107 $ 12,205

Less unamortized debt issuance costs and debt discounts ( 358 ) ( 763 )

Prospect Loan, net 11,749 11,442

2 unchanged sentences

Bison Note Payable

The Company entered into a loan with Bison for $ 10.0 million and issued Warrants to purchase 1,400,000 shares of the Company's Class A common stock.

In December 2017, the Company entered into a loan with Bison for $ 10.0 million (the "Bison Loan") and issued Warrants to purchase 1,400,000 shares of the Company's Class A common stock.

See Note 6 - Stockholders' Deficit for further discussion of the warrants.

The loan was made in accordance with the Stock Purchase Agreement between the Company and Bison Entertainment Investment Limited, another affiliate of Bison, entered into on June 29, 2017.

On July 20, 2018, the Company entered into a term loan agreement (the “2018 Loan Agreement”) with Bison Global, pursuant to which the Company borrowed from Bison Global $ 10.0 million (the “2018 Loan”).

The 2018 Loan has a one ( 1 ) year term that may be extended by mutual agreement of Bison Global and the Company and bears interest at 5 % per annum, payable quarterly in cash.

3 unchanged sentences

The principal is due on March 4, 2021, in cash or in shares of Common Stock, or a combination of cash and Common Stock, at the Company’s option.

The Bison Convertible Note is convertible at the Company's option, at any time prior to payment in full of the principal balance

and all accrued interest of the note, to convert this note in whole or in part, into fully paid and nonassessable shares of the Company's Class A common stock.

The Bison Convertible Note is convertible at the Company's option, at any time prior to payment in full of the principal balance and all accrued interest of the note, to convert this note in whole or in part, into fully paid and nonassessable shares of the Company's Class A common stock.

The Bison Convertible Note is Convertible into 6,666,666 shares of Company's Class A common stock, based on initial conversion price of $ 1.50 per share.

2 unchanged sentences

The Bison Convertible Note, offset by the concurrent payoff and termination of the 2018 Loan, did not result in any increase to the Company’s outstanding debt balance.

On September 11.

2020, Bison Global No.

1 SP converted the Convertible Note in full into an aggregate of 6,666,667 shares of Common Stock at a conversion price of $ 1.50 per share.

Accordingly, the Convertible Note has been extinguished.

In accordance with ASC 470, the Company recognized a loss on extinguishment of $ 285 thousand related to unamortized debt issuance costs.

Second Secured Lien Loans

On July 14, 2016, we entered into a Second Lien Loan Agreement (the “Second Lien Loan Agreement”), under which we may borrow up to $ 15.0 million (the “Second Lien Loans”), subject to certain limitations imposed on us regarding the number of shares that we may issue in connection with the loans.

As of June 30, 2020 we have an outstanding balance of $ 7.5 million which includes $ 4.0 million borrowed from Ronald L.

As of September 30, 2020 we have an outstanding balance of $ 7.6 million which includes $ 4.0 million borrowed from Ronald L.

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

Chez resigned from the Board of Directors in April 2017, and became a strategic advisor to the Company.

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

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

1 unchanged sentence

In addition, under the terms of the Second Lien Loan Agreement, we are required to issue 98,000 shares of our Class A common stock for every $1.0 million borrowed, subject to pro rata adjustments.

As of June 30, 2020, we have issued 906,450 shares of Class A common stock cumulatively under the Second Lien Loan Agreement.

There were no shares issued in the three months ended June 30, 2020.

As of September 30, 2020, we have issued 906,450 shares of Class A common stock cumulatively under the Second Lien Loan Agreement.

The Second Lien Loans may be prepaid without premium or penalty and contain customary covenants, representations and warranties.

3 unchanged sentences

The surrendered notes were immediately canceled and the Company recognized a gain on extinguishment of $ 23 thousand.

On June 26, 2020, the Company entered into a consent agreement to extend the maturity date to September 30, 2020 and grant the Company options to extend further to March 31, 2021 and then to June 30, 2021.

The Exchange Agreement included a true-up clause.

The true-up clause stated that if the gross proceeds from the sale of the Company’s Class A common stock are less than $758 thousand, the Company shall pay up to an aggregate maximum of $50 thousand of such shortfall in cash, and, with respect to any balance of the shortfall remaining after the cash payment, shall issue such additional number of shares of common stock not to exceed, together with the Shares, 1,000,000 shares equal in value, based on the closing price of the common stock.

On July 2, 2020, in accordance with the true-up clause, an additional 33,465 shares of Class A common stock ($ 61 thousand based on the stock price of the Company’s Class A common stock on the date of issue) were issued as a true-up adjustment pursuant to the Exchange Agreement.

In addition, the Company paid an additional $ 50 thousand in July 2020.

The Company recognized a loss on extinguishment of $ 50 thousand during the three months ended September 30, 2020.

The Company recorded a loss on extinguishment of $ 27 thousand for the six months ended September 30, 2020.

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

the Company options to extend further to March 31, 2021 and then to June 30, 2021 .

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

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

Credit Facility and Cinedigm Revolving Loans

1 unchanged sentence

Interest under the Credit Facility is due monthly at a rate elected by the Company of either 0.5 % plus Prime Rate or 3.25 % above LIBOR Rate established by the lender.

As of June 30, 2020 and March 31, 2020, there was $ 10.2 million and $ 14.5 million outstanding, respectively, and there was $0.8 million available, under the Credit Facility based on the Company's borrowing base as of June 30, 2020.

As of September 30, 2020 and March 31, 2020, there was $ 9.1 million and $ 14.5 million outstanding, respectively, and there was $ 210 thousand available, under the Credit Facility based on the Company's borrowing base as of September 30, 2020.

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

3 unchanged sentences

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

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

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

For the three months ended September 30, 2020, the Company was in compliance with this financial covenant.

Mingtai Convertible Note

4 unchanged sentences

On October 9, 2019, the Company signed an extension, for one additional year from the original maturity date to be due on October 9, 2020.

The Mingtai Convertible Note will continue in full force and effect in accordance with its terms, including Company’s right to further extend the maturity date of this note, if it so elects.

The Mingtai Convertible Note is convertible at the option of the Lender, or the Company, at any time prior to payment in full of the principal balance, and all accrued interest of this Convertible Note in whole, or in part, into fully paid and non-assessable shares of Company’s Class A common stock at the conversion rate of $ 1.50 .

8 unchanged sentences

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

On September 11.

2020, Mingtai converted the Notes in full into an aggregate of 3,333,333 shares of Common Stock at a conversion price of $ 1.50 per share.

Accordingly, the Note has been extinguished.

In accordance with ASC 470, the Mingtai Convertible Note was analyzed for potential debt extinguishment.

The discount on the note had been fully accreted prior to conversion, resulting in no gain or loss from extinguishment.

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

4 unchanged sentences

STOCKHOLDERS’ DEFICIT

During the three months ended June 30, 2020, we issued 41,355,226 shares of Class A common stock in connection with the sale of 10,666,666 shares of our Class A common stock, 29,855,081 in connection with the Starrise transaction, settlement of a portion of the outstanding second lien loan, and the issuances of Class A common stock for warrants exercised and preferred stock dividends.

During the six months ended September 30, 2020, we issued 59,789,949 shares of Class A common stock which consists of the sale of 17,880,000 shares of our Class A common stock, 29,855,081 in connection with the Starrise transaction, settlement of a portion of the outstanding second lien loan, issuance of restricted shares to employees and consultants, and the issuances of Class A common stock for warrants exercised and preferred stock dividends.

See Note - 8 Supplemental Cash Flow Disclosure .

On September 1, 2020, we issued 80,000 shares of Class A common stock to Ronald L.

Chez as a bonus payable to him under the Strategic Investor Agreement between the Company and him dated as of April 3, 2017.

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

PREFERRED STOCK

Cumulative dividends in arrears on preferred stock were $ 0.1 million as of June 30, 2020 and 2019.

In July 2020, we paid the preferred stock dividends in arrears in the form of 44,913 shares of Class A common stock.

Cumulative dividends in arrears on preferred stock were $ 0.1 million as of September 30, 2020 and 2019.

In November, 2020, we paid the preferred stock dividends in arrears in the form of 171,993 shares of Class A common stock.

TREASURY STOCK

We have treasury stock, at a cost, consisting of 1,313,836 shares of Class A common stock at June 30, 2020 and March 31, 2020.

We have treasury stock, at a cost, consisting of 1,313,836 shares of Class A common stock at September 30, 2020 and March 31, 2020.

CINEDIGM’S EQUITY INCENTIVE PLANS

3 unchanged sentences

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

performance awards.

or (iv) performance awards.

The 2000 Plan provides for the granting of incentive stock options (“ISOs”) with exercise prices not less than the fair market value of our Class A Common Stock on the date of grant.

5 unchanged sentences

The 2000 Plan provided for the issuance of up to 2,380,000 shares of Class A Common Stock to employees, outside directors and consultants.

As of June 30, 2020, there were 265,887 stock options outstanding in the Plan with weighted average exercise price of $ 15.02 and a weighted average contract life of 2.86 years.

As of March 31, 2020, there were 272,766 shares outstanding in the Plan with weighted average exercise price of $ 15.00 and a weighted average contract life of 3.11 years.

As of September 30, 2020, there were 265,887 stock options outstanding in the Plan with weighted average exercise price of $ 15.02 and a weighted average contract life of 2.61 years.

As of March 31, 2020, there were 272,766 shares pursuant to stock options outstanding in the Plan with weighted average exercise price of $ 15.00 and a weighted average contract life of 3.11 years.

In August 2017, the Company adopted the 2017 Plan.

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

The 2017 Plan provided for the issuance of up to 2,108,270 shares of Class A common stock, in the form of various awards, including stock options, stock appreciation rights, stock, restricted stock, restricted stock units, performance awards and cash awards.

The 2017 Plan provided for the issuance of up to 2,108,270 shares of Class A

common stock, in the form of various awards, including stock options, stock appreciation rights, stock, restricted stock, restricted stock units, performance awards and cash awards.

The Compensation Committee of the Company’s Board of Directors (the “Board”) is authorized to administer the 2017 Plan and make grants thereunder.

1 unchanged sentence

On December 4, 2019, upon shareholder approval, the 2017 Plan was amended to increase the maximum number of shares of Class A common stock authorized for issuance thereunder from 2,108,270 shares to 4,098,270 .

The analysis of all options outstanding under the 2000 Plan as of June 30, 2020 is as follows:

As of June 30, 2020

See Note 10 - Subsequent Events .

The analysis of all options outstanding under the 2000 Plan as of September 30, 2020 is as follows:

As of September 30, 2020

Range of Prices Options Outstanding Weighted

11 unchanged sentences

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

As of June 30, 2020, 12,500 of such options remained outstanding.

As of September 30, 2020, 12,500 of such options remained outstanding.

In December 2010, we issued options to purchase 450,000 shares of Class A Common Stock outside of the 2000 Plan as part of our Chief Executive Officer's initial employment agreement with the Company.

Such options have exercise prices per share between $ 15.00 and $ 50.00 , were vested as of December 2013 and will expire in December 2020.

As of June 30, 2020, all such options remained outstanding.

The following table presents information about outstanding warrants to purchase shares of our Class A common stock as of June 30, 2020.

As of September 30, 2020, all such options remained outstanding.

The following table presents information about outstanding warrants to purchase shares of our Class A common stock as of September 30, 2020.

All of the outstanding warrants are fully vested and exercisable.

3 unchanged sentences

5-year Warrant issued to BEMG in connection with a term loan agreement 1,400,000 December 2022 $ 1.80

The warrants issued in connection with the Second Lien Loans (See Note 5 - Notes Payable ) to Ronald L.

Certain warrants issued in connection with the Second Lien Loans (See Note 5 - Notes Payable ) to Ronald L.

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

On June 4, 2020, Ronald L.

Chez exercised warrants to purchase 236,899 shares of Class A common stock in connection with the Second Lien Loans, resulting in gross proceeds of $ 301 thousand.

Chez exercised all such warrants to purchase 236,899 shares of Class A common stock in connection with the Second Lien Loans, resulting in gross proceeds of $ 301 thousand.

COMMITMENTS AND CONTINGENCIES

12 unchanged sentences

The Company’s portfolio of leases is primarily related to real estate and since most of our leases do not provide a readily determinable implicit rate, the Company estimated its incremental borrowing rate to discount the lease payments based on information available at either the implementation date of Topic 842 or at lease commencement for leases entered into thereafter.

The table below presents the lease-related assets and liabilities recorded on the balance sheet as of June 30, 2020

(In thousands) Classification on the Balance Sheet June 30, 2020

The table below presents the lease-related assets and liabilities recorded on the balance sheet as of September 30, 2020

(In thousands) Classification on the Balance Sheet September 30, 2020

Noncurrent Operating lease right-of-use asset $ 169

5 unchanged sentences

The table below presents certain information related to lease costs for leases:

Three Months Ended

(In thousands) June 30, 2020

Three Months Ended Six Months Ended

(In thousands) September 30, 2020

Operating lease cost $ 37 $ 123

2 unchanged sentences

The table below presents supplemental cash flow information related to leases:

Three Months Ended

(In thousands) June 30, 2020

Three Months Ended Six Months Ended

(In thousands) September 30, 2020

Cash paid for amounts included in the measurement of lease liabilities

3 unchanged sentences

SUPPLEMENTAL CASH FLOW INFORMATION

Three Months Ended

Six Months Ended September 30,

(In thousands) 2020 2019

4 unchanged sentences

Contributed capital under the Starrise transaction, a related party 17,187 —

Right-of-use assets and operating lease liability recorded upon adoption of ASU 842, net — 90

Settlement of second lien loan with Class A common stock 818 —

Conversion of note payable 15,000 0

Right-of-use assets and operating lease liability recorded upon adoption of ASU 842, net — 90

Amounts accrued in connection with addition of property and equipment 34 46

Starrise shares used to pay down vendors 744 — —

11 unchanged sentences

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

As of June 30, 2020

As of September 30, 2020

(In thousands) Intangible Assets, net Goodwill Total Assets Notes Payable, Non-Recourse Notes Payable Operating lease liabilities

10 unchanged sentences

Statements of Operations

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

(Unaudited, in thousands)

8 unchanged sentences

171 1,135 ( 1,306 ) —

Recovery for doubtful accounts

( 193 ) — — ( 193 )

Depreciation and amortization of property and equipment

3 unchanged sentences

Loss from operations $ ( 1,384 ) $ ( 1,965 ) $ ( 1,710 ) $ ( 5,059 )

Employee and director stock-based compensation expense related to the Company’s stock-based awards was $ 0.2 million for the three months ended June 30, 2020.

Employee and director stock-based compensation expense related to the Company’s stock-based awards was $ 1.0 million for the three months ended September 30, 2020.

(In thousands) Cinema Equipment Business Content & Entertainment

2 unchanged sentences

Selling, general and administrative

— 26 1,009 1,035

Total stock-based compensation $ — $ 26 $ 1,009 $ 1,035

Statements of Operations

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

(Unaudited, in thousands)

8 unchanged sentences

Provision (recovery) for doubtful accounts

271 ( 1 ) — 270

Depreciation and amortization of property and equipment

3 unchanged sentences

Income (loss) from operations $ 917 $ ( 1,643 ) $ ( 367 ) $ ( 1,093 )

Employee and director stock-based compensation expense related to the Company’s stock-based awards was $11.0 thousand for the three months ended June 30, 2019.

Employee and director stock-based compensation expense related to the Company’s stock-based awards was $ 0.2 million for the three months ended September 30, 2019.

(In thousands) Cinema Equipment Business Content & Entertainment

3 unchanged sentences

Total stock-based compensation $ — $ 26 $ 152 $ 178

Statements of Operations

Six Months Ended September 30, 2020

(Unaudited, in thousands)

Cinema Equipment Business Content & Entertainment

Business Corporate Consolidated

Revenues $ 1,248 $ 11,952 $ — $ 13,200

Direct operating (exclusive of depreciation and amortization shown below)

354 6,655 — 7,009

Selling, general and administrative

1,180 4,423 4,405 10,008

Allocation of corporate overhead

295 1,919 ( 2,214 ) —

Recovery for doubtful accounts ( 193 ) — — ( 193 )

Depreciation and amortization of property and equipment

2,642 204 23 2,869

Amortization of intangible assets 15 1,164 2 1,181

Total operating expenses 4,293 14,365 2,216 20,874

Loss from operations $ ( 3,045 ) $ ( 2,413 ) $ ( 2,216 ) $ ( 7,674 )

Employee and director stock-based compensation expense related to the Company’s stock-based awards was $ 1.2 million for the six months ended September 30, 2020.

(In thousands) Cinema Equipment Business Content & Entertainment

Business Corporate Consolidated

Direct operating $ — $ — $ — $ —

Selling, general and administrative

— 52 1,160 1,212

Total stock-based compensation $ — 52 1,160 $ 1,212

Statements of Operations

Six Months Ended September 30, 2019

(Unaudited, in thousands)

Cinema Equipment Business Content & Entertainment

Business Corporate Consolidated

Revenues $ 7,638 $ 12,406 $ — $ 20,044

Direct operating (exclusive of depreciation and amortization shown below)

596 7,103 — 7,699

Selling, general and administrative

1,100 5,815 3,922 10,837

Allocation of corporate overhead

405 2,536 ( 2,941 ) —

Provision (recovery) for doubtful accounts 327 ( 1 ) — 326

Depreciation and amortization of property and equipment

3,137 162 84 3,383

Amortization of intangible assets 23 1,564 2 1,589

Total operating expenses 5,588 17,179 1,067 23,834

Loss from operations $ 2,050 $ ( 4,773 ) $ ( 1,067 ) $ ( 3,790 )

Employee and director stock-based compensation expense related to the Company’s stock-based awards was $ 0.2 million for the six months ended September 30, 2019.

(In thousands) Cinema Equipment Business Content & Entertainment

Business Corporate Consolidated

Direct operating $ — $ — $ — $ —

Selling, general and administrative

( 6 ) 3 192 189

Total stock-based compensation $ ( 6 ) $ 3 $ 192 $ 189

SUBSEQUENT EVENTS

Registered Direct Offering

On July 16, 2020, the Company entered into another securities purchase agreement (the “July Securities Purchase Agreement” ) with the Investors for the purchase and sale of 7,213,334 shares (the “July Shares”) of the Company’s Class A common stock, at a purchase price of $ 1.50 per share, in a registered direct offering, pursuant to an effective shelf registration statement on Form S-3 (Reg.

333-239710) which was declared effective by the Securities and Exchange Commission on July 10, 2020 and an applicable prospectus supplement.

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

The Company closed the transaction on July 20, 2020.

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

The Company intends to use the net proceeds from the transaction for working capital and for the other general corporate purposes, which may include, among other things, product development, acquisitions, capital expenditures, and other business opportunities.

Transfer of Starrise Shares

Subsequent to June 30, 2020, the Company transferred 2,010,000 Starrise ordinary shares amounting to approximately $ 0.1 million related to certain vendor liabilities.

Authorized Class A Common Stock

On October 23, 2020, the Company filed a Certificate of Amendment to the Fifth Amended and Restated Certificate of Incorporation, pursuant to which the number of shares of Class A common stock authorized for issuance was increased to 200,000,000 shares.

Equity Incentive Plan

On October 23, 2020, the Company amended its 2017 Equity Incentive Plan to increase the number of shares authorized for issuance thereunder from 4,098,270 to 14,098,270 .

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

What changed 10-Q

Item 1. Financial Statements