UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal period ended: ~~September 30,~~December 31, 2022

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 001-31810

Cinedigm Corp.

(Exact name of registrant as specified in its charter)

~~Delaware~~		~~22-3720962~~
Delaware		22-3720962
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

244 Fifth Avenue, Suite M289, New York~~N.Y.~~, N.Y.		10001
(Address of principal executive offices)		(Zip Code)

(212)206-8600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
CLASS A COMMON STOCK, PAR VALUE $0.001 PER SHARE	CIDM	NASDAQ CAPITAL MARKET

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐		Accelerated filer ☐		Non-accelerated filer☒		Smaller reporting company ☒		Emerging Growth Company ☐

~~Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes~~ ☐ ~~No ☒~~

☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of ~~November~~February 10, ~~2022, 178,184,058~~2023, 179,092,441 shares of Class A Common Stock, $0.001 par value, were outstanding.

CINEDIGM ~~CORP.~~CORP

TABLE OF CONTENTS

		~~Page~~
		Page
	PART I - FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets at ~~September 30,~~December 31, 2022 (Unaudited) and March 31, 2022 (Audited)	1
	Unaudited Condensed Consolidated Statements of Operations for the Three ~~Months~~ and ~~Six~~Nine Months ended ~~September 30,~~December 31, 2022 and 2021	2
	Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three ~~Months~~ and ~~Six~~Nine Months ended ~~September 30,~~December 31, 2022 and 2021	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months ended December 31, 2022 and 2021	4
	Unaudited Condensed Consolidated Statements of Equity for the Three ~~Months~~ and ~~Six~~Nine Months ended ~~September 30,~~December 31, 2022 and 2021	46
	~~Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months ended September 30, 2022 and 2021~~	6
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	78
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2928
Item 4.	Controls and Procedures	4636

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	4838
Item 1A.	Risk Factors	4838
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4838
Item 3.	Defaults Upon Senior Securities	4838
Item 4.	Mine Safety Disclosures	4838
Item 5.	Other Information	4838
Item 6.	Exhibits	4838
Exhibit Index		4838
Signatures		4939

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

CINEDIGM CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

September 30,
2022 March 31,
2022
ASSETS
Current assets
Cash and cash equivalents $ 9,676 $ 13,062
Accounts receivable, net of allowance of $2,726 and $2,921, respectively 24,939 30,843
Inventory 157 116
Unbilled revenue 2,647 2,349
Prepaid and other current assets 8,080 5,793

Total current assets 45,499 52,163
Equity investment in A Metaverse Company, a related party, at fair value 5,200 7,028
Property and equipment, net 1,756 1,980
Operating lease right-of use assets, net 612 749
Intangible assets, net 18,554 20,034
Goodwill 21,025 21,084
Other long-term assets 1,610 1,598
Total assets $ 94,256 $ 104,636
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses $ 47,268 $ 52,025
Line of credit, including unamortized debt issuance costs of $165 and $0, respectively (see Note 5) 3,622 -
Current portion of deferred consideration on purchase of business 3,523 3,432
Current portion of earnout consideration on purchase of business 741 1,081
Operating lease liabilities 127 258
Deferred revenue 270 196

Total current liabilities 55,551 56,992
Deferred consideration on purchase – net of current portion 5,615 5,600
Earnout consideration on purchase – net of current portion 651 603
Operating lease liabilities, net of current portion 489 491
Other long-term liabilities 74 -

Total liabilities 62,380 63,686
Commitments and contingencies (see Note 6)
Stockholders�� Equity
Preferred stock, 15,000,000 shares authorized; Series A 10% - $0.001 par value per share; 20 shares authorized; 7 shares issued and 7 shares outstanding at September 30, 2022 and March 31, 2022. Liquidation preference of $3,648 3,559 3,559
Common stock, $0.001 par value; Class A stock 275,000,000 and 275,000,000 shares authorized at September 30, 2022 and March 31, 2022, respectively, 179,316,947 and 176,629,435 shares issued and 178,001,096 and 175,313,584 shares outstanding at September 30, 2022 and March 31, 2022, respectively 176 174
Additional paid-in capital 525,657 522,601
Treasury stock, at cost; 1,315,851 and 1,315,851 Class A common shares at September 30, 2022 and March 31, 2022, respectively (11,608 ) (11,608 )
Accumulated deficit (484,155 ) (472,310 )
Accumulated other comprehensive loss (477 ) (163 )
Total stockholders’ equity of Cinedigm Corp. 33,152 42,253
Deficit attributable to noncontrolling interest (1,276 ) (1,303 )
Total equity 31,876 40,950
Total liabilities and equity $ 94,256 $ 104,636


	As of
	December 31, 2022			March 31, 2022
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	8,796		$	13,062
Accounts receivable, net of allowance of $2,780 and $2,921, respectively		24,993			30,843
Unbilled revenue		2,681			2,349
Employee retention tax credit		2,475			—
Prepaid and other current assets		7,303			5,909
Total current assets		46,248			52,163
Equity investment in Metaverse, a related party, at fair value		5,200			7,028
Property and equipment, net		1,695			1,980
Intangible assets, net		18,864			20,034
Goodwill		21,025			21,084
Other long-term assets		1,863			2,347
Total assets	$	94,895		$	104,636
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	40,719		$	52,025
Line of credit, including unamortized debt issuance costs of $133 and $0, respectively		4,867			—
Current portion of deferred consideration on purchase of business		4,694			4,513
Other current liabilities		467			454
Total current liabilities		50,747			56,992
Deferred consideration on purchase of business – net of current portion		5,940			6,203
Other long-term liabilities		564			491
Total liabilities		57,251			63,686
Stockholders’ Equity
Preferred stock, 15,000,000 shares authorized; Series A 10% - $0.001 par value per share; 20 shares authorized; 7 shares issued and 7 shares outstanding at December 31, 2022 and March 31, 2022. Liquidation preference of $3,648		3,559			3,559
Class A Common stock, $0.001 par value; 275,000,000 shares authorized at December 31, 2022 and March 31, 2022, 180,225,330 and 176,629,435 shares issued and 178,909,479 and 175,313,584 shares outstanding at December 31, 2022 and March 31, 2022, respectively		177			174
Additional paid-in capital		526,402			522,601
Treasury stock, at cost; 1,315,851 shares		(11,608	)		(11,608	)
Accumulated deficit		(479,229	)		(472,310	)
Accumulated other comprehensive loss		(389	)		(163	)
Total stockholders’ equity of Cinedigm Corp.		38,912			42,253
Deficit attributable to noncontrolling interest		(1,268	)		(1,303	)
Total equity		37,644			40,950
Total liabilities and equity	$	94,895		$	104,636

See accompanying Notes to Condensed Consolidated Financial Statements

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

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

Three Months Ended
September 30, Six Months Ended
September 30,
2022 2021 2022 2021
Revenues $ 14,006 $ 10,103 $ 27,596 $ 25,118
Costs and expenses:
Direct operating (excludes depreciation and amortization shown below) 8,092 3,333 15,448 7,964
Selling, general and administrative 9,597 7,159 19,412 13,202
Provision (recovery) for doubtful accounts 44 (111 ) 47 (40 )
Depreciation and amortization of property and equipment 248 440 504 1,089
Amortization of intangible assets 736 696 1,480 1,543
Total operating expenses 18,717 11,517 36,891 23,758
Income (loss) from operations (4,711 ) (1,414 ) (9,295 ) 1,360
Interest expense, net (380 ) (36 ) (513 ) (180 )
Gain on forgiveness of PPP loan - - 2,178
Change in fair value of equity investment in Metaverse, a related party (572 ) 666 (1,828 ) 1,000
Other (income) expense, net 8 102 (6 ) 91
Income (loss) before income taxes (5,655 ) (682 ) (11,642 ) 4,449
Income tax benefit (expense) - 487 - 550
Net income (loss) (5,655 ) (195 ) (11,642 ) 4,999
Net (income) loss attributable to noncontrolling interest (9 ) 11 (27 ) 4
Net income (loss) attributable to controlling interests (5,664 ) (184 ) (11,669 ) 5,003
Preferred stock dividends (88 ) (89 ) (176 ) (178 )
Net income (loss) attributable to common stockholders $ (5,752 ) $ (273 ) $ (11,845 ) $ 4,825
Net income (loss) per Class A common stock attributable to common stockholders - basic: $ (0.03 ) $ (0.00 ) $ (0.07 ) $ 0.03
Weighted average number of Class A common stock outstanding: basic 176,895,367 168,275,139 176,161,924 167,524,744
Net income (loss) per Class A common stock attributable to common stockholders - diluted: $ (0.03 ) $ (0.00 ) $ (0.07 ) $ 0.03
Weighted average number of Class A common stock outstanding: diluted 176,895,367 168,275,139 176,161,924 170,743,885


	Three Months Ended December 31,						Nine Months Ended December 31,
	2022			2021			2022			2021
Revenues	$	27,882		$	14,084		$	55,478		$	39,202
Costs and expenses:
Direct operating		14,411			6,459			29,859			14,423
Selling, general and administrative		9,107			7,358			29,016			20,520
Depreciation and amortization		924			1,031			2,908			3,663
Total operating expenses		24,442			14,848			61,783			38,606
Operating income (loss)		3,440			(764	)		(6,305	)		596
Interest expense		(367	)		(97	)		(880	)		(277	)
Gain on forgiveness of PPP loan		—			—			—			2,178
Change in fair value of equity investment in Metaverse, a related party		—			453			(1,828	)		1,453
Employee retention tax credit		2,025			—			2,475			—
Other income (expense)		(76	)		(22	)		(82	)		69
Income (loss) before income taxes		5,022			(430	)		(6,620	)		4,019
Income tax benefit		—			26			—			576
Net income (loss)		5,022			(404	)		(6,620	)		4,595
Net (income) loss attributable to noncontrolling interest		(8	)		19			(35	)		23
Net income (loss) attributable to controlling interests		5,014			(385	)		(6,655	)		4,618
Preferred stock dividends		(88	)		(89	)		(264	)		(267	)
Net income (loss) attributable to common stockholders	$	4,926		$	(474	)	$	(6,919	)	$	4,351

Net income (loss) per share attributable to common stockholders:
Basic	$	0.03		$	(0.00	)	$	(0.04	)	$	0.03
Diluted	$	0.03		$	(0.00	)	$	(0.04	)	$	0.03
Weighted average shares of common stock outstanding:
Basic		178,899,605			173,167,450			177,077,803			169,413,873
Diluted		178,899,605			173,167,450			177,077,803			173,017,364

See accompanying Notes to Condensed Consolidated Financial Statements

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands)

Three Months Ended
September 30, Six Months Ended
September 30,
2022 2021 2022 2021
Net income (loss) $ (5,655 ) $ (195 ) $ (11,642 ) $ 4,999
Other comprehensive (loss) income: foreign exchange translation (362 ) 35 (314 ) (19 )
Comprehensive income (loss) (6,017 ) (160 ) (11,956 ) 4,980
Less: comprehensive income (loss) attributable to noncontrolling interest (9 ) 11 (27 ) 4
Comprehensive income (loss) attributable to controlling interests $ (6,026 ) $ (149 ) $ (11,983 ) $ 4,984


	Three Months Ended December 31,						Nine Months Ended December 31,
	2022			2021			2022			2021
Net income (loss)		5,022		$	(404	)	$	(6,620	)	$	4,595
Other comprehensive income (loss):
Foreign exchange translation		88			(14	)		(226	)		(33	)
Comprehensive income (loss) attributable to noncontrolling interest		(8	)		19			(35	)		23
Comprehensive income (loss)	$	5,102		$	(399	)	$	(6,881	)	$	4,585

See accompanying Notes to Condensed Consolidated Financial Statements

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF ~~EQUITY~~CASH FLOWS

(Unaudited)

(In ~~thousands, except share data)~~thousands)

Series A Preferred Stock Class A
Common Stock Treasury Additional
Paid-In Accumulated Accumulated
Other
Comprehensive Total
Stockholders’
Equity Non-Controlling Total
Equity
Shares Amount Shares Amount Shares Amount Capital Deficit Loss (Deficit) Interest (Deficit)
Balances as of March 31, 2021 7 $ 3,559 166,228,568 $ 164 1,313,836 $ (11,603 ) $ 499,272 $ (474,080 ) $ (68 ) $ 17,244 $ (1,362 ) $ 15,882
Foreign exchange translation — — — — — — — — (54 ) (54 ) — (54 )
Stock-based compensation — — 35,714 — — — 983 — — 983 — 983
Issuance of common stock in connection with a business combination — — 1,483,129 2 — — 2,504 — — 2,506 — 2,506
Preferred stock dividends paid with common stock — — 53,278 — — — 89 (89 ) — — — —
Net income — — — — — — — 5,187 — 5,187 7 5,194
Balances as of June 30, 2021 7 3,559 167,800,689 166 1,313,836 (11,603 ) 502,848 (468,982 ) (122 ) 25,866 (1,355 ) 24,511
Foreign exchange translation — — — — — — — — 35 35 — 35
Stock-based compensation — — 132,630 — — — 946 — — 946 — 946
Issuance of common stock in connection with business combinations — — 1,179,156 1 — — 2,317 — — 2,318 — 2,318
Treasury stock in connection with taxes withheld from employees — — (2,015 ) — 2,015 (5 ) — — — (5 ) — (5 )
Preferred stock dividends — — — — — — — (89 ) — (89 ) — (89 )
Net loss — — — — — — — (184 ) — (184 ) (11 ) (195 )
Balances as of September 30, 2021 7 3,559 169,110,460 167 1,315,851 (11,608 ) 506,111 (469,255 ) (87 ) 28,887 (1,366 ) 27,521


	Nine Months Ended December 31,
	2022			2021
Cash flows from operating activities:
Net (loss) income	$	(6,620	)	$	4,595
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		2,908			3,663
Changes in fair value of equity investment in Metaverse		1,828			(1,464	)
Gain from forgiveness of PPP loan		—			(2,178	)
Impairment of advances		1,636			782
Provision (benefit) for doubtful accounts		54			(397	)
Amortization of debt issuance costs		138			—
Stock-based compensation		3,906			3,278
Interest expense for deferred consideration & earnouts		743			97
Non-monetary sale of content licenses		(1,022	)		—
Other		51			59
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net		5,795			(8,164	)
Unbilled revenue		(332	)		(1,449	)
Prepaids and other current and long-term assets		(2,747	)		(1,320	)
Employee retention tax credit		(2,475	)		—
Accounts payable, accrued expenses, and other liabilities		(11,764	)		7,244
Net cash (used in) provided by operating activities		(7,901	)		4,746
Cash flows from investing activities:
Purchases of property and equipment		(429	)		(292	)
Purchase of businesses		—			(4,750	)
Sale of investment securities		—			11
Net cash used in investing activities		(429	)		(5,031	)
Cash flows from financing activities:
Payments of notes payable and deferred consideration		(665	)		(7,786	)
Proceeds from line of credit		19,469			—
Payments on line of credit		(14,469	)		(1,956	)
Debt issuance costs		(271	)		—
Issuance of common stock		—			12,378
Net cash provided by financing activities		4,064			2,636
Net change in cash and cash equivalents		(4,266	)		2,351
Cash and cash equivalents at beginning of period		13,062			17,849
Cash and cash equivalents at end of period	$	8,796		$	20,200

~~See accompanying & Notes to Condensed Consolidated Financial Statements~~

~~CINEDIGM CORP.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF EQUITY~~

~~(Unaudited)~~

~~(In thousands, except share data)~~

Series A Preferred Stock Class A
Common Stock Treasury Additional Paid-In Accumulated Accumulated
Other
Comprehensive Total Stockholders’
Equity Non-Controlling Total
Equity
Shares Amount Shares Amount Shares Amount Capital Deficit Loss (Deficit) Interest (Deficit)
Balances as of March 31, 2022 7 $ 3,559 175,313,584 $ 174 1,315,851 $ (11,608 ) $ 522,601 $ (472,310 ) $ (163 ) $ 42,253 $ (1,303 ) $ 40,950
Foreign exchange translation — — — — — — — — 48 48 — 48
Stock-based compensation — — — — — — 980 — — 980 — 980
Preferred stock dividends paid with common stock — — 108,024 — — — 88 — — 88 — 88
Preferred stock dividends accrued — — — — — — — (88 ) — (88 ) — (88 )
Net income (loss) — — — — — — — (6,005 ) — (6,005 ) 18 (5,987 )
Balances as of June 30, 2022 7 $ 3,559 175,421,608 $ 174 1,315,851 $ (11,608 ) $ 523,669 $ (478,403 ) $ (115 ) $ 37,276 $ (1,285 ) $ 35,991
Foreign exchange translation — — (362 ) (362 ) (362 )
Stock-based compensation — — 791 791 791
Preferred stock dividends paid with common stock — — 178,572 88 88 88
Issuance of common stock in connection with performance stock units and annual incentive awards, net of employee payroll taxes — — 2,066,879 2 871 873 873
Issuance of common stock for BD Earnout commitment — — 334,037 238 238 238
Preferred stock dividends accrued — — (88 ) (88 ) (88 )
Net income (loss) — — (5,664 ) (5,664 ) 9 (5,655 )
Balances as of September 30, 2022 7 $ 3,559 178,001,096 $ 176 1,315,851 $ (11,608 ) $ 525,657 $ (484,155 ) $ (477 ) $ 33,152 $ (1,276 ) $ 31,876

See accompanying Notes to Condensed Consolidated Financial Statements

CINEDIGM CORP.

SUPPLEMENTAL CASH FLOW INFORMATION AND DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITY

(Unaudited)

(In thousands)


	Nine Months Ended December 31,
	2022			2021
Cash interest paid	$	58		$	701
Income taxes paid		—			79
Noncash investing and financing activities:
Accrued dividends on preferred stock		88			89
Issuance of Class A common stock for payment of accrued preferred stock dividends		264			267
Issuance of Class A common stock for business combination		—			4,824
Deferred consideration in purchase of business		—			1,980
Earnout consideration in purchase of a business		—			1,461
Earnout consideration paid with common shares of Company		(238	)		—
Earnout consideration adjustment		80			—
Treasury shares acquired for withholding taxes		—			5
Issuance of common stock for Board of Director compensation		3			—

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~EQUITY

(Unaudited)

(In ~~thousands)~~thousands, except share data)

Six Months Ended
September 30,
2022 2021
Cash flows from operating activities:
Net (loss) income $ (11,642 ) $ 4,999
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization of property and equipment and amortization of intangible assets 1,984 2,632
Changes in fair value of equity investment in Metaverse 1,828 (1,000 )
Gain from forgiveness of PPP loan - (2,178 )
Impairment of advances 614 399
Provision for doubtful accounts 47 (40 )
Amortization of debt issuance costs included in interest expense 12 -
Stock-based compensation, inclusive of $551 withheld for employee payroll taxes for shares not issued 3,198 1,929
Interest expense for deferred consideration 391 -
Interest expense for earnout consideration 104 -
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable 5,857 (2,887 )
Inventory (41 ) 44
Unbilled revenue (298 ) (697 )
Prepaids and other current assets, and other long-term assets (2,913 ) 961
Accounts payable, accrued expenses, and other liabilities (5,494 ) 5,953
Deferred revenue 74 (757 )
Net cash (used in) provided by operating activities (6,279 ) 9,358
Cash flows from investing activities:
Purchases of property and equipment (274 ) (81 )
Purchase of businesses - (4,750 )
Sale of equity investment in Metaverse - 11
Net cash used in investing activities (274 ) (4,820 )
Cash flows from financing activities:
Payments of notes payable (443 ) (7,786 )
Proceeds (payments) from line of credit, net of debt issuance cost 3,610 (1,956 )
Net cash provided by (used in) financing activities 3,167 (9,742 )
Net change in cash and cash equivalents (3,386 ) (5,204 )
Cash and cash equivalents at beginning of period 13,062 17,849
Cash and cash equivalents at end of period $ 9,676 $ 12,645


	Preferred Stock				Common Stock					Treasury					Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Stockholders’			Non Controlling
	Shares		Amount		Shares			Amount		Shares		Amount			Capital		Deficit			Loss			Equity			Interest			Total
Balances as of March 31, 2021 (Audited)		7	$	3,559		166,228,568		$	164		1,313,836	$	(11,603	)	$	499,272	$	(474,080	)	$	(68	)	$	17,244		$	(1,362	)	$	15,882
Foreign exchange translation		—		—		—			—		—		—			—		—			(54	)		(54	)		—			(54	)
Stock-based compensation		—		—		35,714			—		—		—			983		—			—			983			—			983
Issuance of common stock in connection with a business combination		—		—		1,483,129			2		—		—			2,504		—			—			2,506			—			2,506
Preferred stock dividends paid with common stock		—		—		53,278			—		—		—			89		(89	)		—			—			—			—
Net income		—		—		—			—		—		—			—		5,187			—			5,187			7			5,194
Balances as of June 30, 2021		7	$	3,559		167,800,689		$	166		1,313,836	$	(11,603	)	$	502,848	$	(468,982	)	$	(122	)	$	25,866		$	(1,355	)	$	24,511
Foreign exchange translation		—		—		—			—		—		—			—		—			35			35			—			35
Stock-based compensation		—		—		132,630			—		—		—			946		—			—			946			—			946
Issuance of common stock in connection with business combinations		—		—		1,179,156			1		—		—			2,317		—			—			2,318			—			2,318
Treasury stock in connection with taxes withheld from employees		—		—		(2,015	)		—		2,015		(5	)		—		—			—			(5	)		—			(5	)
Preferred stock dividends		—		—		—			—		—		—			—		(89	)		—			(89	)		—			(89	)
Net loss		—		—		—			—		—		—			—		(184	)		—			(184	)		(11	)		(195	)
Balances as of September 30, 2021		7	$	3,559		169,110,460		$	167		1,315,851	$	(11,608	)	$	506,111	$	(469,255	)	$	(87	)	$	28,887		$	(1,366	)	$	27,521
Foreign exchange translation		—		—					—		—		—					—			(14	)		(14	)		—			(14	)
Stock-based compensation		—		—		147,712			—		—		—			1,349		—			—			1,349			—			1,349
Issuance of common stock in connection with equity line purchase commitment		—		—		210,084			—		—		—			—		—			—			—			—			—
Preferred stock dividends		—		—		102,697			—		—		—		178			—			—			178			—			178
Issuance of common stock in connection with performance stock units		—		—	263				—		—		—			—		—			—			—			—			—
Issuance of common stock in connection with equity line, net		—		—		5,300,000			7		—		—			12,371		—			—			12,378			—			12,378
Preferred stock dividends accrued		—		—		—			—		—		—		89			(89	)		—			—			—			—
Net income (loss)		—		—		—			—		—		—			—		(385	)		—			(385	)		(19	)		(404	)
Balances as of December 31, 2021		7	$	3,559		174,871,216		$	174		1,315,851	$	(11,608	)	$	520,099	$	(469,729	)	$	(101	)	$	42,394		$	(1,385	)	$	41,009

See accompanying Notes to Condensed Consolidated Financial Statements

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands, except share data)


	Preferred Stock				Common Stock				Treasury					Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Stockholders'			Non Controlling
	Shares		Amount		Shares		Amount		Shares		Amount			Capital		Deficit			Loss			Equity			Interest			Total
Balances as of March 31, 2022 (Audited)		7	$	3,559		175,313,584	$	174		1,315,851	$	(11,608	)	$	522,601	$	(472,310	)	$	(163	)	$	42,253		$	(1,303	)	$	40,950
Foreign exchange translation		—		—		—		—		—		—			—		—			48			48			—			48
Stock-based compensation		—		—		—		—		—		—			980		—			—			980			—			980
Preferred stock dividends paid with common stock		—		—		108,024		—		—		—			88		—			—			88			—			88
Preferred stock dividends accrued		—		—		—		—		—		—			—		(88	)		—			(88	)		—			(88	)
Net income (loss)		—		—		—		—		—		—			—		(6,005	)		—			(6,005	)		18			(5,987	)
Balances as of June 30, 2022		7	$	3,559		175,421,608	$	174		1,315,851	$	(11,608	)	$	523,669	$	(478,403	)	$	(115	)	$	37,276		$	(1,285	)	$	35,991
Foreign exchange translation		—		—		—		—		—		—			—		—			(362	)		(362	)		—			(362	)
Stock-based compensation		—		—		—		—		—		—			791		—			—			791			—			791
Preferred stock dividends paid with common stock		—		—		178,572		—		—		—			88		—			—			88			—			88
Issuance of common stock in connection with performance stock units and annual incentive awards, net of employee payroll taxes		—		—		2,066,879		2		—		—			871		—			—			873			—			873
Issuance of common stock for BD Earnout commitment		—		—		334,037		—		—		—			238		—			—			238			—			238
Preferred stock dividends accrued		—		—		—		—		—		—					(88	)		—			(88	)		—			(88	)
Net income (loss)		—		—		—		—		—		—			—		(5,664	)		—			(5,664	)		9			(5,655	)
Balances as of September 30, 2022		7	$	3,559		178,001,096	$	176		1,315,851	$	(11,608	)	$	525,657	$	(484,155	)	$	(477	)	$	33,152		$	(1,276	)	$	31,876
Foreign exchange translation		—		—		—		—		—		—			—		—			88			88			—			88
Stock-based compensation		—		—		—		—		—		—			657		—			—			657			—			657
Preferred stock dividends paid with common stock		—		—		224,359		—		—		—			88		—			—			88			—			88
Issuance of common stock for Board of Director compensation		—		—		684,024		1		—		—			—		—			—			1			—			1
Preferred stock dividends accrued		—		—		—		—		—		—			—		(88	)		—			(88	)		—			(88	)
Net income		—		—		—		—		—		—			—		5,014			—			5,014			8			5,022
Balances as of December 31, 2022		7	$	3,559		178,909,479	$	177		1,315,851	$	(11,608	)	$	526,402	$	(479,229	)	$	(389	)	$	38,912		$	(1,268	)	$	37,644

See accompanying Notes to Condensed Consolidated Financial Statements

CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. NATURE OF OPERATIONS AND LIQUIDITY

Cinedigm Corp. (“Cinedigm,” the “Company,” “we,” “us,” or similar pronouns) was incorporated in Delaware on March 31, 2000. We are (i) a distributor and aggregator of independent movie, television and other short form content managing a library of distribution rights to thousands of titles and episodes released across digital, physical, theatrical, home and mobile entertainment platforms (“Streaming”) and (ii) a servicer of digital cinema assets for movie screens in both North America and several international countries.

We report our financial results in two ~~primary~~reportable segments as follows: ~~(1) cinema equipment business~~(i) Cinema Equipment Business ("Cinema Equipment") and ~~(2) content~~(ii) Content and ~~entertainment business~~Entertainment Business (“Content & Entertainment”). The ~~cinema equipment business~~Cinema Equipment segment consists of the non-recourse, financing vehicles and administrators for our digital cinema equipment (the “Systems”) installed in movie theatres throughout North America. It also provides fee-based support to music and movie screens as well as directly to exhibitors and other third-party customers in the form of monitoring, billing, collection and verification services. Our Content & Entertainment segment operates in: ~~(1)~~(i) ancillary market aggregation and distribution of entertainment content and ~~(2)~~(ii) branded and curated over-the-top (“OTT”) digital network business providing entertainment channels and applications.

~~Risks~~Financial Condition and ~~Uncertainties~~Liquidity

~~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,~~December 31, 2022, 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.

~~Liquidity~~

~~We have incurred net losses historically and have net loss of $11.6 million for the six months ended September 30, 2022. We also have~~has an accumulated deficit of ~~$484.2~~$479.2 million and negative working capital of ~~$10.1~~$4.5 million. For the three and nine months ended December 31, 2022, the Company had net income (loss) attributable to common shareholders of $4.9 million ~~as of September 30, 2022.~~and ($6.9) million, respectively. Net cash used in operating activities for the ~~six~~nine months ended ~~September 30,~~December 31, 2022 was ~~$6.3~~$7.9 million. We may continue to generate net losses for the foreseeable future.

The Company is party to a Loan, Guaranty, and Security Agreement with East West Bank (“EWB”) providing for a revolving line of credit (the “Line of Credit Facility”) of $5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries’ assets. The Line of Credit Facility bears interest at a rate equal to 1.5% above the prime rate, 9.0% as of December 31, 2022. The Line of Credit Facility expires on September 15, 2023 with a one-year extension available at EWB’s discretion. As of December 31, 2022, $5.0 million was outstanding on the Line of Credit Facility.

We believe ~~the combination of: (i)~~ our cash and cash equivalent balances, ~~at September 30,~~and availability under our credit facility, as of December 31, 2022 ~~and (ii) expected cash flow from operations,~~ will be sufficient ~~for~~to support our operations ~~and capital needs,~~ for at least twelve months from the filing of this report. ~~Our~~The Company may also undertake equity or debt offerings, if necessary and opportunistically available, for further 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.needs.

Our consolidated financial statements include the accounts of Cinedigm and its wholly-owned and majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.Consolidation

Investments in which we do not have a controlling interest or are not the primary beneficiary, but have the ability to exert significant influence, are accounted for under the equity method of accounting. Noncontrolling interests for which we have been determined to be the primary beneficiary are consolidated and recorded as net loss attributable to noncontrolling interest. See Note 3 ~~- Other Interests~~ ~~to the~~The accompanying interim Condensed Consolidated Financial Statements ~~for a discussion~~ of ~~our noncontrolling interests.~~

~~The preparation of consolidated financial statements~~Cinedigm Corp. have been prepared in conformity with accounting principles generally accepted in the United States ~~of America~~ (“GAAP”) and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended March 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on July 1, 2022. These Condensed Consolidated Financial Statements are unaudited and have been prepared by the Company following the rules and regulations of the SEC.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, the Company believes the disclosures are adequate to make the information presented not misleading.

Accounts payable and accrued expenses consisted of the ~~following:~~following (in thousands):

Prepaid and other assets increased by $2.3 million primarily related to a $1.5 million increase in advances paid to Hallmark and digital streaming TV partners and a $0.5 increase in distribution related expenses to be reimbursed by the licensors.

Payment terms and conditions vary by customer and typically provide net 30 to 90 day terms. We do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to our customer and payment for that product or service will be one year or less. We have in the past entered into arrangements in connection with activation fees due from our System deployments that had extended payment terms. The outstanding balances on these arrangements are insignificant and hence the impact of significant financing would be insignificant.

~~Revenues from our~~ Cinema Equipment Business derived from the collection of VPFs from motion picture studios are seasonal, coinciding with the timing of releases of movies by the motion picture studios. Generally, motion picture studios release the most marketable movies during the summer and the winter holiday season. The unexpected emergence of a hit movie during other periods can alter the traditional trend. The timing of movie releases can have a significant effect on our results of operations, and the results of one quarter are not necessarily indicative of results for the next quarter or any other quarter. While 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.Segment

Our Cinema Equipment ~~Business~~segment consists of financing vehicles and administrators for Systems installed nationwide in our first deployment phase (“Phase I Deployment”) to theatrical exhibitors and for Systems installed domestically and internationally in our second deployment phase (“Phase II Deployment”).

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

For certain Phase II Deployment Systems, we do not retain ownership of the residual cash flows and digital cinema equipment in Phase II Deployment after the completion of cost recoupment and at the expiration of the exhibitor master license agreements.

The Cinema Equipment ~~Business~~segment 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~~Virtual Print Fees (“VPFs”) from distributors and Alternative Content Fees (“ACFs”) from alternative content providers, and to distribute those fees to theatrical exhibitors (collectively, “Services”).

VPFs are earned, net of administrative fees, pursuant to contracts with distributors, whereby amounts are payable by a distributor to Phase I Deployment and to Phase II Deployment when distributor's movies are displayed on screens utilizing our Systems installed in movie theatres. VPFs are earned and payable to us with respect to Phase I Deployment based on a defined fee schedule until the end of the VPF term. One VPF is payable for every digital title initially displayed 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~~Deployment's 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. The Company evaluated the constraining estimates related to the variable consideration and determined that it is not probable to conclude at this point in time that a significant reversal in the amount of cumulative revenue recognized will occur when the uncertainty associated with the variable consideration is subsequently resolved.

Under the terms of our standard cinema equipment licensing agreements, exhibitors will continue to have the right to use our Systems through the end of the term of the licensing agreement, after which time, they have the option to: ~~(1)~~(i) return the Systems to us; ~~(2)~~(ii) renew their license agreement for successive one-year terms; or ~~(3)~~(iii) 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~~receives the sale proceeds. Such sales were originally contemplated as the conclusion of the digital cinema deployment plan.

The Cinema Equipment ~~Business~~segment earns an administrative fee of approximately 5%5% of VPFs collected and, in addition, earns an incentive service fee equal to ~~2.5%~~2.5% of the VPFs earned by Phase 1 ~~DC.~~Deployment. This administrative fee is related to the collection and remittance of the VPF’s and the performance obligation is satisfied at ~~that~~the 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.

During the three and nine months ended December 31, 2022, $7.4 million and $9.1 million of revenue was recognized that was included in the accounts payable balance as constrained variable consideration at the beginning of the year. The Company recognized the revenue once the uncertainty associated with the variable consideration was resolved. As of December 31, 2022, approximately $1.0 million remains on our balance sheet in accounts payable as constrained variable consideration.

Content & Entertainment ~~Business~~segment 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. Revenue is recognized at the point in time when the content is available for subscription on the digital platform (the ~~company’s~~Company’s digital content is considered functional IP), at the time of shipment for physical goods, or point-of-sale for transactional and VOD services as the control over the content or the physical title is transferred to the customer. The Company considers the delivery of content through various distribution channels to be a single performance obligation. ~~Physical revenue~~

Revenue from the sale of physical goods is recognized after deducting ~~the~~ reserves for sales returns and other ~~allowances, which are accounted for as variable consideration.~~

allowances. Reserves for potential sales returns of physical goods and other allowances are recorded based upon historical experience. If actual future returns and allowances differ from past experience, adjustments to our allowances may be required.

The Content & Entertainment ~~Business~~segment also has contracts for the theatrical distribution of ~~third party~~third-party feature movies and alternative content. The Content & Entertainment ~~Business’s~~segment’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. The Content & Entertainment ~~Business~~segment 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~~third-party feature ~~movies’~~movie's or alternative content’s theatrical release date.

The Company follows the five-step model established by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC"), Revenue from contracts with customers ("ASC ~~606~~606") when preparing its assessment of revenue ~~recognition~~recognition.

We have omitted disclosure on the transaction price allocated to remaining performance obligations and estimated timing of revenue recognition as our contracts with customers that have a duration of more than one year are immaterial.

Revenue earned by our Content & Entertainment ~~Business~~segment from the delivery of digital content and physical goods may be recognized gross or net depending on the terms of the arrangement. 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:

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~~direct operating expenses because we are responsible for delivery of the product to our customers prior to transfer of control to the customer.

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~~segment recognizes accounts receivable, net of an estimated allowance for product returns and customer chargebacks, at the time that it recognizes revenue from a sale. Reserves for product returns and other allowances is variable consideration as part of the transaction price. If actual future returns and allowances differ from past experience, adjustments to our allowances may be required.

During the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022 and 2021, ~~and 2022,~~ we did not recognize any credit losses or reversals of previously recorded provisions, and did not have any write-offs charged against the allowance.

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~~segment includes amounts related to the sale of DVDs with future release dates.

Deferred revenue relating to our Cinema & Equipment ~~Business~~segment 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 ~~September 30,~~March 31, 2022 and December 31, 2022 was ~~$0.3 million.~~$0.2 million and $0.4 million, respectively. For the three and ~~six~~nine months ended ~~September 30,~~December 31, 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.

Revenue recognized as of the six months ended September 30, 2022 and 2021 that was included in deferred revenue at the beginning of the year was $0.2 million and $0.8 million, respectively. Revenue recognized as of the three months ended September 30, 2022 and 2021 that was included in deferred revenue at the beginning of the quarter was $0.4 million and $0.3 million, respectively. We expect to recognize substantially all of the deferred revenue as of September 30, 2022 as revenue in the next three months ending December 31, 2022. During the quarter ended September 30, 2022, $1.7 million of revenue was recognized that was included in the accounts payable balance as constrained variable consideration at the beginning of the year. The Company recognized the revenue related once the uncertainty associated with the variable consideration was resolved.

When we use ~~third parties~~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.

The Company disaggregates revenue into different revenue categories for the Cinema Equipment and Content & Entertainment Businesses. The Cinema Equipment 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.Concentrations

~~The following tables present the Company’s revenue categories for the three and six months ended September 30, 2022 and 2021 (in thousands):~~

For the three months ended ~~September 30,~~December 31, 2022, Iconic, Distribution Solutions, a division of Alliance Entertainment, Amazon.com, Inc., and Tubi represented 35%, 16%, 14% and 5%, respectively, of Content & Entertainment segment revenues, and approximately 16%, 7%, 14% and 6%, respectively, of our consolidated revenues.

For the nine months ended December 31, 2022, Iconic, Distribution Solutions, a division of Alliance Entertainment, Amazon.com, Inc., and Tubi, represented 27%, 19%, 25% and 10% respectively, of Content & Entertainment segment revenues, and approximately 8%, 5%, 11% and 5%, respectively, of our consolidated revenues.

For the three ~~customers,~~months ended December 31, 2021, Amazon.com, Inc., Distribution Solutions, a division of Alliance Entertainment and Tubi, represented ~~35%~~15%, 11% and 11%, and 10% respectively, of Content & Entertainment Business revenues, and approximately 19%, and 2% and 11%, respectively, of our consolidated revenues. For the six months ended September 30, 2022, three customers, Amazon.com, Inc., Distribution Solutions, a division of Alliance Entertainment, and Tubi, represented 35% and 20%, and 16% respectively, of Content & Entertainment Business revenues, and approximately 15%, and 5% and 9%, respectively, of our consolidated revenues.

~~For the three months ended September 30, 2021, Amazon.com, Inc. Distribution Solutions, a division of Alliance Entertainment and Tubi, represented 39%, 5% and 12%~~7%, respectively, of Content & Entertainment ~~Business~~segment revenues and approximately ~~26%~~13%, 3%9% and 8%6%, respectively, of our consolidated revenues.

For the ~~six~~nine months ended ~~September 30,~~December 31, 2021, Amazon.com, Inc. Distribution Solutions, a division of Alliance Entertainment and Roku, Inc., represented ~~30%~~24%, 8%9% and ~~12%~~10%, respectively, of Content & Entertainment ~~Business~~segment revenues and approximately ~~19%~~17%, 5%6% and 7%7%, respectively, of our consolidated revenues.

Basic ~~and diluted~~ net ~~loss~~income (loss) per share is computed based on the weighted average number of shares of common ~~share has been calculated as follows:~~

~~Stock issued and treasury~~ stock ~~repurchased or reacquired~~outstanding during the ~~period are weighted for~~period. Diluted net income (loss) per share is computed by dividing the ~~portion~~net income (loss) available to common stockholders by the weighted-average number of ~~the period that they are outstanding.~~

~~We incurred net loss for the three~~common shares outstanding and ~~six months ended September 30, 2022, and therefore the impact of~~ potentially dilutive common shares ~~from~~ outstanding during the period. Potentially dilutive common shares include stock options and warrants ~~totaling 9,664,050~~outstanding during the period, using the treasury stock method. Potentially dilutive common shares ~~as of September 30, 2022, was~~are excluded from the computations of ~~loss~~diluted income (loss) per share asif their ~~impact~~effect would ~~have been~~be anti-dilutive. A net loss available to common stockholders causes all potentially dilutive securities to be anti-dilutive and are not included.

~~We had~~Basic and diluted net income ~~for~~(loss) per share are computed as follows (in thousands, except share and per share data):

For the three and nine months ended ~~September 30,~~December 31, 2021, ~~11,937,243~~12,088,473 and 8,484,982, respectively, potentially dilutive shares have been excluded from the diluted loss per share as their impact would have been antidilutive. ~~We had~~

We indirectly own ~~100%~~100% of the common equity of CDF2 Holdings, LLC (“CDF2 Holdings”), which was created for the purpose of capitalizing on the conversion of the exhibition industry from film to digital technology. CDF2 Holdings assists its customers in procuring the equipment necessary to convert their systems to digital technology by providing financing, equipment, installation and related ongoing services.

CDF2 Holdings is a Variable Interest Entity (“VIE”), as defined in ~~Accounting Standards Codification~~ASC Topic 810 (“ASC 810”), ~~“Consolidation.”~~Consolidation. ASC 810 requires the consolidation of VIEs by an entity that has a controlling financial interest in the VIE which entity is thereby defined as the primary beneficiary of the VIE. To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, among other factors. Although we indirectly, wholly own CDF2 Holdings, we, a third party that also has a variable interest in CDF2 Holdings, and an independent third party manager must mutually approve all business activities and transactions that significantly impact CDF2 Holdings’ economic performance. We have therefore assessed our variable interests in CDF2 Holdings and determined that we are not the primary beneficiary of CDF2 Holdings. As a result, CDF2 Holdings’ financial position and results of operations are not consolidated in our financial position and results of operations. In completing our assessment, we identified the activities that we consider most significant to the economic performance of CDF2 Holdings and determined that we do not have the power to direct those activities, and therefore we account for our investment in CDF2 Holdings under the equity method of accounting.

As of ~~September 30,~~December 31, 2022 and March 31, 2022, our maximum exposure to loss, as it relates to the non-consolidated CDF2 Holdings entity, represents accounts receivable for service fees under a master service agreement with CDF2 Holdings. Such accounts receivable was ~~$0.4~~$2.1 million and ~~$0.8~~$0.8 million as of ~~September 30,~~December 31, 2022 and March 31, 2022, respectively, which are included in accounts receivable, net on the accompanying ~~consolidated balance sheets.~~Condensed Consolidated Balance Sheets.

The accompanying Condensed Consolidated Statements of Operations include ~~$0.0~~$0.1 million and ~~$0.3~~$0.2 million of digital cinema servicing revenue from CDF2 Holdings for the three months ended ~~September 30,~~December 31, 2022 and 2021, respectively. The accompanying Condensed Consolidated Statements of Operations ~~include($104) thousand~~include $0.2 million and ~~$0.2~~$0.5 million of digital cinema servicing revenue from CDF2 Holdings for the ~~six~~nine months ended ~~September 30,~~December 31, 2022 and 2021, respectively.

Total Stockholders’ Deficit of CDF2 Holdings at ~~September 30,~~December 31, 2022 and March 31, 2022 was ~~$57.5~~$59.2 million and ~~$55.6~~$55.6 million, respectively. We have no obligation to fund the operating loss or the stockholders’ deficit beyond our initial investment of ~~$2.0~~$2.0 million and, accordingly, our investment in CDF2 Holdings as of ~~September 30,~~December 31, 2022 and March 31, 2022 is carried at ~~$0.~~$0.

We own an 85% interest in CON TV, LLC, a worldwide digital network that creates original content, and sells and distributes on-demand digital content on the Internet and other consumer digital distribution platforms, such as gaming consoles, set-top boxes, handsets, and tablets. We evaluated the investment under the voting interest entity (“VOE”) model and determined that the entity should be consolidated as we have a controlling financial interest in the entity through our ownership of outstanding voting shares, and that other equity holders do not have substantive voting, participating or liquidation rights. We recorded net loss attributable to noncontrolling interest in our condensed consolidated statement of operations equal to 11% of outstanding profit interest units retained by the noncontrolling interests.

On March 15, 2022, the Company entered into a stock purchase agreement with Roundtable Entertainment Holdings, Inc. (“Roundtable”) pursuant to which the Company purchased 500 shares of Roundtable Series A Preferred Stock and warrants to purchase 100 shares of Roundtable Common Stock (together, the “Roundtable Securities”). The Company ~~paid~~funded the purchase ~~price for~~of the Roundtable Securities by issuing ~~to Roundtable~~ 316,937 shares of Common Stock ~~is based on the closing price of the Company on the date of the purchase.~~to Roundtable. The Company recorded ~~$0.2~~$0.2 million for the purchase of the ~~Roundtable~~ Securities which is included in other long-term assets on the consolidated balance sheet. The investment in the Roundtable Securities was made in connection with a proposed collaboration with Roundtable regarding production and distribution of streaming content including the launch of high profile branded enthusiast streaming channels.Condensed Consolidated Balance Sheets. The Roundtable investment was accounted for using the cost method and is included within other ~~long term~~long-term assets.

As of ~~September 30,~~December 31, 2022, the number of shares of Common Stock authorized for issuance was 275,000,000 shares.

During the three months ended ~~September 30,~~December 31, 2022, the Company issued ~~2,579,488~~908,383 shares of Common ~~Stock .~~Stock. This is comprised of ~~178,572~~224,359 shares in payment of preferred stock dividends ~~2,066,879~~and 684,024 restricted shares issued ~~on August 18,2022~~ in connection with ~~the vesting~~Board of ~~grants pursuant to the 2017 Equity Incentive Plan, and 334,037 shares issued in payment of the Bloody Disgusting earnout commitment.~~Director compensation.

During the ~~six~~nine months ended ~~September 30,~~December 31, 2022, the Company issued ~~2,687,512~~3,595,895 shares of Common ~~Stock .~~Stock. This is comprised of ~~286,596~~510,955 shares in payment of preferred stock dividends, ~~2,066,879~~2,750,903 shares issued on August 18, 2022 in connection with the vesting of grants pursuant to the 2017 Equity Incentive Plan, and 334,037 shares issued in payment of the Bloody Disgusting earnout commitment.

During the nine months ended December 31, 2021, we issued 8,642,648 shares of Common Stock which consist of the sale of shares of our Class A common stock, issuance of Common Stock for business combination, the issuances of Common Stock in payment of preferred stock dividends and in payment of Board of Director retainer fees.

Cumulative dividends in arrears on preferred stock were ~~$0.1 million and $0.2~~$0.1 million as of ~~September 30,~~December 31, 2022 and ~~2021, respectively.~~2021. In May, June and ~~July~~November 2022, ~~and 2021,~~ we paid preferred stock dividends in arrears in the form of ~~286,596 and 53,278~~510,955 shares of Class A Common ~~Stock, respectively.~~Stock.

We have treasury stock, at cost, consisting of 1,315,851 ~~and 1,315,851~~ shares of Common Stock at ~~September 30,~~December 31, 2022 and March 31, ~~2022, respectively.~~2022.

Awards issued under our 2000 Equity Incentive Plan (the “2000 Plan”) may be in any of the following forms (or a combination thereof) (i) stock option awards; (ii) ~~stock appreciation rights;~~SARs; (iii) stock or restricted stock or restricted stock units; or (iv) performance awards. The 2000 Plan provides for the granting of incentive stock options (“ISOs”) with exercise prices not less than the fair market value of our Common Stock on the date of grant. ISOs granted to shareholders having more than ~~10%~~10% of the total combined voting power of the Company must have exercise prices of at least ~~110%~~110% of the fair market value of our Common Stock on the date of grant. ISOs and non-statutory stock options granted under the 2000 Plan are subject to vesting provisions, and exercise is subject to the continuous service of the participant. The exercise prices and vesting periods (if any) for non-statutory options are set at the discretion of our compensation committee. On November 1, 2017, upon the consummation of the initial equity investment in Cinedigm by Bison, as a result of which there was a change of control of the Company, all stock options (incentive and non-statutory) and shares of restricted stock were vested immediately and the options became fully exercisable.

In connection with the grants of stock options and shares of restricted stock under the 2000 Plan, we and the participants have executed stock option agreements and notices of restricted stock awards setting forth the terms of the grants. The 2000 Plan provided for the issuance of up to 2,380,000 shares of Common Stock to employees, outside directors and consultants.

As of September 30, 2022, there were 212,037 stock options outstanding in the 2000 Plan with weighted average exercise price of $14.46 and a weighted average contract life of 1.07 years. As of March 31, 2022, there were ~~217,337~~ shares pursuant to stock options outstanding in the Plan with weighted average exercise price of $14.49 and a weighted average contract life of 1.54 years. A total of 5,300 options expired during the six months ended September 30, 2022.

Options outstanding ~~under the 2000 Plan as of September 30, 2022 is as follows:~~

~~An analysis of all options~~and exercisable under the 2000 Plan are as ~~of September 30, 2022 is presented below:~~follows:

In August 2017, the Company adopted the 2017 Equity Incentive Plan (the “2017 Plan). The 2017 Plan replaced the 2000 Plan, and applies to employees and directors of, and consultants to, the Company. The 2017 Plan ~~provided~~provides for the issuance of up to ~~2,108,270~~18,098,270 shares of Common Stock, in the form of various awards, including stock options, ~~stock appreciation rights (“SARs”), stock,~~SARs, restricted stock, restricted stock units, ~~performance awards~~PSUs 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. The approval of the 2017 Plan did not affect awards already granted under the 2000 Plan. On December 4, 2019, upon shareholder approval, the 2017 Plan was amended to increase the maximum number of shares of Common Stock authorized for issuance thereunder from 2,108,270 shares to 4,098,270.

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

~~On October 11, 2021, the Company amended its 2017 Plan to increase the number of shares authorized for issuance thereunder from 14,098,270 to 18,098,270.~~

~~Stock appreciation rights~~SARs outstanding under the 2017 Plan ~~as of September 30, 2022 is~~are as follows:

An analysis of all ~~stock appreciation rights~~SARs exercisable under the 2017 Plan as of ~~September 30,~~December 31, 2022 is presented below:

~~Total performance stock units (“PSUs”) outstanding are~~The following weighted average assumptions were used to estimate the fair value of SARs granted as follows:

The risk-free rates are based on the ~~activity for~~implied yield available on U.S. Treasury constant maturities with remaining terms equivalent to the respective expected terms of the options.

In addition, the Company has granted PSU awards under the 2017 Plan to employees. These awards vest upon certain performance ~~stock unit awards:~~

goals being achieved as of March 31, 2022 and 2023 and can be settled in cash or equity upon vesting. During the ~~six~~three and nine months ended ~~September 30,~~December 31, 2022, ~~zero~~the Company issued 482,628 shares of common stock, net of 199,498 shares withheld to pay taxes, related to the vesting of 682,126 of PSU awards. As of December 31, 2022, there were 696,280 of PSU awards outstanding that vest as of March 31, 2023 subject to achieving certain performance goals. No additional PSU awards were granted during the three and nine months ended December 31, 2022. During the nine months ended December 31, 2022, 482,628 shares were issued for vested ~~awards and 696,280 shares are to be issued as of September 30, 2022.~~awards.

Employee and director stock-based compensation expense related to our stock-based awards was as ~~follows:~~follows (in thousands):

There was ~~$2.1 million and $0.8~~$0.1 million of stock-based compensation ~~recorded~~expense for the three months ended ~~September 30,~~December 31, 2022 and 2021, respectively, related to ~~employees’ restricted stock awards inclusive of $551 thousand employee payroll taxes withheld for shares not issued.~~the Board. There was ~~$3.0~~$0.3 million and ~~$1.7~~$0.3 million of stock-based compensation ~~recorded~~ for the ~~six~~nine months ended ~~September 30,~~December 31, 2022 and 2021, respectively, related to ~~employees’~~Board of Directors compensation. During the nine months ended December 31, 2022, the Company issued 684,024 restricted ~~stock awards inclusive~~shares to non-employee directors.

~~There was $0.1 million~~March 31, 2022, there were 12,500 options and ~~$0.1 million~~600,000 SARs granted to employees outside of ~~stock-based compensation for~~Cinedigm's Equity Incentive Plan. During the three months ended September 30, 2022 and 2021, respectively, related to board of directors. There was $0.2 million and $0.2 million of stock-based compensation for the six months ended September 30, 2022 and 2021, respectively, related to board of directors. During the six months ended September 30, 2022, the Company issued zero restricted shares to non-employee directors.

In October 2013, we issued options outside of the 2000 Plan to 10 individuals who became employees as a result of a business combination. The employees received options to purchase an aggregate of 62,000 shares of our Common Stock at an exercise price of $17.50 per share. The options were fully vested as of October 2017 and expire 10 years from the date of grant, if unexercised. As of September 30, 2022, 12,500 of such options remained outstanding. During the year ended MarchDecember 31, 2022, ~~the Company granted 2,025,250 stock appreciation rights (“SARs”). The~~100,000 SARs were granted ~~under the 2017 Plan, except for 600,000 SARs granted to an officer of the Company~~ as an inducement ~~grant. All SARs issued have an exercise price equal~~ to ~~the fair value of the Company’s Common Stock on the date of grant and~~ a ~~maturity date of 10 years.~~new employee.

~~The following table presents information about outstanding warrants to purchase shares of our Common Stock as of September 30, 2022. All of the outstanding warrants are fully vested and exercisable.~~

On September 15, 2022, the Company entered into a Loan, Guaranty, and Security Agreement with ~~East West Bank (“EWB”).~~EWB. The agreement provided for a ~~revolving line of credit (“the~~ Line of Credit ~~Facility”)~~Facility of ~~$5.0~~$5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries’ assets. The Line of Credit Facility bears interest at a rate equal to ~~1.5%~~1.5% above the prime ~~rate.~~rate, 9.0% as of December 31, 2022. The Line of Credit Facility expires on September 15, 2023 with a one-year extension available at EWB’s discretion. As of ~~September 30,~~December 31, 2022, ~~$3.8~~$5.0 million ~~remained~~was outstanding on ~~this line~~the Line of ~~credit. The interest rates as of September 30, 2022 were approximately 7.75%.~~Credit Facility. Under the Line of Credit Facility, ~~The~~the Company is subject to certain financial and nonfinancial covenants including terms which require the Company to maintain certain metrics and ratios, maintain certain minimum cash on hand, and to report financial information to our lender on a periodic basis. During the three ~~months~~ and ~~six~~nine months ended ~~September 30,~~December 31, 2022 the ~~company~~Company had interest expense of ~~$19 thousand~~$0.1 million related to ~~this note.~~ the Line of Credit Facility.

~~We operate from leased properties under non-cancelable operating lease agreements, certain of which contain escalating lease clauses.~~

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

~~The table below presents the lease-related assets and liabilities recorded on the balance sheet as of September 30, 2022 and March 31, 2022:~~

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

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

On January 5, 2022, the Company entered into a letter agreement with Hyde Park Entertainment, Inc. (“Hyde Park”), pursuant to which the Company and Hyde Park are collaborating on the development, production and/or distribution of a project based on the novel ~~Audition~~ by Ryu Murakami (the “Audition Project”). Each of the Company and Hyde Park owns 50% of the rights in connection with the Audition Project. The Company paid $100 thousand to Hyde Park plus $26 thousand in legal fees to counsel for the Audition project. Ashok Amritraj, a director of the Company, is the Chairman and CEO of Hyde Park and has an interest in 100% of the revenues of Hyde Park. Ashok Amritraj is a current board member and related party to the Company.

~~7. SUPPLEMENTAL CASH FLOW INFORMATION AND DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITY~~

We operate in two reportable segments: Cinema Equipment ~~Business~~ and Content & ~~Entertainment Business.~~Entertainment. Our segments were determined based on the economic characteristics of our products and services, our internal organizational structure, the manner in which our operations are managed and the criteria used by our ~~CODM~~Chief Operating Decision Maker ("CODM") to evaluate performance, which is generally the segment’s operating income (loss) before depreciation and amortization.

The following tables present certain financial information related to our reportable segments and ~~Corporate:~~Corporate (in thousands):

The following employee and director stock-based compensation expense related to our stock-based awards is included in the above amounts as ~~follows:~~follows (in thousands):

We calculate income tax expense ~~based~~ upon an annual effective tax rate forecast, including estimates and assumptions. We recorded an income tax benefit (expense) of ~~zero~~$0.0 million for the three and ~~six~~nine months ended ~~September 30,~~December 31, 2022. We recorded an income tax benefit of approximately ~~$487 thousand~~$0.0 million and ~~$550 thousand~~$0.6 million for the three and ~~six~~nine months ended ~~September 30, 2021.~~December 31, 2021, respectively. We have not recorded tax benefits on our loss before income taxes because we have provided for a full valuation allowance that offsets potential deferred tax assets resulting from net operating loss carry forwards, reflecting our inability to use such loss carry forwards.

Our effective tax rate for the ~~six~~three months ended ~~September 30,~~December 31, 2022 and 2021 was ~~zero~~0% and ~~negative 12.4%~~4%, respectively. Our effective tax rate for the nine months ended December 31, 2022 and 2021 was 0% and (14%), respectively.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our historical ~~consolidated financial statements~~Condensed 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~~reportable segments as follows: ~~(1) cinema equipment business~~(i) Cinema Equipment Business ("Cinema Equipment") and ~~(2) content~~(ii) Content and ~~entertainment business~~Entertainment Business (“Content & Entertainment”). The ~~cinema equipment business~~Cinema Equipment 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~~465 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)~~(i) ancillary market aggregation and distribution of entertainment content and ~~(2)~~(ii) 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~~Cinema Equipment 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.

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

As of ~~September 30,~~December 31, 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.

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~~has an accumulated deficit of ~~$484.2~~$479.2 million and negative working capital of ~~$10.1~~$4.5 million. For the three and nine months ended December 31, 2022, the Company had net income (loss) attributable to common shareholders of $4.9 million and ($6.9) million, respectively. Net cash used in operating activities for the ~~six~~nine months ended ~~September 30,~~December 31, 2022 was ~~$6.3~~$7.9 million. ~~Based on these and prior conditions, the Company entered into the following transactions described below.~~

~~On May 20, 2020, the Company entered into a securities purchase agreement with certain investors~~We may continue to generate net losses 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 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.foreseeable future.

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. (“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~~party to ~~sell any shares under the ATM Sales Agreement. Any sales~~a Loan, Guaranty, and Security Agreement with East West Bank (“EWB”) providing for a revolving line of ~~shares made under the ATM Sales Agreement will be made pursuant the 2020 Shelf Registration Statement, for an aggregate offering price~~credit (the “Line of ~~up to $30 million. Net proceeds from~~Credit Facility”) of $5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and 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~~subsidiaries’ assets. The Line of ~~7,213,334 shares of Common Stock,~~Credit Facility bears interest at a ~~purchase price~~rate equal to 1.5% above the prime rate. The Line 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~~Credit Facility expires 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~~September 15, 2023 with a ~~single institutional investor for~~one-year extension available at EWB’s discretion. As of December 31, 2022, $5.0 million was outstanding on the ~~purchase and sale~~Line of ~~5,600,000 shares~~Credit Facility. Under the Line 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. 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, andCredit Facility, 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,~~certain financial and nonfinancial covenants including terms which require the Company ~~issued 210,084 shares of Common Stock~~ to ~~B. Riley Principal Capital (the “Commitment Shares”). The purchase price of the shares of Common Stock that we elect~~maintain certain metrics and ratios, maintain certain minimum cash on hand, and 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. 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. Net proceeds from such sales totaled $12.4 million. 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.

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. (“AMC”). 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. A portion of the total proceeds was utilized to pay off the remaining Prospect note payable.

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 relatedreport financial information to our ~~major shareholder. Our major shareholder also maintains~~lender on 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.periodic basis.

On April 10, 2020, the Company purchased an additional 15% interest in Metaverse in a private transaction from shareholders of Metaverse that are affiliated with the major shareholder of the Company. The Company recorded an additional equity investment of approximately $28.2 million, which is the fair market value of the Metaverse shares on the transaction date on the Stock Exchange of Hong Kong, in exchange for the Company’s common stock of $11.0 million, valued at the date of the issuance of the Common Stock of the Company. The difference in the value of shares received in Metaverse and shares issued by the Company is deemed as contributed capital and recorded in additional paid-in capital. This transaction was also recorded as an equity investment in Metaverse.

The Company has accounted for these investments under the equity method of accounting as the Company can exert significant influence over Metaverse with its direct ownership and affiliation with the Company’s majority shareholders. The Company has made an irrevocable election to apply the fair value option under ASC 825-10, Financial Instruments, as it relates to its equity investment in Metaverse.

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: (i)~~ our cash and cash equivalent balances, ~~at September 30,~~and availability under our credit facility, as of December 31, 2022 ~~and (ii) expected cash flow from operations~~ will be sufficient ~~for~~to support our operations ~~and capital needs,~~ for at least twelve months from the filing of this report. ~~Our~~The Company may also undertake equity or debt offerings, if necessary and opportunistically available, for further 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.needs.

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~~Condensed Consolidated Financial Statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Our significant accounting policies are discussed in Note 2 – Summary of Significant Accounting Policies, of the Notes to the Condensed Consolidated Financial Statements, included in Item 1, Condensed Consolidated Financial Statements (Unaudited), of this Quarterly Report on Form 10-Q. Management believes that ~~the following accounting policies~~fair value estimates, revenue recognition, asset acquisitions and business combinations are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our ~~board~~Board of ~~directors.~~Directors.

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 six months ended September 30, 2022 and 2021, no impairment charge was recorded to goodwill, intangible, and long-lived assets.~~

~~The fair value measurement disclosures are grouped into three levels based on valuation factors:~~

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.

~~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.~~

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.

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.~~

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. 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.

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

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. Revenue is recognized at the point in time when the performance obligation is satisfied, which is when the content is available for subscription on the digital platform, at the time of shipment for physical goods, or point-of-sale for transactional and VOD services as the control over the content or the physical title is transferred to the customer. The Company considers the delivery of content through various distribution channels to be a single performance obligation. Physical revenue is recognized after deducting the reserves for sales returns and other allowances, which are accounted for as variable consideration.

Physical goods 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. 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.

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:

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.

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. Reserves for product returns and other allowances is variable consideration as part of the transaction price. If actual future returns and allowances differ from past experience, adjustments to our allowances may be required.

~~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 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.

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.

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.

~~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,~~December 31, 2022 and 2021 (in thousands):

~~Revenues generated by our Cinema Equipment Business segment decreased as a result of the lower system~~

Streaming and Digital experienced 79% growth in “FAST” and TV-VOD 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. Blockbuster 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 compareddue to ~~the three months ended September 30, 2021. The increase is consistent with~~ the addition of ~~seven~~six new streaming channels related to ~~Bloody Disgusting and DMR~~the Asian Media Rights, LLC d/b/a Digital Media Rights ("DMR") business ~~acquisitions~~acquisition and five managed channel additions of The Country Network, Real Madrid TV, El Rey, The Elvis Presley Channel and The Only Way is ~~Essex~~Essex. Additionally, Subscription revenue grew 38% primarily due to the Screambox platform performance driven by strong content acquisition strategies driving increasing subscriptions and the aforementioned DMR business acquisition. New releases such as ~~well~~Terrifier 2, MK Ultra, Chesapeake Shores, and continued success of Demon Slayer, Highlander and Short Circuit added to overall performance.

Revenue in Base Distribution increased by 121% for the three months ended December 31, 2022 compared to the three months ended December 31, 2021. The increase is driven by significant growth in box office theatrical performance bolstered by the Terrifier 2 release during the three months ended December 31, 2022.

Revenues generated by the Cinema Equipment business increased as a result of an increase in Phase II variable consideration of $7.4 million during the ~~number of advertising partners. Additionally,~~period offset by lower system revenue and eligible VPF systems. Total system revenue recognized was ($0.3) million and $1.3 million, during the three months ended December 31, 2022 and 2021, respectively. Blockbuster content released during the period ending December 31, 2022 was consistent with Studio output from the prior period, however VPF eligible theatres decreased significantly for the same period last year.

The increase in direct operating expenses for the three months ended December 31, 2022 for the Content & Entertainment segment ~~experienced triple-digit growth~~compared to the prior year was primarily due to $6.6 million higher content and licensing costs including royalties and distribution expenses related to the continued growth in revenue noted above, coupled with a $1.2 million increase related to DVD manufacturing and fulfillment.

Selling, general and administrative expenses for the three months ended December 31, 2022 increased by $1.7 million primarily due to a $1.3 million increase in compensation expense primarily from the acquisition of DMR partially offset by a reduction in payroll taxes in the prior year as a result of the CARES Act and $0.7 million increase in other operating expenses primarily from rent, direct marketing and subscriptions, offset by $0.6 million decrease related to stock-based compensation to management and employees.

Public company expenses include accounting, legal, audit, investor relations and other related public company costs.

Depreciation expense decreased primarily due to the majority of our digital cinema projection systems reaching the conclusion of their ten-year useful lives during the three months ended December 31, 2022.

Interest expense, net increased by $0.3 million from $0.1 million for the three months ended December 31, 2021 to $0.4 million for the December 31, 2022 as a result of deferred and earnout consideration accretion related to the acquisitions of Bloody Disgusting, FoundationTV and DMR and interest expense associated with our new Line of Credit facility obtained in September 2022.

Employee retention tax credit was $2.0 million for the three months ended December 31, 2022 compared to no employee retention credit for the three months ended December 31, 2021. The employee retention tax credits were filed pursuant to the CARES Act.

Streaming and Digital experienced 102% growth in “FAST” and TV-VOD revenue ~~bolstered~~due to the addition of six new streaming channels related to the DMR business acquisition and five managed channel additions of The Country Network, Real Madrid TV, El Rey, The Elvis Presley Channel and The Only Way is Essex. Additionally, Subscription revenue grew 39% primarily due to the Screambox platform performance driven by ~~top~~strong content acquisition strategies driving increasing subscriptions and the aforementioned DMR business acquisition. Top performing titles, ~~and~~including new releases, such as the ~~Yu-Gi-Oh,~~Terrifier 2, Demon Slayer, Boon, The Ravine, The Mulligan, Incarnation, 7 Days, Chesapeake Shores, When Calls the Heart and the classics, Short Circuit and ~~Highlander.~~Highlander added to overall performance.

Revenue in Base Distribution increased by 75% for the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. The increase is driven by significant growth in box office theatrical performance bolstered by the Terrifier 2 release during the nine months ended December 31, 2022.

Revenues generated by our Cinema Equipment business decreased slightly despite an increase in Phase II variable consideration of $9.1 million during the period. Total system revenue recognized was $2.0 million and $9.1 million during the nine months ended December 31, 2022 and 2021, respectively. Blockbuster content released during the period ending December 31, 2022 was consistent with Studio output from the prior period, however VPF eligible theatres decreased significantly for the same period last year.

The increase in direct operating expenses in the nine months ended December 31, 2022 for the Content & Entertainment segment was primarily due to $11.0 million higher content and licensing costs including royalties and distribution expenses related to the continued growth in revenue noted above, coupled with a $2.4 million increase related to DVD manufacturing and fulfillment, a $1.2 million increase in delivery, platform and Software as a service (“SaaS”) and platform expenses, primarily due to the additive DMR acquisition, $0.7 million related to film restoration and conversion and website content production costs.

The decrease in direct operating expenses in the ~~quarter~~nine months ended ~~September 30,~~December 31, 2022 for the ~~Cinema~~ Equipment ~~Business~~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~~nine months ended ~~September 30,~~December 31, 2022 increased by ~~$2.4~~$8.5 million primarily due to ~~$1.5~~$2.2 million increase in ~~personnel costs~~compensation expense from the acquisitions of Fandor, DMR, and Bloody Disgusting, ~~$1.3~~$1.6 million increase in bonus, severance and insurance expense related to management and employees, $1.0 million increase related to ~~stock-based compensation to management~~legal expense and ~~employees, offset by $0.3~~$1.1 million ~~decrease~~increase in ~~professional consulting services.~~other operating expenses primarily from rent, direct marketing and subscriptions.

~~Recovery of doubtful accounts was $0.0~~Public company expenses include accounting, legal, audit, investor relations and ~~$0.1 million for the fiscal three months ended September 30, 2022 and 2021, respectively.~~other related public company costs.

Depreciation ~~and amortization~~ expense decreased ~~in our Cinema Equipment Business segment as~~primarily due to the majority of our digital cinema projection systems ~~reached~~reaching the conclusion of their ten-year useful lives during the ~~quarter~~nine months ended ~~September 30, 2022 and 2021.~~December 31, 2022.

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 during 2021.

Interest expense, ~~in our Corporate segment~~net increased by $0.6 million to $0.9 million for the nine months ended December 31, 2022 as a result of deferred and earnout consideration accretion related to the ~~acquisition~~acquisitions of Bloody Disgusting, FoundationTV and ~~DMR.~~DMR and interest expense associated with our new Line of Credit facility obtained in September 2022.

Employee retention tax credit was $2.5 million for the nine months ended December 31, 2022 compared to no employee retention credit for the nine months ended December 31, 2021. The employee retention tax credits were filed pursuant to the CARES Act.

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~~decrease in fair value of ~~$0.6~~$1.8 million during the ~~three~~nine months ended ~~September 30,~~December 31, 2022.

~~We recorded income tax expense of zero for the three months ended September 30, 2022. 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.~~

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 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 $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~~our 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~~income (loss) from continuing operations and Adjusted EBITDA has been provided in the financial results. Adjusted EBITDA should not be considered as an alternative to net income (loss) 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~~Condensed Consolidated Financial Statements prepared in accordance with GAAP.

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

~~Results of Operations for the Fiscal Six Months Ended September 30, 2022 and 2021~~

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. 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, 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.

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 costs.

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 was $0.0 and $0.0 for the fiscal six months ended September 30, 2022 and 2021, respectively.~~

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 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 during 2021.

~~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.~~

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.

~~We recorded income tax expense of zero for the six months ended September 30, 2022. 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~~

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, 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 $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.

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:~~

See Note 2 - Summary of Significant Accounting Policies to our ~~consolidated financial statements~~Condensed Consolidated Financial Statements included herein.

~~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.~~

For the ~~six~~nine months ended ~~September 30,~~December 31, 2022, net cash ~~provided by~~used in operating activities is primarily driven by ~~income~~loss 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~~nine months ended ~~September 30,~~December 31, 2022, the Company decreased accounts payable by ~~$5.5~~$11.8 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~~$2.7 million. Operating cash flows from the Content & Entertainment ~~Business~~segment 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~~$1.1 million in advances for the ~~six~~nine months ended ~~September 30,~~December 31, 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~~nine months ended ~~September 30,~~December 31, 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, gain on extinguishment of note payable, including other changes in working capital. Additionally, during the ~~six~~nine months ended ~~September 30,~~December 31, 2021, the Company paid down ~~$18.3~~$32.6 million to vendors at both the Content & Entertainment segment and Corporate. Operating cash flows from the Content & Entertainment segment are typically higher during our fiscal third and fourth quarters, resulting from revenues earned during the holiday season, and lower in the other two quarters as we pay royalties on such revenues. In addition, we make advances on theatrical releases and to certain home entertainment distribution clients for which initial expenditures are generally recovered within six to twenty four months. For the ~~six~~nine months ended ~~September 30,~~December 31, 2021 revenues from the sale of digital projections Systems was ~~$7.8~~$9.1 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.

~~The following table summarizes our significant contractual obligations as of September 30, 2022:~~

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 of VPFs from motion picture studios are seasonal, coinciding with the timing of releases of movies by the motion picture studios. Generally, motion picture studios release the most marketable movies during the summer and the winter holiday season. The unexpected emergence of a hit movie during other periods can alter the traditional trend. The timing of movie releases can have a significant effect on our results of operations, and the results of one quarter are not necessarily indicative of results for the next quarter or any other quarter. While 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.

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 Report on Form 10-Q, we hold a 100% equity interest in CDF2 Holdings, which is an unconsolidated variable interest entity (“VIE”), which wholly owns Cinedigm Digital Funding 2, LLC; however, we are not the primary beneficiary of the VIE.

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.

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

The management of the Company, under the supervision and with the participation of our Chief Executive Officer and Chief ~~Operating~~Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in the Exchange Act), as of ~~September 30,~~December 31, 2022. Based on such evaluation, our principal executive officer and principal financial ~~and accounting~~ officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, on a timely basis, and (ii) accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures due to the material weaknesses identified in our internal control over financial reporting as of ~~September 30,~~December 31, 2022.

Previously Reported Material Weakness on Internal Control Over Financial Reporting

In the Annual ~~report~~Report Form 10-K for the fiscal year ended March 31, 2022 filed with the SEC on July 1, 2022, management concluded that our internal control over financial reporting was not effective as of March 31, 2022. In the evaluation, management identified material weaknesses in the following:

c) Insufficient complement of corporate personnel with appropriate levels of accounting and controls knowledge and experience commensurate with our financial reporting requirements to appropriately analyze, record and disclose accounting matters completely and accurately.

As a result of this evaluation, management extensively used outside consultants who possessed the appropriate levels of accounting and controls knowledge.

Remediation. Following identification of this control deficiency, management has implemented modifications to better ensure that the Company has appropriate and timely reviews on all financial reporting analysis. In addition, as we continue to evaluate and work to improve our internal control over financial reporting, management may determine to take additional measures to address control deficiencies or determine to modify our remediation plan. Management will test and evaluate the implementation of these modifications to ascertain whether they are designed and operating effectively to provide reasonable assurance that they will prevent or detect a material misstatement in the Company’s financial statements.

As noted above, we believe that, as a result of management’s in-depth review of its accounting processes, and the additional procedures management has implemented, there are no material inaccuracies or omissions of material fact in this Form 10-Q and, to the best of our knowledge, we believe that the ~~consolidated financial statements~~Condensed Consolidated Financial Statements in this Form 10-Q fairly present in all material respects our financial condition, results of operations and cash flows in conformity with GAAP.

We and our Board treat the controls surrounding, and the integrity of, our financial statements with the utmost priority. Management is committed to the planning and implementation of remediation efforts to address control deficiencies and any other identified areas of risk. These remediation efforts are intended to both address the identified material weakness and to enhance our overall financial control environment. We are committed to maintaining a strong internal control environment, and we believe the measures described above will strengthen our internal control over financial reporting and remediate the material weakness we have identified. Our remediation efforts have begun, and we will continue to devote significant time and attention to these remedial efforts. As we continue to evaluate and work to improve our internal control over financial reporting, management may determine to take additional measures to strengthen controls or to modify the remediation plan described above, which may require additional implementation time.

There have been no changes, other than our remediation efforts discussed above, in the Company’s internal control over financial reporting during the ~~fiscal quarter~~three months ended ~~September 30,~~December 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~The following risk factor supplements~~There have been no material changes to the Risk Factors disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2022.~~

~~We maintain an amount of outstanding indebtedness, which could impair our ability to operate our business~~2022 and ~~react to changes in our business, remain in compliance with debt covenants and make payments on our debt.~~

We maintain an amount of outstanding indebtedness, which could impair our ability to operate our business and react to changes in our business, remain in compliance with debt covenants and make payments on our debt. Our level of indebtedness could require a significant portionItem 1A of our ~~cash flow from operations to be dedicated to~~Quarterly Report on Form 10-Q for the ~~payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities.~~quarter ended September 30, 2022.

In addition, our current credit facilities contain, and any future credit facilities will likely contain, covenants and other provisions that restrict our operations. These restrictive covenants and provisions could limit our ability to obtain future financing, make needed capital expenditures, withstand a future downturn in our business or the economy in general, or otherwise conduct necessary corporate activities, and may prevent us from taking advantage of business opportunities that arise in the future. If we refinance our credit facilities, we cannot guarantee that any new credit facility will not contain similar covenants and restrictions.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Computer equipment and software			3 - ~~5 years~~
~~Internal use software~~			5 years
Digital cinema projection systems			10 years
Machinery and equipment			3 - 10 years
Furniture and fixtures			3 - 6 years
Internal-Use Software			5 years


Content Library			3 – 20 years
Advertiser Relationships and Channel			3 – 13 years
Customer Relationships			5 – 13 years
Software			10 years
Trademarks and Tradenames			2 – 15 years
Supplier Agreements			2 years


As of December 31, 2022	Cost Basis		Accumulated Amortization			Impairment			Net
Content Library	$	23,685	$	(21,038	)	$	—		$	2,647
Advertiser Relationships and Channel		11,104		(759	)		—			10,345
Customer Relationships		10,658		(7,531	)		(1,968	)		1,159
Software		3,200		(480	)		—			2,720
Trademark and Tradenames		4,026		(2,033	)		—			1,993
Total Intangible Assets	$	52,673	$	(31,841	)	$	(1,968	)	$	18,864


As of March 31, 2022	Cost Basis		Accumulated Amortization			Impairment			Net
Content Library	$	23,685	$	(20,665	)	$	—		$	3,020
Advertiser Relationships and Channel		10,081		(161	)		—			9,920
Customer Relationships		10,658		(7,327	)		(1,968	)		1,363
Software		3,200		(240	)		—			2,960
Trademark and Tradenames		4,026		(1,301	)		—			2,725
Supplier Agreements		11,430		(11,384	)		—			46
Total Intangible Assets	$	63,080	$	(41,078	)	$	(1,968	)	$	20,034

~~Trademark~~			~~3 years~~
~~Content Library~~			~~3 – 20 years~~
~~Customer Relationships~~			~~5 – 13 years~~
~~Tradename~~			~~2 – 15 years~~
~~Supplier Agreements~~			~~2 years~~
~~Advertiser relationships and Channel~~			~~3-13 years~~
~~Software~~			~~10 years~~

	September 30, 2022			March 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	9,676		$	13,062
Accounts receivable, net of allowance of $2,726 and $2,921, respectively		24,939			30,843
Inventory		157			116
Unbilled revenue		2,647			2,349
Prepaid and other current assets		8,080			5,793

Total current assets		45,499			52,163
Equity investment in A Metaverse Company, a related party, at fair value		5,200			7,028
Property and equipment, net		1,756			1,980
Operating lease right-of use assets, net		612			749
Intangible assets, net		18,554			20,034
Goodwill		21,025			21,084
Other long-term assets		1,610			1,598
Total assets	$	94,256		$	104,636
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	47,268		$	52,025
Line of credit, including unamortized debt issuance costs of $165 and $0, respectively (see Note 5)		3,622			-
Current portion of deferred consideration on purchase of business		3,523			3,432
Current portion of earnout consideration on purchase of business		741			1,081
Operating lease liabilities		127			258
Deferred revenue		270			196

Total current liabilities		55,551			56,992
Deferred consideration on purchase – net of current portion		5,615			5,600
Earnout consideration on purchase – net of current portion		651			603
Operating lease liabilities, net of current portion		489			491
Other long-term liabilities		74			-

Total liabilities		62,380			63,686
Commitments and contingencies (see Note 6)
Stockholders�� Equity
Preferred stock, 15,000,000 shares authorized; Series A 10% - $0.001 par value per share; 20 shares authorized; 7 shares issued and 7 shares outstanding at September 30, 2022 and March 31, 2022. Liquidation preference of $3,648		3,559			3,559
Common stock, $0.001 par value; Class A stock 275,000,000 and 275,000,000 shares authorized at September 30, 2022 and March 31, 2022, respectively, 179,316,947 and 176,629,435 shares issued and 178,001,096 and 175,313,584 shares outstanding at September 30, 2022 and March 31, 2022, respectively		176			174
Additional paid-in capital		525,657			522,601
Treasury stock, at cost; 1,315,851 and 1,315,851 Class A common shares at September 30, 2022 and March 31, 2022, respectively		(11,608	)		(11,608	)
Accumulated deficit		(484,155	)		(472,310	)
Accumulated other comprehensive loss		(477	)		(163	)
Total stockholders’ equity of Cinedigm Corp.		33,152			42,253
Deficit attributable to noncontrolling interest		(1,276	)		(1,303	)
Total equity		31,876			40,950
Total liabilities and equity	$	94,256		$	104,636

	Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021
Revenues	$	14,006		$	10,103		$	27,596		$	25,118
Costs and expenses:
Direct operating (excludes depreciation and amortization shown below)		8,092			3,333			15,448			7,964
Selling, general and administrative		9,597			7,159			19,412			13,202
Provision (recovery) for doubtful accounts		44			(111	)		47			(40	)
Depreciation and amortization of property and equipment		248			440			504			1,089
Amortization of intangible assets		736			696			1,480			1,543
Total operating expenses		18,717			11,517			36,891			23,758
Income (loss) from operations		(4,711	)		(1,414	)		(9,295	)		1,360
Interest expense, net		(380	)		(36	)		(513	)		(180	)
Gain on forgiveness of PPP loan		-			-						2,178
Change in fair value of equity investment in Metaverse, a related party		(572	)		666			(1,828	)		1,000
Other (income) expense, net		8			102			(6	)		91
Income (loss) before income taxes		(5,655	)		(682	)		(11,642	)		4,449
Income tax benefit (expense)		-			487			-			550
Net income (loss)		(5,655	)		(195	)		(11,642	)		4,999
Net (income) loss attributable to noncontrolling interest		(9	)		11			(27	)		4
Net income (loss) attributable to controlling interests		(5,664	)		(184	)		(11,669	)		5,003
Preferred stock dividends		(88	)		(89	)		(176	)		(178	)
Net income (loss) attributable to common stockholders	$	(5,752	)	$	(273	)	$	(11,845	)	$	4,825
Net income (loss) per Class A common stock attributable to common stockholders - basic:	$	(0.03	)	$	(0.00	)	$	(0.07	)	$	0.03
Weighted average number of Class A common stock outstanding: basic		176,895,367			168,275,139			176,161,924			167,524,744
Net income (loss) per Class A common stock attributable to common stockholders - diluted:	$	(0.03	)	$	(0.00	)	$	(0.07	)	$	0.03
Weighted average number of Class A common stock outstanding: diluted		176,895,367			168,275,139			176,161,924			170,743,885

	Series A Preferred Stock				Class A Common Stock					Treasury					Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Stockholders’ Equity			Non-Controlling			Total Equity
	Shares		Amount		Shares			Amount		Shares		Amount			Capital		Deficit			Loss			(Deficit)			Interest			(Deficit)
Balances as of March 31, 2021		7	$	3,559		166,228,568		$	164		1,313,836	$	(11,603	)	$	499,272	$	(474,080	)	$	(68	)	$	17,244		$	(1,362	)	$	15,882
Foreign exchange translation		—		—		—			—		—		—			—		—			(54	)		(54	)		—			(54	)
Stock-based compensation		—		—		35,714			—		—		—			983		—			—			983			—			983
Issuance of common stock in connection with a business combination		—		—		1,483,129			2		—		—			2,504		—			—			2,506			—			2,506
Preferred stock dividends paid with common stock		—		—		53,278			—		—		—			89		(89	)		—			—			—			—
Net income		—		—		—			—		—		—			—		5,187			—			5,187			7			5,194
Balances as of June 30, 2021		7		3,559		167,800,689			166		1,313,836		(11,603	)		502,848		(468,982	)		(122	)		25,866			(1,355	)		24,511
Foreign exchange translation		—		—		—			—		—		—			—		—			35			35			—			35
Stock-based compensation		—		—		132,630			—		—		—			946		—			—			946			—			946
Issuance of common stock in connection with business combinations		—		—		1,179,156			1		—		—			2,317		—			—			2,318			—			2,318
Treasury stock in connection with taxes withheld from employees		—		—		(2,015	)		—		2,015		(5	)		—		—			—			(5	)		—			(5	)
Preferred stock dividends		—		—		—			—		—		—			—		(89	)		—			(89	)		—			(89	)
Net loss		—		—		—			—		—		—			—		(184	)		—			(184	)		(11	)		(195	)
Balances as of September 30, 2021		7		3,559		169,110,460			167		1,315,851		(11,608	)		506,111		(469,255	)		(87	)		28,887			(1,366	)		27,521

	Series A Preferred Stock				Class A Common Stock				Treasury					Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Stockholders’ Equity			Non-Controlling			Total Equity
	Shares		Amount		Shares		Amount		Shares		Amount			Capital		Deficit			Loss			(Deficit)			Interest			(Deficit)
Balances as of March 31, 2022		7	$	3,559		175,313,584	$	174		1,315,851	$	(11,608	)	$	522,601	$	(472,310	)	$	(163	)	$	42,253		$	(1,303	)	$	40,950
Foreign exchange translation		—		—		—		—		—		—			—		—			48			48			—			48
Stock-based compensation		—		—		—		—		—		—			980		—			—			980			—			980
Preferred stock dividends paid with common stock		—		—		108,024		—		—		—			88		—			—			88			—			88
Preferred stock dividends accrued		—		—		—		—		—		—			—		(88	)		—			(88	)		—			(88	)
Net income (loss)		—		—		—		—		—		—			—		(6,005	)		—			(6,005	)		18			(5,987	)
Balances as of June 30, 2022		7	$	3,559		175,421,608	$	174		1,315,851	$	(11,608	)	$	523,669	$	(478,403	)	$	(115	)	$	37,276		$	(1,285	)	$	35,991
Foreign exchange translation		—		—																(362	)		(362	)					(362	)
Stock-based compensation		—		—											791								791						791
Preferred stock dividends paid with common stock		—		—		178,572									88								88						88
Issuance of common stock in connection with performance stock units and annual incentive awards, net of employee payroll taxes		—		—		2,066,879		2							871								873						873
Issuance of common stock for BD Earnout commitment		—		—		334,037									238								238						238
Preferred stock dividends accrued		—		—													(88	)					(88	)					(88	)
Net income (loss)		—		—													(5,664	)					(5,664	)		9			(5,655	)
Balances as of September 30, 2022		7	$	3,559		178,001,096	$	176		1,315,851	$	(11,608	)	$	525,657	$	(484,155	)	$	(477	)	$	33,152		$	(1,276	)	$	31,876

	Total
2023	$	1,811
2024		3,048
2025		1,796
2026		1,489
2027		1,269
Thereafter		9,141
Total	$	18,554


	Total
Remainder of fiscal year 2023	$	1,252
2024		3,343
2025		2,137
2026		1,745
2027		1,269
Thereafter		9,118
	$	18,864

(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Equity investment in Metaverse, at fair value	$	—	$	—	$	5,200	$	5,200
	$	—	$	—	$	5,200	$	5,200

Liabilities:
Current portion of earnout consideration on purchase of a business	$	—	$	—	$	741	$	741
Long term portion of earnout consideration on purchase of a business		—		—		651		651
	$	—	$	—	$	1,392	$	1,392

~~Basic net income (loss) per common share attributable to common stockholders~~	=	~~Net loss attributable to common stockholders~~
		Weighted average number of common stock outstanding during the period

~~Diluted net income (loss) per common share attributable to common stockholders~~	=	~~Net loss attributable to common stockholders~~
		Weighted average number of common stock outstanding during the period plus potential dilutive shares


	Three Months Ended December 31, 2022		Nine Months Ended December 31, 2022
SARs		13,471,351		12,787,403
Stock options		12,500		12,500
		13,483,851		12,799,903

As of September 30, 2022
Range of Prices	Options Outstanding		Weighted Average Remaining Life in Years		Weighted Average Exercise Price		Aggregate Intrinsic Value (In thousands)
$1.16 - $7.40		5,000		2.75	$	7.40	$	—
$13.70 - $24.40		207,037		1.03		14.63		—
		212,037					$	—

Options Exercisable				Weighted Average Remaining Life in Years				Weighted Average Exercise Price				Aggregate Intrinsic Value (In thousands)
	212,037				1.07			$	14.46				—


	As of December 31, 2022:
Range of Prices	Options Outstanding and Exercisable		Weighted Average Remaining Life in Years		Weighted Average Exercise Price		Aggregate Intrinsic Value (In thousands)
$1.16 - $7.40		5,000		2.50	$	7.40	$	—
$13.70 - $24.40		207,037		0.78		14.63		—
		212,037		0.82	$	14.46	$	—


	As of March 31, 2022:
Range of Prices	Options Outstanding and Exercisable		Weighted Average Remaining Life in Years		Weighted Average Exercise Price		Aggregate Intrinsic Value (In thousands)
$7.40		5,000		3.25	$	7.40	$	—
$14.00 - $24.40		212,337		1.50		14.65		—
		217,337		1.54	$	14.49	$	—


	As of March 31, 2022:
Range of Prices	SARs Outstanding		Weighted Average Remaining Life in Years		Weighted Average Exercise Price		Aggregate Intrinsic Value (In thousands)
$0.54 - $0.74		5,550,000		8.74	$	0.62	$	1,208
$1.16 - $1.47		2,283,610		7.90		1.37		—
$1.71 - $2.10		2,455,738		8.91		1.97		—
$2.23 - $2.56		604,250		9.60		2.32		—
		10,893,598					$	1,208

SAR Exercisable				Weighted Average Remaining Life in Years				Weighted Average Exercise Price				Aggregate Intrinsic Value (In thousands)
	4,575,590				7.61			$	1.20				-


SARs Exercisable		Weighted Average Remaining Life in Years		Weighted Average Exercise Price		Aggregate Intrinsic Value (In thousands)
	5,448,345		7.75	$	1.13	$	—

	Six Months Ended September 30, 2022
	Nine Months Ended December 31, 2022
SARs Outstanding - March 31, 2022		10,893,598
Issued		- 3,100,000
Forfeited		(~~92,048~~522,245	)
Total SARs Outstanding ~~September 30,~~- December 31, 2022		~~10,801,550~~ 13,471,353

	Six Months Ended September 30, 2022
~~PSUs Outstanding March 31, 2022~~		~~696,280~~
~~Issued~~		-
~~Forfeited~~		-
~~Total PSUs Outstanding September 30, 2022~~		~~696,280~~


	Nine Months Ended December 31, 2022
Expected dividend yield		—
Expected equity volatility		111.89	%
Expected term (years)		6.50
Risk-free interest rate		4.49	%
Exercise price	$	0.49
Market price per share	$	0.49
Weighted average fair value per SAR	$	0.43

	Shares		Weighted Average Grant Date Fair Value
Unvested balance at March 31, 2022		696,280	$	1.25
Granted		-		-
Vested		-		-
Unvested balance at September 30, 2022		696,280	$	1.25

Recipient		Amount outstanding				Expiration		Exercise price per share
5-year Warrant issued to Bison Entertainment and Media Group(“ BEMG”) in connection with a term loan agreement			1,400,000			December 2022		$	1.80

(In thousands)	Classification on the Balance Sheet	September 30, 2022		March 31, 2022
Assets
Noncurrent	Operating lease right-of-use asset, net	$	612	$	749
Liabilities
Current	Operating leases – current portion		127		258
Noncurrent	Operating leases – long-term portion		489		491
Total operating lease liabilities		$	616	$	749

	Three Months Ended		Three Months Ended
(In thousands)	September 30, 2022		September 30, 2021
Operating lease cost	$	111	$	23
Total lease cost	$	111	$	23

	Six Months Ended		Six Months Ended
(In thousands)	September 30, 2022		September 30, 2021
Operating lease cost	$	196	$	45
Total lease cost	$	196	$	45


Content & Entertainment ~~Business~~		Leading independent streaming company of content and channels. We collaborate with producers and other content owners to market, source, curate and distribute independent content to targeted and under-served audiences in theatres and homes, and via mobile and emerging platforms.

	As of September 30, 2022
(In thousands)	Intangible Assets, net		Goodwill		Total Assets		Notes Payable, Non- Recourse		Notes Payable		Operating lease liabilities
Cinema Equipment Business	$	-	$	-	$	13,553	$	-	$	-	$	-
Content & Entertainment Business		18,466		21,025		70,250		-		-		614
Corporate		88		-		10,453		-		3,622		2
Total	$	18,554	$	21,025	$	94,256	$	-	$	3,622	$	616


	Condensed Consolidated Statement of Operations
	Three Months Ended December 31, 2022
	Cinema Equipment		Content & Entertainment			Corporate			Consolidated
Revenues	$	7,186	$	20,696		$	—		$	27,882
Direct operating		89		14,322			—			14,411
Selling, general and administrative		912		3,794			4,401			9,107
Allocation of corporate overhead		88		2,407			(2,495	)		—
Depreciation and amortization		82		734			108			924
Total operating expenses		1,171		21,257			2,014			24,442
Operating income (loss)	$	6,015	$	(561	)	$	(2,014	)	$	3,440

	Statements of Operations
	Three Months Ended September 30, 2022
	(in thousands)
	Cinema Equipment Business		Content & Entertainment Business			Corporate			Consolidated
Revenues	$	2,605	$	11,401		$	-		$	14,006
Direct operating (exclusive of depreciation and amortization shown below)		126		7,966			-			8,092
Selling, general and administrative		455		3,562			5,580			9,597
Allocation of corporate overhead		93		2,492			(2,585	)		-
Provision of doubtful accounts		44		-			-			44
Depreciation and amortization of property and equipment		104		144			-			248
Amortization of intangible assets		-		629			107			736
Total operating expenses		822		14,793			3,102			18,717
Income (loss) from operations	$	1,783	$	(3,392	)	$	(3,102	)	$	(4,711	)

	Statements of Operations
	Three Months Ended September 30, 2021
	(in thousands)
	Cinema Equipment Business			Content & Entertainment Business			Corporate			Consolidated
Revenues	$	3,253		$	6,850		$	—		$	10,103
Direct operating (exclusive of depreciation and amortization shown below)		164			3,169			—			3,333
Selling, general and administrative		431			3,480			3,248			7,159
Allocation of corporate overhead		170			1,139			(1,309	)		—
Provision for (recovery of) doubtful accounts		(130	)		19			—			(111	)
Depreciation and amortization of property and equipment		300			140			—			440
Amortization of intangible assets		—			696			—			696
Total operating expenses		935			8,643			1,939			11,517
Income (loss) from operations	$	2,318		$	(1,793	)	$	(1,939	)	$	(1,414	)