UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K
 
(Mark One)
x     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal period ended: March 31, 20142015

o    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from --- to ---
 
Commission File Number: 000-31810

Cinedigm Corp.
(Exact name of registrant as specified in its charter)

Delaware 22-3720962
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
   
902 Broadway, 9th Floor New York, NY 10010
(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 Name of each exchange on which registered
CLASS A COMMON STOCK, PAR VALUE $0.001 PER SHARE NASDAQ GLOBAL MARKET
   
Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o No x
  
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.
Yes o No x
  
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 x No o
  
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).
 
 
Yes x No o
  
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
o
x
  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
o
Large accelerated filer  o
Accelerated filer  ox
Non-accelerated filer  o
Smaller reporting company  xo
  (Do not check if a smaller reporting company)  
     
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the issuer based on a price of $1.50$1.55 per share, the closing price of such common equity on the Nasdaq Global Market, as of September 30, 2013,2014, was $64,331,768.$100,593,799. For purposes of the foregoing calculation, all directors, officers and shareholders who beneficially own 10% of the shares of such common equity have been deemed to be affiliates, but the Company disclaims that any of such persons are affiliates.

As of June 23, 2014, 76,605,14722, 2015, 74,491,762 shares of Class A Common Stock, $0.001 par value were outstanding.outstanding, which number includes 11,791,384 shares subject to our forward purchase transaction.

DOCUMENTS INCORPORATED BY REFERENCE
Certain information required by Items 10, 11, 12, 13 and 14 of Form 10-K is incorporated by reference into Part III hereof from the registrant’s Proxy Statement for the 2014 Annual Meeting of Stockholders to be held on or about September 16, 2014.None.



CINEDIGM CORP.
TABLE OF CONTENTS
 
Page
FORWARD-LOOKING STATEMENTS
1
 
PART I
ITEM 1.Business
1
ITEM 1A.Risk Factors
7
ITEM 2.Property
1819
ITEM 3.Legal Proceedings
1920
ITEM 4.Mine Safety Disclosures
1920
 
PART II
ITEM 5.Market for Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
2021
ITEM 6.Selected Financial Data
2122
ITEM 7.Management's Discussion and Analysis of Financial Condition and Results of Operations
2223
ITEM 8.Financial Statements and Supplementary Data
3741
ITEM 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
3842
ITEM 9A.Controls and Procedures
3842
ITEM 9B.Other Information
3842
 
PART III
ITEM 10.Directors, Executive Officers and Corporate Governance
3943
ITEM 11.Executive Compensation
3947
ITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
3957
ITEM 13.Certain Relationships and Related Transactions
3959
ITEM 14.Principal Accountant Fees and Services
3960
 
PART IV
ITEM 15.Exhibits, Financial Statement Schedules
40
  
SIGNATURES
41




FORWARD-LOOKING STATEMENTS

Various statements contained in this report or incorporated by reference into this report constitute “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are based on current expectations and are indicated by words or phrases such as “believe,” “expect,” “may,” “will,” “should,” “seek,” “plan,” “intend” or “anticipate” or the negative thereof or comparable terminology, or by discussion of strategy. 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. Such forward-looking statements are based largely on our current expectations and are inherently subject to risks and uncertainties. Our actual results could differ materially from those that are anticipated or projected as a result of certain risks and uncertainties, including, but not limited to, a number of factors, such as:

successful execution of our business strategy, particularly for new endeavors;
the performance of our targeted markets;
competitive product and pricing pressures;
changes in business relationships with our major customers;
successful integration of acquired businesses;
the content we distribute through our in-theatre, on-line and mobile services may expose us to liability;
general economic and market conditions;
the effect of our indebtedness on our financial condition and financial flexibility, including, but not limited to, the ability to obtain necessary financing for our business; and
the other risks and uncertainties that are set forth in Item 1, “Business”, Item 1A "Risk Factors" and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results. Except as otherwise required to be disclosed in periodic reports required to be filed by public companies with the Securities and Exchange Commission (“SEC”) pursuant to the SEC's rules, we have no duty to update these statements, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, we cannot assure you that the forward-looking information contained in this report will in fact transpire.

In this report, “Cinedigm,” “we,” “us,” “our” and the “Company” refers to Cinedigm Corp. and its subsidiaries unless the context otherwise requires.

PART I

ITEM 1.  BUSINESS

OVERVIEW

Cinedigm Corp. (formerly known as Cinedigm Digital Cinema Corp.) was incorporated in Delaware on March 31, 2000 (“Cinedigm”), and collectively with its subsidiaries, the “Company”). Cinedigm isWe are (i) a leading distributor and aggregator of independent movie, television and other short form content managing a library of distribution rights to over 52,000close to 50,000 titles and episodes released across theatrical, digital, physical, and home and mobile entertainment platforms as well as (ii) a leading servicer of digital cinema assets on over 12,000 movies screens in both North Americadomestic and several international countries.foreign movie screens.

Over the past decade, the Company hasSince our inception, we have played a significant role in the digital distribution revolution that continues to transform the media landscape. In addition to itsour pioneering role in transitioning over 12,000 movie screens from traditional analog film prints to digital distribution, the Company, through both organic growth and acquisitions, haswe have become a leading distributor of independent content. The Company distributescontent, both through organic growth and acquisitions. We distribute products for major brands such as the NFL, Discovery Networks, National Geographic and Scholastic as well as leading international and domestic content creators, movie producers, television producers and other short form digital content producers. Cinedigm collaboratesWe collaborate with producers, major brands and other content owners to market, source, curate and distribute quality content to targeted and profitable audiences through (i) theatrical releases, (ii) existing and emerging digital home entertainment platforms, including but not limited to, iTunes, Amazon Prime, Netflix, Hulu, xBox, Playstation,Xbox, PlayStation, and cable video-on-demand ("VOD") and (iii)(ii) physical goods, including DVD and Blu-ray.Blu-ray Discs. In addition, we operate a growing number of branded and curated over-the-top ("OTT") entertainment channels, including Docurama, CONtv and Dove Entertainment Channel, which is expected to launch in late summer 2015.

The Company reports itsWe report our financial results in four primary segments as follows: (1) the first digital cinema deployment (“Phase I Deployment”), (2) the second digital cinema deployment (“Phase II Deployment”), (3) digital cinema services (“Services”) and (4) media content

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and entertainment group (“Content & Entertainment” or "CEG"). The Phase I Deployment and Phase II Deployment segments are the non-recourse, financing vehicles and administrators for the Company'sour digital cinema equipment (the “Systems”) installed in movie theatres nationwide.  Thethroughout the United States and Canada, and in Australia and New Zealand. Our Services segment provides services andfee-based support to over 12,000 movie screens in theour Phase I Deployment and Phase II Deployment segments andas well as directly to exhibitors and other third party customers.  Includedcustomers in these

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services are financial, assetthe form of monitoring, billing, collection and other management services for a specified fee via service agreements with exhibitors globally. Theverification services. Our Content & Entertainment segment is a market leader in three key area of entertainment content distribution -in: (1) ancillary market aggregation and distribution theatrical releasingof entertainment content, and (2) branded and curated over-the-top ("OTT")OTT digital network business providing entertainment channels and applications.

We are structured so that our digital cinema business (collectively, our Phase I Deployment, Phase II Deployment and Services segments) operates independently from our Content & Entertainment business. As of March 31, 2015, we had approximately $157.5 million of non-recourse outstanding debt principal that relates to and is serviced by, our digital cinema business. We also have approximately $47.5 million of outstanding debt principal, as of March 31, 2015 that is attributable to our Content & Entertainment and Corporate segments.

CONTENT & ENTERTAINMENT

Content Distribution and our OTT Entertainment Channels and Applications

Cinedigm Entertainment Group, or CEG, is a leading independent content distributor in the United States as well as an innovator and leader in the quickly evolving OTT digital network business. We are unique among most independent distributors because of our direct relationships with thousands of physical retail locations and digital platforms, including Walmart, Target, iTunes, Netflix and Amazon, as well as the national Video on Demand platforms. Our library of films and television episodes encompass award-winning documentaries from Docurama Films®, next-gen Indies from Flatiron Film Company®, acclaimed independent films and festival picks through partnerships with the Sundance Institute and Tribeca Films, and a wide range of content from brand name suppliers, including National Geographic, Discovery, Scholastic, NFL, Shout! Factory, Hallmark and Jim Henson.

Additionally, we are leveraging our infrastructure, technology, content and distribution expertise to rapidly and cost effectively build and expand our OTT digital network business. Our first channel, Docurama, launched in May 2014 as an advertising-supported video on demand service ("AVOD") across most Internet connected devices and now contains nearly 800 documentary films for download. In March 2015, Wizard World, Inc. and we launched CONtv, a targeted lifestyle channel and "Freemium" service with both AVOD and subscription video on demand offerings ("SVOD"). Our Freemium business model provides users with free content and the ability to upgrade to a selection of premium services by paying subscription fees. CONtv is one of the largest Freemium OTT channels available in terms of hours of content, with thousands of hours of content, including original programs and behind the scenes footage direct from Wizard World Comic Con gatherings. Docurama and CONtv are available across most major platforms, including Apple iOS, Google Android, Roku players and TV, Samsung SmartHub devices and we expect more devices to come to market. In the fall of 2015, we expect to introduce our third OTT channel, Dove Entertainment Channel, which will be a freemium service targeted to families and kids seeking high quality and family friendly content approved by the Dove Foundation. In early 2015, we also announced a partnership with TV4 Entertainment to diversify our OTT offerings and we continue to search for other branded partners to launch additional channels.

CEG has focused its activities in the areas of: (1) ancillary market aggregation and distribution of entertainment content, and (2) branded and curated over-the-top OTT digital network business providing entertainment channels and applications. With these complementary entertainment distribution capabilities, we believe that we are capitalizing on the key drivers of value that we believe are critical to success in content distribution going forward.
In April 2012, we acquired New Video Group, Inc. ("New Video"), an independent home entertainment distributor of quality packaged and digital content that provided distribution services in the DVD, Blu-ray, Digital and VOD channels for more than 500 independent rights holders.

In October 2013, we acquired a division of Gaiam Americas, Inc. and Gaiam, Inc. (together, “Gaiam”) that maintained exclusive distribution rights agreements with large independent studios/content providers, and distributed entertainment content through home video, digital and television distribution channels (“GVE” or the “GVE Acquisition”).

Our acquisitions of New Video and GVE have made our CEG segment one of the leading independent content distributors in the United States, holding direct relationships with thousands of physical storefronts and digital retailers, including Walmart, Target, iTunes, Netflix, and Amazon, as well as all the national cable and satellite television VOD platforms.

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Our Strategy

Direct to consumer digital distribution of film and television content over the Internet is rapidly growing. We believe that our large library of film and television episodes, long-standing digital relationships with platforms, and up-to-date technologies, will allow us to build and successfully launch a diversified portfolio of narrowcast OTT channels that generate recurring revenue streams from advertising, merchandising and subscriptions. We plan to launch niche channels that make use of our existing library of titles, while partnering with strong brands that bring name recognition, marketing support and an existing customer base.

Rapid changes in the entertainment landscape require that we continually refine our strategy to adapt to new technologies and consumer behaviors. For example, we have shifted our acquisitions of home entertainment content to focus on long-term partnerships with producers of high quality, cast-driven, genre content, rather than traditional catalog based titles. In fiscal year 2015, we acquired the distribution rights to a variety of new and original films. In addition, we have accelerated our efforts to be a leader in the OTT digital network business, where we can leverage our existing infrastructure and library, in partnership with well-known brands, to distribute our content direct-to-consumers.

To market the films that we distribute, we have the films appear in a limited number of theatres, while simultaneously being available on VOD. This non-traditional, film-releasing model has allowed us to maximize publicity and make the film available to a large national audience.

We believe that we are well positioned to succeed in the OTT channel business for several key reasons:

The enormous depth and breadth of our almost 50,000 title film and television episode library,
Our digital assets and deep, long-standing relationships as launch partners that cover the major digital platforms and devices,
Our marketing expertise,
Our flexible releasing strategies, which differ from larger entertainment companies that need to protect their legacy businesses, and
Our strengthened capital base

Intellectual Property

We own certain copyrights, trademarks and Internet domain names in connection with the Content & Entertainment business. We view these proprietary rights as valuable assets. We maintain registrations, where appropriate, to protect them and monitor them on an ongoing basis.
Customers

For the fiscal year ended March 31, 2015, two customers, Walmart and Amazon, represented 10% or more of CEG's revenues and one of these customers represented approximately 12% of our consolidated revenues.

Competition

Numerous companies are engaged in various forms of producing and distributing independent movies and alternative content. These competitors may have significantly greater financial, marketing and managerial resources than we do, may have generated greater revenue and may be better known than we are at this time. 

Competitors to our Content & Entertainment segment are as follows:

Anchor Bay Entertainment
Crunchyroll
Entertainment One (eOne) Ltd.
Image Entertainment, Inc.
IFC Entertainment
Lions Gate Entertainment
Magnolia Pictures
Roadside Attractions LLC
The Weinstein Company


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DEPLOYMENT

TheOur Phase I Deployment and Phase II Deployment segments consist of the following:
Operations of: Products and services provided:
Cinedigm Digital Funding I, LLC (“Phase 1 DC”) 
Financing vehicles and administrators for the Company'sour 3,724 Systems installed nationwide in Phase 1 DC's deployment to theatrical exhibitors.  The Company retainsexhibitors, for which we retain ownership of the Systems and the residual cash flows related to the Systems after the repayment of all non-recourse debt at the expiration of exhibitor, master license agreements.

Access Digital Cinema Phase 2 Corp. (“Phase 2 DC”) Financing vehicles and administrators for the Company'sour 8,904 Systems installed in the second digital cinema deployment and international deployments, through Phase 2 DC. The Company retainsWe retain no ownership of the residual cash flows and digital cinema equipment after the completion of cost recoupment and at the expiration of the exhibitor master license agreements.

In June 2005, we formed our Phase 1 DC, a wholly-owned subsidiary of Access Digital Media, Inc. (“AccessDM”),I Deployment segment in order to purchase up to 4,000 Systems for our Phase I Deployment, under an amended framework agreement with Christie Digital Systems USA, Inc. (“Christie”). In December 2007, Phase 1 DC completed itsAs of March 31, 2015, Phase I Deployment withhad 3,724 Systems installed.

In October 2007, we formed our Phase 2 DCII Deployment segment for the administration of up to 10,000 additional Systems for our Phase II Deployment, of which a portion of such Systems have been purchased through an indirectly wholly-owned subsidiary, Access Digital Cinema Phase 2 B/AIX Corp. (“Phase 2 B/AIX”).Systems. As of March 31, 2014,2015, Phase II Deployment had 8,904 of such Systems installed.

The business ofOur Phase 1 DCI Deployment and Phase 2 DC consists of the ownershipII Deployment segments own and licensing oflicense Systems to theatrical exhibitors and the collection ofcollect virtual print fees ("VPFs") from motion picture studios and distributors, andas well as alternative content fees ("ACFs") from alternative content providers and theatrical exhibitors, when content is shown on exhibitors' screens. We have licensed the necessary software and technology solutions to the exhibitor and have facilitated the industry's transition from analog (film) to digital cinema. As part of Phase 1 DC'sthe Phase I Deployment of our Systems, Phase 1 DC haswe have agreements with nine motion picture studios and certain smaller independent studios and exhibitors, allowing Phase 1 DCus to collect VPFs and ACFs when content is shown in theatres, in exchange for having facilitated and financed the deployment on 3,724of Systems. Phase 1 DC has agreements with sixteen theatrical exhibitors that license our Systems in order to show digital content distributed by the motion picture studios and other providers, including Cinedigm's Content and& Entertainment, Group (see Content and Entertainment section below).  which is described below.

In connection with theOur Phase II Deployment Phase 2 DCsegment has entered into digital cinema deployment agreements with eight motion picture studios, and certain smaller independent studios and exhibitors, for the distribution ofto distribute digital movie releases to motion picture exhibitors equipped with our Systems, for which we and providing for payment of VPFs to Phase 2 DC andour wholly owned, non-consolidated subsidiary Cinedigm Digital Funding 2, LLC ("CDF2"CDF2 Holdings"). earn VPFs. As of March 31, 2014,2015, our Phase 2 DCII Deployment segment also entered into master license agreements with 434 exhibitors and CDF2 covering a total of 8,992 screens, whereby the exhibitors agreed to the placement of Systems as part of the Phase II Deployment.install our Systems. As of March 31, 2014, the Company has2015, we had 8,904 Phase 2 DC Systems installed, including 6,4016,414 screens under the exhibitor-buyer structure ("Exhibitor-Buyer Structure"), 1,0491,046 screens covering 10 exhibitors through non-recourse financing provided by KBC Bank NV (“KBC”), 1,4311,421 screens covering 17179 exhibitors through CDF2, and 23 screens under other arrangements with 2two exhibitors.

Exhibitors paid us an installation fee of up to $2$2.0 thousand per screen out of the VPFs collected by the Company's Digital Cinemaour Services division. The Company managessegment. We manage the billing and collection of VPFs and remitsremit to exhibitors all VPFs collected, to the exhibitors, less an administrative fee that will approximateof approximately 10%. For Phase 2 DC Systems we own and finance on a non-recourse basis, we typically received a similar installation fee of up to $2.0 thousand and an ongoing administrative fee of approximately 10% of the VPFs collected. For Systems covered under the Exhibitor-Buyer Structure and CDF2, the Company hasWe have recorded no debt, property and equipment, financing costs or depreciation recorded to its consolidated financial statements. Cinedigm will continue through June 30, 2014 to deployin connection with Systems covered under the Exhibitor-Buyer Structure through "drive-in" theatres and will continue to seek further opportunities internationally. For Phase 2 DC Systems the Company owns and finances on a non-recourse basis, it typically receives a similar up to $2 thousand installation fee and an ongoing administrative fee that will approximate up to 10% of VPFs collected.CDF2 Holdings.

VPFs are earned pursuant to the contracts with movie studios and distributors, whereby amounts are payable to our Phase 1 DCI and to Phase 2 DCII deployment businesses according to fixed fee schedules, when movies distributed by the studiostudios are displayed on screens utilizing our Systems installed in movie theatres.theatres using our installed Systems. One VPF is payable to us upon the initial booking of a movie, for every movie title displayed per System uponSystem. Therefore, the initial booking of

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such movie. The amount of VPF revenue is therefore dependentthat we earn depends on the number of unique movie titles released and displayed using theour Systems. Our Phase 2 DCII Deployment segment earns VPF revenues only for Systems that it owns.

Our Phase 2 DC'sII Deployment agreements with distributors require the payment of VPFs for ten years from the date that each system is installed,installed; however, Phase 2 DCwe may no longer collect VPFs once “cost recoupment”, as defined in the contracts with movie studios and distributors, is achieved. Cost recoupment will occur once the cumulative VPFs and other cash receipts collected by Phase 2 DCus 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, subject to maximum agreed upon amounts during the four-year rolloutroll-out period and thereafter. Furthermore, if

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cost recoupment occurs before the end of the eighth contract year, a one-time “cost recoupment bonus” is payable to us by the studios to Phase 2 DC.  Any other cashstudios. Cash flows, net of expenses, received by our Phase 2 DCII Deployment business, following the achievement of cost recoupment, are required tomust be returned to the distributors on a pro-rata basis. At this time, the Companywe cannot estimate the timing or probability of the achievement of cost recoupment.

Customers

Digital CinemaPhase I and Phase II Deployment customers are mainly motion picture studios and theatrical exhibitors. For the fiscal year ended March 31, 2014,2015, six customers, 20th Century Fox, Warner Brothers, Disney Worldwide Services, Lionsgate,Universal Pictures, Sony Pictures Releasing Corporation Universal Pictures and Warner Brothers,Lions Gate Entertainment, each represented approximately 10% or more of Phase 1 DC's revenues and together generated 71%69%, 71% and 35% of Phase 1 DC's, Phase 2 DC's and consolidated revenues, respectively. No single Phase 1 DC or Phase 2 DC customerscustomer comprised more than 10% of the Company'sour consolidated accounts receivable. We expect to continue to conduct business with each of these customers during the fiscal year ending March 31, 2015.2016.

Seasonality

Revenues earned by our Phase I and Phase II Deployment revenues derivedsegments 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. The seasonality of motion picture exhibition,exhibition; however, has become less pronounced as the motion picture studios are releasing movies somewhat more evenly throughout the year.

SERVICES

The Digital CinemaOur Services (“Services”) divisionsegment provides monitoring, billing, collection, verification and other management services to Phase 1 DC and Phase 2 DC as well as to exhibitor-buyers who purchase their own equipment. ThisOur Services segment provides such services to the Company's 3,724 screens in the Phase 1 deploymentDeployment for a monthly service fee equal to 5% of the VPFs earned by Phase 1 DC and an incentive service fee equal to 2.5% of the VPFs earned by Phase 1 DC. The Services segment also provides services to the 8,904 Phase 2 Systems deployed, as of March 31, 2014. Servicesfor which we typically receivesreceive a monthly service fee that approximates up toof approximately 10% of the VPFs earned by Phase 2 DC. The total Phase 2 service fees are subject to an annual limitation under the terms of the Company's Phase 2our agreements with the motion picture studios, and additionally, are determined based upon the respective Exhibitor-Buyer Structure, KBC or CDF2 agreements. Any unpaidUnpaid services fees in any period remain an obligation to Phase 2 DC in the cost recoupment framework. TheseSuch fees are not recognized as income or accrued as an asset on the Company'sour balance sheet given the uncertainty of the receipt and the timing thereof as future movie release and bookings are not known. Service fees are accrued and recognized only on deployed Phase 2 Systems. As a result, the annual service fee limitation is variable until these fees are paid.

In February 2013, we (i) assigned to our wholly-ownedwholly owned subsidiary, Cinedigm DC Holdings LLC (“DC Holdings LLC”)”), the (i) right and obligation to service the digital cinema projection systems from the Phase I Deployment and certain systems that were part of the Phase II Deployment, (ii) delegated to DC Holdings the right and obligation to service certain other systems that were part of the Phase II Deployment and (iii) assigned to DC Holdings LLC the right to receive servicing fees from the Phase I and Phase II Deployments. We also transferedtransferred to DC Holdings certain of our operational staff whose responsibilities and activities relate solely to the conductoperation of suchthe servicing business and to provide DC Holdings LLC with the right to use the supporting software and other intellectual property associated with the operation of the servicing business.  DC Holdings entered into a term loan agreement (the “Prospect Loan”) with Prospect Capital Corporation (“Prospect”) which restricts DC Holdings LLC and its subsidiaries (including CDF I) from, among other things, (with certain specified exceptions):
making investments;
making capital expenditures beyond certain limits;
incurring other indebtedness or liens;

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engaging in a new line of business;
entering into or amending certain agreements and contracts;
selling or disposing of assets;
acquiring, consolidating with, or merging with or into other companies; and
entering into transactions with affiliates.

Finally,Our Services segment also has international servicing partnerships in Australia and New Zealand with the Independent Cinema Association of Australia to service up to 875 screens and is currently servicing 496530 screens as of March 31, 2014. Services is exploring other similar international servicing partnerships in additional geographic locations.2015.

Customers

For the fiscal year ended March 31, 20142015, no customer comprised more than 10% of Services' revenues or accounts receivable.

Competition

Our Services segment faces limited competition domestically in its digital cinema services business as the major Hollywood movie studios have only signed digital cinema deployment agreements (“DCDAs”) with five entities, including the Company,us, and the deployment period in North America is now complete. The other entities with all such agreementsCompetitors include: Digital Cinema Implementation Partners (“DCIP”), a joint venture of three large exhibitors (Regal Entertainment Group, ("Regal"), AMC Entertainment Holdings, Inc. ("AMC") and Cinemark Holdings, Inc. ("Cinemark") focused on

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managing the conversions of those three exhibitors; Sony Digital Cinema, to support the deployment of Sony projection equipment; Christie Digital USA, Inc., to support the deployment of Christie equipment; and GDC, Inc ("GDC")Inc., to support the deployment of GDC equipment. The Company hasWe have a significantly greater market share than all other competitors beyondexcept for the DCIP consortium, which services a total of approximately 16,000 total screens representing its consortium members.

As the Company expands itswe expand our servicing platform internationally, an additional competitorcompetitors beyond those listed above consistsconsist of Arts Alliance, Inc. ("Arts Alliance"), a leading digital cinema servicer focused on the European markets, GDC, as well as other potential local start-ups seeking to service a specific international market. The Company often seeksWe typically seek to partner with a leading local entity to combine our efficient servicing infrastructure and strong studio relationships with the necessary local market expertise and exhibitor relationships.

CONTENT & ENTERTAINMENT

CEG is a leader in the digital distribution revolution that is transforming the independent content landscape, and is uniquely positioned to benefit from all aspects of the revolution, from distribution in theatres to home, mobile and emerging platforms, including iTunes, Amazon Prime, Netflix, Hulu, xBox, Playstation, and cable VOD, as well as DVD, and Blu-ray (including Ultraviolet). CEG has focused its activities on three main areas of business: (i) Aggregation and distribution of content libraries in the home entertainment market; (ii) theatrical and subsequent home entertainment releasing of newly acquired independent movies; and (iii) the creation and launching of branded, curated OTT digital entertainment channels and applications. With these three complementary entertainment distribution capabilities, Cinedigm is capitalizing on the key drivers of value we believe critical to success in content distribution going forward.

On April 20, 2012, the Company acquired Cinedigm Entertainment Corp. f/k/a New Video Group, Inc. ("New Video"), an independent home entertainment distributor of quality packaged and digital content that provides distribution services in the DVD, Blu-ray, Digital and VOD channels for more than 500 independent rights holders, and was integrated into the Company's Content & Entertainment segment.

On October 21, 2013, the Company and Cinedigm Entertainment Holdings, LLC ("CEG"), a newly-formed, wholly-owned subsidiary of the Company, acquired from Gaiam Americas, Inc. and Gaiam, Inc. (together, “Gaiam”) their division ("GVE") that maintains exclusive distribution rights agreements with large independent studios/content providers, and distributes entertainment content through home video, digital and television distribution channels (the “GVE Acquisition”). The Company agreed to an aggregate purchase price of $51.5 million, subject to a working capital adjustment, with (i) $47.5 million paid in cash and 666,978 shares of Class A Common Stock valued at $1.0 million issued upon the closing of the GVE Acquisition, and (ii) $3.0 million to be paid on a deferred basis, of which $1.0 million was paid during the fiscal year ended March 31, 2014 and the remainder was settled through the collection of a receivable during the fiscal year ended March 31, 2014. The working capital adjustment, if any, related to the purchase price has not yet been finalized between the Company and the sellers of GVE. Pending final resolution, such working capital adjustment will be recorded as adjustments to purchase considerations during the fiscal year ending March 31, 2015. Upon the closing of the GVE Acquisition, GVE became part of the Company's Content & Entertainment segment.

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Theatrical releasing

As of June 18, 2014, we have acquired 25 titles for theatrical release, ranging from drama to horror to documentaries. Our goal is to acquire 12 to 15 new movies per year. CEG acquires finished movies at film festivals and industry screenings with recent acquisitions including Night Movies with Jesse Eisenberg, Dakota Fanning and Stellan Skarsgard, Open Windows with Elijah Wood and Sasha Grey and Song One produced by and starring Anne Hathaway. CEG has also recently entered into guaranteed multi-year distribution partnerships with established producers who each agree to provide CEG with three to five new releases per annum. Examples of recent partnerships include:
Rapid Eye Films - CEG signed a multi-picture distribution and production output deal for North America encompassing 15 films. Rapid Eye Film will produce, co-produce or acquire three to four genre-centric films per year. while CEG will handle the theatrical and home entertainment release and distribution strategy for each picture, with Rapid Eye Film producing and managing the marketing;
Viva Pictures Distribution - CEG acquired ANTBOY, a highly acclaimed Danish film directed by Ask Hasselbalch, as the first of a multi-picture, multi-year deal; and
VMI Worldwide - CEG signed a multi-picture distribution and production output deal where VMI Worldwide will produce, co-produce or acquire four genre-centric films per year during the duration of the deal while CEG will handle the theatrical and home entertainment release and distribution strategies along with the marketing campaigns for each picture.

Distribution and Aggregation

As the leading distributor and aggregator of independent content, CEG maintains a significant library of distribution rights totaling in excess of 52,000 movies and television episodes across all media and grows this library annually through new rights acquisitions. We deliver nearly 10,000 digital properties to 20 platforms across seven territories for more than 900 licensors.

CEG has a competitive advantage over many independent distributors as it maintains direct sales relationships with all major physical and digital retailers, including but not limited to Walmart, Target, Kmart, Sam’s Club and Costco for physical sales and iTunes, Netflix, Amazon, Hulu, Vudu, xBox, and Playstation for digital sales. This direct access provides CEG with the most competitive pricing and marketing support from retailers which enables it to deliver superior sell through and revenues to content owners.

OTT Entertainment Channels/Applications

CEG believes that the industry is at the very beginning of an explosion of new networks that will enable content suppliers to directly reach audiences on all connected devices via various mobile platforms, connected televisions and the Internet. Most connected platforms, such as Samsung, Microsoft xBox, Sony Playstation, AppleTV, Roku, as well as other mobile devices offer a limited number of curated applications targeted at avid audiences. CEG sees a significant opportunity for growth on these platforms given our extensive library of digital rights and strong interest from our digital partners. CEG is developing a number of proprietary niche advertising-VOD and premium subscription VOD channels over the next one to three years leveraging our existing libraries. CEG's first channel, Docurama, launched in May 2013 with a seven documentary slate release in select movie theaters, along with the launch of a premium YouTube subscription channel and our first OTT application. Docurama expanded and is now available on over 165 million devices. CEG announced its second channel, CONtv, in partnership with ComicCon (OTCBB: WW) to target the fanboy / fangirl / gamer community. Wizard World is the largest operator of Comic Cons in North America with 16 Wizard World Comic Con conventions scheduled during 2014, with a broader schedule of over 25 Comic Con's planned for 2015. The conventions bring communities together to celebrate their favorite films, TV shows, celebrities, video games, technology, toys, social networking/gaming platforms, comic books and graphic novels. CEG expects to launch CONtv in Fall 2014. CEG announced is third channel, Dove Television, in partnership with the Dove Foundation, the leading service to rate content for its family friendly appropriateness, to target the family and faith-based market places. CEG intends to launch three to four channels per year following the Wizard World model in which CEG creates joint ventures with established brands that can accelerate channel launches and reduce costs and risk by contributing their brand, existing consumer relationships, marketing support and/or original programming.

Intellectual Property

There is no intellectual property related to our Content & Entertainment segment.


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Customers

For the fiscal year ended March 31, 2014, two customers, Walmart and Amazon represented 10% or more of CEG's revenues and one of these customers represented approximately 11% of the Company's consolidated revenues for the fiscal year ended March 31, 2014.

Competition

Numerous companies are engaged in various forms of producing and distributing independent movies and alternative content. These competitors may have significantly greater financial, marketing and managerial resources than we do, may have generated greater revenue and may be better known than we are. 

The Company views the following as its principal competition in its content and entertainment segment:

Anchor Bay Entertainment;
Crunchyroll;
Entertainment One (eOne);
Image Entertainment, Inc.;
IFC Entertainment;
Lionsgate Entertainment;
Magnolia Pictures;
Roadside Attractions LLC; and
The Weinstein Company.

ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

During the fiscal year ended March 31, 2014, the Companywe made the strategic decision to discontinue and exit itsour software business, Hollywood Software, Inc. d/b/a Cinedigm Software (“Software”), the Company'sour direct, wholly-owned subsidiary. Management concluded that it would bewholly owned subsidiary, in the best interests of shareholders for the Company’sorder to focus to be toward itson our CEG business unit. Further, management believedsegment. Furthermore, we believe that Software, which was previously included in our Services segment, no longer yielded the same synergies across the Company’s businesses as once existed and with the expansion ofcomplemented our content distribution business,continuing operations because we were often were in competition with Software customers.

AsOn September 23, 2014, we completed the sale of Software to a consequence, it was determined that Software met the criteria for classification as held for sale/discontinued operations. As such, Software has been adjusted to reflect fair value of its net assets and the consolidated financial statements and the notes to consolidated financial statements presented herein have been recast solely to reflect, for all periods presented, the adjustments resulting from these changes in classification for discontinued operations.third party. See Note 1 - Nature of Operations and Note 3 - Discontinued Operations to the Consolidated Financial Statements within Item 8, "FinancialFinancial Statements and Supplementary Data"Data for further information.

ENVIRONMENTAL

The nature of our business does not subject us to environmental laws in any material manner.

EMPLOYEES

As of March 31, 2014,2015, we had 179141 employees, with 14 part-time and 127 full-time, of which 11 are part-time and 168 are full-time.  Of our full-time employees, 3433 are in sales and marketing, 4243 are in operations, 13 are in research and development, 28 are in technical services, and 51 are in executive, finance, technology and administration. Excluding employees who are part of discontinued operations, we had 147 full-time employees as of March 31, 2014.administration functions.

AVAILABLE INFORMATION
 
The Company'sOur Internet website address is www.cinedigm.com. The CompanyWe will make available, free of charge at the “About Us - Investor Relations - Financial Information” section of its website, itsour Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and all amendments to those reports and statements filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC.

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In addition, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding companies that file electronically with the Commission. This information is available at www.sec.gov, the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549 or by calling 1-800-SEC-0330.


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ITEM 1A. RISK FACTORS

Risks Related to our Business
An inability to obtain necessary financing may have a material adverse effect on our financial position, operations and prospects if unanticipated capital needs arise.
Our capital requirements may vary significantly from what we currently project and be affected by unforeseen delays and expenses. We may experience problems, delays, expenses and difficulties frequently encountered by similarly-situatedsimilarly situated companies, as well as difficulties as a result of changes in economic, regulatory or competitive conditions. If we encounter any of these problems or difficulties or have underestimated our operating losses or capital requirements, we may require significantly more financing than we currently anticipate. We cannot assure you that we will be able to obtain any required additional financing on terms acceptable to us, if at all. An inability to obtain necessary financing could have a material adverse effect on our financial position, operations and prospects.
Our credit agreement (the "Cinedigm“Cinedigm Credit Agreement"Agreement”) with Société Générale ("SG"(“SG”) and certain other lenders contains certain restrictive covenants that restrict the Companya debt service, coverage ratio test and certain of its subsidiaries from, among other things, (with certain specified exceptions) making certain capital expenditures, incurring other indebtedness or liens, engaging in a new line of business, selling certain assets, acquiring, consolidating with, or merging with or into other companies and entering into transactions with affiliates.$5.0 million minimum liquidity covenant. The Cinedigm Credit Agreement is with full recourse to the Company and to certain of its subsidiaries that guaranteed the Company's obligations, including Cinedigm Entertainment Holdings, LLC, Hollywood Software, Inc. and Vistarchiara Productions, Inc.

us.
Our Phase I credit agreement (the "Phase“Phase I Credit Agreement"Agreement”) with SG and certain other lenders contains certain restrictive covenants that restrict our indirect subsidiary, Cinedigm Digital Funding I, LLC ("(“CDF I"I”) and its subsidiaries from, among other things, (with certain specified exceptions) making certain capital expenditures, incurring other indebtedness or liens, engaging in a new line of business, selling certain assets, acquiring, consolidating with, or merging with or into other companies and entering into transactions with affiliates. The Phase I Credit Agreement is non-recourse to the CompanyCinedigm and our other subsidiaries.

In February 2013, Cinedigm DC Holdings LLC ("(“DC Holdings LLC"LLC”), our wholly-ownedwholly owned subsidiary to which we transferred our business of servicing digital cinema projection systems, entered into a term loan agreement (the "Prospect Loan"“Prospect Loan”) with Prospect Capital Corporation ("Prospect"(“Prospect”) which restricts DC Holdings LLC and its subsidiaries (including CDF I) from, among other things, (with certain specified exceptions) making certain capital expenditures, incurring other indebtedness or liens, engaging in a new line of business, selling certain assets, acquiring, consolidating with, or merging with or into other companies and entering into transactions with affiliates. The Prospect Loan is non-recourse to the CompanyCinedigm and our other subsidiaries, except for Access DM (which is a wholly-ownedwholly owned subsidiary of DC Holdings LLC) and Access Digital Cinema Phase 2, Corp. ("ADCP2"(“ADCP2”), each of which guaranteed the obligations of DC Holdings LLC to Prospect. In addition, the CompanyCinedigm provided a limited recourse guaranty pursuant to which the CompanyCinedigm guaranteed certain representations and warranties and performance obligations with respect to the Prospect Loan in favor of the collateral agent and the administrative agent for the Prospect Loan.

Our indirect subsidiary, Phase 2 B/AIX has entered into several credit agreements (the "KBC Agreements"“KBC Agreements”) with KBC pursuant to which KBC has financed the acquisition of digital cinema projection systems purchased from Barco, Inc. to be installed at various theatre locations. The KBC Agreements are non-recourse to the Companyus and itsour subsidiaries other than Phase 2 B/AIX and are consolidated by the Companyus similarly to CDF I. The KBC Agreements restrict Phase 2 B/AIX from, among other things, (with certain specified exceptions) incurring liens, disposing of certain assets outside the ordinary course of business, merging or consolidating with other entities, changing its line of business and making payments (including dividends) to affiliates. In October 2011, we began earning fees under a management services agreement with CDF2 Holdings, an indirect wholly-owned,wholly owned, non-consolidated variable interest entity that is intended to be a special purpose, bankruptcy remote entity, and CDF 2,CDF2, a wholly-ownedwholly owned subsidiary of CDF2 Holdings. The revenues under this management service agreement were assigned to DC Holdings LLC as of February 28, 2013. CDF2 financed certain digital systems under its credit agreement with SG and certain other lenders (the "Phase“Phase II Credit Agreement"Agreement”). The Phase II Credit Agreement contains certain restrictive covenants that restrict CDF2 Holdings, CDF 2CDF2 and their subsidiaries from, among other things, (with certain specified exceptions) making certain capital expenditures, incurring other indebtedness or liens, engaging in a new line of business, selling certain assets, acquiring, consolidating with, or merging with or into other companies and entering into transactions with affiliates. The Phase II Credit Agreement is non-recourse to the Companyus and our other subsidiaries. The digital cinema projection systems that CDF 2CDF2 partially finances by borrowing under the Phase II Credit Agreement are acquired directly from the manufacturers and are sold to and leased back by CDF 2CDF2 Holdings from

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CHG-Meridian U.S. Finance, Ltd. ("CHG"(“CHG”) pursuant to a Master Lease Agreement and related documents (the "CHG Lease"“CHG Lease”). The CHG Lease contains certain restrictive covenants that restrict CDF2 Holdings from, among other things, (with certain specified exceptions) incurring liens on the leased digital cinema systems and from subleasing, assigning, modifying or altering such systems. The CHG Lease is non-recourse to the Companyus and our other subsidiaries. CDF 2CDF2 Holdings is not consolidated by the Company,us, as the Company doeswe do not exercise control over CDF 2CDF2 Holdings. CDF2 Holdings is managed and controlled exclusively by the three managers, including, a third party, which also has a variable interest in CDF2 Holdings, along with an independent third party manager, that must approve, among other

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things, the annual operating budget and capital budget, engaging in new business or activities and certain transactions that significantly impact CDF 2 Holdings'CDF2 Holdings’ economic performance. The Company'sOur risk is limited to our initial investment and revenues that could be earned under the management services agreement (which revenues have, as mentioned above, been assigned to DC Holdings LLC).

, and constitutes part of the non-recourse debt.
We face the risks of doing business in new and rapidly evolving markets and may not be able successfully to address such risks and achieve acceptable levels of success or profits.
We have encountered and may continue to encounter the challenges, uncertainties and difficulties frequently experienced in new and rapidly evolving markets, including:
limited operating experience;
Ÿlimited operating experience;
Ÿnet losses;
Ÿlack of sufficient customers or loss of significant customers;
Ÿa changing business focus; and
Ÿnet losses;
lack of sufficient customers or loss of significant customers;
a changing business focus; and
difficulties in managing potentially rapid growth.

We expect competition to be intense: ifintense. If we are unable to compete successfully, our business and results of operations will be seriously harmed.
The markets for the digital cinema business and the content distribution business are competitive, evolving and subject to rapid technological and other changes. We expect the intensity of competition in each of these areas to increase in the future. Companies willing to expend the necessary capital to create facilities and/or capabilities similar to ours may compete with our business. Increased competition may result in reduced revenues and/or margins and loss of market share, any of which could seriously harm our business. In order to compete effectively in each of these fields, we must differentiate ourselves from competitors.
Many of our current and potential competitors have longer operating histories and greater financial, technical, marketing and other resources than we do, which may permit them to adopt aggressive pricing policies. As a result, we may suffer from pricing pressures that could adversely affect our ability to generate revenues and our results of operations. Many of our competitors also have significantly greater name and brand recognition and a larger customer base than us. If we are unable to compete successfully, our business and results of operations will be seriously harmed.

Our plan to acquire additional businesses involves risks, including our inability to complete an acquisition successfully, our assumption of liabilities, dilution of your investment and significant costs.
Strategic and financially appropriate acquisitions are a key component of our growth strategy. Although there are no other acquisitions identified by us as probable at this time, we may make further acquisitions of similar or complementary businesses or assets. Even if we identify appropriate acquisition candidates, we may be unable to negotiate successfully the terms of the acquisitions, finance them, integrate the acquired business into our then existing business and/or attract and retain customers. Completing an acquisition and integrating an acquired business may require a significant diversion of management time and resources and involves assuming new liabilities. Any acquisition also involves the risks that the assets acquired may prove less valuable than expected and/or that we may assume unknown or unexpected liabilities, costs and problems. If we make one or more significant acquisitions in which the consideration consists of our capital stock, your equity interest in the Company could be diluted, perhaps significantly. If we were to proceed with one or more significant acquisitions in which the consideration included cash, we could be required to use a substantial portion of our available cash, or obtain additional financing to consummate them.

Our previous acquisitions involve risks, risks, including our inability to integrate successfully the new businesses and our assumption of certain liabilities.
Our acquisition of these businesses and their respective assets also involved the risks that the businesses and assets acquired may prove to be less valuable than we expected and/or that we may assume unknown or unexpected liabilities, costs and problems. In addition, we assumed certain liabilities in connection with these acquisitions and we cannot assure you that we will be able to

8


satisfy adequately such assumed liabilities. Other companies that offer similar products and services may be able to market and sell their products and services more cost-effectively than we can.

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We have recorded goodwill impairment charges and may be required to record additional charges to future earnings if our goodwill becomes further impaired or our intangible assets become impaired.

We are required under generally accepted accounting principles to review our goodwill and definite-lived intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill must be tested for impairment at least annually. Factors that may be considered a change in circumstances indicating that the carrying value of our reporting units and intangible assets may not be recoverable include a decline in stock price and market capitalization, slower growth rates in our industry or our own operations, and/or other materially adverse events that have implications on the profitability of our business. In the fourth quarter of the fiscal year ended March 31, 2015, we recorded a goodwill impairment charge of $6.0 million in our Content & Entertainment operating segment. See Note 2 - Summary of Significant Accounting Policies of our financial statements included in Item 8 of this Annual Report on Form 10-K for details. We may be required to record additional charges to earnings during any period in which a further impairment of our goodwill or other intangible assets is determined which could adversely affect our results of operations.

If we do not manage our growth, our business will be harmed.
We may not be successful in managing our growth. Past growth has placed, and future growth will continue to place, significant challenges on our management and resources, related to the successful integration of the newly acquired businesses. To manage the expected growth of our operations, we will need to improve our existing, and implement new, operational and financial systems, procedures and controls. We may also need to expand our finance, administrative, client services and operations staffs and train and manage our growing employee base effectively. Our current and planned personnel, systems, procedures and controls may not be adequate to support our future operations. Our business, results of operations and financial position will suffer if we do not effectively manage our growth.

If we are not successful in protecting our intellectual property, our business will suffer.
We depend heavily on technology to operate our business. Our success depends on protecting our intellectual property, which is one of our most important assets. We have intellectual property consisting of:
rights to certain domain names;
Ÿrights to certain domain names;
Ÿregistered service marks on certain names and phrases;
Ÿvarious unregistered trademarks and service marks;
Ÿknow-how; and
Ÿregistered service marks on certain names and phrases;
various unregistered trademarks and service marks;
know-how; and
rights to certain logos.

If we do not adequately protect our intellectual property, our business, financial position and results of operations would be harmed. Our means of protecting our intellectual property may not be adequate. Unauthorized parties may attempt to copy aspects of our intellectual property or to obtain and use information that we regard as proprietary. In addition, competitors may be able to devise methods of competing with our business that are not covered by our intellectual property. Our competitors may independently develop similar technology, duplicate our technology or design around any intellectual property that we may obtain.
Although we hold rights to various web domain names, regulatory bodies in the United States and abroad could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. The relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights is unclear. We may be unable to prevent third parties from acquiring domain names that are similar to or diminish the value of our proprietary rights.

Our substantial non-recourse debt and our recourse debt and lease obligations could impair our financial flexibility and restrict our business significantly.
We now have, and will continue to have, significant debt obligations. In October 2013, we entered into the Cinedigm Credit Agreement pursuant to which we borrowed Term Loans in the aggregate amount of $25.0 million and may borrow revolving loans and have letters of credit issued in an aggregate amount at any one time outstanding not to exceed $30.0 million. In April 2015, we repaid and terminated the term loan in its entirety. The obligations under the Cinedigm Credit Agreement, as amended and restated, are with full recourse to the Company and to certain of its subsidiaries that guaranteed the Company's obligations, including Cinedigm Entertainment Holdings, LLC, Hollywood Software, Inc. and Vistarchiara Productions, Inc.Cinedigm. As of March 31, 2014,2015, principal amountsamount outstanding under the Cinedigm Credit Agreement were $39.6was $18.2 million. Additionally, in October 2013, the Company entered into securities purchase agreements (the “Securities Purchase Agreements”) with certain investors party thereto (the “Investors”) pursuant to which the Company agreed to sell to the Investors notes in thewe issued $5.0 million aggregate principal amount of $5.0 millionsubordinated notes (the “2013 Notes”), which debt is unsecured and warrantssubordinate to purchase anthe debt under the Cinedigm Credit Agreement. In April 2015, Cinedigm issued $64.0 million aggregate principal amount of 1,500,000 shares of Class A Common Stock (the “2013 Warrants”). The sales were consummated on October 21, 2013. The proceeds of 5.5% Convertible Senior Notes due 2035 (the sales of“Convertible Notes”), which debt is unsecured, subordinate to the debt under the Cinedigm Credit Agreement and senior to the 2013 Notes and 2013 Warrants were used for working capital and general corporate purposes, including to finance, in part, the GVE Acquisition.Notes.

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As of March 31, 2014,2015, total non-recourse loan principal amounts dueindebtedness of our consolidated subsidiaries (not including guarantees of our debt) was $198.6$157.3 million, andnone of which is not guaranteed by the CompanyCinedigm Corp. or our subsidiaries, other than CDF I with respect to the Phase I Credit Agreement, DC Holdings LLC, AccessDM and ADCP2 with respect to the Prospect Loan, Phase 2 B/AIX with respect to the KBC Agreements. In connection with the Prospect Loan, the Companywe provided a limited recourse guaranty pursuant to which the CompanyCinedigm guaranteed certain representations and warranties and performance obligations with respect to the Prospect Loan in favor of the collateral agent and the administrative agent for the Prospect Loan. Cinedigm Corp. has provided a limited recourse guaranty in respect of a portion of this indebtedness ($68.0 million as of March 31, 2015) pursuant to which it agreed to become a primary obligor of such indebtedness in certain specified circumstances, none of which have occurred as of the date hereof.

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We also had capital lease obligations covering a facility and computer equipment with an aggregate principal amount of $6.1$5.5 million as of March 31, 2014.2015. In May 2011, the Companywe completed the sale of certain assets and liabilities of the Pavilion Theatre and from that point forward, it has not been operated by the Company. The Company hasus. We have remained the primary obligor on the Pavilion capital lease and therefore, the capital lease obligation and the related assets under the capital lease continue to remain with the Companyon our Consolidated Balance Sheets as of March 31, 2015 and 2014. The Company has, however,However, we have entered into a sub-lease agreement with the unrelated third party purchaser whothat makes all payments related to the lease and as such, the Company haswe have no continuing involvement in the operation of the Pavilion Theatre.
In February 2013, DC Holdings LLC, our wholly-ownedwholly owned subsidiary, entered into the Prospect Loan in the aggregate principal amount of $70.0 million. Additionally, in February 2013, CDF I, our indirect wholly-ownedwholly owned subsidiary that is intended to be a special purpose, bankruptcy remote entity, amended and restated the Phase I Credit Agreement, pursuant to which it borrowed $130.0 million of which $5.0 million was assigned to DC Holding LLC. Phase 2 B/AIX, our indirect wholly-ownedwholly owned subsidiary, has entered into the KBC Agreements pursuant to which it has borrowed $65.3 million in the aggregate. As of March 31, 2014,2015, the outstanding principal balance under the KBC Agreements was $35.0$27.0 million in the aggregate.
The obligations and restrictions under the Cinedigm Credit Agreement, the Phase I Credit Agreement, the Prospect Loan, the KBC Agreements and our other debt obligations could have important consequences for us, including:
limiting our ability to obtain necessary financing in the future; and
Ÿlimiting our ability to obtain necessary financing in the future; and
Ÿrequiring us to dedicate a substantial portion of our cash flow to payments on our debt obligations, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other corporate requirements or expansion of our business.

CDF 2CDF2 and CDF2 Holdings are our indirect wholly-owned,wholly owned, non-consolidated VIEs that are intended to be special purpose, bankruptcy remote entities. CDF 2CDF2 has entered into the Phase II Credit Agreement, pursuant to which it borrowed $63.2 million in the aggregate. As of March 31, 2014,2015, the outstanding balance under the Phase II Credit Agreement, which includes interest payable, was $50.4$44.4 million. CDF2 Holdings has entered into the CHG Lease pursuant to which CHG provided sale/leaseback financing for digital cinema projection systems that were partially financed by the Phase II Credit Agreement in an amount of approximately $57.2 million in the aggregate. These facilities are non-recourse to the CompanyCinedigm and our subsidiaries, excluding the Company'sour VIE, CDF 2CDF2 and CDF2 Holdings, as the case may be. Although the Phase II financing arrangements undertaken by CDF 2CDF2 and CDF 2CDF2 Holdings are important to the Companyus with respect to the success of itsour Phase II Deployment, the Company'sour financial exposure related to the debt of CDF 2CDF2 and CDF2 Holdings is limited to the $2.0 million initial investment it made into CDF 2CDF2 and CDF2 Holdings. CDF2 Holding’s total stockholder’s deficit at March 31, 20142015 was $2.7 million. The Company has$6.7 million. We have no obligation to fund the operating loss or the deficit beyond its initial investment, and accordingly, the Companywe carried itsour investment in CDF2 Holdings at $0.
The obligations and restrictions under the Phase II Credit Agreement and the CHG Lease could have important consequences for CDF 2CDF2 and CDF2 Holdings, including:
Limiting our ability to obtain necessary financing in the future; and
ŸLimiting our ability to obtain necessary financing in the future; and
Ÿrequiring them to dedicate a substantial portion of their cash flow to payments on their debt obligations, thereby reducing the availability of their cash flow for other uses.
requiring them to dedicate a substantial portion of their cash flow to payments on their debt obligations, thereby reducing the availability of their cash flow for other uses.

If we are unable to meet our lease and non-recourse debt obligations, we could be forced to restructure or refinance our obligations, to seek additional equity financing or to sell assets, which we may not be able to do on satisfactory terms or at all. As a result, we could default on those obligations and in the event of such default, our lenders could accelerate our debt or take other actions that could restrict our operations.
The foregoing risks would be intensified to the extent we borrow additional money or incur additional debt.


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The agreements governing the financing of our Phase I Deployment and part of our Phase II Deployment, the Cinedigm Credit Agreement and the Prospect Loan impose certain limitations on us.
The Cinedigm Credit Agreement restricts our ability and the ability of the Company and itsour subsidiaries that have guaranteed the obligations under the Cinedigm Credit Agreement, subject to certain exceptions, to, among other things:
Ÿmake certain capital expenditures and investments;
Ÿincur other indebtedness or liens;
Ÿcreate or acquire subsidiaries which do not guarantee the obligations or foreign subsidiaries;
Ÿengage in a new line of business;
Ÿpay dividends;
Ÿsell assets;
Ÿamend certain agreements;
Ÿacquire, consolidate with, or merge with or into other companies; and
Ÿenter into transactions with affiliates.
make certain capital expenditures and investments;
incur other indebtedness or liens;
create or acquire subsidiaries which do not guarantee the obligations or foreign subsidiaries;
engage in a new line of business;
pay dividends;
sell assets;
amend certain agreements;
acquire, consolidate with, or merge with or into other companies; and
enter into transactions with affiliates.

The Phase I Credit Agreement governing the financing of our Phase I Deployment restricts the ability of CDF I and its existing and future subsidiaries to, among other things:
make certain capital expenditures and investments;
Ÿmake certain capital expenditures and investments;
Ÿincur other indebtedness or liens;
Ÿengage in a new line of business;
Ÿsell assets;
Ÿacquire, consolidate with, or merge with or into other companies; and
Ÿincur other indebtedness or liens;
engage in a new line of business;
sell assets;
acquire, consolidate with, or merge with or into other companies; and
enter into transactions with affiliates.

One or more of the KBC Agreements governing part of the financing of our Phase II Deployment restrict the ability of Phase 2 B/AIX to, among other things:
dispose of or incur other liens on the digital cinema projection systems financed by KBC;
Ÿdispose of or incur other liens on the digital cinema projection systems financed by KBC;
Ÿengage in a new line of business;
Ÿsell assets outside the ordinary course of business or on other than arm's length terms;
Ÿmake payments to majority owned affiliated companies; and
Ÿconsolidate with, or merge with or into other companies.
engage in a new line of business;
sell assets outside the ordinary course of business or on other than arm’s length terms;
make payments to majority owned affiliated companies; and
consolidate with, or merge with or into other companies.

The agreements governing the Prospect Loan restrict the ability of DC Holdings LLC and its subsidiaries, subject to certain exceptions, to, among other things:
make certain capital expenditures and investments;
Ÿmake certain capital expenditures and investments;
Ÿincur other indebtedness or liens;
Ÿengage in a new line of business;
Ÿsell assets;
Ÿacquire, consolidate with, or merge with or into other companies; and
Ÿincur other indebtedness or liens;
engage in a new line of business;
sell assets;
acquire, consolidate with, or merge with or into other companies; and
enter into transactions with affiliates.


The agreements governing the financing of other parts of our Phase II Deployment impose certain limitations, which may affect our Phase 2 deployment.
The Phase II Credit Agreement governing part of the financing of part of our Phase II Deployment that has not been financed by the KBC Agreements restricts the ability of CDF 2,CDF2, CDF2 Holdings and their existing and future subsidiaries to, among other things:
make certain capital expenditures and investments;
incur other indebtedness or liens;
engage in a new line of business;
sell assets;
acquire, consolidate with, or merge with or into other companies; and
enter into transactions with affiliates.


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Ÿmake certain capital expenditures and investments;
Ÿincur other indebtedness or liens;
Ÿengage in a new line of business;
Ÿsell assets;
Ÿacquire, consolidate with, or merge with or into other companies; and
Ÿenter into transactions with affiliates.
The CHG Lease governing part of the financing of part of our Phase II Deployment restricts the ability of CDF2 Holdings to, among other things:
incur liens on the digital cinema projection systems financed; and
Ÿincur liens on the digital cinema projection systems financed; and
Ÿsublease, assign or modify the digital cinema projection systems financed.

We may not be able to generate the amount of cash needed to fund our future operations.
Our ability either to make payments on or to refinance our indebtedness, or to fund planned capital expenditures and research and development efforts, will depend on our ability to generate cash in the future. Our ability to generate cash is in part subject to general economic, financial, competitive, regulatory and other factors that are beyond our control.
Based on our current level of operations, we believe our cash flow from operations, available borrowings and loan and credit agreement terms will be adequate to meet our future liquidity needs through at least June 30, 2015.March 31, 2016. Significant assumptions underlie this belief, including, among other things, that there will be no material adverse developments in our business, liquidity or capital requirements. If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as:
reducing capital expenditures;
Ÿreducing capital expenditures;
Ÿreducing research and development efforts;
Ÿselling assets;
Ÿrestructuring or refinancing our remaining indebtedness; and
Ÿreducing research and development efforts;
selling assets;
restructuring or refinancing our remaining indebtedness; and
seeking additional funding.

We cannot assure you, however, that our business will generate sufficient cash flow from operations, or that we will be able to make future borrowings in amounts sufficient to enable us to pay the principal and interest on our current indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all.

We have incurred losses since our inception.
We have incurred losses since our inception in March 2000 and have financed our operations principally through equity investments and borrowings. As of March 31, 2014,2015, we had negative working capital, defined as current assets less current liabilities, of $5.0$30.9 million, and cash and cash equivalents and restricted cash totaling $57.0$25.8 million; we had an accumulated deficit of $268.7$19.1 million; however, during the fiscal year ended March 31, 2014,2015, we generated $39.6$9.2 million of net cash from operating activities.
Our net losses and cash outflows may increase as and to the extent that we increase the size of our business operations, increase our sales and marketing activities, increase our content distribution rights acquisition activities, enlarge our customer support and professional services and acquire additional businesses. These efforts may prove to be more expensive than we currently anticipate which could further increase our losses. We must continue to increase our revenues in order to become profitable. We cannot reliably predict when, or if, we will become profitable. Even if we achieve profitability, we may not be able to sustain it. If we cannot generate operating income or positive cash flows in the future, we will be unable to meet our working capital requirements.

Many of our corporate actions may be controlled by our officers, directors and principal stockholders; these actions may benefit these principal stockholders more than our other stockholders.
As of March 31, 2014,2015, our directors, executive officers and principal stockholders, those known by the Companyus to beneficially own more than 5% of the outstanding shares of the Class A common stock, beneficially own, directly or indirectly, in the aggregate, approximately 42.1%27.1% of our outstanding Class A common stock. In particular, Chris McGurk, our Chairman and Chief Executive Officer, owns 199,615367,400 shares of Class A common stock and has stock options to purchase 6,000,000 shares of Class A common stock. 4,500,000stock, of suchwhich 5,000,000 options are vested and 1,500,000 of such1,000,000 options vest in thirdsequal amounts in March of each of 2015, 2016 and 2017.

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If all the options were exercised, Mr. McGurk would own 6,199,6156,367,400 shares or approximately 7.5%7.6% of the then-outstanding Class A common stock. In addition, an affiliate of Sageview Capital L.P. ("Sageview"(“Sageview”) owns 216,109268,687 shares of Class A common stock and warrants to purchase 16,000,000 shares of Class A common stock. If such warrants arewere exercised, Sageview would own 16,216,10916,268,687 shares or approximately 17.5%17.4% of the then-outstanding Class A common stock. Laura Nisonger Sims, a member of our board of directors, is a principal of Sageview.

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These stockholders will have significant influence over our business affairs, with the ability to control matters requiring approval by our security holders, including elections of directors and approvals of mergers or other business combinations. Also,In addition, certain corporate actions directed by our officers may not necessarily inure to the proportional benefit of our other stockholders of our company.

stockholders.
Our success will significantly depend on our ability to hire and retain key personnel.
Our success will depend in significant part upon the continued performance of our senior management personnel and other key technical, sales and creative personnel. We do not currently have significant "key person"“key person” life insurance policies for any of our employees. We have entered into employment agreements with four of our top executive officers, one of which will terminate within the next 12 months unless renewed.officers. If we lose one or more of our key employees, we may not be able to find a suitable replacement(s) and our business and results of operations could be adversely affected. In addition, competition for key employees necessary to create and distribute our entertainment content and software products is intense and may grow in the future. Our future success will also depend upon our ability to hire, train, integrate and retain qualified new employees and our inability to do so may have an adverse impact upon our business, financial condition, operating results, liquidity and prospects for growth.

If the market price of the Class A common stock declines, we may not be able to maintain our listing on the Nasdaq Global Market which may impair our financial flexibility and restrict our business significantly.
The stock markets have experienced extreme price and volume fluctuations that have affected the market prices of equity securities of many companies that may be unrelated or disproportionate to the operating results of such companies. These broad market movements may adversely affect the market price of the Class A common stock. The Class A common stock is presently listed on Nasdaq. Although we are not currently in jeopardy of delisting, we cannot assure you that we will meet the criteria for continued listing and the Class A common stock could become delisted. Any such delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the loss of confidence in our financial stability by suppliers, customers and employees. If the Class A common stock is delisted from Nasdaq, we may face a lengthy process to re-list the Class A common stock, if we are able to re-list the Class A common stock at all, and the liquidity that Nasdaq provides will no longer be available to investors.

While we believe we currently have effective internal control over financial reporting, we are required to assess our internal control over financial reporting on an annual basis and any future adverse results from such assessment could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price.
Section 404 of the Sarbanes-Oxley Act of 2002 and the accompanying rules and regulations promulgated by the SEC to implement it required us to include in our Form 10-K annual reports by our management regarding the effectiveness of our internal control over financial reporting. The report included, among other things, an assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year. The assessment did not result in the disclosure of any material weaknesses in our internal control over financial reporting identified by management. During this process, if our management identified one or more material weaknesses in our internal control over financial reporting that cannot be remediated in a timely manner, we would not be unable to assert such internal control as effective. While we currently believe our internal control over financial reporting is effective, the effectiveness of our internal controls in future periods is subject to the risk that our controls may become inadequate because of changes in conditions, and, as a result, the degree of compliance of our internal control over financial reporting with the applicable policies or procedures may deteriorate. If, in the future, we are unable to conclude that our internal control over financial reporting is effective (or if our independent auditors disagree with our conclusion), we could lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our stock price.

If we do not respond to future advances in technology and changes in customer demands, our financial position, prospects and results of operations may be adversely affected.
The demand for our Systems and other assets in connection with our digital cinema business (collectively, our "Digital“Digital Cinema Assets"Assets”) may be affected by future advances in technology and changes in customer demands. We cannot assure you that there will be continued demand for our Digital Cinema Assets. Our profitability depends largely upon the continued use of digital presentations at theatres. Although we have entered into long term agreements with major motion picture studios and independent

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studios (the "Studio Agreements"“Studio Agreements”), there can be no assurance that these studios will continue to distribute digital content to movie theatres. If the development of digital presentations and changes in the way digital files are delivered does not continue or technology is used that is not compatible with our Systems, there may be no viable market for our Systems and related products. Any reduction in the use of our Systems and related products resulting from the development and deployment of new technology may negatively impact our revenues and the value of our Systems.
The demand for DVD products areis declining, and we anticipate that this decline will continue. We anticipate, however, that the distribution of DVD products will continue to generate positive cash flows for the Company. Should a decline in consumer demand be greater than the Company anticipates,we anticipate, our business could be adversely affected.

We have concentration in our digital cinema business with respect to our major motion picture studio customers, and the loss of one or more of our largest studio customers could have a material adverse effect on us.

Our Studio Agreements account for a significant portion of our revenues within Phase 1 DC and Phase 2 DC. Together these studios generated 71%69%, 71%, and 35% of Phase 1 DC's,DC’s, Phase 2 DC'sDC’s and our consolidated revenues, respectively, for the fiscal year ended March 31, 2014.
2015.
The Studio Agreements are critical to our business. If some of the Studio Agreements were terminated prior to the end of their terms or found to be unenforceable, or if our Systems are not upgraded or enhanced as necessary, or if we had a material failure of our Systems, it may have a material adverse effect on our revenue, profitability, financial condition and cash flows. The Studio

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Agreements also generally provide that the VPF rates and other material terms of the agreements may not be more favorable to one studio as compared to the others.
One content provider represents a significant portion of our Content & Entertainment business.

Our Content & Entertainment business has an exclusive agreement, with one content provider, to distribute certain non-music related video products, in physical format only, the sales of which represent approximately 11% of the segment's revenues. A change in this arrangement, or the failure to renew this agreement when it expires, could have an adverse effect on the Content & Entertainment business.

Termination of the MLAs and MLAAs could damage our revenue and profitability.

The master license agreements with each of our licensed exhibitors (the "MLAs"“MLAs”) are critical to our business as are master license administrative agreements (the "MLAAs"“MLAAs”). The MLAs have terms, which expire in 2020 through 2022 and provide the exhibitor with an option to purchase our Systems or to renew for successive one yearone-year periods up to ten years thereafter. The MLAs also require our suppliers to upgrade our Systems when technology necessary for compliance with DCI Specification becomes commercially available and we may determine to enhance the Systems, which may require additional capital expenditures. If any one of the MLAs were terminated prior to the end of its term, not renewed at its expiration or found to be unenforceable, or if our Systems are not upgraded or enhanced as necessary, it would have a material adverse effect on our revenue, profitability, financial condition and cash flows. Additionally, termination of MLAAs could adversely impact our servicing business.

We have concentration in our business with respect to our major licensed exhibitors, and the loss of one or more of our largest exhibitors could have a material adverse effect on us.

Approximately 64% of Phase 1 DC'sDC’s Systems and 19% of total systems are under MLA in theatres owned or operated by one large exhibitor. The loss of this exhibitor or another of our major licensed exhibitors could have a negative impact on the aggregate receipt of VPF revenues as a result of the loss of any associated MLAs. Although we do not receive revenues from licensed exhibitors and we have attempted to limit our licenses to only those theatres, which we believe are successful, each MLA with our licensed exhibitors is important, depending on the number of screens, to our business since VPF revenues are generated based on screen turnover at theatres. If the MLA with a significant exhibitor was terminated prior to the end of its term, it would have a material adverse effect on our revenue, profitability, financial condition and cash flows. There can be no guarantee that the MLAs with our licensed exhibitors will not be terminated prior to the end of its term.

An increase in the use of alternative movie distribution channels and other competing forms of entertainment could drive down movie theatre attendance, which, if causing significant theatre closures or a substantial decline in motion picture production, may lead to reductions in our revenues.

Various exhibitor chains, which are the Company'sour distributors, face competition for patrons from a number of alternative motion picture distribution channels, such as DVD, network and syndicated television, VOD, pay-per-view television and downloading utilizing the Internet. These exhibitor chains also compete with other forms of entertainment competing for patrons'patrons’ leisure time and disposable income such as concerts, amusement parks and sporting events. An increase in popularity of these alternative movie distribution channels and competing forms of entertainment could drive down movie theatre attendance and potentially cause

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certain of our exhibitors to close their theatres for extended periods of time. Significant theatre closures could in turn have a negative impact on the aggregate receipt of our VPF revenues, which in turn may have a material adverse effect on our business and ability to service our debt.
An increase in the use of alternative movie distribution channels could also cause the overall production of motion pictures to decline, which, if substantial, could have an adverse effect on the businesses of the major studios with which we have Studio Agreements. A decline in the businesses of the major studios could in turn force the termination of certain Studio Agreements prior to the end of their terms. The Studio Agreements with each of the major studios are critical to our business, and their early termination may have a material adverse effect on our revenue, profitability, financial condition and cash flows.
Our success depends on external factors in the motion picture and television industry.

Our success depends on the commercial success of movies and television programs, which is unpredictable. Operating in the motion picture and television industry involves a substantial degree of risk. Each movie and television program is an individual artistic work, and inherently unpredictable audience reactions primarily determine commercial success. Generally, the popularity of movies and television programs depends on many factors, including the critical acclaim they receive, the format of their initial release, for example, theatrical or direct-to-video, the actors and other key talent, their genre and their specific subject matter. The

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commercial success of movies and television programs also depends upon the quality and acceptance of movies or programs that our competitors release into the marketplace at or near the same time, critical reviews, the availability of alternative forms of entertainment and leisure activities, general economic conditions and other tangible and intangible factors, many of which we do not control and all of which may change. We cannot predict the future effects of these factors with certainty, any of which could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects. In addition, because a movie'smovie’s or television program'sprogram’s performance in ancillary markets, such as home video and pay and free television, is often directly related to its box office performance or television ratings, poor box office results or poor television ratings may negatively affect future revenue streams. Our success will depend on the experience and judgment of our management to select and develop new content acquisition and investment opportunities. We cannot make assurances that movies and television programs will obtain favorable reviews or ratings, will perform well at the box office or in ancillary markets or that broadcasters will license the rights to broadcast any of our television programs in development or renew licenses to broadcast programs in our library. The failure to achieve any of the foregoing could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Our business involves risks of liability claims for media content, which could adversely affect our business, results of operations and financial condition.

As a distributor of media content, we may face potential liability for:
Ÿdefamation;
Ÿinvasion of privacy;
Ÿnegligence;
Ÿcopyright or trademark infringement (as discussed above); and
Ÿother claims based on the nature and content of the materials distributed.
defamation;
invasion of privacy;
negligence;
copyright or trademark infringement (as discussed above); and
other claims based on the nature and content of the materials distributed.

These types of claims have been brought, sometimes successfully, against producers and distributors of media content. Any imposition of liability that is not covered by insurance or is in excess of insurance coverage could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

The acquisition restrictions contained in our certificate of incorporation, which are intended to help preserve our net operating losses, may not be effective or may have unintended negative effects.
We have experienced, and may continue to experience, substantial operating losses, and under Section 382 of the Internal Revenue Code of 1986, as amended ("Section 382"), and rules promulgated by the Internal Revenue Service, we may "carry forward" these net operating losses ("NOLs") in certain circumstances to offset any current and future earnings and thus reduce our federal income tax liability, subject to certain requirements and restrictions. To the extent that the NOLs do not otherwise become limited, we believe that we will be able to carry forward a significant amount of the NOLs, and therefore these NOLs could be a substantial asset to us. If, however, we experience a Section 382 ownership change, our ability to use the NOLs will be substantially limited, and the timing of the usage of the NOLs could be substantially delayed, which could therefore significantly impair the value of that asset.

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To reduce the likelihood of an ownership change, we have established acquisition restrictions in our certificate of incorporation. The acquisition restrictions in our certificate of incorporation are intended to restrict certain acquisitions of the Class A common stock to help preserve our ability to utilize our NOLs by avoiding the limitations imposed by Section 382 and the related Treasury regulations. The acquisition restrictions are generally designed to restrict or deter direct and indirect acquisitions of the Class A common stock if such acquisition would result in a shareholder becoming a "5-percent shareholder" (as defined by Section 382 and the related Treasury regulations) or increase the percentage ownership of Company stock that is treated as owned by an existing 5-percent shareholder.
Although the acquisition restrictions are intended to reduce the likelihood of an ownership change that could adversely affect us, we can give no assurance that such restrictions would prevent all transfers that could result in such an ownership change. In particular, we have been advised by our counsel that, absent a court determination, there can be no assurance that the acquisition restrictions will be enforceable against all of our shareholders, and that they may be subject to challenge on equitable grounds. In particular, it is possible that the acquisition restrictions may not be enforceable against the shareholders who voted against or abstained from voting on the restrictions at our 2009 annual meeting of stockholders.
Under certain circumstances, our Board may determine it is in the best interest of the Company to exempt certain 5-percent shareholders from the operation of the acquisition restrictions, if a proposed transaction is determined not to be detrimental to the Company's utilization of its NOLs.
The acquisition restrictions also require any person attempting to become a holder of 5% or more of the Class A common stock, as determined under Section 382, to seek the approval of our Board. This may have an unintended "anti-takeover" effect because our Board may be able to prevent any future takeover. Similarly, any limits on the amount of stock that a stockholder may own could have the effect of making it more difficult for stockholders to replace current management. Additionally, because the acquisition restrictions have the effect of restricting a stockholder's ability to dispose of or acquire the Class A common stock, the liquidity and market value of the Class A common stock might suffer. The acquisition restrictions may be waived by our Board. Stockholders are advised to monitor carefully their ownership of the Class A common stock and consult their own legal advisors and/or Company to determine whether their ownership of the Class A common stock approaches the proscribed level.
The occurrence of various events may adversely affect the ability of the Company to fully utilize NOLs.
The Company has a substantial amount of NOLs for U.S. federal income tax purposes that are available both currently and in the future to offset taxable income and gains. Events outside of our control may cause us to experience a Section 382 ownership change, and limit our ability to fully utilize such NOLs.
In general, an ownership change occurs when, as of any testing date, the percentage of stock of a corporation owned by one or more "5-percent shareholders," as defined in the Section 382 and the related Treasury regulations, has increased by more than 50 percentage points over the lowest percentage of stock of the corporation owned by such shareholders at any time during the three-year period preceding such date. In general, persons who own 5% or more of a corporation's stock are 5-percent shareholders, and all other persons who own less than 5% of a corporation's stock are treated, together, as a single, public group 5-percent shareholder, regardless of whether they own an aggregate of 5% or more of a corporation's stock. If a corporation experiences an ownership change, it is generally subject to an annual limitation, which limits its ability to use its NOLs to an amount equal to the equity value of the corporation multiplied by the federal long-term tax-exempt rate.
If we were to experience an ownership change, we could potentially have, in the future, higher U.S. federal income tax liabilities than we would otherwise have had and it may also result in certain other adverse consequences to us. Therefore, we have adopted the acquisition restrictions set forth in Article Fourth of our certificate of incorporation in order to reduce the likelihood that we will experience an ownership change under Section 382. There can be no assurance, however, that these efforts will deter or prevent the occurrence of an ownership change and the adverse consequences that may arise therefrom, as described above under the risk factor titled "The acquisition restrictions contained in our certificate of incorporation, which are intended to help preserve our net operating losses, may not be effective or may have unintended negative effects."

Our revenues and earnings are subject to market downturns.
Our revenues and earnings may fluctuate significantly in the future. General economic or other conditions could cause lower than expected revenues and earnings within our digital cinema, technology or content and entertainment businesses. The global economic turmoil of recent years has caused a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, an unprecedented level of intervention from the U.S. federal government and other foreign governments, decreased consumer confidence, overall slower economic activity and extreme volatility in credit, equity and fixed income markets. While the ultimate outcome of these events cannot be predicted, a decrease in economic activity in the U.S. or in other regions of the world in which we do business could adversely affect demand for our movies, thus reducing our revenue and earnings. While stabilization has continued, it remains a slow process and the global economy remains subject to volatility. Moreover, financial

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institution failures may cause us to incur increased expenses or make it more difficult either to financing of any future acquisitions, or financing activities. Any of these factors could have a material adverse effect on our business, results of operations and could result in significant additional dilution to shareholders.

EconomicChanges in economic conditions could materially adversely affect the Company.have a material adverse effect on our business, financial position and results of operations.
The Company'sOur operations and performance could be influenced by worldwide economic conditions. Uncertainty about current global economic conditions poses a risk as consumers and businesses may postpone spending in response to tighter credit, negative financial news and/or declines in income or asset values, which could have a material negative effect on the demand for the Company'sour products and services. Other factors that could influence demand include continuing increases in fuel and other energy costs, conditions in the residential real estate and mortgage markets, labor and healthcare costs, access to credit, consumer confidence, and other macroeconomic factors affecting consumer spendingconsumer-spending behavior. These and other economic factors could have a material adverse effect on demand for the Company'sour products and services and on the Company'sour financial condition and operating results. Uncertainty about current global economic conditions could also continue to increase the volatility of the Company'sour stock price.

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Changes to existing accounting pronouncements or taxation rules or practices may affect how we conduct our business and affect our reported results of operations.
New accounting pronouncements or tax rules and varying interpretations of accounting pronouncements or taxation practice have occurred and may occur in the future. A change in accounting pronouncements or interpretations or taxation rules or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective. Changes to existing rules and pronouncements, future changes, if any, or the questioning of current practices or interpretations may adversely affect our reported financial results or the way we conduct our business.

We are subject to counterparty risk with respect to a forward stock purchase transaction entered into subsequent to March 31, 2015.

The forward counterparty to the forward stock purchase transaction that we are party to is one of the lenders under the Cinedigm Credit Agreement, and we are subject to the risk that it might default under the forward stock purchase transaction. Our exposure to the credit risk of the forward counterparty will not be secured by any collateral. Global economic conditions have in the recent past resulted in, and may again result in, the actual or perceived failure or financial difficulties of many financial institutions. If the forward counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings, with a claim equal to our exposure at that time under our transaction with that counterparty. Our exposure will depend on many factors, but, generally, an increase in our exposure will be correlated to an increase in the market price of our Class A common stock. In addition, upon default by the forward counterparty, we may suffer more dilution than we currently anticipate with respect to our Class A common stock. We can provide no assurances as to the financial stability or viability of the forward counterparty to the forward stock purchase transaction.

Risks Related to our Class A Common Stock

If the market price of the Class A common stock declines, we may not be able to maintain our listing on the Nasdaq Global Market, which may impair our financial flexibility and restrict our business significantly.

The stock markets have experienced extreme price and volume fluctuations that have affected the market prices of equity securities of many companies that may be unrelated or disproportionate to the operating results of such companies. These broad market movements may adversely affect the market price of the Class A common stock. The Class A common stock is presently listed on Nasdaq. The Class A common stock has been trading below $1 per share in recent months and we cannot assure you that we will meet the criteria for continued listing, in which case the Class A common stock could become delisted. Any such delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the loss of confidence in our financial stability by suppliers, customers and employees. If the Class A common stock is delisted from Nasdaq, we may face a lengthy process to re-list the Class A common stock, if we are able to re-list the Class A common stock at all, and the liquidity that Nasdaq provides will no longer be available to investors.
The acquisition restrictions contained in our certificate of incorporation, which are intended to help preserve our net operating losses, may not be effective or may have unintended negative effects.
We have experienced, and may continue to experience, substantial operating losses, and under Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”), and rules promulgated by the Internal Revenue Service, we may “carry forward” these net operating losses (“NOLs”) in certain circumstances to offset any current and future earnings and thus reduce our federal income tax liability, subject to certain requirements and restrictions. To the extent that the NOLs do not otherwise become limited, we believe that we will be able to carry forward a significant amount of the NOLs, and therefore these NOLs could be a substantial asset to us. If, however, we experience a Section 382 ownership change, our ability to use the NOLs will be substantially limited, and the timing of the usage of the NOLs could be substantially delayed, which could therefore significantly impair the value of that asset.
To reduce the likelihood of an ownership change, we have established acquisition restrictions in our certificate of incorporation. The acquisition restrictions in our certificate of incorporation are intended to restrict certain acquisitions of the Class A common stock to help preserve our ability to utilize our NOLs by avoiding the limitations imposed by Section 382 and the related Treasury regulations. The acquisition restrictions are generally designed to restrict or deter direct and indirect acquisitions of the Class A common stock if such acquisition would result in a shareholder becoming a “5-percent shareholder” (as defined by Section 382 and the related Treasury regulations) or increase the percentage ownership of Company stock that is treated as owned by an existing 5-percent shareholder.

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Although the acquisition restrictions are intended to reduce the likelihood of an ownership change that could adversely affect us, we can give no assurance that such restrictions would prevent all transfers that could result in such an ownership change. In particular, we have been advised by our counsel that, absent a court determination, there can be no assurance that the acquisition restrictions will be enforceable against all of our shareholders, and that they may be subject to challenge on equitable grounds. In particular, it is possible that the acquisition restrictions may not be enforceable against the shareholders who voted against or abstained from voting on the restrictions at our 2009 annual meeting of stockholders.
Under certain circumstances, our Board may determine it is in our best interest to exempt certain 5-percent shareholders from the operation of the acquisition restrictions, if a proposed transaction is determined not to be detrimental to the utilization of our NOLs.
The acquisition restrictions also require any person attempting to become a holder of 5% or more of the Class A common stock, as determined under Section 382, to seek the approval of our Board. This may have an unintended “anti-takeover” effect because our Board may be able to prevent any future takeover. Similarly, any limits on the amount of stock that a stockholder may own could have the effect of making it more difficult for stockholders to replace current management. Additionally, because the acquisition restrictions have the effect of restricting a stockholder’s ability to dispose of or acquire the Class A common stock, the liquidity and market value of the Class A common stock might suffer. The acquisition restrictions may be waived by our Board. Stockholders are advised to monitor carefully their ownership of the Class A common stock and consult their own legal advisors and/or Company to determine whether their ownership of the Class A common stock approaches the proscribed level.
The occurrence of various events may adversely affect our ability to fully utilize NOLs.
We have a substantial amount of NOLs for U.S. federal income tax purposes that are available both currently and in the future to offset taxable income and gains. Events outside of our control may cause us to experience a Section 382 ownership change, and limit our ability to fully utilize such NOLs.
In general, an ownership change occurs when, as of any testing date, the percentage of stock of a corporation owned by one or more “5-percent shareholders,” as defined in the Section 382 and the related Treasury regulations, has increased by more than 50 percentage points over the lowest percentage of stock of the corporation owned by such shareholders at any time during the three-year period preceding such date. In general, persons who own 5% or more of a corporation’s stock are 5-percent shareholders, and all other persons who own less than 5% of a corporation’s stock are treated, together, as a single, public group 5-percent shareholder, regardless of whether they own an aggregate of 5% or more of a corporation’s stock. If a corporation experiences an ownership change, it is generally subject to an annual limitation, which limits its ability to use its NOLs to an amount equal to the equity value of the corporation multiplied by the federal long-term tax-exempt rate.
If we were to experience an ownership change, we could potentially have, in the future, higher U.S. federal income tax liabilities than we would otherwise have had and it may also result in certain other adverse consequences to us. Therefore, we have adopted the acquisition restrictions set forth in Article Fourth of our certificate of incorporation in order to reduce the likelihood that we will experience an ownership change under Section 382. There can be no assurance, however, that these efforts will deter or prevent the occurrence of an ownership change and the adverse consequences that may arise therefrom, as described above under the risk factor titled “The acquisition restrictions contained in our certificate of incorporation, which are intended to help preserve our net operating losses, may not be effective or may have unintended negative effects.”
Our stock price has been volatile and may continue to be volatile in the future and this volatility may affect the price at which you could sell our Class A common stock.
The trading price of the Class A common stock has been volatile and may continue to be volatile in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on an investment in the Class A common stock:
actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
changes in the market’s expectations about our operating results;
success of competitors;
our operating results failing to meet the expectation of securities analysts or investors in a particular period;
changes in financial estimates and recommendations by securities analysts concerning us, the market for digital and physical content, content distribution and entertainment in general;
operating and stock price performance of other companies that investors deem comparable to us;
our ability to market new and enhanced products on a timely basis;
changes in laws and regulations affecting our business or our industry;

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commencement of, or involvement in, litigation involving us;
changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;
the volume of shares of the Class A common stock available for public sale;
any major change in our board of directors or management;
sales of substantial amounts of Class A common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and
general economic and political conditions such as recessions, interest rates, international currency fluctuations and acts of war or terrorism.

Broad market and industry factors may materially harm the market price of the Class A common stock irrespective of our operating performance. The stock market in general, and Nasdaq in particular, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of the Class A common stock, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies that investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of the Class A common stock also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.
Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
Our fourth amended and restated certificate of incorporation, as amended, and bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our management without the consent of our board of directors. These provisions include:
a restriction on certain acquisitions of our common stock to help preserve our ability to utilize our significant NOLs by avoiding the limitations imposed by Section 382 of the Code;
no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
the ability of our board of directors to determine to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
the requirement that an annual meeting of stockholders may be called only by the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
limiting the liability of, and providing indemnification to, our directors and officers;
controlling the procedures for the conduct and scheduling of stockholder meetings; and
providing that directors may be removed prior to the expiration of their terms by the Board of Directors only for cause.

These provisions, alone or together, could delay hostile takeovers and changes in control of the Company or changes in our management.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the DGCL, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock. Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for the Class A common stock.




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ITEM 2.  PROPERTY

Our segmentsWe operated from the following leased properties at March 31, 2014.2015.

Deployment
Operations of:Location:Facility Type:Expires:Square Feet:
Phase 1 DC (1)Continuing operations    
Phase 2 DC (1)LocationSquare Feet (Approx.)Lease Expiration DatePrimary Use
Century City, California25,800July 2021Primary operations, sales, marketing and administrative offices for our Content & Entertainment Group. In addition, certain operations and administration for our other business segments.
Manhattan Borough of New York City16,500April 2016Corporate executive and administrative headquarters assumed following our acquisition of New Video in April 2012. Shared between all business segments.
    

Content & Entertainment
Discontinued operations
Location
Operations of:Location:Facility Type:Expires:Square Feet:Feet (Approx.)
CEGCentury City, CaliforniaAdministrative officesJanuary 2017 (4)10,623
 Century City, CaliforniaLease Expiration DateAdministrative officesDecember 2014 (5)17,172
 Manhattan Borough of New York CityExecutive and administrative officesApril 2016 (7)11,200
Corporate
Primary Use
Operations of:Location:Facility Type:Expires:Square Feet:
CinedigmManhattan Borough of New York CityExecutive and administrative officesApril 2016 (7)11,200

Discontinued operations
Operations of:Location:Facility Type:Expires:Square Feet:
Pavilion TheatreBrooklyn Borough of New York City31,100
July 2022Nine-screen digital movie theatre
July
2022 (2)
31,120 formerly operated by us prior to a sale of assets in May 2011. We have sublet the property to an independent third party and we no longer make payments on such lease; however, we remain the primary obligor.
Data Center (6)Brooklyn Borough of New York CityIDC30,500
January 2016Leased data center facility,
January
2016 (3)
30,520
SoftwareWoodland Hills, CaliforniaAdministrative and technical officesAugust 20146,726

(1)Employees share office space with CEG in Century City, California and New York, New York.
(2)There for which payment is no lease renewal provision.  In May 2011, the Company completed the sale of certain assets and liabilities of the Pavilion Theatre and from that point forward, will not be operatedmade by the Company. The Company has remaineda discontinued subsidiary. We remain the primary obligor on the Pavilion capital lease and entered into a separate sublease agreement with the third party to sublet the Pavilion Theatre.
(3)lease. There is no lease renewal provision.provision with this lease.
(4)In addition to CEG, various departments within the Company also occupy space at this location.
(5)Short term lease to accommodate added personnel from GVE Acquisition.
(6)
Since May 1, 2007, the IDC facility has been operated by FiberMedia, consisting of unrelated third parties, pursuant to a master collocation agreement. FiberMedia currently pays the lease directly to the landlord and the Company will attempt to obtain landlord consent to assign the facility lease to FiberMedia.  Until such landlord consent is obtained, the Company will remain as the lessee.
(7)Leased property assumed following the acquisition of New Video in April 2012. A total of 11,200 square feet are split between Content and Entertainment and Corporate.

We believe that we have sufficient space to conduct our business for the foreseeable future. All of our leased properties are, in the opinion of our management, in satisfactory condition and adequately covered by insurance.

We do not own any real estate or invest in real estate or related investments.



1819


ITEM 3.  LEGAL PROCEEDINGS

Gaiam Dispute
In August 2014, we initiated mediation with Gaiam with respect to certain claims resulting from the GVE Acquisition in accordance with the requirements of the Membership Interest Purchase Agreement (the ”MIPA”). On January 13 and 16, 2015, Gaiam and we participated in a two-day mediation to determine whether the parties’ disputes could be resolved informally without arbitration. The mediation was not successful, and, therefore, we are pursuing our claims against Gaiam through arbitration.
We believe that (i) Gaiam materially breached its representations and warranties under the MIPA, including a representation that the financial statements provided to us were consistent with GAAP; (ii) Gaiam engaged in fraud and tortious acts in connection with the sale; (iii) the amount of working capital in the business unit was substantially below the working capital target identified in the MIPA and is subject to a working capital adjustment; (iv) Gaiam breached the Transition Services Agreement, resulting in additional costs to us and potential losses associated with the non-collection our accounts receivable; and (v) Gaiam breached the terms of other agreements related to the transfer of cash from collected accounts receivable, including mishandling post-closing collections. Among other things, we believe that significant sections of the financial statements that Gaiam provided to us, both before and after the GVE Acquisition, were not consistent with GAAP, despite Gaiam’s contractual obligations to ensure GAAP compliance, and that Gaiam’s financial statements did not fairly present the financial position and results of GVE as of the date of the transaction. Our investigation of these issues is ongoing as of the date of this Report on Form 10-K.
We demanded that Gaiam agree to participate in an expedited arbitration before a nationally recognized accounting firm to determine the value of the working capital in accordance with the relevant procedures set forth in the MIPA (“the Working Capital Arbitration”). We also demanded that Gaiam agree simultaneously to participate in a separate arbitration before the American Arbitration Association (“the AAA Arbitration”) to resolve the parties’ non-working capital disputes. Gaiam initially asserted that the AAA Arbitration should occur prior to the Working Capital Arbitration and refused to proceed with the Working Capital Arbitration until after the AAA Arbitration was completed. Therefore, we commenced legal proceedings against Gaiam to comply with the MIPA and to compel Gaiam to participate in the Working Capital Arbitration without further delay.
By Order dated May 5, 2015, the United States District Court for the Central District of California ordered Gaiam to proceed with the Working Capital Arbitration forthwith. Although Gaiam initially filed an appeal of the Order with the Ninth Circuit, that appeal has been dismissed. The parties are not partyproceeding with the Working Capital Arbitration currently and expect to any pending, threatened or contemplated litigation.receive an initial decision on the working capital claims at issue in the Working Capital Arbitration by approximately mid-July 2015. In addition, the parties are proceeding with their respective non-working capital claims in the AAA Arbitration.
The relief requested by us exceeds $30.0 million and includes unspecified compensatory damages, attorneys’ fees, costs and interest, and all other appropriate relief including punitive damages. Gaiam has disputed our allegations and asserted its own claims against us, including seeking working capital reimbursement from us of over $6.0 million.
We believe that the claims that we have asserted against Gaiam in the Working Capital Arbitration and the AAA Arbitration have merit, and we intend to pursue our claims vigorously. Conversely, we believe that Gaiam’s claims are without merit. At this early stage, there can be no assurance as to the likelihood of success on the merits.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.




1920


PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

CLASS A COMMON STOCK

Our Class A Common Stock trades publicly on the Nasdaq Global Market (“NASDAQ”Nasdaq”), under the trading symbol “CIDM”. The following table shows the high and low sales prices per share of our Class A Common Stock as reported by NASDAQNasdaq for the periods indicated:
 For the Fiscal Year Ended March 31, For the Fiscal Year Ended March 31,
 2014 2013 2015 2014
 HIGH LOW HIGH LOW HIGH LOW HIGH LOW
April 1 – June 30 $1.63 $1.40 $1.80 $1.32 $2.97 $2.32 $1.63 $1.40
July 1 – September 30 $1.54 $1.36 $1.52 $1.11 $2.55 $1.52 $1.54 $1.36
October 1 – December 31 $2.31 $1.46 $1.58 $1.22 $1.97 $1.39 $2.31 $1.46
January 1 – March 31 $3.19 $2.05 $1.73 $1.30 $1.72 $1.44 $3.19 $2.05
The last reported closing price per share of our Class A Common Stock as reported by NASDAQNasdaq on June 23, 201422, 2015 was $2.97$0.88 per share. As of June 23, 2014,22, 2015, there were 9381 holders of record of our Class A Common Stock, not including beneficial owners of our Class A Common Stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.

CLASS B COMMON STOCK

No shares of Class B Common Stock are currently outstanding. On September 13, 2012, after receiving approval of its stockholders at the annual meeting of stockholders held on September 12, 2012, the Companywe amended itsour Fourth Amended and Restated Certificate of Incorporation to eliminate any authorized but unissued shares of Class B Common Stock. Accordingly, no further Class B Common Stock will be issued.

DIVIDEND POLICY
 
We have never paid any cash dividends on our Class A Common Stock or Class B Common Stock and do not anticipate paying any on our Class A Common Stock in the foreseeable future. Any future payment of dividends on our Class A Common Stock will be in the sole discretion of our board of directors. The holders of our Series A 10% Non-Voting Cumulative Preferred Stock are entitled to receive dividends. Prior to September 2010, the Company was prohibited under the terms of a term loan with Sageview to make such payments. There were $89 of cumulative dividends in arrears on the Preferred Stock at March 31, 2014.2015.
 
SALES OF UNREGISTERED SECURITIES
 
None.
  
PURCHASE OF EQUITY SECURITIES

There were no purchases of shares of our Class A Common Stock made by us or on our behalf during the three months ended March 31, 2014.2015.

On April 29, 2015, we issued $64.0 million aggregate principal amount of 5.5% convertible senior notes (the "Convertible Notes"), due April 15, 2035. We do not anticipate purchasing anyused $11.4 million of the net proceeds from the Convertible Notes issuance to enter into a forward stock purchase transaction to acquire approximately 11.8 million shares of our Class A Common Stockcommon stock for settlement at any time prior to the fifth anniversary of the issuance date of the Convertible Notes and approximately $2.6 million to repurchase approximately 2.7 million shares of our Class A common stock from certain purchasers of the Convertible Notes in privately negotiated transactions on April 30, 2015.

The shares to be purchased under the foreseeable future.forward stock purchase transaction will be treated as retired for certain accounting purposes, beginning with the financial statements for the quarter ending June 30, 2015, but will remain outstanding for corporate law purposes, including for purposes of any future stockholder votes, until the forward stock purchase transaction is settled and such shares are delivered to the Company to be retired to treasury.


2021


ITEM 6.  SELECTED FINANCIAL DATA

The following tables set forth our historical selected financial and operating data for the periods indicated. The selected financial and operating data should be read together with the other information contained in this document, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 7 and the audited historical financial statements and the notes thereto included elsewhere in this document. The historical results here are not necessarily indicative of future results.
For the Fiscal Years Ended March 31,For the Fiscal Years Ended March 31,
Statement of Operations Data(In thousands, except for share and per share data)(In thousands, except for share and per share data)
Related to Continuing Operations:2014 2013 2012 2011 20102015 2014 2013 2012 2011
Revenues$104,328
 $81,092
 $68,363
 $54,225
 $47,625
$105,484
 $104,328
 $81,092
 $68,363
 $54,225
Direct operating (exclusive of depreciation and amortization shown below)28,920
 8,515
 3,468
 2,327
 3,388
30,109
 28,920
 8,515
 3,468
 2,327
Selling, general and administrative26,333
 20,805
 13,625
 10,904
 9,241
32,402
 26,333
 20,805
 13,625
 10,904
Provision for doubtful accounts394
 478
 459
 117
 —
(Benefit) provision for doubtful accounts(206) 394
 478
 459
 117
Restructuring, transition and acquisitions expenses, net1,533
 857
 1,811
 1,403
 —
2,638
 1,533
 857
 1,811
 1,403
Goodwill impairment6,000
 —
 —
 —
 —
Depreciation and amortization of property and equipment37,289
 36,359
 35,715
 31,771
 29,637
37,519
 37,289
 36,359
 35,715
 31,771
Amortization of intangible assets3,473
 1,538
 278
 315
 315
5,864
 3,473
 1,538
 278
 315
Total operating expenses97,942
 68,552
 55,356
 46,837
 42,581
114,326
 97,942
 68,552
 55,356
 46,837
Income from operations6,386
 12,540
 13,007
 7,388
 5,044
(Loss) income from operations(8,842) 6,386
 12,540
 13,007
 7,388
                  
Interest income98
 48
 140
 154
 312
101
 98
 48
 140
 154
Interest expense(19,755) (28,314) (29,899) (26,991) (33,583)(19,899) (19,755) (28,314) (29,899) (26,991)
Debt prepayment fees—
 (3,725) —
 —
 —
—
 —
 (3,725) —
 —
(Loss) gain on extinguishment of notes payable—
 (7,905) —
 (4,448) 10,744
Loss on extinguishment of notes payable—
 —
 (7,905) —
 (4,448)
(Loss) income on investment in non-consolidated entity(1,812) 322
 (510) —
 —
—
 (1,812) 322
 (510) —
Other income (expense), net444
 654
 912
 (419) (568)105
 444
 654
 912
 (419)
Change in fair value of warrant liability—
 —
 —
 3,142
 2,994
—
 —
 —
 —
 3,142
Change in fair value of interest rate derivatives679
 1,231
 200
 (1,326) (8,463)(441) 679
 1,231
 200
 (1,326)
Loss from continuing operations before benefit from income taxes(13,960) (25,149) (16,150) (22,500) (23,520)(28,976) (13,960) (25,149) (16,150) (22,500)
Benefit from income taxes—
 4,944
 —
 —
 —
—
 —
 4,944
 —
 —
Loss from continuing operations(13,960) (20,205) (16,150) (22,500) (23,520)(28,976) (13,960) (20,205) (16,150) (22,500)
Loss from discontinued operations(11,904) (861) (3,194) (7,358) (5,988)
Income (loss) from discontinued operations100
 (11,904) (861) (3,194) (7,358)
(Loss) gain on sale of discontinued operations—
 —
 (3,696) 622
 —
(3,293) —
 —
 (3,696) 622
Net loss(25,864) (21,066) (23,040) (29,236) (29,508)(32,169) (25,864) (21,066) (23,040) (29,236)
Net loss attributable to noncontrolling interest861
 —
 —
 —
 —
Net loss attributable to Cinedigm Corp.(31,308) (25,864) (21,066) (23,040) (29,236)
Preferred stock dividends(356) (356) (356) (394) (400)(356) (356) (356) (356) (394)
Net loss attributable to common shareholders$(26,220) $(21,422) $(23,396) $(29,630) $(29,908)$(31,664) $(26,220) $(21,422) $(23,396) $(29,630)
Basic and diluted net loss per share from continuing operations$(0.25) $(0.43) $(0.46) $(0.74) $(0.83)$(0.37) $(0.25) $(0.43) $(0.46) $(0.74)
Shares used in computing basic and diluted net loss per share (1)
57,084,319
 47,517,167
 36,259,036
 30,794,102
 28,624,154
76,785,351
 57,084,319
 47,517,167
 36,259,036
 30,794,102
 
(1) 
For all periods presented, the Company haswe incurred net losses and, therefore, the impact of dilutive potential common stock equivalents and convertible notes are anti-dilutive and are not included in the weighted shares.

2122


For the Fiscal Years Ended March 31,For the Fiscal Years Ended March 31,
(In thousands)(In thousands)
Balance Sheet Data (At Period End):2014 2013 2012 2011 20102015 2014 2013 2012 2011
Cash and cash equivalents, restricted available-for-sale investments and restricted cash$56,966
 $20,199
 $33,071
 $22,979
 $24,193
$25,750
 $56,966
 $20,199
 $33,071
 $22,979
Working (deficit) capital$(5,002) $(17,497) $2,755
 $2,110
 $(2,599)$(30,871) $(5,002) $(17,497) $2,755
 $2,110
Total assets$345,998
 $281,459
 $287,517
 $292,997
 $280,331
$279,705
 $345,998
 $281,459
 $287,517
 $292,997
Notes payable, non-recourse$198,604
 $237,909
 $170,989
 $192,554
 $173,301
$157,298
 $198,604
 $237,909
 $170,989
 $192,554
Total stockholders' equity (deficit)$10,227
 $(17,314) $(11,473) $1,787
 $11,292
Other Financial Data (At Period End):       
  
Total stockholders' (deficit) equity of Cinedigm Corp.$(18,959) $10,227
 $(17,314) $(11,473) $1,787
Other Financial Data:         
Net cash provided by operating activities$39,594
 $29,369
 $39,938
 $30,075
 $9,948
$9,211
 $39,594
 $29,369
 $39,938
 $30,075
Net cash used in investing activities$(52,009) $(4,250) $(17,315) $(41,067) $(19,394)
Net cash provided by (used in) financing activities$49,182
 $(29,514) $(15,528) $12,646
 $2,712
Net cash provided by (used in) investing activities$1,197
 $(52,009) $(4,250) $(17,315) $(41,067)
Net cash (used in) provided by financing activities$(41,624) $49,182
 $(29,514) $(15,528) $12,646

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our historical consolidated financial statements and the related notes included elsewhere in this document.

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 the Company’sour control that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.
 
OVERVIEW

Cinedigm Corp. (formerly known as Cinedigm Digital Cinema Corp.) was incorporated in Delaware on March 31, 2000 (“Cinedigm”, and collectively with its subsidiaries, the “Company”). Cinedigm is (i) a leading distributor of independent movie, television and other short form content managing a library of distribution rights to over 52,000 titles and episodes released across theatrical, digital, physical, home and mobile entertainment platforms as well as (ii) a leading servicer of digital cinema assets on over 12,000 movies screens in both North America and several international countries.

Over the past decade, the Company hasSince our inception, we have played a significant role in the digital distribution revolution that continues to transform the media landscape. In addition to itsour pioneering role in transitioning over 12,000 movie screens from traditional analog film prints to digital distribution, the Company, through both organic growth and acquisitions, haswe have become a leading distributor of independent content. The Company distributescontent, both through organic growth and acquisitions. We distribute products for major brands such as the NFL, Discovery Networks, National Geographic and Scholastic, as well as leading international and domestic content creators, movie producers, television producers and other short form digital content producers. Cinedigm collaboratesWe collaborate with producers, major brands and other content owners to market, source, curate and distribute quality content to targeted and profitable audiences through (i) theatrical releases, (ii) existing and emerging digital home entertainment platforms, including but not limited to, iTunes, Amazon Prime, Netflix, Hulu, xBox, Playstation,Xbox, PlayStation, and cable video-on-demand ("VOD"), and (iii)(ii) physical goods, including DVD and Blu-ray.Blu-ray Discs.

The Company reports itsWe report our financial results in four primary segments as follows: (1) the first digital cinema deployment (“Phase I Deployment,Deployment”), (2) the second digital cinema deployment (“Phase II Deployment,Deployment”), (3) Servicesdigital cinema services (“Services”) and (4) media content and entertainment group (“Content & Entertainment.Entertainment” or "CEG"). The Phase I Deployment and Phase II Deployment segments are the non-recourse, financing vehicles and administrators for the Company's Systemsour digital cinema equipment (the “Systems”) installed in North American movie theatres.  Thetheatres throughout the United States, and in Australia and New Zealand. Our Services segment provides services, software andfee based support to theover 12,000 movie screens in our Phase I Deployment, and Phase II Deployment segments as well as directly to exhibitors and other third party customers.  Includedcustomers in these services are asset management services for a specified fee via service agreements with Phase I Deploymentthe form of monitoring, billing, collection and Phase II Deployment as well as third party exhibitors as buyers of their own digital cinema equipment; and software license, maintenance and consulting services to Phase I and Phase II Deployment, various other exhibitors, studios and other content organizations.  These services primarily facilitate the conversion from analog to digital cinema and have positioned the Company at what it believes to be the forefront of a rapidly developing industry relating to the distribution and management of digital cinema and other content to theatres and other remote venues worldwide.  Theverification services. Our Content &

22


Entertainment segment is a market leader in three key area of entertainment content distribution -in: (1) ancillary market aggregation and distribution theatrical releasing andof entertainment content and; (2) branded and curated OTTover-the-top ("OTT") digital network business providing entertainment channels and applications.

We are structured so that our digital cinema business (collectively, our Phase I Deployment, Phase II Deployment and Services segments) operates independently from our Content & Entertainment business. As of March 31, 2015, we had approximately $157.5 million of non-recourse outstanding debt principal that relates to, and is serviced by, our digital cinema business. We also have approximately $47.5 million of outstanding debt principal, as of March 31, 2015 that is attributable to our Content & Entertainment and Corporate segments.


23


The following organizational chart provides a graphic representation of our business and our four reporting segments:


We have incurred consolidated net losses including the results of our non-recourse deployment subsidiaries, of$32.2 million, $25.9 million and $21.1 million duringfor the fiscal years ended March 31, 2015, 2014 and 2013 respectively, and we have an accumulated deficit of $268.7$300.4 million as of March 31, 2014.2015. Included in our consolidated net losses were net restructuring, transition and acquisitionsacquisition expenses of $2.6 million, $1.5 million and $0.9 million duringfor the fiscal years ended March 31, 2015, 2014 and 2013, respectively.respectively, and a goodwill impairment charge of $6.0 million in the fiscal year ended March 31, 2015. We also have significant contractual obligations related to our non-recourse and recourse debt for the fiscal year ended March 31, 20152016 and beyond. In addition and as discussed further in Management's Discussion and Analysis - Liquidity and Capital Resources, on April 29, 2015, we issued $64.0 million aggregate principal amount of 5.5% convertible senior notes (the "Convertible Notes"), due April 15, 2035. We used $18.6 million of the net proceeds from the offering to repay borrowings and terminate one of our term loans under our 2013 Credit Agreement, of which $18.2 million was used to pay the remaining principal balance. We also repurchased 2.7 million shares of our Class A common stock from certain purchasers of Convertible Notes in privately negotiated transactions for $2.6 million. In addition, $11.4 million of the net proceeds was used to fund the cost of repurchasing 11.8 million shares of our Class A common stock pursuant to a forward purchase contract that may be settled at any time prior to the fifth anniversary of the issuance of the Convertible Notes.

We may continue generating consolidated net losses for the foreseeable future. Based on our cash position at March 31, 2014, and2015, expected cash flows from operations, and the net proceeds from the April 2015 offering of Convertible Notes we believe that we have the ability to meet our obligations through at least June 30, 2015.2016. 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.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In connection with the preparation of our financial statements, we are required to make assumptions

2324


Critical Accounting Policiesand estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

TheOur significant accounting policies are discussed in Note 2 - Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Management believes that the following is a discussionaccounting policies are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management's most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our critical accounting policies.board of directors.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation expense is recorded using the straight-line method over the estimated useful lives of the respective assets as follows:

Computer equipment and software3-5 years
Digital cinema projection systems10 years
Machinery and equipment3-10 years
Furniture and fixtures3-6 years

Leasehold improvements are being amortized over the shorter of the lease term or the estimated useful life of the improvement. Maintenance and repair costs are charged to expense as incurred. Major renewals, improvements and additions are capitalized.

Useful lives are determined based on an estimate of either physical or economic obsolescence, or both. During the fiscal years ended March 31, 2015 and 2014, and 2013, the Company haswe have neither made any revisions to estimated useful lives, nor recorded any impairment charges from continuing operations on itsour property and equipment. During the fiscal year ended March 31, 2013, the Company reduced its capital lease obligation resulting from an amended sub-lease agreement in January 2013, through which an unrelated third party purchaser pays the capital lease and the Company is the primary obligor.

GOODWILLFAIR VALUE ESTIMATES

Goodwill is the excess of the purchase price paid overand Intangible and Long-Lived Assets

We must estimate the fair value of assets acquired and liabilities assumed in a business combination. Our assessment of the estimated fair value of each of these can have a material effect on our reported results as intangible assets are amortized over various lives. Furthermore, a change in the estimated fair value of an asset or liability often has a direct influence on the amount to recognize as goodwill, which is an asset that is not amortized. Often determining the fair value of these assets and liabilities assumed requires an assessment of expected use of the assets and the expected costs to extinguish the liabilities. Such estimates are inherently difficult and subjective and can have a material influence on our consolidated financial statements.

We use either the income, cost or market approach to aid in our conclusions of such fair values and asset lives. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life of the asset, discounted to present value. The cost approach presumes that an investor would pay no more for an asset than its replacement or reproduction cost. The market approach estimates value based on what other participants in the market have paid for reasonably similar assets. Although each valuation approach is considered in valuing the assets acquired, the approach ultimately selected is based on the characteristics of an acquired business. Goodwill is testedthe asset and the availability of information.

We evaluate our goodwill annually for impairment on an annual basis or more often if warranted bywhenever events or changes in circumstances indicating thatindicate the carrying value may exceed fair value, also known as impairment indicators.

The Company’s process of evaluating goodwill for impairment involves the determination of fair value of its goodwilla reporting unit CEG.is below its carrying amount. The Company conducts its annualdetermination of whether or not goodwill impairment analysis duringhas become impaired involves a significant level of judgment in the fourth quarterassumptions underlying the approach used to determine the value of each fiscal year, measured as of March 31, unless triggering events occur which require goodwill to be tested at another date. As discussed in Note 1 to the Company's consolidated financial statements in Item 8, goodwill increased during the fiscal year ended March 31, 2014 as a result of the Gaiam Acquisition.

our reporting units. Inherent in the fair value determination for each reporting unit are certain judgments and estimates relating to future cash flows, including management’s interpretation of current economic indicators and market conditions, and assumptions about the Company’sour strategic plans with regard to itsour operations. To the extent additional information arises, market conditions change or the Company’sour strategies change, it is possible that the conclusion regarding whether the Company’s remaining goodwill is impaired could change and result in future goodwill impairment charges that willcould have a material effect on the Company’sour consolidated financial position or results of operations.

25



The Company applies the applicable accounting guidance whenWhen testing goodwill for impairment which permits the Companywe are permitted to make a qualitative assessment of whether goodwill is impaired, or optchoose to bypass the qualitative assessment, and proceed directly to performing the first step of the two-step impairment test. If the Company performswe perform a qualitative assessment and concludesconclude it is more likely than not that the fair value of a reporting unit exceeds its carrying value, goodwill is not considered impaired and the two-step impairment test is unnecessary. However, if the Company concludeswe conclude otherwise, it iswe are then required to perform the first step of the two-step impairment test.

The Company has the unconditional option to bypass the qualitative assessment for any reporting unit and proceed directly to performing the first step of the goodwill impairment test. The Company may resume performing the qualitative assessment in any subsequent period.

For reporting units where we decide to perform a qualitative assessment, Company management assesses and makes judgments regarding a variety of factors which potentially impact the fair value of a reporting unit, including general economic conditions, industry and market-specific conditions, customer behavior, cost factors, our financial performance and trends, our strategies and business plans, capital requirements, management and personnel issues, and our stock price, among others. Management then

24


considers the totality of these and other factors, placing more weight on the events and circumstances that are judged to most affect a reporting unit's fair value or the carrying amount of its net assets, to reach a qualitative conclusion regarding whether it is more likely than not that the fair value of a reporting unit exceeds its carrying amount.

For reporting units where we decide to perform a quantitative testing approach in order to test goodwill, a determination of the fair value of our reporting units is required and is based, among other things, on estimates of future operating performance of the reporting unit and/or the component of the entity being valued. This impairment test includes the projection and discounting of cash flows, analysis of our market factors impacting the businesses the Company operates and estimating the fair values of tangible and intangible assets and liabilities. Estimating future cash flows and determining their present values are based upon, among other things, certain assumptions about expected future operating performance and appropriate discount rates determined by management.

The discounted cash flow methodology establishes fair value by estimating the present value of the projected future cash flows to be generated from the reporting unit. The discount rate applied to the projected future cash flows to arrive at the present value is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows.  The discounted cash flow methodology uses projections of financial performance for a five-year period.  The most significant assumptions used in the discounted cash flow methodology are the discount rate and expected future revenues and gross margins, which vary among reporting units. The market participant based weighted average cost of capital for each unit gives consideration to factors including, but not limited to, capital structure, historic and projected financial performance, industry risk and size.

The market multiple methodology establishes fair value by comparing the reporting unit to other companies that are similar, from an operational or industry standpoint and considers the risk characteristics in order to determine the risk profile relative to the comparable companies as a group.  The most significant assumptions are the market multiplies and the control premium. The Company has elected not to apply a control premium to the fair value conclusions for the purposes of impairment testing.

During the annual testing of goodwill for impairment in the fourth quarter of the fiscal year ended March 31, 2014, management2015, we performed the quantitative assessment for itsour CEG reporting unit, the only reporting unit with goodwill.goodwill, and determined that the CEG reporting unit had a fair value less than the unit's carrying amount. As a result, we recorded a goodwill impairment charge of $6.0 million in the year ended March 31, 2015. In determining fair value usingwe used various assumptions, including expectations of future cash flows based on projections or forecasts derived from analysis of business prospects, economic or market trends and any regulatory changes that may occur. We estimateestimated the fair value of the reporting unit using a net present value methodology, which is dependent on significant assumptions related to estimated future discounted cash flows, discount rates and tax rates. Certain of the estimates and assumptions that we used in determining the value of our CEG reporting unit are discussed in Note 2 - Summary of Significant Accounting Policies of Item 8 - Financial Statements and Supplementary Data of this Report on Form 10-K.

The assumptionsgoodwill impairment was primarily a result of reduced expectations of future cash flows to be generated by our CEG reporting unit, reflecting the continuing decline in consumer demand for the annual impairment test should not be construed as earnings guidance or long-term projections and are typicallypackaged goods in favor of films in downloadable form. As a result, we have shifted our operating focus to devote more conservative projections. The assumptions include growth ratesresources to our OTT channel business, which we expect to build upon significantly in adjusted EBITDA that are derived from the Company's budget and projections for the fiscal years ended March 31, 2015 of approximately $8.4 million with growth rates of 66% and 13% for the fiscal years endedending March 31, 2016 through 2018. Launching OTT channels requires that we make significant up-front investments to build the infrastructure, acquire content and 2017, respectively, anddevelop partnerships, in exchange for anticipated revenue streams, which we also took into account in our discounted cash flow analysis. Beyond 2018, however, we expect that increased cash flows from our OTT channel business will more than offset decreases in cash flows from the sale of packaged goods. In addition, we applied a flat growthhigher discount rate for goodwill testing purposes of approximately 5% for CEG for the fiscal years thereafter through the fiscal year ending March 31, 2019. Further, we assumedto expected future cash flows, reflecting a market-based weighted averagehigher implied cost of capital of 13% for CEG to discount cash flows and a blended federal and state tax rate of 40%.

The fair value of the CEG reporting unit as calculated for goodwill testing purposes exceeded its carrying value, inclusive of goodwill of $25.5 million, by over 43%. Thus, a potential future decreasedebt financing. Future decreases in the fair value of this reporting unit would have a carrying value in excess of the fair value. As such, no further analysis of theour CEG reporting unit was required and nomay require us to record additional goodwill impairment, was recorded for the fiscal year ended March 31, 2014 and 2013. There is, however, a significant risk of future impairmentparticularly if management'sour expectations of future cash flows are not achieved.

DEFINITE-LIVED INTANGIBLE ASSETS

AsWe review the recoverability of March 31, 2014, the Company’sour long-lived assets and finite-lived intangible assets, consistedwhen 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 customer relationships, supplier agreements, content libraries, theatre relationships, covenantsits 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 compete, a favorable operating lease, trade namesbe recoverable and trademarks. Duringpossibly impaired. We then estimate the fiscal years ended March 31, 2014fair 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.

Stock-based Compensation

Stock-based compensation expense is measured at the grant date based on the fair value of the award and 2013, no impairment charge for finite-lived intangible assets was recorded within continuing operations.is recognized as expense over the vesting period. Determining the fair value of stock-based awards at the grant date requires judgment in estimating expected stock volatility and the amount of stock-based awards that are expected to be forfeited. If actual results differ significantly from these estimates, stock-based compensation expense and our results of operations could be materially affected.

REVENUE RECOGNITION

Phase I Deployment and Phase II Deployment

VPFs are earned, net of administrative fees, pursuant to contracts with movie studios and distributors, whereby amounts are payable by a studio to Phase 1 DC, CDF I and to Phase 2 DC when movies distributed by the studio are displayed on screens utilizing the Company’sour Systems installed in movie theatres. VPFs are earned and payable to Phase 1 DC and CDF I based on a defined fee schedule with a reduced VPF rate year over year until the sixth year (calendar 2011) at which point the VPF rate remains unchanged

25


through the tenth year. One VPF is payable for every digital title displayed per System. The amount of VPF revenue is dependent on the number of movie titles released and displayed using the Systems in any given accounting period. VPF revenue is recognized in the period in which the digital title first plays on a System for general audience viewing in a digitally-equippeddigitally equipped movie theatre, as Phase 1 DC’s, CDF I’s and Phase 2 DC’s performance obligations have been substantially met at that time.


26


Phase 2 DC’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 2 DC may no longer collect VPFs once “cost recoupment,” as defined in the contracts with movie studios and distributors, is achieved. Cost recoupment will occur once the cumulative VPFs and other cash receipts collected by Phase 2 DC 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 the Company’s service fees, subject to maximum agreed upon amounts during the three-year rollout period and thereafter. Further, if cost recoupment occurs before the end of the eighth contract year, the studios will pay us a one-time “cost recoupment bonus” is payable by the studios to the Company.bonus.”  Any other cash flows, net of expenses, received by Phase 2 DC following the achievement of cost recoupment are required to be returned to the distributors on a pro-rata basis. At this time, the Companywe cannot estimate the timing or probability of the achievement of cost recoupment.

Alternative content fees (“ACFs”) are earned pursuant to contracts with movie exhibitors, whereby amounts are payable to Phase 1 DC, CDF I and to Phase 2 DC, generally either a fixed amount or as a percentage of the applicable box office revenue derived from the exhibitor’s showing of content other than feature movies, such as concerts and sporting events (typically referred to as “alternative content”). ACF revenue is recognized in the period in which the alternative content first opens for audience viewing.

Revenues are deferred forearned in connection with up front exhibitor contributions are deferred and are recognized over the expected cost recoupment period, which is expected to be ten years.period.

Services

Exhibitors who purchased and own Systems using their own financing in the Phase II Deployment paid us an upfront activation fee that is generally $2of approximately $2.0 thousand per screen to the Company (the “Exhibitor-Buyer Structure”). These upfrontUpfront activation fees arewere recognized in the period in which these exhibitor owned Systems arewere delivered and ready for content, as the Company haswe had no further obligations to the customer after that time and are generally paid quarterly from VPF revenues over approximately one year.  Additionally, the Company recognizescollection was reasonably assured. In addition, we recognize activation fee revenue of between $1$1.0 thousand and $2$2.0 thousand on Phase 2 DC Systems and for Systems installed by CDF2 Holdings upon installation and such fees are generally collected upfront upon installation. The Company will then manage the billingOur Services segment manages and collectioncollects VPFs on behalf of VPFs and will remit all VPFs collected to the exhibitors, lessfor which it earns an administrative fee that will approximate upequal to 10% of the VPFs collected.

TheOur Services segment earns an administrative fee related to theof approximately 5% of Phase I Deployment approximates 5% of the VPFs collected and earns an incentive service fee equal to 2.5% of the VPFs earned by Phase 1 DC. This administrative fee is recognized in the period in which the billing of VPFs occurs, as performance obligations have been substantially met at that time.

Content & Entertainment

CEG earns fees for the distribution of content in the home entertainment markets via several distribution channels, including digital, video-on-demand, and physical goods (e.g. DVD and Blu-ray)Blu-ray Discs). The fee rateFees earned byare typically based on the Company varies dependinggross amounts billed to our customers less the amounts owed to the media studios or content producers under distribution agreements, and gross media sales of owned or licensed content. Depending upon the nature of the agreements with the platform and content providers.providers, the fee rate that we earn varies. Generally, revenues are recognized atwhen content is available for subscription on the availability date of the content for a subscription digital platform, at the time of shipment for physical goods, or point-of-sale for transactional and video-on-demand services. Reserves for sales returns and other allowances are provided based upon past experience. If actual future returns and allowances differ from past experience, adjustments to our allowances may be required. Sales returns and allowances are reported net in accounts receivable and as a reduction of revenues.
CEG also has contracts for the theatrical distribution of third party feature movies and alternative content. CEG’s distribution fee revenue and CEG's participation in box office receipts is recognized at the time a feature movie and alternative content isare viewed. CEG has the right to receive or bill a portion of the theatrical distribution fee in advance of the exhibition date, and therefore such amount is recorded as a receivable at the time of execution, and all related distribution revenue is deferred until the third party feature movies’ or alternative content’s theatrical release date.
Revenue is deferred in cases where a portion or the entire contract amount cannot be recognized as revenue due to non-delivery of services. Such amounts are classified as deferred revenue and are recognized as earned revenue in accordance with the Company’sour revenue recognition policies described above.


27


In connection with revenue recognition for CEG, the following are also considered critical accounting policies:


26


Advances

Advances, which are recorded within prepaid and other current assets within the consolidated balance sheets,Consolidated Balance Sheets, represent amounts prepaid to studios or content producers for which the Company provides contentwe provide distribution servicesservices. We evaluate advances regularly for recoverability and such advances are estimated torecord impairment charges for amounts that we expect may not be fully recoupablerecoverable as of the consolidated balance sheetConsolidated Balance Sheet date.

Participations payable
The Company records
Royalties owed to studios or content producers under licensing agreements for which we provide content distribution are recorded as liabilities within accounts payable and accrued expenses on the consolidated balance sheet, that represent amounts owed to studios or content producers for which the Company provides content distribution services for royalties owed under licensing arrangements. The Company identifies and records as a reduction to the liability any expensesConsolidated Balance Sheet. Expenses that are to be reimbursed to the Companyus by such studios or content producers.producers are recorded as a reduction to the liability.

Results of Continuing Operations for the Fiscal Years Ended March 31, 2015 and 2014

Movie Cost AmortizationRevenues
Once a movie is released, capitalized acquisition costs are amortized
 For the Fiscal Year Ended March 31,
($ in thousands)2015
2014
$ Change
% Change
Phase I Deployment$36,161

$36,309

$(148)
— %
Phase II Deployment12,347

12,146

201

2 %
Services11,876

12,558

(682)
(5)%
Content & Entertainment45,100

43,315

1,785

4 %
 $105,484

$104,328

$1,156

1 %

Revenues in our Phase I and participations and residual costs are accrued on an individual title basis in the proportionPhase II Deployment businesses increased slightly compared to the revenue recognized duringprior year as total VPFs, the period for each title ("Period Revenue") bears to the estimated remaining total revenue to be recognized from all sources for each title ("Ultimate Revenue"). The amountnumber of movieSystems deployed, wide-release titles and other costs thatscreen utilization rates, which is amortized each period will depend on the ratio of Period active screens displaying content versus total installed screens, were consistent with the prior fiscal year.

Revenue generated by our Services segment decreased primarily due to Ultimate Revenue for each movie. The Company makesan expected reduction of revenues earned from activation fees. We deployed Systems in Australia and New Zealand in the fiscal year ended March 31, 2014, which contributed $0.9 million of non-recurring activation fee revenue to the prior year.

Revenues at our CEG business increased, reflecting the full year contribution of our October 2013 acquisition of GVE, compared to five months of revenue from the GVE Acquisition included in the prior year period. Offsetting the increase in revenue were higher than anticipated returns of DVDs and Blu-ray discs in the current year in connection with our integration of GVE, as we transferred to a new physical goods replication, distribution and fulfillment partner. In addition, we terminated several non-profitable customer contracts during the third fiscal quarter of 2015 and experienced delays in signing certain estimates and judgments of Ultimate Revenuenew movie co-production partnerships that are now expected to contribute to revenue in the fiscal year ending March 31, 2016. Furthermore, as discussed in Item 3 - Legal Proceedings, certain issues arising in connection with the GVE Acquisition negatively impacted our sales in the current fiscal year. Our CEG business continued to be recognized for each title. Ultimate Revenue does not include estimatesimpacted by changes in consumer behavior, particularly declining in-store purchasing of revenue that will be earned beyond 5 years ofpackaged entertainment products and reduced retail shelf space allotted thereto.

Direct Operating Expenses
 For the Fiscal Year Ended March 31,
($ in thousands)2015 2014 $ Change % Change
Phase I Deployment$970
 $766
 $204
 27 %
Phase II Deployment485
 610
 (125) (20)%
Services58
 380
 (322) (85)%
Content & Entertainment28,596
 27,164
 1,432
 5 %
 $30,109
 $28,920
 $1,189
 4 %
Direct operating expenses were comparable to the prior year period; although the fiscal year ended March 31, 2015 includes a movie’s initial theatrical release date. Movie cost amortization is a componentfull year of direct operating expense from the GVE Acquisition, compared to five months in the prior fiscal year. In the fiscal year ended March 31, 2015, we recognized charges of approximately $2.8 million to accelerate expensing of certain advances based

28


upon revised estimates of projected revenue for certain products. In addition, we had higher than anticipated expenses related to our transition to a new physical goods replication, distribution and fulfillment partner in connection with the GVE Acquisition. These increases were offset by reduced upfront theatrical releasing, marketing and acquisitions costs withinof $2.6 million as CEG released four movies during the consolidated statements of operations.current fiscal year compared to 14 releases in the prior fiscal year.

EstimatesSelling, General and Administrative Expenses
 For the Fiscal Year Ended March 31,
($ in thousands)2015 2014 $ Change % Change
Phase I Deployment$464
 $328
 $136
 41 %
Phase II Deployment130
 279
 (149) (53)%
Services744
 765
 (21) (3)%
Content & Entertainment18,736
 14,448
 4,288
 30 %
Corporate12,328
 10,513
 1,815
 17 %
 $32,402
 $26,333
 $6,069
 23 %

Selling, general and administrative expenses increased compared to the prior year, primarily reflecting the full year contribution of Ultimate Revenue and anticipated participation and residual costs are reviewed periodicallythe GVE Acquisition in the ordinary courseContent & Entertainment segment, which contributed five months to such operating expenses in the prior year period. Expenses incurred in connection with expanding our OTT business also contributed to the increase compared to the prior year period. Professional fees in our Corporate operations increased $1.7 million, related to the Gaiam litigation, incremental costs related to Sarbanes-Oxley compliance and a financial systems conversion.

Restructuring, Transition and Acquisitions Expenses, Net

Restructuring, transition and acquisitions expense, net were $2.6 million for the fiscal year ended March 31, 2015, which reflect the continued integration of GVE and an ongoing alignment of resources Content & Entertainment business. In the March 31, 2014 fiscal year, we recorded restructuring, transition and acquisitions expenses, net of $1.5 million, primarily related professional fees, workforce reduction and integration related to our GVE Acquisition, which was offset by a $3.4 million reduction in contingent liabilities recorded in connection with our acquisition of New Video Group.

Goodwill Impairment

In the fourth quarter of the year ended March 31, 2015, we recorded a goodwill impairment charge of $6.0 million. Goodwill impairment was primarily a result of reduced expectations of future cash flows to be generated by our CEG reporting unit, reflecting the continuing decline in consumer demand for packaged goods in favor of films in downloadable form. As a result, we have shifted our operating focus to devote more resources to our OTT channel business, which we expect to build upon significantly in fiscal years ending March 31, 2016 through 2018. Launching OTT channels requires that we make significant up-front investments to build the infrastructure, acquire content and develop partnerships, in exchange for anticipated revenue streams, which we also took into account in our discounted cash flow analysis. Beyond 2018, however, we expect that increased cash flows from our OTT channel business will more than offset decreases in cash flows from the sale of packaged goods. In addition, we applied a higher discount rate to expected future cash flows, reflecting a higher implied cost of debt financing.

Depreciation and Amortization Expense on Property and Equipment
 For the Fiscal Year Ended March 31,
($ in thousands)2015 2014 $ Change % Change
Phase I Deployment$28,550
 $28,549
 $1
 — %
Phase II Deployment7,523
 7,523
 —
 — %
Services177
 214
 (37) (17)%
Content & Entertainment219
 210
 9
 4 %
Corporate1,050
 793
 257
 32 %
 $37,519
 $37,289
 $230
 1 %
Depreciation and amortization expense was consistent with the prior fiscal year, as we have not added substantially to our property and equipment balances. Depreciation and amortization expense increased at Corporate for certain leasehold improvements made to our California offices and equipment acquired under capital lease arrangements.

29



Amortization of intangible assets

Amortization of intangible assets increased to $5.9 million for the fiscal year ended March 31, 2015 compared to $3.5 million in the prior fiscal year, reflecting a full year of amortization expense related to the finite-lives intangible assets recognized in connection with the GVE Acquisition, the valuation of which were finalized during the three months ended March 31, 2014.

Interest expense
 For the Fiscal Year Ended March 31,
($ in thousands)2015 2014 $ Change % Change
Phase I Deployment$13,585
 $15,051
 $(1,466) (10)%
Phase II Deployment1,610
 1,976
 (366) (19)%
Corporate4,704
 2,728
 1,976
 72 %
 $19,899
 $19,755
 $144
 1 %
We made principal payments of $58.4 million on our long-term debt arrangements and had borrowings under our revolving credit facility of $18.2 million in the year ended March 31, 2015.
Interest expense reported by our Phase I and Phase II Deployment segments decreased as a result of reduced debt balances compared to the prior period. The 2013 Term Loans, which are revised if necessary. Arepaid from free cash flow, were charged at a rate of LIBOR, plus 275 basis points with a 1.0% LIBOR floor in the fiscal year ended March 31, 2015, compared to the prior credit agreement rate of LIBOR, plus 350 basis points with a 1.75% LIBOR floor in the prior year. Interest expense related to the KBC Facilities decreased due to a reduction of outstanding principal. The Prospect Loan bears interest rate of 13.5%, which includes a rate of LIBOR, plus 9.0% with a 2.0% LIBOR floor, payable in cash, and a rate of 2.5% paid-in-kind, which is added to the principal balance of the loan. We expect interest expense related to the KBC Facilities to continue to decrease due to the pay-down of such balances.
Interest expense at Corporate increased during the fiscal year ended March 31, 2015, primarily as a result of higher borrowings under our revolving credit facility. In addition, the interest rate on the Cinedigm Term Loans and Cinedigm Revolving Loans increased from a base rate plus 3.0% or the Eurodollar rate plus 4.0%, to a base rate of 5.0% or the Eurodollar rate plus 6.0%. Base rate, per annum, is equal to the highest of (a) the rate quoted by the Wall Street Journal as the “base rate on corporate loans by at least 75% of the nation’s largest banks,” (b) 0.50% plus the federal funds rate, and (c) the Eurodollar rate plus 1.0%. The 2013 Notes bear interest at 9.0%.
Non-cash interest expense was approximately $0.7 million and $0.6 million for the fiscal year ended March 31, 2015 and 2014, respectively.

Change in fair value of interest rate derivatives
The change in any given periodfair value of the interest rate derivatives, which we use to minimize our exposure to changes in interest rates, was a loss of approximately $0.4 million and a gain of $0.7 million for the Ultimate Revenuefiscal year ended March 31, 2015 and 2014, respectively.

Discontinued operations

We recognized a loss related to discontinued operations of $3.2 million for the fiscal year ended March 31, 2015, which represents the operating results of Software and a $3.3 million loss that was recorded in connection with the sale of Software. During the fiscal year ended March 31, 2014, we recorded a loss from discontinued operations of $11.9 million, reflecting the operating results of Software, which included an individual title will$8.5 million charge for the impairment of goodwill and intangible assets, due to a change in the fair value of its business.

Adjusted EBITDA

We define Adjusted EBITDA to be earnings before interest, taxes, depreciation and amortization, other income, net, stock-based compensation and expenses, merger and acquisition costs, restructuring, transition and acquisitions expense, net, goodwill impairment and certain other items.

Adjusted EBITDA (including the results of the Phase I and Phase II Deployment segments) was $47.9 million for the fiscal year ended March 31, 2015, compared to $55.7 million for the fiscal year ended March 31, 2014. Adjusted EBITDA from our non-

30


deployment businesses was $1.2 million for the fiscal year ended March 31, 2015, compared to $9.5 million for the fiscal year ended March 31, 2014. Lower than expected revenues, which were a result in an increase orof delayed sales and termination of certain unprofitable customer contracts, and higher than expected returns resulting from our transition to a new replication, distribution and fulfillment partner, contributed to the decrease in the percentagecurrent period. In addition, we experienced changes in consumer and customer behavior, particularly the trend of amortizationfewer in-store purchases of capitalized moviephysical entertainment products, and a declining amount shelf space reserved for such products. The reconciliation of Adjusted EBITDA for year ended March 31, 2015, also takes into consideration $6.0 million for goodwill impairment and $1.7 million of legal and other costscompliance related expenses, primarily related to our ongoing litigation with Gaiam, expenses related to enhanced reporting requirements under Sarbanes-Oxley and accrued participationa financial systems conversion.

Adjusted EBITDA is not a measurement of financial performance under GAAP and residual costs relativemay not be comparable to other similarly titled measures of other companies. We use Adjusted EBITDA as a previous period. Depending onfinancial metric to measure the financial performance of the business because management believes it provides additional information with respect to the performance of its fundamental business activities. For this reason, we believe Adjusted EBITDA will also be useful to others, including its stockholders, as a title, significantvaluable financial metric.

We present Adjusted EBITDA because we believe that Adjusted EBITDA is a useful supplement to net loss from continuing operations as an indicator of operating performance. We also believe that Adjusted EBITDA is a financial measure that is useful both to management and investors when evaluating our performance and comparing our performance with that of our competitors. We also use Adjusted EBITDA for planning purposes and to evaluate our financial performance because Adjusted EBITDA excludes certain incremental expenses or non-cash items, such as stock-based compensation charges, that we believe are not indicative of our ongoing operating performance.

We believe that Adjusted EBITDA is a performance measure and not a liquidity measure, and therefore a reconciliation between net loss from continuing operations and Adjusted EBITDA has been provided in the financial results. Adjusted EBITDA should not be considered as an alternative to income from operations or net loss from continuing operations as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of cash flows, in each case as determined in accordance with GAAP, or as a measure of liquidity. In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows. 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 future Ultimate Revenue may occur, which could result in significant changesreconciliation of our consolidated Adjusted EBITDA to the amortization of the capitalized acquisition costs.consolidated GAAP net loss from continuing operations:


2731


  For the Fiscal Year Ended March 31,
($ in thousands) 2015
2014
Net loss from continuing operations before benefit from income taxes $(28,976)
$(13,960)
Add Back:
 




Depreciation and amortization of property and equipment 37,519

37,289
Amortization of intangible assets 5,864

3,473
Interest expense
19,899

19,755
Interest income (101)
(98)
Loss on investment in non-consolidated entity
—

1,812
Other income, net (105)
(444)
Change in fair value of interest rate derivatives 441

(679)
Stock-based compensation and expenses 2,151

2,282
Goodwill impairment
6,000

—
Restructuring, transition and acquisitions expenses
2,638

5,023
Professional fees pertaining to litigation and compliance
1,668

—
Allocated costs attributable to discontinued operations
—

1,214
Loss attributable to noncontrolling interest
861

—
Adjusted EBITDA $47,859

$55,667







Adjustments related to the Phase I and Phase II Deployments:






Depreciation and amortization of property and equipment
$(36,073)
$(36,072)
Amortization of intangible assets
(46)
(52)
       Income from operations
(10,506)
(10,092)
Intersegment services fees earned
—

16
Adjusted EBITDA from non-deployment businesses
$1,234

$9,467


Results of Continuing Operations for the Fiscal Years Ended March 31, 2014 and 2013

Revenues
 For the Fiscal Year Ended March 31,
($ in thousands)2014 2013 $ Change % Change
Phase I Deployment$36,309
 $39,646
 $(3,337) (8)%
Phase II Deployment12,146
 12,464
 (318) (3)%
Services12,558
 12,932
 (374) (3)%
Content & Entertainment43,315
 16,050
 27,265
 170 %
 $104,328
 $81,092
 $23,236
 29 %
Revenues increased $23.2 million or 29% during the fiscal year ended March 31, 2014 resulting from the organic growth in revenues in Content & Entertainment as well as the GVE Acquisition, partially offset by decreases in Deployment and Services revenues. Phase 1 and Phase 2 Deployment revenues declined by $3.7 million for the fiscal year ended March 31, 2014 as VPFs were reduced due to (i) a reduced releasing calendar in the current fiscal year as compared to the prior fiscal year period as 118 wide titles were released as compared to 135 wide titles in the previous fiscal year; and (ii) constrained booking patterns on many tent-pole and wide studio releases as a crowded release calendar at the peak summer and holiday seasons limited screen space; and (iii) several underperformingunder-performing blockbuster releases receiving smaller releases than historically common.
In the Services segment, a $0.4 million, or 3%, decrease in revenues was primarily due to (i) the expected reduction in service revenues as the termination of the North American deployment program resulted in $1.3 million of activation fee revenue recognized

32


during the current fiscal year as compared to $3.5 million of activation fees in the prior fiscal year; (ii) reduced VPFs of $4.0 million translating into an approximately $0.4 million reduction in service fees; and (iii) delays in remaining deployments by several international exhibitors to the next fiscal year. These decreases were partially offset by an increase in service fees of $1.2 million due to our international deployment. During the fiscal year ended March 31, 2014, 925 Phase 2 DC Exhibitor-Buyer Structure Systems were installed and a total of 8,904 installed Phase 2 Systems were generating service fees at March 31, 2014 as compared to 7,980 Phase 2 Systems at March 31, 2013. The CompanyWe also servicesservice an additional 3,724 screens in its Phase I deployment subsidiary. We expect modest growth in Services as we (i) continue with international servicing and software installations in Australia, New Zealand and Europe during the fiscal year ending March 31, 2015 from our 88 international screen backlog; and (ii) secure additional international servicing customers.

The CEG business expanded by $27.3 million, or 170%, year over year, of which $21.3 million is directly attributed to revenues of GVE earned from October 21, 2013 through the end of our fiscal year. Organic growth was driven by expansion in distribution fees earned from (i) recent acquisitions of physical and digital distribution rights of home entertainment titles; (ii) expanded fee revenue and monetization of our library of over 52,000close to 50,000 movies and television episodes; and (iii) revenues from theatrical releases that have reached the home entertainment window.

Direct Operating Expenses
 For the Fiscal Year Ended March 31,
($ in thousands)2014 2013 $ Change % Change
Phase I Deployment$766
 $459
 $307
 67 %
Phase II Deployment610
 687
 (77) (11)%
Services380
 821
 (441) (54)%
Content & Entertainment27,164
 6,548
 20,616
 315 %
 $28,920
 $8,515
 $20,405
 240 %
Direct operating expenses increased by 240% as a result of (i) $10.2 million attributed to the GVE Acquisition during the fiscal year; (ii) increased direct expenses for the expanded CEG home entertainment releasing slate as certain selling, general and administrative expenses were shifted to direct costs due to our outsourced DVD replication and manufacturing partnership with Universal Pictures; and (iii) significant growth in upfront theatrical releasing, marketing and acquisitions costs as CEG released fourteen movies during the current fiscal year versus a single small release in the prior fiscal year.
CEG released fourteen theatrical movies during the current fiscal year which totaled over $8.4 million of upfront releasing costs. In accordance with GAAP, Cinedigm must recognize its upfront content acquisition and marketing expenses at the time of a theatrical release of a movie. This timing difference creates a “J-Curve” and will continue in future periods as we increase our

28


distribution activities. We will also experience an increase in direct operating expenses corresponding with additional revenue growth.
The decrease in the Services segment was primarily related to expense reductions in digital cinema services as the domestic installation period ended.

Selling, General and Administrative Expenses
 For the Fiscal Year Ended March 31,
($ in thousands)2014 2013 $ Change % Change
Phase I Deployment$328
 $92
 $236
 257 %
Phase II Deployment279
 139
 140
 101 %
Services765
 797
 (32) (4)%
Content & Entertainment14,448
 8,308
 6,140
 74 %
Corporate10,513
 11,469
 (956) (8)%
 $26,333
 $20,805
 $5,528
 27 %

Selling, general and administrative expenses grew by 27% during the period as strong expense controls and synergies from the GVE Acquisition were relative to the 29% increase in revenues. The Content & Entertainment segment increased 74% as a result of the GVE Acquisition, which added $5.2 million of expense, and the expansion of our theatrical releasing and marketing teams which we added in the summer and fall of 2012 as well as increased staffing to support the rapid growth in our home entertainment

33


acquisition and distribution volume. The decrease within Corporate reflects ongoing prudent expense management and synergies from the GVE Acquisition

Restructuring, Transition and Acquisitions Expenses, Net

Restructuring, transition and acquisitions expenses, net were $1.5 million and $0.9 million for the fiscal years ended March 31, 2014 and 2013, respectively, and include the following:

During the fiscal year ended March 31, 2014, the Companywe completed a strategic assessment of itsour resource requirements within itsour Content & Entertainment reporting segment which, based upon the GVE Acquisition, resulted in a restructuring expense of $1.5 million as a result of workforce reduction and severance and employee-related expenses. Transition expenses of $0.5 million are principally attributed to the integration of GVE. Restructuring expenses were approximately $0.3 million during the fiscal year ended March 31, 2013;
Merger and acquisition expenses included in corporate of $3.0 million for the fiscal year ended March 31, 2014 consisted primarily of professional fees and internal expenses directly related to the GVE Acquisition of $2.5 million and $0.5 million, respectively. Merger and acquisition expenses included in corporate for the fiscal year ended March 31, 2013 of $1.3 million include professional fees incurred which pertained to the purchase of New Video which was consummated in April 2012; and
A reduction of a contingent liability of $3.4 million and $0.8 million related to the acquisition of New Video for the fiscal years ended March 31, 2014 and 2013, respectively.

Depreciation and Amortization Expense on Property and Equipment
 For the Fiscal Year Ended March 31,
($ in thousands)2014 2013 $ Change % Change
Phase I Deployment$28,549
 $28,549
 $—
 —%
Phase II Deployment7,523
 7,371
 152
 2%
Services214
 9
 205
 2,278%
Content & Entertainment210
 72
 138
 192%
Corporate793
 358
 435
 122%
 $37,289
 $36,359
 $930
 3%
Depreciation and amortization expense increased $0.9 million or 3%. The increase in the Phase II Deployment segment represents depreciation on the increased number of Phase 2 DC Systems which were not in service during the fiscal year ended March 31,

29


2013. We expect the depreciation and amortization expense in the Phase II Deployment segment to remain at similar levels as the Phase 2 deployment period has ended and we do not expect to add international Systems that require inclusion on our balance sheet.

Amortization of intangible assets

Amortization of intangible assets increased to $3.5 million for the fiscal year ended March 31, 2014 from $1.5 million, which is attributed to the finite-lives intangible assets added from the GVE Acquisition.

Interest expense
 For the Fiscal Year Ended March 31,
($ in thousands)2014 2013 $ Change % Change
Phase I Deployment$15,051
 $9,016
 $6,035
 67 %
Phase II Deployment1,976
 2,351
 (375) (16)%
Corporate2,728
 16,947
 (14,219) (84)%
 $19,755
 $28,314
 $(8,559) (30)%

Interest expense decreased $8.6 million or 30% due to the interest savings driven by the February 2013 refinancing and the continued repayment of non-recourse and recourse term loan debt as the Companywe reduced principal outstanding by $42.0 million during the fiscal year ended March 31, 2014. The 67% increase in interest paid and accrued within the non-recourse Phase I Deployment segment is the result of the shifting of the Company'sour corporate debt to non-recourse as part of the February 2013 refinancing. The non-recourse

34


Phase I deployment debt was refinanced, expanded and combined with the proceeds of the non-recourse 2013 Prospect Loan to repay the recourse 2010 Note in the Company'sour Corporate segment. The 2013 Term Loans are at a rate of LIBOR, plus 275 basis points with a 1.0% LIBOR floor, versus the prior credit agreement rate of LIBOR, plus 350 basis points with a 1.75% LIBOR floor. Interest decreased within the Phase II Deployment segment related to the KBC Facilities due to the reduction of outstanding principal. Phase 2 DC’s non-recourse interest expense is expected to continue to decrease as it did during the fiscal year as we continue to repay the KBC Facilities from free cash flow and the benefit from the resulting reduced debt balance. The decrease in interest paid and accrued within Corporate is related to the recourse note, which was paid off in February 2013. The 2013 Prospect Loan carries an interest rate of 13.5%, including a cash rate of LIBOR, plus 9.0% with a 2.0% LIBOR floor, and a PIK rate of 2.5%. Interest on the prior recourse note was 8% PIK Interest and 7% per annum paid in cash. Corporate interest expense during the fiscal year ended March 31, 2014 includes recourse debt from the Cinedigm Term Loans and Cinedigm Revolving Loans and the 2013 Notes. Each of the Cinedigm Term Loans and the Cinedigm Revolving Loans bear interest at the base rate plus 3.0% or the eurodollarEurodollar rate plus 4.0%. Base rate, per annum, is equal to the highest of (a) the rate quoted by the Wall Street Journal as the “base rate on corporate loans by at least 75% of the nation’s largest banks,” (b) 0.50% plus the federal funds rate, and (c) the eurodollarEurodollar rate plus 1.0%. The 2013 Notes bear interest at 9.0%.
Non-cash interest expense was approximately $0.6 million and $2.1 million for the fiscal year ended March 31, 2014 and 2013, respectively.

Change in fair value of interest rate derivatives
The change in fair value of the interest rate derivatives were gains of approximately $0.7 million and $1.2 million for the fiscal year ended March 31, 2014 and 2013, respectively. The interest swap associated with the 2013 Term Loans matured in June 2013.
Benefit from income taxes

A net benefit from income taxes of $5.0 million was recorded primarily from the acquisition of New Video during the fiscal year ended March 31, 2013. A net deferred tax liability of $5.0 million was recorded upon the New Video Acquisition for the excess of the financial statement basis over the tax basis of the acquired assets and liabilities. As New Video will be included in the Company'sour consolidated federal and state tax returns, deferred tax liabilities assumed in the New Video Acquisition are able to offset the reversal of the Company's pre-existingour preexisting deferred tax assets. Accordingly, the Company'sour valuation allowance has been reduced by $5.0 million and recorded as a deferred tax benefit in the accompanying consolidated statements of operations for the fiscal year ended March 31, 2013. ManagementWe will continue to assess the realizability ofour ability to realize the deferred tax assets at each interim and annual balance sheet date based upon actual and forecasted operating results.


30


Loss from discontinued operations

Loss from discontinued operations, which principally represents the results of Software, was $11.9 million and $0.9 million for the fiscal years ended March 31, 2014 and 2013, respectively. During the fiscal year ended March 31, 2014, goodwill and intangible assets were impaired by approximately $8.5 million, due to the change in fair value of the Software business.

Adjusted EBITDA

We define Adjusted EBITDA is defined by the Company for the periods presented to be earnings before interest, taxes, depreciation and amortization, other income, net, stock-based compensation and expenses, merger and acquisition costs, restructuring and transition expenses and certain other items.

The Company reported Adjusted EBITDA (including itsthe results of the Phase 1 DCI and Phase 2 DC subsidiaries) ofII Deployment segments) was $55.7 million for the fiscal year ended March 31, 2014, a decrease of 1% in comparison to $56.4 million for the fiscal year ended March 31, 2013. The approximately $4.0 million reduction in VPFs and service fees during the fiscal year ending March 31, 2014, which are outside the Company’sof our influence and which all directly reduce Adjusted EBITDA offset the growth in CEG EBITDA deriving from the GVE Acquisition and organic growth. Adjusted EBITDA from non-deployment businesses was $9.5 million during the fiscal year ended ended March 31, 2014, increasing 59% from $5.9 million for the fiscal year ended ended March 31, 2014.

Adjusted EBITDA is not a measurement of financial performance under GAAP and may not be comparable to other similarly titled measures of other companies. The Company usesWe 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, the Company believeswe believe Adjusted EBITDA will also be useful to others, including its stockholders, as a valuable financial metric.


Management presents
35


We present Adjusted EBITDA because it believeswe believe that Adjusted EBITDA is a useful supplement to net loss from continuing operations as an indicator of operating performance. ManagementWe also believesbelieve that Adjusted EBITDA is a financial measure that is useful both to management and investors when evaluating the Company'sour performance and comparing our performance with the performancethat of our competitors. ManagementWe also usesuse Adjusted EBITDA for planning purposes as well asand to evaluate the Company'sour financial performance because Adjusted EBITDA excludes certain non-recurringincremental expenses or non-cash items, such as stock-based compensation charges, that management believeswe believe are not indicative of the Company'sour ongoing operating performance.

The Company believesWe 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 ishas 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. Management doesWe 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 the Company'sour consolidated financial statements prepared in accordance with GAAP.


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Following is the reconciliation of the Company'sour consolidated Adjusted EBITDA to consolidated GAAP net loss from continuing operations:

  For the Fiscal Year Ended March 31,
($ in thousands) 2014 2013
Net loss from continuing operations before income taxes $(13,960) $(25,149)
Add Back:
    
Depreciation and amortization of property and equipment 37,289
 36,359
Amortization of intangible assets 3,473
 1,538
Interest expense 19,755
 28,314
Interest income (98) (48)
Debt prepayment fees —
 3,725
Loss on extinguishment of notes payable —
 7,905
Loss (income) on investment in non-consolidated entity 1,812
 (322)
Other income, net (444) (654)
Change in fair value of interest rate derivatives (679) (1,231)
Stock-based compensation and expenses 2,282
 2,044
Non-recurring transaction expenses 5,023
 1,907
Allocated costs attributable to discontinued operations 1,214
 1,980
Adjusted EBITDA $55,667
 $56,368
     
Adjustments related to the Phase I and Phase II Deployments:
    
Depreciation and amortization of property and equipment $(36,072) $(35,920)
Amortization of intangible assets (52) (53)
       Income from operations (10,092) (14,483)
Intersegment services fees earned 16
 24
Adjusted EBITDA from non-deployment businesses $9,467
 $5,936


32


Recent Accounting PronouncementPronouncements

In AprilMay 2014, the Financial Accounting Standards Board ("FASB") issued new accounting guidance on revenue recognition. The new standard provides for a single five-step model to be applied to all revenue contracts with customers as well as requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. The guidance will be effective during our fiscal year ending March 31,

36


2018. In May of 2015, the FASB issued an exposure draft to extend the effective date of this standard by one year. We are currently evaluating the impact of the adoption of this accounting standard update on our consolidated financial statements.
In June 2014, the FASB issued an accounting standards update, which modifiesprovides additional guidance on how to account for share-based payments where the requirementsterms of an award may provide that the performance target could be achieved after an employee completes the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite period is treated as a performance condition. The guidance will be effective during our fiscal year ending March 31, 2017. We are currently evaluating the impact of the adoption of this accounting standard update on our consolidated financial statements, and may be applied (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.
In August 2014, the FASB amended accounting guidance pertaining to going concern considerations by company management. The amendments in this update state that in connection with preparing financial statements for disposalseach annual and interim reporting period, an entity's management should evaluate whether there are conditions or events that raise substantial doubt about the entity's ability to qualifycontinue as discontinued operations and expands related disclosure requirements.a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued, when applicable). The guidance will be effective during our fiscal year ending March 31, 2018. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In February 2015, the FASB issued an accounting standards update that amended accounting guidance on consolidation. The amendments affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The update will be effective for the Company during thetour fiscal year ending March 31, 2015. The2017. We are currently evaluating the impact of the adoption of this accounting standard update on our consolidated financial statements.

In April 2015, the FASB issued an accounting standards update, maywhich requires debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability. This update will be effective during our fiscal year ending March 31, 2017. We are currently evaluating the impact whether future disposals qualify as discontinued operations and therefore could impact the Company's financial statement presentation and disclosures.of this accounting standard update on our Consolidated Balance Sheet.

Liquidity and Capital Resources

We have incurred net losses each year since we commenced our operations. Since our inception, we have financed our operations substantially through the private placement of shares of our common and preferred stock, the issuance of promissory notes, our initial public offering and subsequent private and public offerings, notes payable and common stock used to fund various acquisitions.

Our business is primarily driven by the growth in global demand for entertainment content in all forms and, in particular, the shifting consumer demand for content in digital forms within home and mobile devices as well as the maturing digital cinema marketplace. PrimaryOur primary revenue drivers willare expected to be the increasing number of digitally equipped devices/screens and the demand for entertainment content in theatrical, home and mobile ancillary markets. According to the Motion Picture Association of America, during 20132014 there were approximately 43,000 domestic (United States and Canada) movie theatre screens and approximately 135,000142,000 screens worldwide, of which approximately 40,00042,000 of the domestic screens were equipped with digital cinema technology, and 12,628 of those screens contained our Systems. Historically, the number of digitally-equippeddigitally equipped screens in the marketplace has been a significant determinant of our potential revenue streams.revenue. Going forward, the expansion of our content business into the ancillary distribution markets, as well into the acquisition and distribution of new movie releases, expands our market opportunities, and willis expected to be the primary driver of our revenue streams as the rapidly evolving digital and entertainment landscape creates a significant new growth potentialopportunity for the Company.growth.

Beginning in May 2010,December 2008, Phase 2 B/AIX, anour indirect wholly-ownedwholly owned subsidiary, of the Company, enteredbegan entering into additional credit facilities thewith KBC Facilities, to fund the purchase of Systems from Barco, to be installed in movie theatres as part of the Company’sour Phase II Deployment. As of March 31, 2014,2015, the outstanding principal balance of the KBC Facilities was $35.0$27.0 million.

In February 2013, the Companywe refinanced itsour existing non-recourse senior 2010 Term Loan and recourse 2010 Note with a $125.0 million senior non-recourse credit facility led by Société Générale New York Branch and a $70.0 million non-recourse credit facility provided by Prospect Capital Corporation. These two new non-recourse credit facilities will beare supported by the cash flows of the Phase 1 deployment and the Company’sour digital cinema servicing business. As of March 31, 2014,2015, the outstanding principal balance of these non-recourse credit facilities was $163.0$129.7 million.

37



In October 2013, the Companywe entered into the Cinedigm Credit Agreement pursuant to which the Companywe borrowed term loans of $25.0 million and revolving loans of up to $30.0 million, of which all of the term loans and $15.0$24.3 million of the revolving loans were drawn upon in connection with the GVE Acquisition.as of March 31, 2015. The Cinedigm Credit Agreement, which further enhances the Company'sour working capital needs and ability to further invest in entertainment content, will be supported by the cash flows of the Company'sour media library, acquired in connection with the GVE Acquisition. Additionally, the Companywe entered into an agreement providing $5.0 million of financing. As of March 31, 2014,2015, the outstanding principal balance of these recourse credit facilities was $44.6$47.5 million.

In April 2015, we issued $64.0 million aggregate principal amount of 5.5% convertible senior notes (the "Convertible Notes"), due April 15, 2035, unless earlier repurchased, redeemed or converted. The net proceeds from the note offering were approximately$60.9 million, after deducting the initial purchaser's discount and estimated offering expenses payable. In connection with the closing of the offering, we used approximately $18.6 million of the net proceeds to repay borrowings under and terminate the term loan under the Cinedigm Credit Agreement. In addition, we used $11.4 million of the net proceeds to enter into a forward stock purchase transaction to acquire approximately 11.8 million shares of our Class A common stock for settlement on or about the fifth year anniversary of the issuance date of the Convertible Notes and approximately $2.6 million to repurchase approximately 2.7 million shares of our Class A common stock from certain purchasers of the Convertible Notes in privately negotiated transactions. We expect to use the remainder of the net proceeds for working capital and general corporate purposes, including development of our OTT channels and applications and possible acquisitions.

As of March 31, 2014,2015, we had negative working capital, defined as current assets less current liabilities, of $5.0$30.9 million and cash and cash equivalents and restricted cash totaling $57.0$25.8 million.

OperatingOur changes in cash flows were as follows:

 For the Fiscal Years Ended March 31,
($ in thousands)2015 2014 2013
Net cash provided by operating activities$9,211
 $39,594
 $29,369
Net cash provided by (used in) investing activities1,197
 (52,009) (4,250)
Net cash (used in) provided by financing activities(41,624) 49,182
 (29,514)
Net (decrease) increase in cash and cash equivalents$(31,216) $36,767
 $(4,395)

Net cash provided by operating activities provided netis primarily driven by income or loss from operations, excluding non-cash expenses such as depreciation, amortization, bad debt provisions and stock-based compensation, offset by changes in working capital. We expect cash of $39.6 million and $29.4 million for the fiscal years ended March 31, 2014 and 2013, respectively. Cash flowsreceived from VPFs are expected to remain consistent with the current fiscal year and support non-recourse debt paydown. Generally, changespay-down. Changes in accounts receivable from our studio customers and others are a large component oflargely impact cash flows from operating cash flowactivities and will vary based on the seasonality of movie release schedules by the major studios. TheCash flows associated with our CEG business differs from our deployment business as we build receivables, the amount of cash flows and timing which will dependare highly dependent upon the success and timing of theits theatrical and home entertainment releases, throughreleases. Operating cash flows from CEG are typically higher during our fiscal third and fourth quarters, resulting from revenues earned during the end of this calendar year whichholiday season, and lower in the Company expects to collect upon during its fiscal fourth quarter and first quarter of the next fiscal year. The Company has put in place an up to $30.0 million revolver to support these working capital fluctuations.following two quarters as we pay royalties on such revenues. In addition, the Company makeswe make advances towardson theatrical releases and expects to recover the initial expenditures within six to twelve months and advances to certain home entertainment distribution clients, for which it expectsinitial expenditures are generally recovered within six to recover within the same period. CEG also generates additional operating cash flows during the Company's

33


fiscal thirdtwelve months. To manage working capital fluctuations, we have a revolving line of credit that allows for borrowings of up to $30.0 million. Timing and fourth quarter resulting from holiday revenues and distributes royalties from such revenues in the subsequent one to two fiscal quarters. The changes in the Company'svolume of our trade accounts payable iscan also be a significant factor but the Company does not anticipate major changes in payables activity. The Company also hasimpacting cash flows from operations. Certain non-cash expense fluctuations, primarily resulting from the change in the fair value of interest rate derivative arrangements.arrangements, can also impact the timing and amount of cash flows from operations. We expect operating activities to continue to be a positive source of cash.

InvestingRegularly recurring cash flows from investing activities used net cashconsist primarily of $52.0purchases of property and equipment which amounted to $1.6 million, $1.4 million and $4.3$6.5 million in the fiscal years ended March 31, 2015, 2014 and 2013, respectively. We also had significant cash flows relating to the acquisition and disposition of businesses in each of the three fiscal years ended March 31, 2015. In the year ended March 31, 2015, we completed the sale of our Software business, for which we were paid $3.0 million in cash. In addition, we received capital contributions of $0.7 million related to the noncontrolling interest in CONtv. For the fiscal years ended March 31, 2014 and 2013, respectively. The increase is principally due to thecash used in investing activities reflects our acquisitions of GVE Acquisitionand New Video, Inc., respectively, for which occurredwe paid $48.5 million and $3.1 million in October 2013.cash, respectively.

FinancingFor the fiscal year ended March 31, 2015, cash flows used in financing activities providedprimarily reflects repayments of notes payable and capital lease obligations, offset by net borrowings under our revolving credit facility. We generated cash of $49.2 million and used net cash of $29.5 millionfrom financing

38


activities for the fiscal yearsyear ended March 31, 2014, and 2013, respectively.  Proceedswhich reflects proceeds from the issuance ofborrowings under the Cinedigm Credit Facility in October 2013 and issuances of Class A Common Stock duringin July 2013, October 2013 and March 2014, more than offset normal principal reductionby repayments of notes payables duringpayable.

As discussed above, in April 2015, we raised an aggregate amount of $64.0 million of cash through a private offering of 5.5% Senior Convertible Notes, due April 2035. We used $18.2 million of the fiscal year ended March 31, 2014. Financing activities are expected to continue using the net cash generatedproceeds from the Phase 1 and Phase 2 DC operations as well as a portionoffering to pay the remaining outstanding principal balance of the cash generated from CEG, primarily for principal repayments on the 2013 Term Loans, 2013 Prospect Loan,term loan under the Cinedigm Credit Facility and other existing debt facilities. Agreement.

We have contractual obligations that include long-term debt consisting of notes payable, credit facilities, non-cancelable long-term capital lease obligations for the Pavilion Theatre, capital leases for information technology equipment and other various computer related equipment, non-cancelable operating leases consisting of real estate leases, and minimum guaranteed obligations under theatre advertising agreements with exhibitors for displaying cinema advertising. The capital lease obligation of the Pavilion Theatre is paid by an unrelated third party, although Cinedigm remains the primary lessee and would be obligated to pay if the unrelated third party were to default on its rental payment obligations.

The following table summarizes our significant contractual obligations as of March 31, 2014:2015:

Payments DuePayments Due
Contractual Obligations ($ in thousands)Total 2015 
2016 &
2017
 
2018 &
2019
 ThereafterTotal 2016 
2017 &
2018
 
2019 &
2020
 Thereafter
Long-term recourse debt (1)
$44,594
 $19,219
 $20,375
 $5,000
 $—
$47,486
 $42,486
 $—
 $5,000
 $—
Long-term non-recourse debt (2)
212,158
 33,825
 61,992
 34,601
 81,740
168,658
 32,973
 53,147
 3,411
 79,127
Capital lease obligations (3)
6,076
 614
 1,351
 1,226
 2,885
5,495
 640
 1,350
 1,280
 2,225
Debt-related obligations, principal$262,828
 $53,658
 $83,718
 $40,827
 $84,625
$221,639
 $76,099
 $54,497
 $9,691
 $81,352
                  
Interest on recourse debt (1)
$4,901
 $1,772
 $2,427
 $702
 $—
$1,706
 $554
 $900
 $252
 $—
Interest on non-recourse debt (2)
69,134
 12,206
 21,255
 17,890
 17,783
54,493
 10,631
 18,313
 16,844
 8,705
Interest on capital leases (3)
4,570
 857
 1,531
 1,227
 955
3,713
 798
 1,392
 1,024
 499
Total interest$78,605
 $14,835
 $25,213
 $19,819
 $18,738
$59,912
 $11,983
 $20,605
 $18,120
 $9,204
Total debt-related obligations$341,433
 $68,493
 $108,931
 $60,646
 $103,363
$281,551
 $88,082
 $75,102
 $27,811
 $90,556
                  
Total non-recourse debt including interest$281,292
 $46,031
 $83,247
 $52,491
 $99,523
$223,151
 $43,604
 $71,460
 $20,255
 $87,832
Operating lease obligations (4)
$1,590
 $1,284
 $306
 $—
 $—
$7,321
 $1,663
 $2,457
 $2,609
 $592

(1)Recourse debt includes the Cinedigm Credit Agreement and the 2013 Notes.Notes, of which $18.2 million was repaid in April of 2015.
(2)Non-recourse debt is generally defined as debt whereby the lenders’ sole recourse, with respect to defaults, by the Company is limited to the value of the asset whichthat is collateral for the debt. The 2013 Term Loans are not guaranteed by the Companyus or itsour other subsidiaries, other than Phase 1 DC and CDF I, the 2013 Prospect Loan is not guaranteed by the Companyus or itsour other subsidiaries, other than Phase 1 DC and DC Holdings LLC and the KBC Facilities are not guaranteed by the Companyus or itsour other subsidiaries, other than Phase 2 DC.
(3)Represents the capital lease and capital lease interest for the Pavilion Theatre and capital leases on information technology equipment. The Company hasWe have remained the primary obligor on the Pavilion capital lease, and therefore, the capital lease obligation and related assets under the capital lease remain on the Company'sour consolidated financial statements as of March 31, 2014. The Company has, however,2015. However, we have entered into a sub-lease agreement with the unrelated third party purchaser which pays the capital lease and as such, has no continuing involvement in the operation of the Pavilion Theatre. This capital lease was previously included in discontinued operations.
(4)Includes the remaining operating lease agreement for one IDC lease now operated and paid for by FiberMedia, consisting of unrelated third parties.  FiberMedia currently pays the lease directly to the landlord and the Company will attempt to obtain landlord consent to assign the facility lease to FiberMedia.  Until such landlord consent is obtained, the Company will remain as the lessee.

34



We may continue to generate net losses for the foreseeable future primarily due to depreciation and amortization, interest on the 2013 Term Loans, 2013 Prospect Loan and Cinedigm Credit Agreement, marketing and promotional activities and content acquisition and marketing costs. Certain of these costs, including costs of content acquisition, marketing and promotional activities, could be reduced if necessary. The restrictions imposed by the 2013 Term Loans and 2013 Prospect Loan may limit our ability to obtain financing, make it more difficult to satisfy our debt obligations or require us to dedicate a substantial portion of our cash flow to payments on our existing debt obligations. The 2013 Prospect Loan requires certain screen turn performance from Phase 1 DC and Phase 2 DC. While such restrictions may reduce the availability of our cash flow to fund working capital, capital expenditures and other corporate requirements, we do not have similar restrictions imposed upon our Software and CEG businesses. We may seek to raise additional capital for strategic acquisitions or working capital as 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.

39



Seasonality

Revenues from our Phase I Deployment and Phase II Deployment segments 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 CEG benefits from the winter holiday season, we believe the seasonality of motion picture exhibition, however, is becoming less pronounced as the motion picture studios are releasing movies somewhat more evenly throughout the year.

Off-balance sheet arrangements

We are not a party to any off-balance sheet arrangements, other than operating leases in the ordinary course of business, which are disclosed above in the table of our significant contractual obligations, and CDF2 Holdings. In addition, as discussed further in Note 2 - Basis of Presentation and Consolidationto the Consolidated Financial Statements the Company holdsincluded in Item 8 of this Report on Form 10-K, 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, the Company iswe are not the primary beneficiary of the VIE.

Impact of Inflation

The impact of inflation on our operations has not been significant to date. However, there can be no assurance that a high rate of inflation in the future would not have an adverse impact on our operating results.


3540


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


CINEDIGM CORP.
INDEX TO FINANCIAL STATEMENTS

ReportReports of Independent Registered Public Accounting Firm
F-1
Consolidated Balance Sheets at March 31, 20142015 and 20132014
F-2F-3
Consolidated Statements of Operations for the fiscal years ended March 31, 2015, 2014 and 2013
F-4F-5
Consolidated Statements of Comprehensive Loss for the fiscal years ended March 31, 2015, 2014 and 2013
F-5F-6
Consolidated Statements of Stockholders'(Deficit) Equity (Deficit) for the fiscal years ended March 31, 2015, 2014 and 2013
F-6F-7
Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2015, 2014 and 2013
F-7F-10
Notes to Consolidated Financial Statements
F-8F-11


3741


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


TheTo the Board of Directors and Stockholders
Cinedigm Corp.

We have audited the accompanying consolidated balance sheets of Cinedigm Corp. and subsidiaries (formerly known as Cinedigm Digital Cinema Corp., the(the “Company”) as of March 31, 20142015 and 2013,2014, and the related consolidated statements of operations, comprehensive loss, stockholders’(deficit) equity, (deficit), and cash flows for each of the years in the two-yearthree-year period ended March 31, 2014.2015. The financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cinedigm Corp. and subsidiaries as of March 31, 20142015 and 2013,2014, and the consolidated results of their operations and their cash flows for each of the years in the two-yearthree-year period ended March 31, 2014,2015 in conformity with accounting principles generally accepted in the United States of America.


We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Cinedigm Corp. and subsidiaries’ internal control over financial reporting as of March 31, 2015, based on criteria established in the 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated June 30, 2015 expressed an unqualified opinion thereon.


/s/ EisnerAmper LLP

New York, New York
June 25, 2014

30, 2015




F-1


CINEDIGM CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
 March 31,
 2014 2013
ASSETS   
Current assets   
Cash and cash equivalents$50,215
 $13,448
Accounts receivable, net56,863
 29,384
Inventory3,164
 127
Unbilled revenue, current portion5,144
 7,432
Prepaid and other current assets8,698
 5,964
Note receivable, current portion112
 331
Assets of discontinued operations, net of current liabilities278
 2,279
Total current assets124,474
 58,965
Restricted cash6,751
 6,751
Security deposits269
 218
Property and equipment, net134,936
 170,088
Intangible assets, net37,639
 12,799
Goodwill25,494
 8,542
Deferred costs, net9,279
 8,634
Accounts receivable, long-term1,397
 1,225
Note receivable, net of current portion99
 130
Investment in non-consolidated entity, net—
 1,812
Assets of discontinued operations, net of current portion5,660
 12,295
Total assets$345,998
 $281,459
Cinedigm Corp.

See
We have audited Cinedigm Corp. and subsidiaries (the “Company”) internal control over financial reporting as of March 31, 2015, based on criteria established in the 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying notesManagement’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to Consolidated Financial Statementsexpress an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Cinedigm Corp. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of March 31, 2015, based on criteria established in the 2013 Internal Control - Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Cinedigm Corp. and subsidiaries as of March 31, 2015 and 2014 and the related consolidated statements of operations, comprehensive loss, stockholders’ (deficit) equity, and cash flows for each of the years in the three-year period ended March 31, 2015, and our report dated June 30, 2015 expressed an unqualified opinion thereon.

/s/ EisnerAmper LLP

New York, New York
June 30, 2015


F-2


CINEDIGM CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)

March 31,
 2015
2014
ASSETS


Current assets 
 
Cash and cash equivalents$18,999

$50,215
Accounts receivable, net59,591

56,863
Inventory3,210

3,164
Unbilled revenue5,065

5,144
Prepaid and other current assets19,950

19,949
Note receivable, current portion128

112
Assets of discontinued operations, net of current liabilities—

278
Total current assets106,943

135,725
Restricted cash6,751

6,751
Security deposits156

269
Property and equipment, net98,561

134,936
Intangible assets, net31,784

37,639
Goodwill26,701

25,494
Debt issuance costs, net7,586

9,279
Accounts receivable, long-term1,208

1,397
Note receivable, net of current portion15

99
Assets of discontinued operations, net of current portion—

5,660
Total assets$279,705

$357,249

See accompanying notes to Consolidated Financial Statements


F-3


CINEDIGM CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
(continued)

 March 31,
March 31,
 2014 2013
2015
2014
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)    
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY


 
Current liabilities    



Accounts payable and accrued expenses $72,604
 $39,777

$77,147

$83,855
Current portion of notes payable, non-recourse 33,825
 34,447

32,973

33,825
Current portion of notes payable 19,219
 —

24,294

19,219
Current portion of capital leases 614
 132

640

614
Current portion of deferred revenue 3,214
 1,844

2,760

3,214
Current portion of contingent consideration for business combination —
 1,500
Total current liabilities 129,476
 77,700

137,814

140,727
Notes payable, non-recourse, net of current portion 164,779
 203,462

124,325

164,779
Notes payable, net of current portion 23,525
 —

21,750

23,525
Capital leases, net of current portion 5,472
 4,386

4,855

5,472
Interest rate derivatives —
 544
Deferred revenue, net of current portion 12,519
 10,931

10,098

12,519
Contingent consideration, net of current portion —
 1,750
Total liabilities 335,771
 298,773

298,842

347,022
Commitments and contingencies (see Note 8)    





Stockholders’ Equity (Deficit)    
Preferred stock, 15,000,000 shares authorized;
Series A 10% - $0.001 par value per share; 20 shares authorized; 7 shares issued and outstanding at March 31, 2014 and 2013, respectively. Liquidation preference of $3,648		 3,559
 3,466
Class A common stock, $0.001 par value per share; 118,759,000 shares authorized; 76,571,972 and 48,396,697 shares issued and 76,520,532
and 48,345,257 shares outstanding at March 31, 2014 and 2013, respectively
 76
 48
Class B common stock, $0.001 par value per share; 1,241,000 shares authorized; 1,241,000 shares issued and 0 shares outstanding, at March 31, 2014 and 2013, respectively —
 —
Stockholders’ (Deficit) Equity





Preferred stock, 15,000,000 shares authorized;
Series A 10% - $0.001 par value per share; 20 shares authorized; 7 shares issued and outstanding at March 31, 2015 and 2014, respectively. Liquidation preference of $3,648
3,559

3,559
Class A common stock, $0.001 par value per share; 210,000,000 and 118,759,000 shares authorized; 77,178,494 and 77,127,054 shares issued and 77,075,614
and 76,520,532 shares outstanding at March 31, 2015 and 2014, respectively

77

76
Class B common stock, $0.001 par value per share; 1,241,000 shares authorized; 1,241,000 shares issued and 0 outstanding at March 31, 2015 and 2014, respectively
—

—
Additional paid-in capital 275,519
 221,810

277,984

275,519
Treasury stock, at cost; 51,440 Class A shares (172) (172)
(172)
(172)
Accumulated deficit (268,686) (242,466)
(300,350)
(268,686)
Accumulated other comprehensive loss (69) —

(57)
(69)
Total stockholders’ equity (deficit) 10,227
 (17,314)
Total liabilities and stockholders’ equity (deficit) $345,998
 $281,459
Total stockholders’ (deficit) equity of Cinedigm Corp.
(18,959)
10,227
Deficit attributable to noncontrolling interest
(178)
—
Total (deficit) equity
(19,137)
10,227
Total liabilities and (deficit) equity
$279,705

$357,249

See accompanying notes to Consolidated Financial Statements

F-3F-4


CINEDIGM CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for share and per share data)

For the Fiscal Year Ended March 31,For the Fiscal Year Ended March 31,
2014 20132015
2014
2013
Revenues$104,328
 $81,092
$105,484

$104,328

$81,092
Costs and expenses:   




Direct operating (exclusive of depreciation and amortization shown below)28,920
 8,515
30,109

28,920

8,515
Selling, general and administrative26,333
 20,805
32,402

26,333

20,805
Provision for doubtful accounts394
 478
(Benefit) provision for doubtful accounts(206)
394

478
Restructuring, transition and acquisitions expenses, net1,533
 857
2,638

1,533

857
Goodwill impairment6,000

—

—
Depreciation and amortization of property and equipment37,289
 36,359
37,519

37,289

36,359
Amortization of intangible assets3,473
 1,538
5,864

3,473

1,538
Total operating expenses97,942
 68,552
114,326

97,942

68,552
Income from operations6,386
 12,540
(Loss) income from operations(8,842)
6,386

12,540
Interest income98
 48
101

98

48
Interest expense(19,755) (28,314)(19,899)
(19,755)
(28,314)
Debt prepayment fees—
 (3,725)—

—

(3,725)
Loss on extinguishment of notes payable—
 (7,905)—

—

(7,905)
(Loss) income on investment in non-consolidated entity(1,812) 322
—

(1,812)
322
Other income, net444
 654
105

444

654
Change in fair value of interest rate derivatives679
 1,231
(441)
679

1,231
Loss from continuing operations before benefit from income taxes(13,960) (25,149)(28,976)
(13,960)
(25,149)
Benefit from income taxes—
 4,944
—

—

4,944
Loss from continuing operations(13,960) (20,205)(28,976)
(13,960)
(20,205)
Loss from discontinued operations(11,904) (861)
Income (loss) from discontinued operations100

(11,904)
(861)
Loss on sale of discontinued operations(3,293)
—

—
Net loss(25,864) (21,066)(32,169)
(25,864)
(21,066)
Net loss attributable to noncontrolling interest861

—

—
Net loss attributable to controlling interests(31,308)
(25,864)
(21,066)
Preferred stock dividends(356) (356)(356)
(356)
(356)
Net loss attributable to common stockholders$(26,220) $(21,422)
Net loss attributable to common shareholders$(31,664)
$(26,220)
$(21,422)
Net loss per Class A and Class B common share attributable to common shareholders - basic and diluted:   




Loss from continuing operations$(0.25) $(0.43)$(0.37)
$(0.25)
$(0.43)
Loss from discontinued operations(0.21) (0.02)(0.04)
(0.21)
(0.02)
$(0.46) $(0.45)
Net loss attributable to common shareholders$(0.41)
$(0.46)
$(0.45)
Weighted average number of Class A and Class B common shares outstanding: basic and diluted57,084,319
 47,517,167
76,785,351

57,084,319

47,517,167

See accompanying notes to Consolidated Financial Statements

F-4F-5


CINEDIGM CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)

 For the Fiscal Year Ended March 31, For the Fiscal Year Ended March 31,
 2014 2013 2015 2014 2013
Net loss $(25,864) $(21,066) $(32,169) $(25,864) $(21,066)
Other comprehensive loss: foreign exchange translation (69) —
Other comprehensive income (loss): foreign exchange translation 12
 (69) —
Comprehensive loss $(25,933) $(21,066) $(32,157) $(25,933) $(21,066)
Less: comprehensive loss attributable to noncontrolling interest 861
 —
 —
Comprehensive loss attributable to controlling interests $(31,296) $(25,933) $(21,066)

See accompanying notes to Consolidated Financial Statements


F-5F-6


CINEDIGM CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands, except share data)


Series A
Preferred Stock
 
Class A
Common Stock
 
Class B
Common Stock
 
Treasury
Stock
 
Additional
Paid-In
 Accumulated 
Total
Stockholders’
Series A
Preferred Stock
 
Class A
Common Stock
 
Class B
Common Stock
 
Treasury
Stock
 
Additional
Paid-In
 Accumulated Accumulated Other Comprehensive 
Total
Stockholders’
(Deficit)
Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit DeficitShares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Loss Equity
Balances as of March 31, 20127
 $3,357
 37,671,487
 $38
 25,000
 $—
 (51,440) $(172) $206,348
 $(221,044) $(11,473)7
 $3,357
 37,671,487
 $38
 25,000
 $—
 (51,440) $(172) $206,348
 $(221,044) $—
 $(11,473)
Issuance of common stock in connection with the vesting of restricted stock—
 —
 94,318
 —
 —
 —
 —
 —
 (9) —
 (9)—
 —
 94,318
 —
 —
 —
 —
 —
 (9) —
 —
 (9)
Issuance of common stock for the services of Directors—
 —
 223,332
 —
 —
 —
 —
 —
 300
 —
 300
—
 —
 223,332
 —
 —
 —
 —
 —
 300
 —
 —
 300
Issuance of common stock in connection with April 2012 offering—
 —
 7,857,143
 8
 —
 —
 —
 —
 10,992
 —
 11,000
—
 —
 7,857,143
 8
 —
 —
 —
 —
 10,992
 —
 —
 11,000
Issuance of common stock in connection with acquisition of New Video Group—
 —
 2,525,417
 2
 —
 —
 —
 —
 3,430
 —
 3,432
—
 —
 2,525,417
 2
 —
 —
 —
 —
 3,430
 —
 —
 3,432
Conversion of Class B common stock to Class A common stock—
 —
 25,000
 —
 (25,000) —
 —
 —
 —
 —
 —
—
 —
 25,000
 —
 (25,000) —
 —
 —
 —
 —
 —
 —
Costs associated with issuance of common stock—
 —
 —
 —
 —
 —
 —
 —
 (1,121) —
 (1,121)—
 —
 —
 —
 —
 —
 —
 —
 (1,121) —
 —
 (1,121)
Stock-based compensation—
 —
 —
 —
 —
 —
 —
 —
 1,979
 —
 1,979
—
 —
 —
 —
 —
 —
 —
 —
 1,979
 —
 —
 1,979
Preferred stock dividends—
 —
 —
 —
 —
 —
 —
 —
 —
 (356) (356)—
 —
 —
 —
 —
 —
 —
 —
 —
 (356) —
 (356)
Accretion of preferred stock dividends—
 109
 —
 —
 —
 —
 —
 —
 (109) —
 —
—
 109
 —
 —
 —
 —
 —
 —
 (109) —
 —
 —
Net loss—
 —
 —
 —
 —
 —
 —
 —
 —
 (21,066) (21,066)—
 —
 —
 —
 —
 —
 —
 —
 —
 (21,066) —
 (21,066)
Balances as of March 31, 20137
 $3,466
 48,396,697
 $48
 —
 $—
 (51,440) $(172) $221,810
 $(242,466) $(17,314)7
 $3,466
 48,396,697
 $48
 —
 $—
 (51,440) $(172) $221,810
 $(242,466) $—
 $(17,314)

See accompanying notes to Consolidated Financial Statements




F-6F-7


 
Series A
Preferred Stock
 
Class A
Common Stock
 
Class B
Common Stock
 
Treasury
Stock
 
Additional
Paid-In
 Accumulated Accumulated Other Comprehensive 
Total
Stockholders’
(Deficit)
 Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Loss Equity
Balances as of March 31, 20137
 $3,466
 48,396,697
 $48
 —
 $—
 (51,440) $(172) $221,810
 $(242,466) $—
 $(17,314)
Comprehensive loss—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 (69) (69)
Issuance of common stock in connection with the exercise of warrants and stock options—
 —
 152,261
 —
 —
 —
 —
 —
 8
 —
 —
 8
Issuance of common stock for professional services of third parties—
 —
 91,071
 —
 —
 —
 —
 —
 129
 —
 —
 129
Issuance of common stock in connection with the vesting of restricted stock—
 —
 15,944
 —
 —
 —
 —
 —
 —
 —
 —
 —
Shares issued to employee—
 —
 90,000
 —
 —
 —
 —
 —
 —
 —
 —
 —
Issuance of common stock for the services of Directors—
 —
 211,307
 —
 —
 —
 —
 —
 295
 —
 —
 295
Issuance of warrants—
 —
 —
 —
 —
 —
 —
 —
 1,598
 —
 —
 1,598
Exercise of warrants—
 —
 215,176
 1
 —
 —
 —
 —
 364
 —
 —
 365
Issuance of common stock in connection with public offerings—
 —
 27,233,395
 27
 —
 —
 —
 —
 51,184
 —
 —
 51,211
Costs associated with issuance of common stock—
 —
 —
 —
 —
 —
 —
 —
 (2,094) —
 —
 (2,094)
Stock-based compensation—
 —
 —
 —
 —
 —
 —
 —
 2,051
 —
 —
 2,051
Preferred stock dividends—
 —
 166,121
 —
 —
 —
 —
 —
 267
 (356) —
 (89)
Accretion of preferred stock dividends—
 93
 —
 —
 —
 —
 —
 —
 (93) —
 —
 —
Net loss—
 —
 —
 —
 —
 —
 —
 —
 —
 (25,864) —
 (25,864)
Balances as of March 31, 20147
 $3,559
 76,571,972
 $76
 —
 $—
 (51,440) $(172) $275,519
 $(268,686) $(69) $10,227

See accompanying notes to Consolidated Financial Statements




F-8


 
Series A
Preferred Stock
 
Class A
Common Stock
 
Class B
Common Stock
 
Treasury
Stock
 
Additional
Paid-In
 Accumulated Accumulated Other Comprehensive 
Total
Stockholders’
(Deficit)
 Non-controlling Total (Deficit)
 Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Loss Equity Interest Equity
Balances as of March 31, 20147
 $3,559
 76,571,972
 $76
 —
 $—
 (51,440) $(172) $275,519
 $(268,686) $(69) $10,227
 $—
 $10,227
Comprehensive income—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 12
 12
 —
 12
Cashless exercise of stock options—
 —
 47,112
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
Issuance of common stock for professional services of third parties—
 —
 212,187
 1
 —
 —
 —
 —
 429
 —
 —
 430
 —
 430
Costs associated with issuance of common stock—
 —
 —
 —
 —
 —
 —
 —
 (87) —
 —
 (87) —
 (87)
Stock-based compensation—
 —
 167,785
 —
 —
 —
 —
 —
 1,767
 —
 —
 1,767
 —
 1,767
Preferred stock dividends—
 —
 179,438
 —
 —
 —
 —
 —
 356
 (356) —
 —
 —
 —
Contribution by noncontrolling interest owner—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 683
 683
Net loss—
 —
 —
 —
 —
 —
 —
 —
 —
 (31,308) —
 (31,308) (861) (32,169)
Balances as of March 31, 20157
 $3,559
 77,178,494
 $77
 —
 $—
 (51,440) $(172) $277,984
 $(300,350) $(57) $(18,959) $(178) $(19,137)
                            

See accompanying notes to Consolidated Financial Statements


F-9


CINEDIGM CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Fiscal Year Ended March 31,For the Fiscal Year Ended March 31,
2014 20132015 2014 2013
Cash flows from operating activities        
Net loss$(25,864) $(21,066)$(32,169) $(25,864) $(21,066)
Adjustments to reconcile net loss to net cash provided by operating activities:        
Loss on disposal of business3,293
 —
 —
Depreciation and amortization of property and equipment and
amortization of intangible assets
41,015
 38,063
43,383
 41,015
 38,063
Goodwill impairment6,000
 —
 —
Impairment related to discontinued operations8,470
 —
—
 8,470
 —
Amortization of capitalized software costs942
 1,165
—
 942
 1,165
Amortization of debt issuance costs1,378
 2,120
Provision for doubtful accounts1,329
 490
Amortization of debt issuance costs included in interest expense1,843
 1,378
 2,120
(Benefit) provision for doubtful accounts(206) 1,329
 490
Provision for inventory reserve100
 400
 —
Change in fair value of contingent consideration for business combination(3,490) —
—
 (3,490) —
Stock-based compensation and expenses2,514
 2,279
2,197
 2,514
 2,279
Change in fair value of interest rate derivatives(679) (1,231)441
 (679) (1,231)
Accretion and PIK interest expense added to note payable2,335
 9,153
2,399
 2,335
 9,153
Loss on extinguishment of notes payable—
 7,905
—
 —
 7,905
(Income) loss on investment in non-consolidated entity1,812
 (322)
Loss (income) on investment in non-consolidated entity—
 1,812
 (322)
Benefit from deferred income taxes—
 (5,019)—
 —
 (5,019)
Changes in operating assets and liabilities, net of acquisitions:        
Accounts receivable(12,979) 860
(2,317) (12,979) 860
Inventory(813) (127)(146) (1,213) (127)
Unbilled revenue4,530
 (2,403)542
 4,530
 (2,403)
Prepaid expenses and other current assets5,570
 (3,840)
Other assets250
 (1,168)
Accounts payable and accrued expenses11,228
 4,235
Prepaid expenses and other assets1,183
 5,820
 (5,008)
Accounts payable, accrued expenses and other liabilities(14,510) 10,938
 3,122
Deferred revenue2,336
 (612)(2,822) 2,336
 (612)
Other liabilities(290) (1,113)
Net cash provided by operating activities39,594
 29,369
9,211
 39,594
 29,369
Cash flows from investing activities:        
Purchase of New Video Group, Inc., net of cash acquired of $6,873—
 (3,127)
Purchase of GVE(48,500) —
Net proceeds from disposal of business2,950
 —
 —
Purchases of businesses, net of cash acquired of $6,873 in 2013—
 (48,500) (3,127)
Contributions from noncontrolling interest683
 —
 —
Purchases of property and equipment(1,356) (6,476)(1,571) (1,356) (6,476)
Purchases of intangible assets(9) (32)(10) (9) (32)
Additions to capitalized software costs(2,144) (3,092)(855) (2,144) (3,092)
Sales/maturities of restricted available-for-sale investments—
 9,477
—
 —
 9,477
Restricted cash—
 (1,000)—
 —
 (1,000)
Net cash used in investing activities(52,009) (4,250)
Net cash provided by (used in) investing activities1,197
 (52,009) (4,250)
Cash flows from financing activities:        
Repayment of notes payable(45,955) (232,507)
Payments of notes payable(58,367) (45,955) (232,507)
Proceeds from notes payable49,400
 199,118
18,150
 49,400
 199,118
Payments of debt issuance costs(2,435) (5,853)
Debt issuance costs(729) (2,435) (5,853)
Principal payments on capital leases(318) (151)(591) (318) (151)
Proceeds from the issuance of common stock in connection with the exercise of stock options and warrants372
 —
Proceeds from the issuance of Class A common stock in connection with the exercise of stock options and warrants—
 372
 —
Proceeds from issuance of Class A common stock50,212
 11,000
—
 50,212
 11,000
Costs associated with issuance of Class A common stock(2,094) (1,121)(87) (2,094) (1,121)
Net cash provided by (used in) financing activities49,182
 (29,514)
Net cash (used in) provided by financing activities(41,624) 49,182
 (29,514)
Net change in cash and cash equivalents36,767
 (4,395)(31,216) 36,767
 (4,395)
Cash and cash equivalents at beginning of year13,448
 17,843
50,215
 13,448
 17,843
Cash and cash equivalents at end of year$50,215
 $13,448
$18,999
 $50,215
 $13,448
See accompanying notes to Consolidated Financial Statements

F-7F-10


CINEDIGM CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal years ended March 31, 2014 and 2013
($ in thousands, except for share and per share data)

1.NATURE OF OPERATIONS

Cinedigm Corp. (formerly known as Cinedigm Digital Cinema Corp.) was incorporated in Delaware on March 31, 2000 (“Cinedigm”, and collectively with its subsidiaries, the “Company”). Cinedigm isWe are (i) a leading distributor and aggregator of independent movie, television and other short form content managing a library of distribution rights to over 52,000close to 50,000 titles and episodes released across theatrical, digital, physical, theatrical, home and mobile entertainment platforms as well asand (ii) a leading servicer of digital cinema assets in over 12,000 moviesmovie screens in both North America and several international countries.

The Company reports itsWe report our financial results in four primary segments as follows: (1) the first digital cinema deployment (“Phase I Deployment”), (2) the second digital cinema deployment (“Phase II Deployment”), (3) digital cinema services (“Services”) and (4) media content and entertainment group (“Content & Entertainment” or "CEG"). The Phase I Deployment and Phase II Deployment segments are the non-recourse, financing vehicles and administrators for the Company'sour digital cinema equipment (the “Systems”) installed in movie theatres nationwide.  Thethroughout the United States, and in Australia and New Zealand. Our Services segment provides services andfee based support to approximately over 12,000 movie screens in theour Phase I Deployment, and Phase II Deployment segments as well as directly to exhibitors and other third party customers.  Includedcustomers in these services are Systems management services for a specified fee via service agreements with Phase I Deploymentthe form of monitoring, billing, collection and Phase II Deployment as well as third party exhibitors as buyers of their own digital cinema equipment. These services primarily facilitate the conversion from analog to digital cinema and have positioned the Company at what it believes to be the forefront of a rapidly developing industry relating to the distribution and management of digital cinema and other content to theatres and other remote venues worldwide.  Theverification services. Our Content & Entertainment segment provides content marketingis a market leader in: (1) ancillary market aggregation and distribution servicesof entertainment content and; (2) branded and curated over-the-top ("OTT") digital network business providing entertainment channels and applications.

We are structured so that our digital cinema business (collectively, the Phase I Deployment, Phase II Deployment and Services segments) operates independently from our Content & Entertainment segment. As of March 31, 2015, we had approximately $157.5 million of outstanding debt principal that relates to, and is serviced by, our digital cinema business and is non-recourse to us. We also had approximately $47.5 million of outstanding debt principal that is a part of our Content & Entertainment and Corporate segments.

In April 2015, we issued $64.0 million aggregate principal amount of 5.5% convertible senior notes (the "Convertible Notes"), due April 15, 2035. We used $18.6 million of the net proceeds from the offering to repay borrowings under and terminate one of our term loans under our 2013 Credit Agreement, of which $18.2 million was used to pay the remaining principal balance. We also repurchased 2.7 million shares of our Class A common stock from certain purchasers of Convertible Notes in both theatricalprivately negotiated transactions for $2.6 million. In addition, $11.4 million of the net proceeds was used to to fund the cost of repurchasing 11.8 million shares of our Class A common stock pursuant to a forward purchase contract that may be settled at any time prior to the fifth anniversary of the issuance of the Convertible Notes. The remainder of the net proceeds of approximately $28.2 million is expected to be used for working capital and ancillary home entertainment markets to independent movie, television and other short form content owners and to theatrical exhibitors. As a leading distributor of independent content, the Company collaborates with producers, major brands and other content owners to market, source, curate and distribute quality content to targeted and profitable audiences through (i) theatrical releases, (ii) existing and emerging digital home entertainment platforms, including but not limited to, iTunes, Amazon Prime, Netflix, Hulu, Xbox, Playstation, and cable video-on-demand ("VOD"general corporate purposes (see Note 15 - Subsequent Events) and (iii) physical goods, including DVD and Blu-ray..

Gaiam Acquisition

On October 21, 2013, the Company and Cinedigm Entertainment Holdings, LLC ("CHE"),our CEG segment acquired a newly-formed, wholly-owned subsidiarydivision of the Company, acquired from Gaiam Americas, Inc. and Gaiam, Inc. (together, “Gaiam”) their division ("GVE") that maintains exclusive distribution rights agreements with large independent studios/content providers, and distributes entertainment content through home video, digital and television distribution channels (the("GVE" or the “GVE Acquisition”). The Company agreed to an aggregate purchase price of $51,500,for the GVE acquisition was $51.5 million, subject to a working capital adjustment, with (i) $47,500$47.5 million paid in cash and 666,978 shares of Class A Common Stock valued at $1,000$1.0 million issued upon the closing of the GVE Acquisition, and (ii) $3,000$3.0 million to be paid on a deferred basis, of which $1,000$1.0 million was paid during the fiscal year ended March 31, 2014 and the remainder was settled through the collection of a receivable during the fiscal year ended March 31, 2014. The working capital adjustment related to the purchase price of the GVE Acquisition has not yet been finalized and, among other things, is the subject of an arbitration proceeding pending between the Companyus and the sellers of GVE. Pending final resolution, such working capital adjustment, if any, will be recorded as adjustments to purchase considerations during the fiscal year ending March 31, 2015.Gaiam (see Note 8 - Commitments and Contingencies). Upon the closing of the GVE Acquisition, GVE became part of the Company'sour Content & Entertainment segment.
Included within restructuring, transition and acquisitions expenses, net on the consolidated statements of operations during
During the fiscal year ended March 31, 2014 are $2,500 of professional fees and $485 of internal expenses directly related2015, measurement period adjustments were made to the purchase price allocation of the GVE Acquisition.
The results During the three months ended June 30, 2014, we wrote-off $2.5 million of operations of GVE have been includedunrecoverable advances acquired in the accompanying consolidated statements of operations from the acquisition date of October 21, 2013 and have been fully integratedconnection with the financial results and operationsGVE Acquisition. Furthermore, during the three months ended September 30, 2014, we increased our estimate of the Company's Content & Entertainment segment. The total amountliabilities that were assumed in connection with the GVE Acquisition due to information that was communicated to us after the conclusion of revenuesour transition services agreement with Gaiam, but existed prior to the acquisition. As a result, we increased accounts payable and net incomeaccrued expenses by $4.8 million. If these items had been identified as of GVE since the acquisition date that have been included in the consolidated statements of operations during the fiscal year ended March 31, 2014, was approximately $21,325reported amounts of prepaid and $4,324, respectively.other current assets, accounts payable and accrued expenses and goodwill would have been $6.2 million, $77.4 million and $32.7 million, respectively, on our Consolidated Balance Sheet.


F-11


The purchase price has been preliminarily allocated to the identifiable net assets acquired as of the date of acquisition as follows pending any final working capital adjustment:follows:

F-8


(In thousands) Net Assets Acquired
Accounts receivable$15,524
 $15,524
Inventory2,224
 2,224
Advances7,698
 7,698
Other assets152
 152
Content library17,211
 17,211
Supplier contracts and relationships11,691
 11,691
Goodwill16,952
 16,952
Total assets acquired71,452
 71,452
Total liabilities assumed(19,952) (19,952)
Total net assets acquired$51,500
 $51,500
The Company estimatesWe have estimated the useful life of the content library and supplier contracts and relationships to be 6six years and 8eight years, respectively.
The fair values assigned to intangible assets were determined through the application of various commonly used and accepted valuation procedures and methods, including the multi-period excess earnings method. These valuation methods rely on management judgment, including expected future cash flows resulting from existing customer relationships, customer attrition rates, contributory effects of other assets utilized in the business, peer group cost of capital and royalty rates, and other factors. The valuation of tangible assets was preliminarily determined to approximate book value at the time of the GVE Acquisition. Useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows. Goodwill is mainly attributable to the assembled workforce and synergies expected to arise from the GVE Acquisition.
Unaudited Pro forma Information Related Toto the Acquisition of GVE
The following consolidated unaudited consolidated pro forma summary information for the fiscal years ended March 31, 2014 and 2013 has been prepared by adjusting the historical data as set forth in the accompanying consolidated statements of operations for the fiscal years ended March 31, 2014 and 2013 to give effect to the GVE Acquisition as if it had occurred at April 1, 2012. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the GVE Acquisition, nor does the pro forma reflect additional revenue opportunities following the GVE Acquisition.
 For the Fiscal Years Ended March 31, For the Fiscal Years Ended March 31,
 2014 2013
(In thousands, except per share amounts) 2014 2013
Revenue $124,914
 $131,884
 $124,914
 $131,884
Loss from continuing operations $(13,478) $(9,387) (13,478) $(9,387)
Net loss $(25,382) $(10,248) $(25,382) $(10,248)
        
Net loss per share (basic and diluted) $(0.44) $(0.22)
Net loss per share to common shareholders (basic and diluted) $(0.44) $(0.22)

Sale of Software
During the fiscal year ended March 31, 2014, the Companywe made the strategic decision to discontinue and exit itsour software business and executetherefore executed a plan of sale for Hollywood Software, Inc. d/b/a Cinedigm Software (“Software”), the Company'sour direct, wholly-owned subsidiary. Management concluded that it would bewholly owned subsidiary, in the best interests of shareholders for the Company’sorder to focus to be towardon theatrical releasing, physical and aggregation anddigital distribution of independentaggregated content digitally and in the form of DVDs and Blu-Ray discs, and VOD, along with the growth and servicing of theour existing digital cinema business. Further, managementFurthermore, we believed that Software, which was previously included in our Services segment, no longer yielded the same synergies across the Company’s businesses as once existed.
complemented our businesses. As a consequence, it was determined that Software met the criteria for classification as held for sale/discontinued operations. As such,result, Software has been adjusted to reflect the fair value of its net assets and the consolidated financial statements and the notes to consolidated financial statements presented herein have been recast solely to reflect,reclassified as discontinued operations for all periods presented,presented. On September 23, 2014, we completed the adjustments resulting from these changes in classificationsale of Software to a third party and recognized a loss on sale of $3.3 million for discontinued operations.


F-9


Purchase of New Video Group
On April 20, 2012, the Company acquired all of the issued and outstanding capital stock of New Video, an independent home entertainment distributor of quality packaged goods entertainment and digital content that provides distribution services in the DVD, Blu-ray, Digital and VOD channels for more than 500 independent rights holders (the “New Video Acquisition”). The Company paid $10,000 in cash and 2,525,417 shares of Class A common stock at $1.51 per share, subject to certain transfer restrictions, plus up to an additional $6,000 in cash or Class A common stock, at the Company’s discretion, if certain business unit financial performance targets are met during the fiscal years ended March 31, 2014 and 2015. In addition, the Company registered the resale of the shares of Class A common stock paid as part of the purchase price, which registration was declared effective by the Securities and Exchange Commission on April 2, 2013. Included within restructuring, transition and acquisitions expense, net on the accompanying consolidated statements of operations are merger and acquisition expenses, consisting primarily of professional fees, directly related to the New Video Acquisition totaled $1,900, of which $1,300 was incurred during the fiscal year ended March 31, 2013.

The results of operations of New Video have been included in the accompanying consolidated statements of operations from the date of the acquisition within the Company's Content & Entertainment segment. The total amount of revenues and net income of New Video since the acquisition date that have been included in the consolidated statements of operations for the fiscal year ended March 31, 2013 was approximately $13,400 and $1,500, respectively.

As the acquisition of New Video was consummated near the beginning of the fiscal year ended March 31, 2013, the difference between actual operating results and pro forma results for the fiscal year ended March 31, 2013 is not substantial.2015.

The aggregate purchase price after post-closing adjustments for 100% of the equity of New Video was $17,207, including cash acquired of $6,873.
The purchase price has been allocated to the identifiable net assets acquired as of the date of acquisition as follows:
Cash and cash equivalents $6,873
Accounts receivable 8,983
Other assets 1,142
Intangible assets subject to amortization 13,915
Goodwill 6,974
Total assets acquired 37,887
Less: Total liabilities assumed (15,661)
Less: Net deferred tax liability (5,019)
Total net assets acquired $17,207
Of the $13,915 of intangible assets subject to amortization, $9,671 was assigned to customer relationships with a useful life of 15 years, $2,769 was assigned to a content library with a useful life of five years, $1,193 was assigned to a favorable lease with a useful life of approximately four years and $282 was assigned to covenants not to compete with a useful life of two years.

The fair values assigned to intangible assets were determined through the application of various commonly used and accepted valuation procedures and methods, including the multi-period excess earnings method. These valuation methods rely on management judgment, including expected future cash flows resulting from existing customer relationships, customer attrition rates, contributory effects of other assets utilized in the business, peer group cost of capital and royalty rates, and other factors. The valuation of tangible assets was determined to approximate book value at the time of the New Video Acquisition. Useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows. The goodwill of $6,974 represents the premium the Company paid over the fair value of the net tangible and intangible assets acquired. Goodwill is principally attributed to the assembled workforce and synergies anticipated as a result of the New Video Acquisition.


F-10F-12


2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND CONSOLIDATION

The Company has incurred net losses historically and has an accumulated deficit of $268,686 as of March 31, 2014. The Company also has significant contractual obligations related to its recourse and non-recourse debt for the fiscal year ending March 31, 2015 and beyond. The Company may continue to generate net losses for the foreseeable future. Based on the Company’s cash position at March 31, 2014, and expected cash flows from operations, management believes that the Company has the ability to meet its obligations through at least June 30, 2015. Failure to generate additional revenues, raise additional capital or manage discretionary spending could have an adverse effect on the Company’s financial position, results of operations or liquidity.

The Company’sOur consolidated financial statements include the accounts of Cinedigm, Cinedigm Entertainment Corp. (“CEC”) f/k/a New Video Group, Inc. ("New Video"), Cinedigm Home Entertainment Corp ("CEH"), CONtv, LLC (“CONtv”), Docurama, LLC, Dove Family Channel, LLC, Vistachiara Productions, Inc. f/k/a The Bigger Picture, currently d/b/a Cinedigm's Content and Entertainment Group ("CEG"), Christie/AIX, Inc. ("C/AIX") d/b/a Cinedigm Digital Cinema (“Phase 1 DC”), Cinedigm Digital Funding I, LLC (“CDF I”), Access Digital Cinema Phase 2 Corp. (“Phase 2 DC”), Access Digital Cinema Phase 2 B/AIX Corp. (“Phase 2 B/AIX”), Cinedigm Digital Cinema Australia Pty Ltd, Cinedigm DC Holdings LLC ("DC Holdings"), Access Digital Media, Inc. (“AccessDM”), FiberSat Global Services, Inc. d/b/a Cinedigm Satellite and Support Services (“Satellite”), ADM Cinema Corporation (“ADM Cinema”) d/b/a the Pavilion Theatre (certain assets and liabilities of which were sold in May 2011), Christie/AIX, Inc. ("C/AIX") d/b/a Cinedigm Digital Cinema (“Phase 1 DC”), Vistachiara Productions, Inc. f/k/a The Bigger Picture, currently d/b/a Cinedigm. Cinedigm's Content and Entertainment Group, Cinedigm Entertainment Corp. f/k/a New Video Group, Inc. ("New Video"), CHE, Access Digital Cinema Phase 2 Corp. (“Phase 2 DC”), Cinedigm Digital Cinema Australia Pty Ltd, Access Digital Cinema Phase 2 B/AIX Corp. (“Phase 2 B/AIX”), Cinedigm Digital Funding I, LLC (“CDF I”) and Cinedigm DC Holdings LLC ("DC Holdings LLC"). Cinedigm Content and Entertainment Group, New VideoCEC and CHE are together referred to as CEG. Software, along with AccessDM and Satellite (together referred to as DMS (the majority of which was sold in November, 2011 and remaining assets of which were sold in May 2012)) are part of discontinued operations. All intercompany transactions and balances have been eliminated in consolidation.

INVESTMENT IN NON-CONSOLIDATED ENTITY

The Company indirectly owns 100% of the common equity of CDF2 Holdings, LLC ("Holdings"),Investments in which iswe do not have a Variable Interest Entity (“VIE”), as defined in Accounting Standards Codification Topic 810 ("ASC 810"), “Consolidation". The Company has determined that it iscontrolling interest or are not the primary beneficiary, of Holdings in accordance with ASC 810, and it is accountingbut have the ability to exert significant influence, are accounted for its investment in Holdings under the equity method of accounting. The Company'sNoncontrolling interests for which we have been determined to be the primary beneficiary are consolidated and recorded net investment in Holdings is reflectedof tax as “Investment in non-consolidated entity, net" in the accompanying consolidated balance sheets.net income (loss) attributable to noncontrolling interest. See Note 5 - Other Interests to the Consolidated Financial Statements for further discussion.a discussion of our noncontrolling interests.

RECLASSIFICATION

Certain reclassifications, principally for discontinued operations (see Note 3)We have been made to the fiscal year ended March 31, 2013reclassified certain amounts previously reported in our financial statements to conform to the current presentation. Unless noted otherwise, discussions in these notes pertain to our continuing operations.

We have incurred net losses historically and have an accumulated deficit of $300.4 million as of March 31, 2015. We also have significant contractual obligations related to our recourse and non-recourse debt for the fiscal year endedending March 31, 2014 presentation.2016 and beyond. We may continue to generate net losses for the foreseeable future. Based on our cash position at March 31, 2015, expected cash flows from operations and the issuance of Convertible Notes in April 2015 (see Note 15 - Subsequent Events), we believe that we have the ability to meet our obligations through at least June 30, 2016. 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.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with generally accepted accounting principles ("GAAP") in the United States of America requires managementus to make estimates and assumptions that affect the assets and liabilities, and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates include the adequacy of accounts receivable reserves, return reserves, inventory reserves, recoupment of advances, minimum guarantees, assessment of goodwill and intangible asset impairment and valuation reserve for income taxes among others.and estimates related to reserves. Actual results could differ from these estimates.

CASH AND CASH EQUIVALENTS

The Company considersWe consider all highly liquid investments with an original maturity of three months or less to be “cash equivalents.” The Company maintainsWe maintain bank accounts with major banks, which, from time to time, may exceed the Federal Deposit Insurance Corporation’s insured limits. The CompanyWe periodically assessesassess the financial condition of the institutions and believesbelieve that the risk of any loss is minimal.

ACCOUNTS RECEIVABLE

The Company maintainsWe maintain reserves for potential credit losses on accounts receivable. Management reviewsWe review the composition of accounts receivable and analyzesanalyze 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. Allowance for doubtful accounts amounted to $898 and $681 as of March 31, 2014 and 2013, respectively.

F-11


Within theOur Content & Entertainment segment the Company recognizes the accounts receivable, net of an estimated allowance for product returns and customer chargebacks, at the time we recognize the originalthat it recognizes revenue from a sale. We base the amount of the returns allowance and customer chargebacks upon historical experience and future expectations.

We record Accounts receivable, long-term result from up-frontin connection with activation fees earnedthat we earn from the Company's Systems deployments withthat have extended payment terms thatterms. Such accounts receivable are discounted to their present value at prevailing market rates.


F-13


ADVANCES
Advances, which are recorded within prepaid and other current assets within the consolidated balance sheets,Consolidated Balance Sheets, represent amounts prepaid to studios or content producers for which the Company provideswe provide content distribution servicesservices. We evaluate advances regularly for recoverability and such advances are estimated torecord charges for amounts that we expect may not be fully recoupablerecoverable as of the consolidated balance sheet date.

INVENTORY

Inventory consists of finished goods of Company owned physical DVD and Blu-ray Disc titles and is stated at the lower of cost (determined based on weighted average cost) or market. We identify inventory items to be written down for obsolescence based on the item’stheir sales status and condition. We write down discontinued or slow moving inventories based on an estimate of the markdown to retail price needed to sell through our current stock level of the inventories.

RESTRICTED CASH

We have debt obligations that require us to maintain specified cash balances, which are restricted to repayment of interest. In connection with theour 2013 Term Loans issued in February 2013 and the 2013 Prospect Loan Agreement issued in February 2013 (collectively, see(see Note 6)6 - Notes Payable), we maintain the Company maintainsfollowing restricted cash restricted for repaying interest on the respective loans as follows:balances:
  As of March 31, 2014 As of March 31, 2013
Reserve account related to the 2013 Term Loans (See Note 6) 5,751
 5,751
Reserve account related to the 2013 Prospect Loan Agreement (See Note 6) 1,000
 1,000
  $6,751
 $6,751
  As of March 31,
(In thousands) 2015 2014
Reserve account related to the 2013 Term Loans (See Note 6 - Notes Payable)
 $5,751
 $5,751
Reserve account related to the Prospect Loan (See Note 6 - Notes Payable)
 1,000
 1,000
Restricted cash $6,751
 $6,751

DEFERRED COSTS

Deferred costs primarily consist of unamortized debt issuance costs related to the 2013 Term Loans, 2013 Prospect Loan and Cinedigm Credit Agreement (see Note 6)6 - Notes Payable), which are principally amortized under the effective interest rate method over the terms of the respective debt.  All other unamortized debt issuance costs are amortized on a straight-line basis over the term of the respective debt. For such debt, amortization on a straight-line basis is not materially different from the effective interest method.  

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation expense is recorded using the straight-line method over the estimated useful lives of the respective assets as follows:
Computer equipment and software3 - 5 years
Digital cinema projection systems10 years
Machinery and equipment3 - 10 years
Furniture and fixtures3 - 6 years
Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the leasehold improvements. Maintenance and repair costs are charged to expense as incurred. Major renewals, improvements and additions are capitalized. Upon the sale or other disposition of any property and equipment, the cost and related accumulated depreciation and amortization are removed from the accounts and the gain or loss on disposal is included in the consolidated statements of operations.

ACCOUNTING FOR DERIVATIVE ACTIVITIES

Derivative financial instruments are recorded at fair value. The Company had three separate interest rate swap agreements (the “Interest Rate Swaps”) to limit the Company’s exposure to changes in interest rates related to the 2013 Term Loans which matured in June 2013.  Additionally, the Company entered into two separate interest rate cap transactions during the fiscal year ended

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March 31, 2013, recorded in prepaid and other current assets on the consolidated balance sheets, to limit the Company's exposure to interest rates related to the 2013 Term Loans and 2013 Prospect Loan. Changes in the fair value of derivative financial instruments are either recognized in accumulated other comprehensive loss (a component of stockholders' equity/deficit) or in the consolidated statements of operations depending on whether the derivative qualifies for hedge accounting. We entered into three separate interest rate swap agreements (the “Interest Rate Swaps”), which matured in June 2013, to limit our exposure to changes in interest rates related to our 2013 Term Loans. In addition, we entered into two separate interest rate cap transactions during the fiscal year ended March 31, 2013 to limit our exposure to interest rates related to our 2013 Term Loans and Prospect Loan. The Company hasinterest rate caps on the 2013 Term Loans and Prospect Loan mature in March of 2016 and 2018, respectively. We have not sought hedge accounting treatment for these instruments and therefore, changes in the value of itsour Interest Rate Swaps and caps were recorded in the consolidated statementsConsolidated Statements of operations (See Note 6).Operations.

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FAIR VALUE MEASUREMENTS

The fair value measurement disclosures are grouped into three levels based on valuation factors:
 
Level 1 – quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs)
Level 3 – significant unobservable inputs (including the Company’sour own assumptions in determining the fair value of investments)
 
Assets and liabilities measured at fair value on a recurring basis use the market approach, where prices and other relevant information are generated by market transactions involving identical or comparable assets or liabilities.

The following tables summarize the levels of fair value measurements of the Company’sour financial assets and liabilities:

 As of March 31, 2014 As of March 31, 2015
 Level 1 Level 2 Level 3 Total
(In thousands) Level 1 Level 2 Level 3 Total
Restricted cash 6,751
 —
 —
 6,751
 $6,751
 $—
 $—
 $6,751
Interest rate derivatives —
 787
 —
 787
 —
 208
 —
 208
 $6,751
 $787
 $—
 $7,538
 $6,751
 $208
 $—
 $6,959
 As of March 31, 2013 As of March 31, 2014
 Level 1 Level 2 Level 3 Total
Cash equivalents $1,004
 $—
 $—
 $1,004
(In thousands) Level 1 Level 2 Level 3 Total
Restricted cash 6,751
 —
 —
 6,751
 $6,751
 $—
 $—
 $6,751
Interest rate derivatives —
 (544) —
 (544) —
 787
 —
 787
Contingent consideration —
 —
 (3,250) (3,250)
 $7,755
 $(544) $(3,250) $3,961
 $6,751
 $787
 $—
 $7,538

Contingent consideration was a liability to the sellers of New Video based upon its business unit financial performance target in each of the fiscal years ending March 31, 2014 and 2015. The estimates of the fair value of the contingent consideration arrangement was estimated by using the current forecast of New Video adjusted EBITDA, as defined by the New Video stock purchase agreement. That measure is based on significant inputs that are not observable in the market, which are considered Level 3 inputs.

The following change in contingent consideration liabilities during the fiscal year ended March 31, 2014 were as follows:
Balance at March 31, 2013 $3,250
Change in fair value (3,490)
Accretion of contingent liability 240
Balance at March 31, 2014 $—

Key assumptions included a discount rate of 7% and that New Video would achieve 100% of its business unit financial performance target in each of the two fiscal years described above, resulting in a payment of 75% of the maximum contingent consideration amount. During the fiscal year ended March 31, 2014, the Company determined that the business unit would not meet the target for each of the fiscal years ending March 31, 2014 and 2015 as defined in the New Video stock purchase agreement. Accordingly, the fair value of the liability was reduced by $3,490 to $0 and is a reduction of restructuring, transition and acquisitions expenses, net within the consolidated statements of operations for the fiscal year ended March 31, 2014.


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The Company’sOur cash and cash equivalents, accounts receivable, unbilled revenue and accounts payable and accrued expenses are financial instruments andthat are recorded at cost in the consolidated balance sheets. TheConsolidated Balance Sheets because the estimated fair values of these financial instruments approximate their carrying amounts because ofdue to their short-term nature. The carrying amount of accounts receivable, long-term and notes receivable approximates fair value based on the discounted cash flows of that instrumentsuch instruments using current assumptions at the balance sheet date. At March 31, 2015 and 2014, the estimated fair value of the Company’sour fixed rate debt was $74,618,$32.4 million and $74.6 million, respectively, compared to its carrying amountamounts of $71,964.$31.6 million and $72.0 million, respectively. At March 31, 2015 and 2014, the estimated fair value of the Company’sour variable rate debt was $172,102,$170.2 million and $172.1 million, respectively, compared to a carrying amount of $169,384.  The$171.8 million and $169.4 million. We estimated the fair value of fixed rate and variable rate debt is estimated by management based upon current interest rates available to the Companyus at the respective balance sheet datedates for arrangements with similar terms and conditions. Based on borrowing rates currently available to the Companyus for loans with similar terms, the carrying value of notes payable and capital lease obligations approximates fair value.

IMPAIRMENT OF LONG-LIVED AND FINITE-LIVED ASSETS

The Company reviewsWe review the recoverability of itsour long-lived assets and finite-lived intangible assets, when events or conditions occur that indicate a possible impairment exists. The assessment for recoverability is based primarily on the Company’sour ability to recover the carrying value of itsour 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. The CompanyWe then estimatesestimate the fair value of the asset to determine whether an impairment loss should be recognized. An impairment loss will be recognized if the difference between theasset's fair value and theis determined to be less than its carrying value of the asset exceeds its fair value. Fair value is determined by computing the expected future undiscounteddiscounted cash flows. During the fiscal years ended March 31, 20142015 and 2013,2014, no impairment charge from continuing operations for long-lived assets or finite-lived assets was recorded.

GOODWILL

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.


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

The Company appliesWe apply the applicable accounting guidance when testing goodwill for impairment, which permits the Companyus to make a qualitative assessment of whether goodwill is impaired, or opt to bypass the qualitative assessment, and proceed directly to performing the first step of the two-step impairment test. If the Company performswe perform a qualitative assessment and concludesconclude it is more likely than not that the fair value of a reporting unit exceeds its carrying value, goodwill is not considered impaired and the two-step impairment test is unnecessary. However, if the Company concludeswe conclude otherwise, it is thenwe are required to perform the first step of the two-step impairment test.

The Company hasWe have the unconditional option to bypass the qualitative assessment for any reporting unit and proceed directly to performing the first step of the goodwill impairment test. The CompanyWe may resume performing the qualitative assessment in any subsequent period.

For reporting units where we decide to perform a qualitative assessment, Company management assesseswe assess and makesmake judgments regarding a variety of factors which potentially impact the fair value of a reporting unit, including general economic conditions, industry and market-specific conditions, customer behavior, cost factors, our financial performance and trends, our strategies and business plans, capital requirements, management and personnel issues, and our stock price, among others. ManagementWe then considersconsider the totality of these and other factors, placing more weight on the events and circumstances that are judged to most affect a reporting unit's fair value or the carrying amount of its net assets, to reach a qualitative conclusion regarding whether it is more likely than not that the fair value of a reporting unit exceeds its carrying amount.

For reporting units where we decide to perform a quantitative testing approach in order to test goodwill, a determination of the fair value of our reporting units is required and is based, among other things, on estimates of future operating performance of the reporting unit and/or the component of the entity being valued. This impairment test includes the projection and discounting of cash flows, analysis of our market factors impacting the businesses the Companywe operates and estimating the fair values of tangible

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and intangible assets and liabilities. Estimating future cash flows and determining their present values are based upon, among other things, certain assumptions about expected future operating performance and appropriate discount rates determined by management.us.

The discounted cash flow methodology establishes fair value by estimating the present value of the projected future cash flows to be generated from the reporting unit. The discount rate applied to the projected future cash flows to arrive at the present value is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows. The discounted cash flow methodology uses projections of financial performance for a five-year period. The most significant assumptions used in the discounted cash flow methodology are the discount rate and expected future revenues and gross margins, which vary among reporting units. The market participant based weighted average cost of capital for each unit gives consideration to factors including, but not limited to, capital structure, historic and projected financial performance, industry risk and size.

The market multiple methodology establishes fair value by comparing the reporting unit to other companies that are similar, from an operational or industry standpoint and considers the risk characteristics in order to determine the risk profile relative to the comparable companies as a group.  The most significant assumptions are the market multiplies and the control premium. The Company has elected not to apply a control premium to the fair value conclusions for the purposes of impairment testing.

During the annual testing of goodwill for impairment in the fourth quarter of the fiscal year ended March 31, 2014, management2015, we performed the quantitative assessment for itsour CEG reporting unit, the only reporting unit with goodwill.goodwill, and determined that the CEG reporting unit had a fair value less than the unit's carrying amount. As a result, we recorded a goodwill impairment charge of $6.0 million in the year ended March 31, 2015. In determining fair value usingwe used various assumptions, including expectations of future cash flows based on projections or forecasts derived from analysis of business prospects, economic or market trends and any regulatory changes that may occur. We estimateestimated the fair value of the reporting unit using a net present value methodology, which is dependent on significant assumptions related to estimated future discounted cash flows, discount rates and tax rates. The assumptions for the annual impairment test should not be construed as earnings guidance or long-term projections andprojections. Our cash flow assumptions are typically more conservative projections. The assumptions include growth rates inbased on a 5-year internal projection of adjusted EBITDA that are derived from the Company's budget and projections for the fiscal years ended March 31, 2015 of approximately $8,400 with growth rates of 66% and 13% for the fiscal years ended March 31, 2016 and 2017, respectively, and a flat growth rate for goodwill testing purposes of approximately 5% for CEG for the fiscal years thereafter through the fiscal year ending March 31, 2019. Further, weContent & Entertainment reporting unit. We assumed a market-based weighted average cost of capital of 13% for CEG17% to discount cash flows for our CEG segment and used a blended federal and state tax rate of 40%.

Based on the assumptions above, the estimated fair valueThe goodwill impairment was primarily a result of thereduced expectations of future cash flows to be generated by our CEG reporting unit, as calculatedreflecting the continuing decline in consumer demand for goodwill testing purposes exceeded its carrying value, inclusivepackaged goods in favor of goodwillfilms in downloadable form. As a result, we have shifted our operating focus to devote more resources to our OTT channel business, which we expect to build upon significantly in fiscal years ending March 31, 2016 through 2018. Launching OTT channels requires that we make significant up-front investments to acquire content, build the infrastructure and develop partnerships, in exchange for anticipated revenue streams, which we also took into account in our discounted cash flow analysis. Beyond 2018, however, we expect that increased cash flows from our OTT channel business will more than offset decreases in cash flows from the sale of $25,494, by over 43%. Thus,packaged goods. In addition, we applied a potentialhigher discount rate to expected future decrease cash flows, reflecting a higher implied cost of debt financing. Future decreases

F-16


in the fair value of this reporting unit would have a carrying value in excess of the fair value. As such, no further analysis of theour CEG reporting unit was required and nomay require us to record additional goodwill impairment, was recorded for the fiscal year ended March 31, 2014 and 2013. There is, however, a significant risk of future impairmentparticularly if management'sour expectations of future cash flows are not achieved.

Information related to the goodwill allocated to the Company'sour Content & Entertainment segment is as follows:

As of March 31, 2012$1,568
Goodwill resulting from the New Video Acquisition6,974
(In thousands) Goodwill
As of March 31, 20138,542
 $8,542
Goodwill resulting from the GVE Acquisition16,952
 16,952
As of March 31, 2014$25,494
 25,494
Goodwill resulting from measurement period adjustments to the GVE Acquisition 7,207
Goodwill impairment (6,000)
As of March 31, 2015 $26,701

Gross amounts of goodwill and accumulated impairment charges that we have recorded are as follows:
(In thousands)  
Goodwill $32,701
Accumulated impairment losses (6,000)
Net goodwill at March 31, 2015 $26,701

Total goodwill recorded in connection with the GVE Acquisition was $24.2 million, all of which is deductible for tax purposes.

REVENUE RECOGNITION

Phase I Deployment and Phase II Deployment

Virtual print fees (“VPFs”) are earned, net of administrative fees, pursuant to contracts with movie studios and distributors, whereby amounts are payable by a studio to Phase 1 DC and to Phase 2 DC when movies distributed by the studio are displayed on screens utilizing the Company’sour Systems installed in movie theatres. VPFs are earned and payable to Phase 1 DC based on a defined fee schedule with a reduced VPF rate year over year until the sixth year at which point the VPF rate remains unchanged through the tenth year. One VPF is payable for every digital title displayed per System. The amount of VPF revenue is dependent on the number of movie titles released and displayed using the Systems in any given accounting period. VPF revenue is recognized in the period in which the digital title first plays on a System for general audience viewing in a digitally-equippeddigitally equipped movie theatre, as Phase 1 DC’s and Phase 2 DC’s performance obligations have been substantially met at that time.


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Phase 2 DC’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 2 DC may no longer collect VPFs once “cost recoupment,” as defined in the agreements, is achieved. Cost recoupment will occur once the cumulative VPFs and other cash receipts collected by Phase 2 DC 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 the Company’s service fees, subject to maximum agreed upon amounts during the three-year rollout period and thereafter. Further, if cost recoupment occurs before the end of the eighth contract year, the studios will pay us a one-time “cost recoupment bonus” is payable by the studios to the Company.bonus.”  Any other cash flows, net of expenses, received by Phase 2 DC following the achievement of cost recoupment are required to be returned to the distributors on a pro-rata basis. At this time, the Companywe cannot estimate the timing or probability of the achievement of cost recoupment.

Alternative content fees (“ACFs”) are earned pursuant to contracts with movie exhibitors, whereby amounts are payable to Phase 1 DC and to Phase 2 DC, generally either a fixed amount or as a percentage of the applicable box office revenue derived from the exhibitor’s showing of content other than feature movies, such as concerts and sporting events (typically referred to as “alternative content”). ACF revenue is recognized in the period in which the alternative content first opens for audience viewing.

Revenues are deferred forearned in connection with up front exhibitor contributions are deferred and are recognized over the expected cost recoupment period, which is expected to be ten years.period.


F-17


Services

Exhibitors who purchased and own Systems using their own financing in the Phase II Deployment paid us an upfront activation fee that is generally $2of approximately $2.0 thousand per screen to the Company (the “Exhibitor-Buyer Structure”). These upfrontUpfront activation fees arewere recognized in the period in which these exhibitor owned Systems arewere delivered and ready for content, as the Company haswe had no further obligations to the customer after that time and are generally paid quarterly from VPF revenues over approximately one year.  Additionally, the Company recognizescollection was reasonably assured. In addition, we recognize activation fee revenue of between $1$1.0 thousand and $2$2.0 thousand on Phase 2 DC Systems and for Systems installed by CDF2 Holdings (See Note 5 - Other Interests) upon installation and such fees are generally collected upfront upon installation. The Company will then manage the billingOur services segment manages and collectioncollects VPFs on behalf of VPFs and will remit all VPFs collected to the exhibitors, lessfor which it earns an administrative fee that will approximate upequal to 10% of the VPFs collected.

TheOur Services segment earns an administrative fee related to the Phase I Deployment approximatesof approximately 5% of the 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 recognized in the period in which the billing of VPFs occurs, as performance obligations have been substantially met at that time.

Content & Entertainment

CEG earns fees for the distribution of content in the home entertainment markets via several distribution channels, including digital, VOD, and physical goods (e.g. DVD and Blu-ray) isBlu-ray Discs). Fees earned are typically based on the gross amounts billed to our customers less the amounts owed to the media studios or content producers under distribution agreements, and gross media sales of owned or licensed content. The fee rate earned by the Company varies dependingDepending upon the nature of the agreements with the platform and content providers.providers, the fee rate that we earn varies. Generally, revenues are recognized atwhen content is available for subscription on the availability date of the content for a subscription digital platform, at the time of shipment for physical goods, or point-of-sale for transactional and VOD services. Reserves for sales returns and other allowances are recorded based upon historical experience. If actual future returns and allowances differ from past experience, adjustments to our allowances may be required. Sales returns and allowances are reported as a reduction of revenues.

CEG also has contracts for the theatrical distribution of third party feature movies and alternative content. CEG’s distribution fee revenue and CEG's participation in box office receipts is recognized at the time a feature movie and alternative content isare viewed. CEG has the right to receive or bill a portion of the theatrical distribution fee in advance of the exhibition date, and therefore such amount is recorded as a receivable at the time of execution, and all related distribution revenue is deferred until the third party feature movies’ or alternative content’s theatrical release date.

Movie Cost Amortization

Once a movie is released, capitalized acquisition costs are amortized and participations and residual costs are accrued on an individual title basis in the proportion to the revenue recognized during the period for each title ("Period Revenue") bears to the estimated remaining total revenue to be recognized from all sources for each title ("Ultimate Revenue"). The amount of movie and other costs that is amortized each period will depend on the ratio of Period Revenue to Ultimate Revenue for each movie. The Company makes certain estimates and judgments of Ultimate Revenue to be recognized for each title. Ultimate Revenue does not include estimates of revenue that will be earned beyond 5 years of a movie’s initial theatrical release date. Movie cost amortization is a component of direct operating costs within the consolidated statements of operations.


F-16


Estimates of Ultimate Revenue and anticipated participation and residual costs are reviewed periodically in the ordinary course of business and are revised if necessary. A change in any given period to the Ultimate Revenue for an individual title will result in an increase or decrease in the percentage of amortization of capitalized movie and other costs and accrued participation and residual costs relative to a previous period. Depending on the performance of a title, significant changes to the future Ultimate Revenue may occur, which could result in significant changes to the amortization of the capitalized acquisition costs.

DIRECT OPERATING COSTS

Direct operating costs consist of operating costs such as cost of goods sold, fulfillment expenses, shipping costs, property taxes and insurance on Systems, royalty expenses, marketing and direct personnel costs.

PARTICIPATIONS AND ROYALTIES PAYABLE

The Company recordsWe record liabilities within accounts payable and accrued expenses on the consolidated balance sheet,Consolidated Balance Sheet, that represent amounts owed to studios or content producers for which the Companywe provides content distribution services for royalties owed under licensing arrangements. The Company identifiesWe identify and recordsrecord as a reduction to the liability any expenses that are to be reimbursed to the Companyus by such studios or content producers. At March 31, 2015 and 2014, participations payable were $37.8 million and $37.8 million, respectively.

ADVERTISING

Advertising costs are expensed as incurred and are included in selling, general and administrative expenses. For the fiscal years ended March 31, 2015, 2014 and 2013, the Companywe recorded advertising costs of $101$0.1 million, $0.1 million and $111,$0.1 million, respectively.

STOCK-BASED COMPENSATION

During the fiscal yearsended March 31, 2014 and 2013, the Company recorded employeeEmployee and director stock-based compensation expense from continuing operations of $2,282 and $2,044, respectively.related to our stock-based awards was as follows:

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  For the Fiscal Year Ended March 31,
(In thousands) 2015 2014 2013
Direct operating $17
 $22
 $15
Selling, general and administrative 2,134
 2,260
 2,029
Total stock-based compensation expense $2,151
 $2,282
 $2,044

The weighted-average grant-date fair value of options granted during the fiscal years ended March 31, 2015, 2014 and 2013 was $2.04, $0.90 and $0.88, respectively. There were 141,000 and 106,951 stock options exercised during the fiscal yearyears ended March 31, 2014. During2015 and 2014, respectively. There were no exercises of stock options during the fiscal year ended March 31, 2013, there were no exercises of stock options.2013.

The CompanyWe estimated the fair value of stock options at the date of each grant using a Black-Scholes option valuation model with the following assumptions:
 For the Fiscal Year Ended March 31, For the Fiscal Year Ended March 31,
Assumptions for Option Grants 2014 2013 2015 2014 2013
Range of risk-free interest rates 0.7 - 1.6%
 0.6 - 0.9%
 1.4% - 1.8%
 0.7 - 1.6%
 0.6 - 0.9%
Dividend yield —
 —
 —
 —
 —
Expected life (years) 5
 5
 5
 5
 5
Range of expected volatilities 72.6- 73.7%
 74.5 - 76.2%
 70.4% - 72.1%
 72.6- 73.7%
 74.5 - 76.2%

The risk-free interest rate used in the Black-Scholes option pricingoption-pricing model for options granted under the Company’sour stock option plan awards is the historical yield on U.S. Treasury securities with equivalent remaining lives. The Company doesWe do not currently anticipate paying any cash dividends on Class A common stock in the foreseeable future. Consequently,As a result, an expected dividend yield of zero is used in the Black-Scholes option pricingoption-pricing model. The Company estimatesWe estimate the expected life of options granted under the Company’sour stock option plans using both exercise behavior and post-vesting termination behavior, as well as consideration of outstanding options. The Company estimatesWe estimate expected volatility for options granted under the Company’sour stock option plans based on a measure of our Class A common stock's historical volatility in the trading market for the Company’s common stock.

Employee and director stock-based compensation expense from continuing operations related to the Company’s stock-based awards was as follows:

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 For the Fiscal Year Ended March 31,
 2014 2013
Direct operating$22
 $15
Selling, general and administrative2,260
 2,029
 $2,282
 $2,044
market.

NET LOSS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS

Basic and diluted net loss per common share has been calculated as follows:
Basic and diluted net loss per common share attributable to common shareholders =Net loss + preferred dividendsattributable to common shareholders
Weighted average number of common stock shares
 outstanding during the period

Loss per share from continuing operations is calculated similarly to basic and diluted loss per common share attributable to common shareholders, except that it uses loss from continuing operations in the numerator and takes into account the net loss attributable to noncontrolling interest.

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

The CompanyWe incurred net losses for each of the fiscal years ended March 31, 2015, 2014 and 2013 and therefore the impact of potentially dilutive potential common shares from outstanding stock options and warrants totaling 28,696,045 shares, 28,601,920 shares and 23,594,108 shares as of March 31, 2014 and 2013, respectively, were excluded from the computation of earnings per share for the fiscal years ended March 31, 2015, 2014 and 2013, respectively, as ittheir impact would behave been anti-dilutive.

COMPREHENSIVE LOSS

As of March 31, 2015 and 2014, the Company’s otherour comprehensive loss consisted of net loss and foreign currency translation adjustments.


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RECENT ACCOUNTING PRONOUNCEMENTPRONOUNCEMENTS

In AprilMay 2014, the Financial Accounting Standards Board ("FASB") issued new accounting guidance on revenue recognition. The new standard provides for a single five-step model to be applied to all revenue contracts with customers as well as requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. The guidance will be effective during our fiscal year ending March 31, 2018. In May of 2015, the FASB issued an exposure draft to extend the effective date of this standard by one year. We are currently evaluating the impact of the adoption of this accounting standard update on our consolidated financial statements.

In June 2014, the FASB issued an accounting standards update, which modifiesprovides additional guidance on how to account for share-based payments where the requirementsterms of an award may provide that the performance target could be achieved after an employee completes the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite period is treated as a performance condition. The guidance will be effective during our fiscal year ending March 31, 2017. We are currently evaluating the impact of the adoption of this accounting standard update on our consolidated financial statements. The standards update may be applied (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In August 2014, the FASB amended accounting guidance pertaining to going concern considerations by company management. The amendments in this update state that in connection with preparing financial statements for disposalseach annual and interim reporting period, an entity's management should evaluate whether there are conditions or events that raise substantial doubt about the entity's ability to qualifycontinue as discontinued operations and expands related disclosure requirements.a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued, when applicable). The guidance will be effective during our fiscal year ending March 31, 2018. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In February 2015, the FASB issued an accounting standards update, which amended accounting guidance on consolidation. The amendments affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The update will be effective for the Company during theour fiscal year ending March 31, 2015. The2017. We are currently evaluating the impact of the adoption of thethis accounting standard update may impact whether future disposals qualify as discontinued operations and therefore could impact the Company'son our consolidated financial statement presentation and disclosures.statements.


F-18In April 2015, the FASB issued an accounting standards update, which requires debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability. This update will be effective during our fiscal year ending March 31, 2017. We are currently evaluating the impact of this accounting standard update on our consolidated balance sheet.


3.DISCONTINUED OPERATIONS

As discussed in Note 1, discontinuedDiscontinued operations is principallyare primarily comprised of the operations of Software. On September 23, 2014, we completed the sale of Software to a third party for cash consideration of $3.0 million and recognized a loss on sale of $3.3 million for the year ended March 31, 2015. There is no tax provision or benefit related to any of the discontinued operations.

The assets and liabilities of discontinued operations were comprised of the following:

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 As of March 31, 2014 As of March 31, 2013 As of
(In thousands) March 31, 2014
Current assets of discontinued operations:      
Accounts receivable, net $1,835
 $2,311
 $1,835
Unbilled revenue 534
 2,557
 534
Prepaid and other current assets 11
 12
 11
Total current assets of discontinued operations 2,380
 4,880
 2,380
      
Current liabilities of discontinued operations:      
Accounts payable and accrued expenses 668
 543
 668
Deferred revenue 1,434
 2,058
 1,434
Total current liabilities of discontinued operations 2,102
 2,601
 2,102
      
Current assets of discontinued operations, net of current liabilities $278
 $2,279
 $278
      
Property and equipment, net $474
 $423
 $474
Goodwill —
 4,197
Capitalized software, net 4,862
 7,132
 4,862
Unbilled revenue, net of current portion 324
 543
 324
Assets of discontinued operations, net of current portion $5,660
 $12,295
 $5,660

The results of Software and DMS have been reported as discontinued operations for all periods presented. The lossincome (loss) from discontinued operations was as follows:
 For the Fiscal Year Ended March 31, For the Fiscal Year Ended March 31,
 2014 2013
(In thousands) 2015 2014 2013
Revenues $4,138
 $7,046
 $1,968
 $4,138
 $7,046
Costs and Expenses:          
Direct operating (exclusive of depreciation and amortization shown below) 1,997
 4,071
 326
 1,997
 4,071
Selling, general and administrative 4,318
 3,330
 1,435
 4,318
 3,330
Provision for doubtful accounts 935
 196
 —
 935
 196
Research and development 79
 144
 14
 79
 144
Impairment of goodwill and capitalized software 8,470
 —
 —
 8,470
 —
Depreciation of property and equipment 235
 139
 —
 235
 139
Amortization of intangible assets 18
 27
 —
 18
 27
Total operating expenses 16,052
 7,907
 1,775
 16,052
 7,907
Loss from operations (11,914) (861)
Income (loss) from operations 193
 (11,914) (861)
Interest income 10
 2
 —
 10
 2
Other expense, net —
 (2) (93) —
 (2)
Loss from discontinued operations $(11,904) $(861)
Income (loss) from discontinued operations $100
 $(11,904) $(861)

F-19F-21



4.CONSOLIDATED BALANCE SHEET COMPONENTS

ACCOUNTS RECEIVABLE

Accounts receivable, net consisted of the following:
As of March 31, As of March 31,
2014 2013
(In thousands) 2015 2014
Trade receivables$57,761
 $30,065
 $60,188
 $57,761
Allowance for doubtful accounts(898) (681) (597) (898)
Total accounts receivable, net$56,863
 $29,384
 $59,591
 $56,863

PREPAID AND OTHER CURRENT ASSETS

Prepaid and other current assets consisted of the following:
As of March 31, As of March 31,
2014 2013
(In thousands) 2015 2014
Non-trade accounts receivable, net$4,572
 $3,079
 $4,271
 $4,572
Advances1,950
 2,097
 12,551
 13,201
Due from producers1,094
 —
 1,580
 1,094
Prepaid insurance105
 196
 207
 105
Other prepaid expenses977
 592
 1,341
 977
Total prepaid and other current assets$8,698
 $5,964
 $19,950
 $19,949

PROPERTY AND EQUIPMENT

Property and equipment, net consisted of the following:
As of March 31, As of March 31,
2014 2013
(In thousands) 2015 2014
Leasehold improvements$638
 $592
 $821
 $638
Computer equipment and software8,817
 6,881
 9,590
 8,817
Digital cinema projection systems360,651
 360,651
 360,744
 360,651
Machinery and equipment449
 438
 546
 449
Furniture and fixtures387
 330
 380
 387
370,942
 368,892
 372,081
 370,942
Less - accumulated depreciation and amortization(236,006) (198,804) (273,520) (236,006)
Total property and equipment, net$134,936
 $170,088
 $98,561
 $134,936

For the fiscal years ended March 31, 2014 and 2013, totalTotal depreciation and amortization of property and equipment amounted to $37,289was $37.5 million, $37.3 million and $36,359, respectively.  For$36.4 million for the fiscal years ended March 31, 2015, 2014 and 2013, the amortizationrespectively. Amortization of the Company’s capital leases included in depreciation and amortization of property and equipment amounted to $583was $0.8 million, $0.6 million and $239,$0.2 million for the fiscal years ended March 31, 2015, 2014 and 2013, respectively.


F-20F-22


INTANGIBLE ASSETS

Intangible assets, net consisted of the following:
As of March 31, 2014 As of March 31, 2015
Gross Carrying Amount Accumulated Amortization Net Amount Useful Life (years)
(In thousands) Gross Carrying Amount Accumulated Amortization Net Amount Useful Life (years)
Trademarks$111
 $(99) $12
 3
 $105
 $(92) $13
 3
Corporate trade names134
 (134) —
 2-10
Customer relationships and contracts21,968
 (2,836) 19,132
 3-15
 21,968
 (4,942) 17,026
 3-15
Theatre relationships550
 (252) 298
 10-12
 550
 (298) 252
 10-12
Covenants not to compete508
 (496) 12
 3-5
 508
 (508) —
 3-5
Content library19,767
 (2,257) 17,510
 5-6
 19,767
 (5,679) 14,088
 5-6
Favorable lease agreement1,193
 (518) 675
 4
 1,193
 (788) 405
 4
$44,231
 $(6,592) $37,639
  
 $44,091
 $(12,307) $31,784
  

As of March 31, 2013 As of March 31, 2014
Gross Carrying Amount Accumulated Amortization Net Amount Useful Life (years)
(In thousands) Gross Carrying Amount Accumulated Amortization Net Amount Useful Life (years)
Trademarks$105
 $(89) $16
 3
 $111
 $(99) $12
 3
Corporate trade names134
 (134) —
 2-10
 134
 (134) —
 2-10
Customer relationships and contracts10,658
 (1,578) 9,080
 3-5
 21,968
 (2,836) 19,132
 3-15
Theatre relationships550
 (206) 344
 10-12
 550
 (252) 298
 10-12
Covenants not to compete508
 (355) 153
 3-5
 508
 (496) 12
 3-5
Content library2,769
 (508) 2,261
 5
 19,767
 (2,257) 17,510
 5-6
Favorable lease agreement1,193
 (248) 945
 4
 1,193
 (518) 675
 4
$15,917
 $(3,118) $12,799
  
 $44,231
 $(6,592) $37,639
  

ForAmortization expense related to intangible assets was $5.9 million, $3.5 million and $1.5 million for the fiscal years ended March 31, 2015, 2014, and 2013, amortization expense amounted to $3,473 and $1,538, respectively. The CompanyWe did not record any impairment of intangible assets from continuing operations during the fiscal years ended March 31, 20142015 and 2013.2014.
 
Amortization expenseBased on identified intangible assets that are subject to amortization as of March 31, 2015, we expect future amortization expense for the next five fiscal years is estimatedeach period to be as follows:follows (dollars in thousands):
For the fiscal years ending March 31,
2015$5,810
Fiscal years ending March 31,  
2016$5,799
 $5,799
2017$5,663
 $5,663
2018$5,021
 $5,528
2019$4,975
 $5,518
2020 $2,106


F-21F-23


ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following:
As of March 31, As of March 31,
2014 2013
(In thousands) 2015 2014
Accounts payable$36,803
 $18,089
 $30,903
 $36,803
Participations payable26,577
 14,452
Participations and royalties payable 37,766
 37,828
Accrued compensation and benefits554
 1,175
 1,212
 554
Accrued taxes payable302
 258
 224
 302
Interest payable280
 987
 208
 280
Accrued restructuring and transition expenses1,019
 —
 —
 1,019
Accrued other expenses7,069
 4,816
 6,834
 7,069
Total accounts payable and accrued expenses$72,604
 $39,777
 $77,147
 $83,855

5. INVESTMENT IN NON-CONSOLIDATED ENTITYOTHER INTERESTS
 
Investment in CDF2 Holdings
 
As discussed in Note 2,We indirectly own 100% of the common equity of CDF2 Holdings, a subsidiary of Phase 2 DC,LLC ("CDF2 Holdings"), which is wholly owned by the Company, and its wholly owned limited liability company, Cinedigm Digital Funding 2, LLC, werewas 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 equipment in the conversion ofto convert their Systems to digital technology by providing the necessary financing, equipment, installation and related ongoing services.

CDF2 Holdings is a VIE,Variable Interest Entity (“VIE”), as defined in Accounting Standards Codification Topic 810 ("ASC 810, indirectly wholly owned by the Company.810"), “Consolidation". ASC 810 requires the consolidation of VIEs by an entity that has a controlling financial interest in the VIE which entity is thereby defined as the primary beneficiary of the VIE. To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, among other factors. Although Holdings iswe indirectly, wholly owned by the Company,own CDF2 Holdings, we, a third party whichthat also has a variable interest in CDF2 Holdings, along withand an independent third party manager and the Company must mutually approve all business activities and transactions that significantly impact CDF2 Holdings' economic performance. The Company has thusWe have therefore assessed itsour variable interests in CDF2 Holdings and determined that it iswe are not the primary beneficiary of HoldingsCDF2 Holdings. As a result, CDF2 Holdings' financial position and therefore accounts for its investmentresults of operations are not consolidated in Holdings under the equity methodour financial position and results of accounting.operations. In completing our assessment, the Companywe identified the activities that it considerswe consider most significant to the economic performance of CDF2 Holdings and determined that we do not have the power to direct those activities. As a result, Holdings' financial positionactivities, and resultstherefore we account for our investment in CDF2 Holdings under the equity method of operations are not consolidated in the financial position and results of operations of the Company.accounting.

The Company'sAs of March 31, 2015 and 2014, 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 were $0.3 million and $0.3 million as of March 31, 2015 and 2014, and 2013 includes:

The investment in the equity of Holdings of $0 and $1,812, respectively; and
Accounts receivable due from Holdings for service fees under its master service agreement of $346 and $396, respectively, which are included within our accounts receivable, net on the accompanying consolidated balance sheets.Consolidated Balance Sheets.

During the fiscal years ended March 31, 2015, 2014 and 2013, the Companywe received $1,077$1.2 million, $1.1 million, and $1,597$1.6 million, respectively, in aggregate revenues through digital cinema servicing fees from CDF2 Holdings, respectively,which are included in our revenues on the accompanying consolidated statementsConsolidated Statements of operations.Operations.

The Holding’s Total Stockholder’sStockholder's Deficit of CDF2 Holdings at March 31, 2015 and 2014 was $2,714. The Company has$6.7 million and $2.7 million, respectively. We have no obligation to fund the operating loss or the stockholder's deficit beyond itsour initial investment of $2.0 million, and accordingly, the Company carried its investment in Holdings at $0.

The changes in the carrying amount ofwe have recorded our investment in CDF2 Holdings on our Consolidated Balance Sheets at $0 for as of March 31, 2015 and 2014.

Noncontrolling Interest in CONtv

In June 2014, we and Wizard World, Inc. formed CON TV, LLC (“CONtv”) to fund, design, create, launch, and operate a worldwide digital network that creates original content, and sells and distributes on-demand digital content via the Internet and other consumer digital distribution platforms, such as gaming consoles, set-top boxes, handsets, and tablets.


F-24


We have determined that we have a controlling financial interest in CONtv. As a result, and in accordance with ASC 810, we have consolidated the financial position and results of operations of CONtv as of and for the fiscal year ended March 31, 2014 are as follows:
Balance at March 31, 2012 $1,490
Equity in income of Holdings 322
Balance at March 31, 2013 1,812
Equity in loss of Holdings (1,812)
Balance at March 31, 2014 $—
2015.


F-22During the year ended March 31, 2015, we made total contributions of $0.9 million in CONtv. Wizard World Inc.'s share of stockholders' deficit in CONtv is reflected as noncontrolling interest in our Consolidated Balance Sheets and was $0.2 million as of March 31, 2015. The noncontrolling interest's share of loss from continuing operations and net loss was $0.9 million for the year ended March 31, 2015.


6.NOTES PAYABLE

Notes payable consisted of the following:
 As of March 31, 2014 As of March 31, 2013 As of March 31, 2015 As of March 31, 2014
Notes Payable Current Portion Long Term Portion Current Portion Long Term Portion
(In thousands) Current Portion Long Term Portion Current Portion Long Term Portion
2013 Term Loans, net of debt discount $25,688
 $68,590
 $26,250
 $96,207
 $25,125
 $36,418
 $25,688
 $68,590
2013 Prospect Loan Agreement —
 68,454
 —
 70,151
Prospect Loan —
 67,967
 —
 68,454
KBC Facilities 7,961
 27,009
 8,059
 36,205
 7,649
 19,361
 7,961
 27,009
P2 Vendor Note 105
 466
 74
 569
 125
 393
 105
 466
P2 Exhibitor Notes 71
 260
 64
 330
 74
 186
 71
 260
Total non-recourse notes payable $33,825
 $164,779
 $34,447
 $203,462
 $32,973
 $124,325
 $33,825
 $164,779
                
Cinedigm Term Loans $3,750
 $20,015
 $—
 $—
 $—
 $17,965
 $3,750
 $20,015
Cinedigm Revolving Loans 15,469
 —
 —
 —
 24,294
 —
 15,469
 —
2013 Notes —
 3,510
 —
 —
 —
 3,785
 —
 3,510
Total recourse notes payable $19,219
 $23,525
 $—
 $—
 $24,294
 $21,750
 $19,219
 $23,525
Total notes payable $53,044
 $188,304
 $34,447
 $203,462
 $57,267
 $146,075
 $53,044
 $188,304

Non-recourse debt is generally defined as debt whereby the lenders’ sole recourse, with respect to defaults, by the Company is limited to the value of the asset, collateralized bywhich is collateral for the debt. TheCertain of our subsidiaries are liable with respect to, and their assets serve as collateral for, certain indebtedness for which our assets and the assets of our other subsidiaries that are not parties to the transaction are generally not liable. We have referred to this indebtedness as "non-recourse debt" because the recourse of the lenders is limited to the assets of specific subsidiaries. Such indebtedness includes the Prospect Loan, the KBC Facilities, the 2013 Term Loans, are not guaranteed by the Company or its other subsidiaries, other than Phase 1 DC. The 2013 Prospect Loan Agreement is not guaranteed by the Company or its other subsidiaries and the service fees of Phase 1 DC and Phase 2 DC were assigned by the Company to DC Holdings LLC. The KBC Facilities, the P2 Vendor Note and the P2 Exhibitor Notes are not guaranteed by the Company or its other subsidiaries, other than Phase 2 DC.Note.

2013 Term Loans

OnIn February 28, 2013, our CDF I subsidiary entered into an amended and restated credit agreement (the “2013 Credit Agreement”) with Société Générale New York Branch, as administrative agent and collateral agent forother lenders. Under the lenders party thereto and certain other secured parties (the “Collateral Agent”), andterms of the lenders party thereto. The 2013 Credit Agreement, amended and restated its prior credit agreement. The primary changes effected by the Amended and Restated Credit Agreement were (i) changing theCDF I may borrow an aggregate principal amount of the term loans$130.0 million, $5.0 million of which was allowed to $130,000, which included an assignment of $5,000 of the principal balancebe assigned to an affiliate of CDF I, (ii) changing the interest rate (described further below) and (iii) extending the term of the credit facility to February 2018. The proceeds of the term loans ("2013 Term Loans") under the 2013 Credit Agreement were used by CDF I to refinance its prior credit agreement.

The Company recognized a loss from debt extinguishment on its prior credit agreement of $2,996, principally from the write-off of previously deferred debt issuance costs and original issue discount, during the fiscal year ended March 31, 2013. Additionally, the Company recognized a loss from debt extinguishment on another prior debt agreement of $4,909 during the fiscal year ended March 31, 2013.I.

Under the 2013 Credit Agreement, each of the 2013 Term loans bearsbear interest, at the option of CDF I, and subject to certain conditions, based on thea base rate (generally, the bank prime rate) or the one-month LIBOR rate set at a minimum of 1.00%, plus a margin of 1.75% (in the case of base rate loans) or, 2.75% (in the case of LIBOR rate loans). All collections and revenues of CDF I are deposited into designated accounts, from which amounts are paid out on a monthly basis to pay certain operating expenses and principal, interest, fees, costs and expenses relating to the 2013 Credit Agreement according to certain designated priorities. On a quarterly basis, if funds remain after the payment of all such amounts, they will be applied to prepay the 2013 Term Loans. The 2013 Term Loans mature and must be paid in full by February 28, 2018. In addition, CDF I may prepay the 2013 Term Loans, in whole or in part, subject to paying certain breakage costs, if applicable, and a 1.0% prepayment premium if a prepayment is made during the first year of the 2013 Term Loans.applicable. The one-month LIBOR rate at March 31, 20142015 was 0.15%0.18%.

The 2013 Credit Agreement also requires each of CDF I’s existing and future direct and indirect domestic subsidiaries (the "Guarantors") to guarantee under an Amended and Restated Guaranty and Security Agreement dated as of February 28, 2013 by and among CDF I, the Guarantors and the Collateral Agent (the “Guaranty and Security Agreement”), the obligations under the 2013 Credit Agreement and all such obligations to be secured bywith a first priority perfected security interest in all of the collective

F-23


assets of CDF I and the Guarantors, including real estate owned or leased, and all capital stock or other equity interests in our C/AIX subsidiary, the direct holder of CDF I’s equity, CDF I and CDF I’s subsidiaries. In connection with the 2013 Credit Agreement, AccessDM, a wholly-owned subsidiary of the Company and the direct parent of C/AIX, entered into an amended and restated pledge agreement dated as of February 28, 2013 (the “AccessDM Pledge Agreement”) in favor of the Collateral Agent pursuant to which AccessDM pledged to the Collateral Agent all of the outstanding shares of common stock of C/AIX, and C/AIX entered into an amended and restated pledge agreement dated as of February 28, 2013 (the “C/AIX Pledge Agreement”) in favor of the Collateral Agent pursuant to which C/AIX pledged to the Collateral Agent all of the outstanding membership interests of CDF I.equity. The 2013 Credit Agreement contains customary representations, warranties, affirmative covenants, negative covenants and events of default.

All collections and revenuesCollections of CDF I accounts receivable are deposited into accounts designated accounts. These amounts are included in cash and cash equivalents in the consolidated balance sheets and are only available to pay certain operating expenses, principal, interest, fees, costs and expenses relating to the 2013 Credit Agreement, according to certainAgreement. Amounts designated priorities, whichfor these purposes totaled $6,493$3.9 million and $6,787$6.5 million as of March 31, 2015 and 2014, respectively, and 2013, respectively. The Companyare included in cash and cash equivalents on our Consolidated Balance Sheets. We also set upmaintain a debt service fund under the 2013 Credit Agreement for future principal and

F-25


interest payments,payments. As of March 31, 2015 and 2014, the debt service fund had a balance of $5.8 million, which is classified as restricted cash of $6,751 as of March 31, 2014 and 2013, respectively.on our Consolidated Balance Sheets.

The balance of the 2013 Term Loans, net of the original issue discount, at March 31, 20142015 was as follows:
As of March 31, 2014 As of March 31, 2013 As of March 31,
(In thousands) 2015 2014
2013 Term Loans, at issuance, net$125,087
 $125,087
 $125,087
 $125,087
Payments to date(30,543) (2,275) (63,348) (30,543)
Discount on 2013 Term Loans(266) (355) (196) (266)
2013 Term Loans, net94,278
 122,457
 61,543
 94,278
Less current portion(25,688) (26,250) (25,125) (25,688)
Total long term portion$68,590
 $96,207
 $36,418
 $68,590

2013 Prospect Loan Agreement
On
In February 28, 2013, our DC Holdings, LLC, AccessDM and Phase 2 DC subsidiaries entered into a term loan agreement (the “2013 Prospect Loan Agreement”“Prospect Loan”) with Prospect Capital Corporation (“Prospect”), as administrative agent (the “Prospect Administrative Agent”) and collateral agent (the “Prospect Collateral Agent”) for the lenders party thereto, and the other lenders party thereto pursuant to which DC Holdings LLC borrowed $70,000 (the “2013 Prospect Loan”).$70.0 million. The 2013 Prospect Loan as subsequently amended, will bearbears interest annually in cash at LIBOR plus 9.00%9.0% (with a 2.00%2.0% LIBOR floor), which is payable in cash, and at an additional 2.50% to be accrued as an increase into the aggregate principal amount of the 2013 Prospect Loan until the 2013 Credit Agreement is paid off, at which time all accrued interest will be payable in cash.

Collections of DC Holdings accounts receivable are deposited into accounts designated to pay certain operating expenses, principal, interest, fees, costs and expenses relating to the Prospect Loan. On a quarterly basis, if funds remain after the payment of all such amounts, they are applied to prepay the Prospect Loan. Amounts designated for these purposes, included in cash and cash equivalents on the Consolidated Balance Sheets, totaled $6.5 million and $8.1 million as of March 31, 2015 and 2014, respectively. We also maintain a debt service fund under the Prospect Loan for future principal and interest payments. As of March 31, 2015 and 2014, the debt service fund had a balance of $1.0 million, which is classified as restricted cash on the Consolidated Balance Sheets.

The 2013 Prospect Loan matures on March 31, 2021. The 2013 Prospect Loan2021 and may be accelerated upon a change in control (as defined in the Term Loan Agreement)agreement) or other events of default as set forth therein and would be subject to mandatory acceleration upon an insolvency of DC Holdings LLC. The 2013Holdings. We are permitted to pay the full outstanding balance of the Prospect Loan is payable on a voluntary basisat any time after the second anniversary of the initial borrowing, in whole but not in part, subject to athe following prepayment penalty equal to 5.00%penalties:

5.0% of the principal amount prepaid if the 2013 Prospect Loan is prepaid afterbetween the second anniversary but prior to theand third anniversaryanniversaries of issuance, a prepayment penalty of 4.00%issuance;
4.0% of the principal amount prepaid ifbetween the 2013 Prospect Loan is prepaid after such third anniversary but prior to theand fourth anniversaryanniversaries of issuance, a prepayment penalty of 3.00%issuance;
3.0% of the principal amount prepaid ifbetween the 2013 Prospect Loan is prepaid after such fourth anniversary but prior to theand fifth anniversaryanniversaries of issuance, a prepayment penalty of 2.00%issuance;
2.0% of the principal amount prepaid ifbetween the 2013 Prospect Loan is prepaid after such fifth anniversary but prior to theand sixth anniversary of issuance, a prepayment penalty of 1.00%issuance;
1.0% of the principal amount prepaid ifbetween the 2013 Prospect Loan is prepaid after such sixth anniversary but prior to theand seventh anniversaryanniversaries of issuance,issuance; and without
No penalty if the 2013balance of the Prospect Loan, including accrued interest, is prepaid thereafter, plus cash in an amount equal to the accrued and unpaid interest amount with respect to the principal amount through and including the prepayment date.thereafter.
In connection with the 2013 Prospect Loan, the Company assigned to DC Holdings LLC its rights to receive servicing fees under the Company’s Phase I and Phase II deployments. Pursuant to a Limited Recourse Pledge Agreement (the “Limited Recourse Pledge”) executed by the Company and a Guaranty, Pledge and Security Agreement (the “Prospect Guaranty and Security Agreement”) among DC Holdings LLC, AccessDM, Phase 2 DC and Prospect, as Prospect Collateral Agent, the
The Prospect Loan is secured by, among other things, a first priority pledge of the stock of CDF2 Holdings, our wholly owned by the Company,unconsolidated subsidiary, the stock of AccessDM, owned by DC Holdings, LLC and the stock of our Phase 2 DC owned by the Company,subsidiary, and is also guaranteed by AccessDM and Phase 2 DC. The Company providesWe provide limited financial support to the 2013 Prospect Loan not to exceed $1,500$1.5 million per year in the event financial performance does not meet certain defined benchmarks.


F-24


The 2013 Prospect Loan Agreement contains customary representations, warranties, affirmative covenants, negative covenants and events of default. The balance offollowing table summarizes the 2013activity related to the Prospect Loan Agreement at March 31, 2014 and 2013 was as follows:Loan:


F-26


As of March 31, 2014 As of March 31, 2013 As of March 31,
2013 Prospect Loan Agreement, at issuance$70,000
 $70,000
(In thousands) 2015 2014
Prospect Loan, at issuance $70,000
 $70,000
PIK Interest1,906
 151
 3,640
 1,906
Payments to date$(3,452) $—
 (5,673) (3,452)
2013 Prospect Loan Agreement, net$68,454
 $70,151
Prospect Loan, net $67,967
 $68,454
Less current portion—
 —
 —
 —
Total long term portion$68,454
 $70,151
 $67,967
 $68,454

KBC Facilities

In December 2008 Phase 2 B/AIX, a direct wholly-owned subsidiary of Phase 2 DC and an indirect wholly-owned subsidiary of the Company,we began entering into multiple credit facilities to fund the purchase of Systems from Barco, Inc. to be installed in movie theatres as part of the Company’sour Phase II Deployment. AThere were no draws on the KBC Facilities during the fiscal year ended March 31, 2015. The following table presents a summary of the credit facilities is as follows:

KBC Facilities (dollar amounts in thousands):
     Outstanding Principal Balance Draw as of      Outstanding Principal Balance
Facility1
Facility1
 Credit Facility 
Interest Rate2
 Maturity Date As of March 31, 2014 As of March 31, 2013 March 31, 2014
Facility1
 Credit Facility 
Interest Rate2
 Maturity Date As of March 31, 2015 As of March 31, 2014
1
 $8,900
 8.5% December 2016 $—
 $—
 $—

 $2,890
 3.75% December 2017 $—
 $315
2
 2,890
 3.75% December 2017 315
 1,961
 —

 22,336
 3.75% September 2018 10,371
 13,561
3
 22,336
 3.75% September 2018 13,561
 16,752
 —

 13,312
 3.75% September 2018 6,656
 8,558
4
 13,312
 3.75% September 2018 8,558
 10,459
 —

 11,425
 3.75% March 2019 6,528
 8,160
5
 11,425
 3.75% March 2019 8,160
 9,794
 —

 6,450
 3.75% December 2018 3,455
 4,376
6
 6,450
 3.75% December 2018 4,376
 5,298
 —
 $65,313
   $34,970
 $44,264
 $—
  $56,413
   $27,010
 $34,970
1 For each facility, principal is to be repaid in twenty-eight quarterly installments.
2 The interest rate for facilities 2 through 6 are the three month LIBOR rate of 0.23% at March 31, 2014, plus the interest rate noted above.
1.
For each facility, principal is to be repaid in twenty-eight quarterly installments.
2.
Each of the facilities bears interest at the three-month LIBOR rate, which was 0.27% at March 31, 2015, plus the interest rate noted above.

Cinedigm Credit Agreement

On October 17, 2013, the Companywe entered into a credit agreement (the “Cinedigm Credit Agreement”) with Société Générale, New York Branch, as administrative agent and collateral agent for the lenders party thereto and certain other secured parties (the “Collateral Agent”).rale. Under the Cinedigm Credit Agreement, and subject to the terms and conditions thereof, the Companywe may borrow an aggregate principal amount of up to $55,000,$55.0 million, including term loans of $25,000$25.0 million (the “Cinedigm Term Loans”) and revolving loans of up to $30,000$30.0 million (the “Cinedigm Revolving Loans”). All of the Cinedigm Term Loans, for which principal willis be paid quarterly, and $15,000$15.0 million of the Cinedigm Revolving Loans were drawn at closing in connection with funding the GVE Acquisition upon the Company’s contribution of such funds.Acquisition. Each of the Cinedigm Term Loans and the Cinedigm Revolving Loans bears interest at the base rate plus 3.0%5.0% or the eurodollarEurodollar rate plus a margin of 6.0% until May 15, 2015, at which time the margin decreases to 5.0%. The base rate, per annum, is equal to the highest of (a) the rate quoted by the Wall Street Journal as the “base rate on corporate loans by at least 75% of the nation’s largest banks,” (b) 0.50% plus the federal funds rate, and (c) the Eurodollar rate plus 1.0%. Collections of certain CEG accounts receivable are be deposited into a special blocked account, from which amounts are used to pay certain operating expenses and principal, interest, fees, costs and expenses relating to the Cinedigm Credit Agreement according to designated priorities. When amounts collected are in excess of such principal, interest, fees, costs and expenses, a portion of the excess collections are used to prepay the Cinedigm Term Loans. We may prepay the Cinedigm Term Loans and Cinedigm Revolving Loans, in whole or in part, subject to paying certain breakage costs, as applicable.

In February 2015, we agreed to certain changes in the Cinedigm Credit Agreement. Among other things, the Cinedigm Credit Agreement was amended to reduce certain requirements that determine the maximum amount of revolving loans that may be borrowed at any one time and to change the interest rate margins on outstanding loans. As a result of these amendments, the Cinedigm Term Loans bear interest at the base rate plus 5.0% through May 15, 2015 and 3.0% thereafter or the Eurodollar rate plus 6.0% until May 15, 2015 and 4.0% thereafter, and the Cinedigm Revolving Loans bear interest at the base rate plus 4.0% or the Eurodollar rate plus 5.0%. The interest rate margins may be reduced if we voluntarily prepay Term Loans in an aggregate amount of at least $10.0 million. The Base rate, per annum, is equal to the highest of (a) the rate quoted by the Wall Street Journal as the “base rate on corporate loans by at least 75% of the nation’s largest banks,” (b) 0.50% plus the federal funds rate, and (c) the eurodollarEurodollar rate plus 1.0%. All collections and revenues of CEG will be deposited into a special blocked account, from which amounts are paid out on a monthly basis to pay certain operating expenses and principal, interest, fees, costs and expenses relating to the Cinedigm Credit Agreement according to certain designated priorities. On a quarterly basis, if funds remain after the payment of all such amounts, a portion of such funds will be applied to prepay the Cinedigm Term Loans. The Cinedigm Term Loans and Cinedigm Revolving Loans mature and must be paid in full by October 21, 2016. In addition, the Company may prepay the Cinedigm Term Loans and Cinedigm Revolving Loans, in whole or in part, subject to paying certain breakage costs, as applicable.




F-25F-27





TheIn April 2015, we repaid the entire outstanding balance of the Cinedigm Term Loans asand extended the term of the Cinedigm Revolving Loans to March 31, 2014 was as follows:2018 in connection with our issuance of Convertible Notes. See Note 15 - Subsequent Event.

The following table presents the activity related to the Cinedigm Term Loans:
 As of March 31, 2014 As of March 31,
(In thousands) 2015 2014
Cinedigm Term Loans, at issuance, net $25,000
 $25,000
 $25,000
Payments to date (875) (6,808) (875)
Discount on Cinedigm Term Loans (360) (227) (360)
Cinedigm Term Loans, net 23,765
 17,965
 23,765
Less current portion (3,750) —
 (3,750)
Total long term portion $20,015
 $17,965
 $20,015

At March 31, 2015 and 2014, the balance of the Cinedigm Revolving Loans was $15,469.$24.3 million and $15.5 million, respectively.
During the fiscal year ended March 31, 2015, we borrowed $18.2 million under the Cinedigm Revolving Loans for working capital purposes and made principal payments of $9.3 million.

2013 Notes
On
In October 17, 2013, and October 21, 2013, the Companywe entered into securities purchase agreements (the “Securities Purchase Agreements”) with certain investors, party thereto (the “Investors”) pursuant to which the Company agreed to sell to the Investorswe sold notes in the aggregate principal amount of $5,000$5.0 million (the “2013 Notes”) and warrants to purchase an aggregate of 1,500,000 shares of Class A Common Stock (the “2013 Warrants”). The sales were consummated on October 21, 2013. to such investors. The proceeds of the sales of the 2013 Notes and 2013 Warrants were used for working capital and general corporate purposes, including to finance,financing, in part, the GVE Acquisition. The CompanyWe allocated a proportional value of $1,598$1.6 million to the 2013 Warrants using a Black-Scholes option valuation model with the following assumptions:

Risk free interest rate 1.38%
Dividend yield —
Expected life (years) 5
Expected volatility 76.25%

The Company hasWe have treated the proportional value of the 2013 Warrants of $1,598 as a debt discount. The debt discount of the 2013 Notes will beis being amortized through the maturity of the 2013 Notes as interest expense.

The principal amount outstanding under the 2013 Notes is due on October 21, 2018. The 2013 Notes bear interest at 9.0% per annum, payable in quarterly installments over the term of the 2013 Notes. The 2013 Notes entitle the Company to redeem the 2013 Notesmay be redeemed at any time on or after October 21, 2015, subject to certain premiums.
Letters of Credit
As of March 31, 2014, outstanding letters of credit amounted to $4,000. No amounts were drawn upon during the fiscal year ended March 31, 2014.

At March 31, 2014, the Company was2015, we were in compliance with all of itsour debt covenants.

The aggregate principal repayments on the Company’sour notes payable, excluding debt discounts and PIK interest, are scheduled to be as follows:follows (dollars in thousands):

Fiscal years ending March 31,  
2016 $75,459
2017 29,047
2018 24,100
2019 8,411
2020 —
Thereafter 79,127
  $216,144


F-26F-28


For the fiscal years ending March 31,
2015 $53,042
2016 37,833
2017 44,534
2018 31,200
2019 8,401
Thereafter 81,740
  $256,750

7.STOCKHOLDERS’ EQUITY

CAPITAL STOCK

COMMON STOCK

In September 2014, we increased the number of shares of Class A Common Stock authorized for issuance by 91,241,000 shares and designated the additional shares as Class A Common Stock. As of March 31, 2015 and 2014, we had 210,000,000 and 2013, the Company has 118,759,000 authorized shares of Class A Common Stock, respectively.
As of March 31, 2015 and 2014, we had 1,241,000 shares of authorized Class B Common Stock of which none remain available for issuance.
On June 26, 2013, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Merriman Capital, Inc. and National Securities Corporation (together, the “Underwriters”) pursuant to which the Underwriters agreed to act as underwriters of 3,780,718 shares of the Company’s Class A common stock at a purchase price equal to $1.2834 per share, representing a per security discount equal to 7.0% of the public offering price per security of $1.38 (the “Offering”). In July 2013, the Underwriters’ exercised an option in full to buy up to an additional 567,108 shares from the Company under the above referenced terms (the "Over-Allotment"). The Company also agreed to bear the expenses of the Offering. The Over-Allotment shares were issued and sold on July 10, 2013. Total proceeds from the issuance of the Company's Class A common stock, including the Over-Allotment, amounted to approximately $5,520, net of underwriting discount, during July 2013.
On October 17, 2013, the Company conducted an underwritten public offering resulting in the sale by the Company of an aggregate of 9,089,990 shares of Class A Common Stock, priced at $1.43 per share on October 21, 2013 and October 23, 2013, with net proceeds to the Company of approximately $12,049.
On October 17, 2013, the Company entered into a common stock purchase agreement (the “Stock Purchase Agreement”) with an investor party thereto (the “Common Stock Investor”) pursuant to which the Company agreed to sell to the Common Stock Investor 1,398,601 shares (the “2013 Shares”) of Class A Common Stock, for an aggregate purchase price in cash of $2,000, priced at $1.43 per share. The sale was consummated on October 21, 2013.
On March 25, 2014, the Company completed an underwritten public offering resulting in the sale by the Company of an aggregate of 11,730,000 shares of Class A Common Stock, priced at $2.70 per share, with net proceeds to the Company of approximately $29,700.

PREFERRED STOCK

Cumulative dividends in arrears on the preferred stock at March 31, 2015 and 2014 and 2013 were $89 on each date.$0.1 million. In April 2014, the Company2015, we paid itsour preferred stock dividends accrued at March 31, 20142015 in the form of 33,85155,262 shares of its Class A Common Stock.

CINEDIGM’S EQUITY INCENTIVE PLAN

Stock Options

Awards issued under the Planour equity incentive plan (the "Plan") may be in any of the following forms (or a combination thereof) (i) stock option awards; (ii) stock appreciation rights; (iii) stock or restricted stock or restricted stock units; or (iv) performance awards. The Plan provides for the granting of incentive stock options (“ISOs”) with exercise prices not less than the fair market value of the Company’sour Class A Common Stock on the date of grant. ISOs granted to shareholders ofhaving more than 10% of the total combined voting power of the Company must have exercise prices of at least 110% of the fair market value of the Company’sour Class A Common Stock on the date of grant. ISOs and non-statutory stock options granted under the 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 the Company’sour compensation committee. Upon a change of control of the Company, all stock options (incentive and non-statutory) that have not previously vested will vest immediately and become fully exercisable. In connection with the grants of stock options under the Plan, the Companywe and the participants have executed stock option agreements setting forth the terms of the grants.

F-27

The Plan provides for the issuance of up to 14,300,000 shares of Class A Common Stock to employees, outside directors and consultants.


During the fiscal year ended March 31, 2014, the Company2015, we granted stock options to purchase 2,915,000861,625 shares of itsour Class A Common Stock to its employees at exercise prices ranging from $1.37$1.44 to $2.91$2.66 per share, which willshare. Such options vest ratably over a four year period.years from their date of grant. As of March 31, 2014,2015, the weighted average exercise price for outstanding stock options was $1.74 and the weighted average remaining contractual life was 6.157.6 years.

The following table summarizes the activity of the Plan related to shares issuable pursuant to outstanding options:
Shares Under Option 
Weighted Average Exercise Price
Per Share
Shares Under Option 
Weighted Average Exercise Price
Per Share
Balance at March 31, 20123,750,790
 2.27
Granted972,000
 1.60
Exercised—
 —
Canceled(609,790) 1.91
Balance at March 31, 20134,113,000
 2.14
4,113,000
 $2.14
Granted2,915,000
 1.51
2,915,000
 1.51
Exercised(106,951) 1.41
(106,951) 1.41
Canceled(848,063) 2.74
(848,063) 2.74
Balance at March 31, 20146,072,986
 1.74
6,072,986
 1.74
Granted861,625
 1.51
Exercised(141,000) 1.41
Canceled(884,941) 2.74
Balance at March 31, 20155,908,670
 1.74

An analysis of all options outstanding under the Plan as of March 31, 20142015 is presented below:as follows:

F-29


Range of Prices Options Outstanding 
Weighted
Average
Remaining
Life in Years
 
Weighted
Average
Exercise
Price
 Aggregate Intrinsic Value Options Outstanding 
Weighted
Average
Remaining
Life in Years
 
Weighted
Average
Exercise
Price
 Aggregate Intrinsic Value (In thousands)
$0.00 - $1.37 935,371
 4.0
 $1.37
 $1,113,201
 615,000
 4.5 $1.37
 $151,875
$1.38 - $1.60 4,194,661
 8.8
 1.46
 4,610,811
$1.38 - $1.50 2,639,795
 7.7 1.43
 225,617
$1.51 - $1.60 1,319,250
 8.3 1.53
 36,312
$1.61 - $2.50 310,954
 7.3
 1.77
 244,890
 705,625
 8.7 1.79
 —
$2.51 - $5.00 496,500
 7.4
 3.06
 —
 540,000
 8.0 2.84
 —
$5.01 - $15.00 135,500
 2.3
 8.12
 —
$5.01 - $20.00 89,000
 1.4 8.44
 —
 6,072,986
     $5,968,902
 5,908,670
   $413,804

An analysis of all options exercisable under the Plan as of March 31, 20142015 is presented below:
Options
Exercisable
 
Weighted
Average
Remaining
Life in Years
 
Weighted
Average
Exercise
Price
 Aggregate Intrinsic Value
1,839,680
 6.15
 $2.15
 $1,644,469

Restricted Stock Awards

The Plan also provides for the issuance of restricted stock and restricted stock unit awards.  During the fiscal year ended March 31, 2014, the Company did not grant any restricted stock or restricted stock units.


F-28


The following table summarizes the activity of the Plan related to restricted stock awards:
 Restricted Stock Awards Weighted Average Market Price Per Share
Balance at March 31, 2012157,198
 1.18
Granted—
 —
Vested(122,601) 1.12
Canceled(18,489) 1.37
Balance at March 31, 201316,108
 1.40
Granted—
 —
Vested(15,140) 1.40
Canceled(968) 1.40
Balance at March 31, 2014—
 —
Options
Exercisable
 
Weighted
Average
Remaining
Life in Years
 
Weighted
Average
Exercise
Price
 Aggregate Intrinsic Value (In thousands)
2,668,445
 6.46 $1.80
 $413,804

OPTIONS GRANTED OUTSIDE CINEDIGM’S EQUITY INCENTIVE PLAN
In October 2013, the Companywe issued options outside of the Equity Incentive Plan to 10 individuals that became employees who joined the Company following the GVE Acquisition. The employees received options to purchase an aggregate of 620,000 shares of the Company'sour Class A Common Stock. The options have ten-year terms andStock at an exercise price of $1.75 per share. The options vest and become exercisable in 25% increments on the first four anniversaries of the date of grant, until fully vested after four years, and expire ten years from the date of grant, if unexercised. As of March 31, 2015, there were 386,250 unvested options outstanding.

WARRANTS

At March 31, 2014,2015, outstanding warrants consisted of 16,000,000 held by Sageview ("Sageview Warrants"), 525,000 held by a strategic management service provider and 1,250,625 of the 2013 Warrants.

The Sageview Warrants, which were exercisable beginning on September 30, 2009 at an exercise price of $1.37, contain a customary cashless exercise provision and anti-dilution adjustments and expire on August 11, 2016 (subject to extension in limited circumstances).

TheWe have issued 525,000 warrants to purchase shares of Class A common stock to a strategic management service provider warrants were issued in connection with a consulting management services agreement entered into with the Company. Theseagreement. The warrants, for the purchase of 525,000 shares of Class A common stock vested over 18 months commencing in July 2011, are subject to terminationwhich may be terminated with 90 days notice in the event of termination of the consulting management services agreement, vested over 18 months commencing in July 2011 and expire on July 1, 2021.

The 2013 Warrants will be exercisable through October 21, 2018 at an exercise price per share of $1.85. The 2013 Warrants and 2013 Notes are subject to certain transfer restrictions. During the fiscal year ended March 31, 2014, holders of the 2013 Warrants exercised 249,375 warrants. As of March 31, 2015 and 2014, 1,250,625 of the 2013 Warrants were outstanding.

8.COMMITMENTS AND CONTINGENCIES

LITIGATION

Gaiam Dispute
In August 2014, we initiated mediation with Gaiam with respect to certain claims resulting from the GVE Acquisition in accordance with the requirements of the Membership Interest Purchase Agreement (the ”MIPA”). On January 13 and 16, 2015, Gaiam and we participated in a two-day mediation to determine whether the parties’ disputes could be resolved informally without arbitration. The Companymediation was not successful, and, therefore, we are pursuing our claims against Gaiam through arbitration.

F-30


We believe that (i) Gaiam materially breached its representations and warranties under the MIPA, including a representation that the financial statements provided to us were consistent with GAAP; (ii) Gaiam engaged in fraud and tortious acts in connection with the sale; (iii) the amount of working capital in the business unit was substantially below the working capital target identified in the MIPA and is subject to a working capital lease obligation whereadjustment; (iv) Gaiam breached the Transition Services Agreement, resulting in additional costs to us and potential losses associated with the non-collection our accounts receivable; and (v) Gaiam breached the terms of other agreements related to the transfer of cash from collected accounts receivable, including mishandling post-closing collections. Among other things, we believe that significant sections of the financial statements that Gaiam provided to us, both before and after the GVE Acquisition, were not consistent with GAAP, despite Gaiam’s contractual obligations to ensure GAAP compliance, and that Gaiam’s financial statements did not fairly present the financial position and results of GVE as of the date of the transaction. Our investigation of these issues is ongoing as of the date of this Report on Form 10-K.
We demanded that Gaiam agree to participate in an expedited arbitration before a nationally recognized accounting firm to determine the value of the working capital in accordance with the relevant procedures set forth in the MIPA (“the Working Capital Arbitration”). We also demanded that Gaiam agree simultaneously to participate in a separate arbitration before the American Arbitration Association (“the AAA Arbitration”) to resolve the parties’ non-working capital disputes. Gaiam initially asserted that the AAA Arbitration should occur prior to the Working Capital Arbitration and refused to proceed with the Working Capital Arbitration until after the AAA Arbitration was completed. Therefore, we commenced legal proceedings against Gaiam to comply with the MIPA and compel Gaiam to participate in the Working Capital Arbitration without further delay.
By Order dated May 5, 2015, the United States District Court for the Central District of California ordered Gaiam to proceed with the Working Capital Arbitration forthwith. Although Gaiam initially filed an appeal of the Order with the Ninth Circuit, that appeal has been dismissed. The parties are proceeding with the Working Capital Arbitration currently and expect to receive an initial decision on the working capital claims at issue in the Working Capital Arbitration by approximately mid-July 2015. In addition, the parties are proceeding with their respective non-working capital claims in the AAA Arbitration.
The relief requested by us exceeds $30.0 million and includes unspecified compensatory damages, attorneys’ fees, costs and interest, and all other appropriate relief including punitive damages. Gaiam has disputed our allegations and asserted its own claims against us, including seeking working capital reimbursement from us of over $6.0 million.
We believe that the claims that we have asserted against Gaiam in the Working Capital Arbitration and the AAA Arbitration have merit, and we intend to pursue our claims vigorously. Conversely, we believe that Gaiam’s claims are without merit. At this early stage, there can be no continuing involvement other than being the primary obligor. A sub-lease agreement, through which an unrelated third party purchaser pays the capital lease, was amended during January 2013. The impact of the capital lease amendmentassurance as to the Company's consolidated financial statements was not material.

LITIGATION

likelihood of success on the merits.
We are subject to certain legal proceedings in the ordinary course of business. We do not expect any such items to have a significant impact on our financial position and results of operations and liquidity.

LEASES

AsWe have capital lease obligations covering a facility and computer equipment with an aggregate principal amount of $5.5 million as of March 31, 2014, the Company has outstanding capital lease obligations of $6,086.2015. In May 2011, the Companywe completed the sale of certain assets and liabilities of the Pavilion Theatre and fromceased to operate it at that point forward, it will not be operated by the Company.

F-29


The Company hastime. We have remained the primary obligor on the Pavilion capital lease and therefore, the capital lease obligation and the related assets under the capital lease continue to be reflected on our Consolidated Balance Sheets as of March 31, 2015 and 2014. We have entered into a separate subleasesub-lease agreement with the unrelated third party purchaser who makes all payments related to subletthe lease and as such, we have no continuing involvement in the operation of the Pavilion Theatre.

During the fiscal year ended March 31, 2013, the Company reduced its capital lease obligation resulting from an amended sub-lease agreement in January 2013, through which an unrelated third party purchaser pays the capital lease and the Company is the primary obligor.

As of March 31, 2014, minimum future capital lease payments (including interest) totaled $10,656, are due as follows:
For the fiscal years ending March 31,
2015$1,471
20161,441
20171,441
20181,301
20191,152
Thereafter3,850
 10,656
Less: amount representing interest at rates ranging from 5.7% to 17.7%(4,570)
Outstanding capital lease obligation$6,086

The corresponding asset included in property and equipment, net for the Pavilion Theatre was $3,948 as of March 31, 2014.

The Company’s businessesWe operate from leased properties under non-cancelable operating lease agreements.agreements, certain of which contain escalating lease clauses. As of March 31, 2014,2015, obligations under non-cancelable operating leases totaled $1,589 and are due as follows:follows (dollars in thousands):

For the fiscal years ending March 31,
2015$1,283
2016306
 $1,589
Fiscal years ending March 31,  
2016 $1,663
2017 1,227
2018 1,230
2019 1,279
2020 1,330
Thereafter 592
  $7,321

F-31



Total rentRent expense, included in selling, general and administrative expenses in our Consolidated Statements of Operations, was $1,484$1.6 million, $1.5 million and $1,217$1.2 million for the fiscal years ended March 31, 2015, 2014 and 2013, respectively.

9.SUPPLEMENTAL CASH FLOW INFORMATION
For the Fiscal Year Ended March 31, For the Fiscal Year Ended March 31,
2014 2013
(In thousands) 2015 2014 2013
Cash interest paid$17,309
 $18,368
 $24,069
 $17,309
 $18,368
Assets acquired under capital leases$1,886
 $—
 $—
 $1,886
 $—
Accretion of preferred stock discount$93
 $109
 $—
 $93
 $109
Accrued dividends on preferred stock$356
 $356
 $89
 $356
 $356
Issuance of Class A Common Stock in connection with New Video Acquisition$—
 $3,432
 $—
 $—
 $3,432
Issuance of Class A Common Stock in connection with GVE Acquisition$1,000
 $—
 $—
 $1,000
 $—
Issuance of Class A Common Stock and warrants for professional services of third parties$129
 $—
 $—
 $129
 $—
Issuance of common stock for payment of preferred stock dividends$267
 $—
Issuance of Class A Common Stock for payment of preferred stock dividends $267
 $267
 $—
Non-cash payment of deferred consideration in connection with GVE Acquisition$2,000
 $—
 $—
 $2,000
 $—


F-30F-32


10.SEGMENT INFORMATION

The Company is comprised ofWe operate in four reportable segments: Phase I Deployment, Phase II Deployment, Services and Content & Entertainment. TheEntertainment or CEG. Our segments were determined based on the economic characteristics of our products and services, providedour internal organizational structure, the manner in which our operations are managed and the criteria used by each segment and how management reviews and makes decisions regarding segment operations. Performance of the segmentsour Chief Operating Decision Maker to evaluate performance, which is evaluated ongenerally the segment’s income (loss) from continuing operations before interest, taxes, depreciation and amortization.
 
The Phase I Deployment and Phase II Deployment segments consist of the following:
Operations of:Products and services provided:
Phase 1 DCI DeploymentFinancing vehicles and administrators for the Company’sour 3,724 Systems installed nationwide, in Phase 1 DC’s deployment to theatrical exhibitors.  The Company retainsfor which we retain ownership of the Systems and the residual cash flows related to the Systems after the repayment of all non-recourse debt at the expiration of exhibitor master license agreements.
Phase 2 DCII DeploymentFinancing vehicles and administrators for the Company’sour 8,904 Systems installed in the second digital cinema deploymentdomestically and international deployments, through Phase 2 DC.  The Company retainsinternationally, for which we retain no ownership of the residual cash flows and digital cinema equipment after the completion of cost recoupment and at the expiration of the exhibitor master license agreements.

The Services segment provides monitoring, billing, collection, verification and other management services to the Company’s Phase I Deployment, Phase II Deployment, Holdings, as well as to exhibitors who purchase their own equipment. Services also collects and disburses VPFs from motion picture studios and distributors and ACFs from alternative content providers, movie exhibitors and theatrical exhibitors.

The Content & Entertainment segment, or CEG, is a leadingServicesProvides monitoring, collection, verification and other management services to our Phase I Deployment, Phase II Deployment, CDF2 Holdings, as well as to exhibitors who purchase their own equipment. Services also collects and disburses VPFs from motion picture studios, distributors and ACFs from alternative content providers, movie exhibitors and theatrical exhibitors.
Content & EntertainmentLeading distributor of independent content, and collaborates with producers and other content owners to market, source, curate and distribute independent content to targeted and profitable audiences in theatres and homes, and via mobile and emerging platforms.

One customer represented approximately 11%12% of our consolidated revenues of the Company for the fiscal year ended March 31, 2014.


F-31


Information related to the segments of the Company and its subsidiaries is detailed below:

  As of March 31, 2014
  Phase I Phase II Services Content & Entertainment Corporate Consolidated
Total intangible assets, net $298
 $—
 $—
 $37,333
 $8
 $37,639
Total goodwill $—
 $—
 $—
 $25,494
 $—
 $25,494
Assets from continuing operations $109,538
 $66,957
 $3,848
 $124,226
 $35,491
 340,060
Net assets from discontinued operations           5,938
Total assets           $345,998
             
Notes payable, non-recourse $162,732
 $35,872
 $—
 $—
 $—
 $198,604
Notes payable —
 —
 —
 —
 42,744
 42,744
Capital leases —
 —
 —
 81
 6,005
 6,086
Total debt $162,732
 $35,872
 $—
 $81
 $48,749
 $247,434

  As of March 31, 2013
  Phase I Phase II Services Content & Entertainment Corporate Consolidated
Total intangible assets, net $344
 $6
 $—
 $12,449
 $—
 $12,799
Total goodwill $—
 $—
 $—
 $8,542
 $—
 $8,542
Assets from continuing operations $137,880
 $79,139
 $4,691
 $39,158
 $6,017
 $266,885
Net assets from discontinued operations           14,574
Total assets           $281,459
             
Notes payable, non-recourse $192,609
 $45,300
 $—
 $—
 $—
 $237,909
Capital leases —
 —
 —
 —
 4,518
 4,518
Total debt $192,609
 $45,300
 $—
 $—
 $4,518
 $242,427





F-32


  Statements of Operations
  For the Three Months Ended March 31, 2014
  (Unaudited)
  Phase I Phase II Services Content & Entertainment Corporate Consolidated
Revenues from external customers $8,572
 $2,815
 $2,760
 $17,517
 $—
 $31,664
Intersegment revenues (1) —
 —
 —
 5
 —
 5
Total segment revenues 8,572
 2,815
 2,760
 17,522
 —
 31,669
Less: Intersegment revenues —
 —
 —
 (5) —
 (5)
Total consolidated revenues $8,572
 $2,815
 $2,760
 $17,517
 $—
 $31,664
Direct operating (exclusive of depreciation and amortization shown below) 200
 164
 79
 8,919
 —
 9,362
Selling, general and administrative 122
 76
 141
 4,719
 2,532
 7,590
Plus: Allocation of Corporate overhead —
 —
 599
 1,678
 (2,277) —
Provision for doubtful accounts 47
 6
 11
 103
 —
 167
Restructuring, transition and acquisitions expenses, net —
 —
 —
 896
 (1,784) (888)
Depreciation and amortization of property and equipment 7,137
 1,881
 53
 61
 256
 9,388
Amortization of intangible assets 12
 1
 —
 1,405
 —
 1,418
Total operating expenses 7,518
 2,128
 883
 17,781
 (1,273) 27,037
Income (loss) from operations $1,054
 $687
 $1,877
 $(264) $1,273
 $4,627

(1) Intersegment revenues principally represent personnel expenses.

The following employee and director stock-based compensation expense related to the Company’s stock-based awards is included in the above amounts as follows:
  Phase I Phase II Services Content & Entertainment Corporate Consolidated
Direct operating $—
 $—
 $—
 $4
 $—
 $4
Selling, general and administrative —
 —
 5
 98
 243
 346
Total stock-based compensation $—
 $—
 $5
 $102
 $243
 $350

2015.


F-33


  Statements of Operations
  For the Three Months Ended March 31, 2013
  (Unaudited)
  Phase I Phase II Services Content & Entertainment Corporate Consolidated
Revenues from external customers $9,871
 $3,151
 $2,570
 $4,052
 $—
 $19,644
Intersegment revenues (1) —
 —
 4
 8
 —
 12
Total segment revenues 9,871
 3,151
 2,574
 4,060
 —
 19,656
Less: Intersegment revenues —
 —
 (4) (8) —
 (12)
Total consolidated revenues $9,871
 $3,151
 $2,570
 $4,052
 $—
 $19,644
Direct operating (exclusive of depreciation and amortization shown below) 112
 174
 144
 2,519
 —
 2,949
Selling, general and administrative 3
 52
 154
 2,114
 2,206
 4,529
Plus: Allocation of Corporate overhead —
 —
 806
 668
 (1,474) —
Provision for doubtful accounts 62
 13
 6
 65
 106
 252
Restructuring, transition and acquisitions expenses, net —
 —
 —
 —
 (750) (750)
Depreciation and amortization of property and equipment 7,137
 1,893
 3
 55
 7
 9,095
Amortization of intangible assets 12
 2
 —
 423
 1
 438
Total operating expenses 7,326
 2,134
 1,113
 5,844
 96
 16,513
Income (loss) from operations $2,545
 $1,017
 $1,457
 $(1,792) $(96) $3,131

(1) Intersegment revenues principally represent personnel expenses.

The following employee and director stock-based compensation expensetables present certain financial information related to the Company’s stock-based awards is included in the above amounts as follows:our reportable segments:

  Phase I Phase II Services Content & Entertainment Corporate Consolidated
Direct operating $—
 $—
 $—
 $2
 $—
 $2
Selling, general and administrative —
 —
 8
 21
 315
 344
Total stock-based compensation $—
 $—
 $8
 $23
 $315
 $346
  As of March 31, 2015
(In thousands) Intangible Assets, net Goodwill Total Assets Notes Payable, Non-Recourse Notes Payable Capital Leases
Phase I Deployment $252
 $—
 $80,381
 $129,508
 $—
 $—
Phase II Deployment —
 —
 61,502
 27,790
 —
 —
Services     1,084
      
Content & Entertainment 31,520
 26,701
 122,610
 —
 —
 84
Corporate 12
 —
 14,128
 —
 46,044
 5,411
Total $31,784
 $26,701
 $279,705
 $157,298
 $46,044
 $5,495
  As of March 31, 2014
(In thousands) Intangible Assets, net Goodwill Total Assets Notes Payable, Non-Recourse Notes Payable Capital Leases
Phase I Deployment $298
 $—
 $109,538
 $162,732
 $—
 $—
Phase II Deployment —
 —
 66,957
 35,872
 —
 —
Services —
 —
 3,848
 —
 —
 —
Content & Entertainment 37,333
 25,494
 135,477
 —
 —
 81
Corporate 8
 —
 35,491
 —
 42,744
 6,005
Net assets of discontinued operations —
 —
 5,938
 —
 —
 —
Total $37,639
 $25,494
 $357,249
 $198,604
 $42,744
 $6,086











F-34


  Statements of Operations
  For the Fiscal Year Ended March 31, 2015
  Phase I Phase II Services Content & Entertainment Corporate Consolidated
Revenues $36,161
 $12,347
 $11,876
 $45,100
 $—
 $105,484
Direct operating (exclusive of depreciation and amortization shown below) 970
 485
 58
 28,596
 —
 30,109
Selling, general and administrative 464
 130
 744
 18,736
 12,328
 32,402
Allocation of corporate overhead —
 —
 1,853
 5,409
 (7,262) —
(Benefit) provision for doubtful accounts (204) (23) 21
 —
 —
 (206)
Restructuring, transition and acquisitions expenses, net 61
 —
 —
 1,662
 915
 2,638
Goodwill impairment —
 —
 —
 6,000
 —
 6,000
Depreciation and amortization of property and equipment 28,550
 7,523
 177
 219
 1,050
 37,519
Amortization of intangible assets 46
 —
 —
 5,813
 5
 5,864
Total operating expenses 29,887
 8,115
 2,853
 66,435
 7,036
 114,326
Income (loss) from operations $6,274
 $4,232
 $9,023
 $(21,335) $(7,036) $(8,842)


The following employee and director stock-based compensation expense related to our stock-based awards is included in the above amounts as follows:
  Phase I Phase II Services Content & Entertainment Corporate Consolidated
Direct operating $—
 $—
 $7
 $10
 $—
 $17
Selling, general and administrative —
 —
 11
 291
 1,832
 2,134
Total stock-based compensation $—
 $—
 $18
 $301
 $1,832
 $2,151


F-35



 Statements of Operations Statements of Operations
 For the Fiscal Year Ended March 31, 2014 For the Fiscal Year Ended March 31, 2014
 Phase I Phase II Services Content & Entertainment Corporate Consolidated Phase I Phase II Services Content & Entertainment Corporate Consolidated
Revenues from external customers $36,309
 $12,146
 $12,558
 $43,315
 $—
 $104,328
 $36,309
 $12,146
 $12,558
 $43,315
 $—
 $104,328
Intersegment revenues (1) —
 —
 16
 48
 —
 64
 —
 —
 16
 48
 —
 64
Total segment revenues 36,309
 12,146
 12,574
 43,363
 —
 104,392
 36,309
 12,146
 12,574
 43,363
 —
 104,392
Less: Intersegment revenues —
 —
 (16) (48) —
 (64) —
 —
 (16) (48) —
 (64)
Total consolidated revenues $36,309
 $12,146
 $12,558
 $43,315
 $—
 $104,328
 $36,309
 $12,146
 $12,558
 $43,315
 $—
 $104,328
Direct operating (exclusive of depreciation and amortization shown below) 766
 610
 380
 27,164
 —
 28,920
 766
 610
 380
 27,164
 —
 28,920
Selling, general and administrative 328
 279
 765
 14,448
 10,513
 26,333
 328
 279
 765
 14,448
 10,513
 26,333
Plus: Allocation of Corporate overhead —
 —
 2,186
 4,204
 (6,390) —
Allocation of corporate overhead —
 —
 2,186
 4,204
 (6,390) —
Provision for doubtful accounts 197
 59
 35
 103
 —
 394
 197
 59
 35
 103
 —
 394
Restructuring, transition and acquisitions expenses, net —
 —
 —
 2,038
 (505) 1,533
 —
 —
 —
 2,038
 (505) 1,533
Depreciation and amortization of property and equipment 28,549
 7,523
 214
 210
 793
 37,289
 28,549
 7,523
 214
 210
 793
 37,289
Amortization of intangible assets 46
 6
 —
 3,420
 1
 3,473
 46
 6
 —
 3,420
 1
 3,473
Total operating expenses 29,886
 8,477
 3,580
 51,587
 4,412
 97,942
 29,886
 8,477
 3,580
 51,587
 4,412
 97,942
Income (loss) from operations $6,423
 $3,669
 $8,978
 $(8,272) $(4,412) $6,386
 $6,423
 $3,669
 $8,978
 $(8,272) $(4,412) $6,386

(1) Intersegment revenues principallyprimarily represent personnel expenses.

The following employee and director stock-based compensation expense related to the Company’sour stock-based awards is included in the above amounts as follows:
  Phase I Phase II Services Content & Entertainment Corporate Consolidated
Direct operating $—
 $—
 $13
 $9
 $—
 $22
Selling, general and administrative —
 —
 13
 187
 2,060
 2,260
Total stock-based compensation $—
 $—
 $26
 $196
 $2,060
 $2,282



F-35F-36



 
Statements of Operations

 Statements of Operations
 For the Fiscal Year Ended March 31, 2013 For the Fiscal Year Ended March 31, 2013
 Phase I Phase II Services Content & Entertainment Corporate Consolidated Phase I Phase II Services Content & Entertainment Corporate Consolidated
Revenues from external customers $39,646
 $12,464
 $12,932
 $16,050
 $—
 $81,092
 $39,646
 $12,464
 $12,932
 $16,050
 $—
 $81,092
Intersegment revenues (1) —
 —
 24
 32
 —
 56
 —
 —
 24
 32
 —
 56
Total segment revenues 39,646
 12,464
 12,956
 16,082
 —
 81,148
 39,646
 12,464
 12,956
 16,082
 —
 81,148
Less: Intersegment revenues —
 —
 (24) (32) —
 (56) —
 —
 (24) (32) —
 (56)
Total consolidated revenues $39,646
 $12,464
 $12,932
 $16,050
 $—
 $81,092
 $39,646
 $12,464
 $12,932
 $16,050
 $—
 $81,092
Direct operating (exclusive of depreciation and amortization shown below) 459
 687
 821
 6,548
 —
 8,515
 459
 687
 821
 6,548
 —
 8,515
Selling, general and administrative 92
 139
 797
 8,308
 11,469
 20,805
 92
 139
 797
 8,308
 11,469
 20,805
Plus: Allocation of Corporate overhead —
 —
 3,188
 3,392
 (6,580) —
Allocation of corporate overhead —
 —
 3,188
 3,392
 (6,580) —
Provision for doubtful accounts 218
 59
 30
 65
 106
 478
 218
 59
 30
 65
 106
 478
Restructuring, transition and acquisitions expenses, net —
 —
 —
 340
 517
 857
 —
 —
 —
 340
 517
 857
Depreciation and amortization of property and equipment 28,549
 7,371
 9
 72
 358
 36,359
 28,549
 7,371
 9
 72
 358
 36,359
Amortization of intangible assets 46
 7
 —
 1,483
 2
 1,538
 46
 7
 —
 1,483
 2
 1,538
Total operating expenses 29,364
 8,263
 4,845
 20,208
 5,872
 68,552
 29,364
 8,263
 4,845
 20,208
 5,872
 68,552
Income (loss) from operations $10,282
 $4,201
 $8,087
 $(4,158) $(5,872) $12,540
 $10,282
 $4,201
 $8,087
 $(4,158) $(5,872) $12,540

(1) Intersegment revenues principallyprimarily represent personnel expenses.

The following employee and director stock-based compensation expense related to the Company’sour stock-based awards is included in the above amounts as follows:
  Phase I Phase II Services Content & Entertainment Corporate Consolidated
Direct operating $—
 $—
 $—
 $15
 $—
 $15
Selling, general and administrative —
 —
 42
 84
 1,903
 2,029
Total stock-based compensation $—
 $—
 $42
 $99
 $1,903
 $2,044



F-36F-37


The following table presents the results of our operating segments for the three months ended March 31, 2015:

  Statements of Operations
  For the Three Months Ended March 31, 2015
  (Unaudited)
  Phase I Phase II Services Content & Entertainment Corporate Consolidated
Revenues $8,870
 $3,060
 $2,914
 $12,786
 $—
 $27,630
Direct operating (exclusive of depreciation and amortization shown below) 218
 106
 2
 8,858
 —
 9,184
Selling, general and administrative 167
 29
 156
 4,849
 3,126
 8,327
Allocation of corporate overhead —
 —
 458
 1,340
 (1,798) —
Provision for doubtful accounts —
 —
 —
 —
 —
 —
Restructuring, transition and acquisitions expenses, net —
 —
 —
 (106) 494
 388
Goodwill impairment —
 —
 —
 6,000
 —
 6,000
Depreciation and amortization of property and equipment 7,138
 1,880
 18
 78
 238
 9,352
Amortization of intangible assets 12
 —
 —
 1,039
 2
 1,053
Total operating expenses 7,535
 2,015
 634
 22,058
 2,062
 34,304
Income (loss) from operations $1,335
 $1,045
 $2,280
 $(9,272) $(2,062) $(6,674)


The following employee and director stock-based compensation expense related to our stock-based awards is included in the above amounts as follows:
  Phase I Phase II Services Content & Entertainment Corporate Consolidated
Direct operating $—
 $—
 $3
 $2
 $—
 $5
Selling, general and administrative —
 —
 1
 76
 597
 674
Total stock-based compensation $—
 $—
 $4
 $78
 $597
 $679


F-38


11.RESTRUCTURING, TRANSITION AND ACQUISITIONS EXPENSES
DuringIn connection with our acquisitions of New Video Group and GVE in the 2013 and 2014 fiscal year ended March 31, 2014, the Companyyears, respectively, we completed a strategic assessmentassessments of its resource requirements within itsour Content & Entertainment reporting segment which, based upon the GVE Acquisition, resultedbusiness in a restructuring expense of $1,513 asorder to realign resources and shift our focus toward owning and distributing original content. As a result, of workforce reduction and severance and employee-related expenses duringwe recorded the fiscal year ended March 31, 2014. Transition expenses of $525 are principally attributed to the integration after the GVE Acquisition. Each of these expenses are a component offollowing restructuring, transition and acquisitions expenses, net withinprimarily related to the consolidated statementsintegration of operations forGVE (in fiscal years 2014 and 2015), workforce reduction, severance and employee-related expenses, professional fees, relocation expenses and other internal expenses directly related to the fiscal year ended March 31, 2014.acquisitions.
A summaryThe following table presents a roll forward of activity for restructuring, activities included in accounts payabletransition and accruedacquisition expenses as of March 31, 2014 is as follows:and related liability balances:
Balance at March 31, 2013 Total Cost Amounts Paid/Adjusted Balance at March 31, 2014
$—
 $2,011
 $(992) $1,019
(In thousands)  
Amount accrued as of March 31, 2012 $953
Costs incurred 340
Amounts paid/adjustments (1,293)
Amount accrued as of March 31, 2013 —
Costs incurred 2,011
Amounts paid/adjustments (992)
Amount accrued as of March 31, 2014 1,019
Costs incurred 2,638
Amounts paid/adjustments (3,657)
Amount accrued as of March 31, 2015 $—


12.INCOME TAXES

The CompanyWe did not recognize income tax benefit or expense during the fiscal yearyears ended March 31, 2015 and 2014. The components of the benefit from income taxes for the fiscal year ended March 31, 2013 was as follows:

For the fiscal year ending March 31,
2013
(In thousands) For the fiscal year ended March 31, 2013
Federal:   
Deferred$4,731
 $4,731
Total federal4,731
 4,731
   
State:   
Current(75) (75)
Deferred288
 288
Total state213
 213
Total benefit from income taxes$4,944
 $4,944



F-37


Net deferred taxes consisted of the following:    
 As of March 31,
 2014 2013
Deferred tax assets:   
Net operating loss carryforwards$98,407
 $96,920
Stock based compensation4,210
 4,001
Revenue deferral109
 119
Interest rate swap148
 421
Capital loss carryforwards3,734
 3,734
Other1,314
 389
Total deferred tax assets before valuation allowance107,922
 105,584
Less: Valuation allowance(74,323) (68,835)
Total deferred tax assets after valuation allowance$33,599
 $36,749
Deferred tax liabilities:   
Depreciation and amortization$(30,252) $(32,393)
Intangibles(3,347) (4,356)
Total deferred tax liabilities(33,599) (36,749)
Net deferred tax$—
 $—

The Company has provided a valuation allowance equal to its net deferred tax assets for the fiscal years ended March 31, 2014 and 2013. The Company is required to recognize all or a portion of its deferred tax assets if it believes that it is more likely than not, given the weight of all available evidence, that all or a portion of its deferred tax assets will be realized. Management assesses the realizability of the deferred tax assets at each interim and annual balance sheet date based on actual and forecasted operating results. The Company assessed both its positive and negative evidence to determine the proper amount of its required valuation allowance. Factors considered include the Company's current taxable income and projections of future taxable income. Management increased the valuation allowance by $5,488 (net of the reduction described hereafter) and $6,933 during the fiscal years ended March 31, 2014 and 2013, respectively. During the fiscal year ended March 31, 2013, we recorded a net deferred tax liability in connection with the acquisition of $5,019 was recorded upon the New Video, Acquisition forrepresenting the excess of the financial statement basis over the tax basis of the acquired assets and liabilities. As New Video is included in the Company's consolidated federal and state tax returns, deferredDeferred tax liabilities assumed in the New Video Acquisitionconnection with the acquisition were able to offset the reversal of the Company'sagainst our pre-existing deferred tax assets. Accordingly,assets and, therefore, we reduced the Company's valuation allowance was reduced by $5,019 and recorded as a deferred tax benefit in the accompanying consolidated statements of operations$5.0 million for the fiscal year ended March 31, 2013. Management


F-39


Net deferred taxes consisted of the following:    
  As of March 31,
(In thousands) 2015 2014
Deferred tax assets:    
Net operating loss carryforwards $103,312
 $98,407
Stock based compensation 4,144
 4,210
Revenue deferral 46
 109
Interest rate derivatives 234
 148
Capital loss carryforwards 8,605
 3,734
Other 1,955
 1,314
Total deferred tax assets before valuation allowance 118,296
 107,922
Less: Valuation allowance (88,320) (74,323)
Total deferred tax assets after valuation allowance $29,976
 $33,599
Deferred tax liabilities:    
Depreciation and amortization $(27,840) $(30,252)
Intangibles (2,136) (3,347)
Total deferred tax liabilities (29,976) (33,599)
Net deferred tax $—
 $—

We have provided a valuation allowance equal to our net deferred tax assets for the fiscal years ended March 31, 2015 and 2014. We are required to recognize all or a portion of our deferred tax assets if we believe that it is more likely than not that such assets will be realized, given the weight of all available evidence. We assess the realizability of the deferred tax assets at each interim and annual balance sheet date. In assessing the need for a valuation allowance, we considered both positive and negative evidence, including recent financial performance, projections of future taxable income and scheduled reversals of deferred tax liabilities. We increased the valuation allowance by $14.0 million and $5.5 million during the fiscal years ended March 31, 2015 and 2014, respectively. We will continue to assess the realizability of the deferred tax assets at each interim and annual balance sheet date based upon actual and forecasted operating results.

At March 31, 2014, the Company2015, we had Federal and state net operating loss carryforwards of approximately $254,000$267.0 million available in the United States of America ("US") and approximately $36$0.4 thousand in Australia to reduce future taxable income. The US federal and state net operating loss carryforwards will begin to expire in 2020. The Australian net operating loss carryforward does not expire.

Under the provisions of the Internal Revenue Code, certain substantial changes in the Company'sour ownership may result in a limitation on the amount of net operating losses that may be utilized in future years. As of March 31, 2014,2015, approximately $6,300$6.3 million of the Company'sour net operating loss from periods prior to November 2003 are subject to an annual Section 382 of the Internal Revenue Code of 1986, as amended ("Section 382") limitation of approximately $1,300,$1.3 million, and approximately $25,100$25.1 million of net operating losses from periods prior to March 2006 are subject to an annual Section 382 limitation of approximately $9,400.$9.4 million. Net operating losses of approximately $221,000,$251.0 million, which were generated since March 2006 are currently not subject to an annual limitation under Section 382. Future significant ownership changes could cause a portion or all of these net operating losses to expire before utilization.



F-38


The differences between the United States statutory federal tax rate and the Company’sour effective tax rate are as follows:

F-40


     
As of March 31,For the fiscal years ended March 31,
2014 20132015 2014 2013
Provision at the U.S. statutory federal tax rate34.0 % 34.0 %34.0 % 34.0 % 34.0 %
State income taxes, net of federal benefit4.6
 3.0
(0.1)% 4.6 % 3.0 %
Change in valuation allowance(38.7) (17.7)(44.7)% (38.7)% (17.7)%
Non-deductible equity compensation(4.3) (2.4)(1.9)% (4.3)% (2.4)%
Acquisition costs and adjustments3.9
 (1.4)— % 3.9 % (1.4)%
Sale of subsidiary—
 6.8
10.8 % — % 6.8 %
Other0.5
 (1.9)1.9 % 0.5 % (1.9)%
Income tax benefit— % 20.4 %— % — % 20.4 %

Since April 1, 2007, the Company haswe have applied accounting principles that clarify the accounting and disclosure for uncertainty in income taxes. As of March 31, 2015 and 2014, and 2013, the Companywe did not have any uncertainties in income taxes.

The Company filesWe file income tax returns in the U.S. federal jurisdiction, various states and various states.Australia. For federal income tax purposes, the Company’sour fiscal 20112012 through 20142015 tax years remain open for examination by the tax authorities under the normal three yearthree-year statute of limitations. For state tax purposes, the Company’sour fiscal 20102011 through 20142015 tax years generally remain open for examination by most of the tax authorities under a four yearfour-year statute of limitations. For Australian tax purposes, the Company’s initial fiscal year endtax years ended March 31, 2014 tax year isand 2015 are open for examination.


13.QUARTERLY FINANCIAL DATA (Unaudited) ($ in thousands, except for share and per share data)

The following tables set forth quarterly supplementary data for each of the years in the two-year period ended March 31, 2015:
For the Fiscal Year Ended March 31, 20143/31/2014
 12/31/2013 
9/30/2013 (3)
 
6/30/2013 (3)
Revenues$31,664
 $34,885
 $19,242
 $18,537
Net loss from continuing operations$(465) $(2,693) $(4,419) $(6,383)
Basic and diluted net income (loss) per share from continuing operations$(0.01) $(0.05) $(0.08) $(0.13)
Shares used in computing basic and diluted net loss per share65,416,816
 61,729,658
 52,920,060
 48,357,020
  Fiscal Year Ended March 31, 2015
(In thousands, except share and per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter
Revenues $22,857
 $23,721
 $31,276
 $27,630
Net loss from continuing operations (2)
 $(10,812) $(4,592) $(1,933) $(11,639)
Basic and diluted net loss per share from continuing operations (1)
 $(0.14) $(0.06) $(0.03) $(0.14)
Shares used in computing basic and diluted net loss per share 76,567,128
 76,748,753
 76,863,408
 76,962,142

For the Fiscal Year Ended March 31, 2013
3/31/2013 (3)

 
12/31/2012 (3)

 
9/30/2012 (3)

 
6/30/2012 (3)
Revenues$19,644
 $21,779
 $20,618
 $19,051
Net loss from continuing operations (1)
$(16,067) $(1,260) $(2,813) $(65)
Basic and diluted net loss per share from continuing operations (2)
$(0.33) $(0.03) $(0.06) $0.00
Shares used in computing basic and diluted net loss per share48,320,257
 48,320,257
 48,299,715
 45,119,838
        
(1) Includes the following:
       
Debt prepayment fees$(3,725) $—
 $—
 $—
Loss on extinguishment of notes payable$(7,905) $—
 $—
 $—
  Fiscal Year Ended March 31, 2014
(In thousands, except share and per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter
Revenues $18,537
 $19,242
 $34,885
 $31,664
Net loss from continuing operations $(6,383) $(4,419) $(2,693) $(465)
Basic and diluted net loss per share from continuing operations (1)
 $(0.13) $(0.08) $(0.05) $(0.01)
Shares used in computing basic and diluted net loss per share 48,357,020
 52,920,060
 61,729,658
 65,416,816

(1) Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted earnings per share information may not equal annual basic and diluted earnings per share.

(2) Amount is calculated based upon net loss from continuing operations divided by shares used in computing basic and diluted net loss per share. The sumIn the fourth quarter of net loss from continuing operations per fully diluted share across the table may not equal the fiscal year ended March 31, 2013 amount due to rounding.2015, we recorded a goodwill impairment charge of $6.0 million.
(3) Reflects reclassification of Software to discontinued operations.


F-39F-41


14.SUPPLEMENTARY FINANCIAL INFORMATION

The following table provides details of our valuation and qualifying accounts (dollars in thousands):

Year ended March 31, 2015 Beginning Balance Additions Deductions Ending Balance
Valuation allowance for deferred taxes $74,323
 $13,997
 $—
 $88,320
Allowance for doubtful accounts $898
 $—
 $(301) $597
Inventory reserve $400
 $100
 $—
 $500
Price protection, chargeback and return reserves $3,096
 $16,899
 $(16,963) $3,032
         
Year ended March 31, 2014        
Valuation allowance for deferred taxes $68,835
 $5,488
 $—
 $74,323
Allowance for doubtful accounts $681
 $394
 $(177) $898
Inventory reserve $—
 $400
 $—
 $400
Price protection, chargeback and return reserves $534
 $15,959
 $(13,397) $3,096
         
Year ended March 31, 2013        
Valuation allowance for deferred taxes $64,476
 $4,359
 $—
 $68,835
Allowance for doubtful accounts $240
 $478
 $(37) $681
Price protection, chargeback and return reserves $—
 $542
 $(8) $534


15.SUBESQUENT EVENTS

Convertible Notes Offering

On April 29, 2015 we issued $64.0 million aggregate principal amount of unsecured senior convertible notes payable (the "Convertible Notes") that bear interest at a rate of 5.5% per year, payable semiannually. The Convertible Notes will mature on April 15, 2035, unless earlier repurchased, redeemed or converted and will be convertible at the option of the holders at any time until the close of business on the business day immediately preceding the maturity date. Upon conversion, we will deliver to holders in respect of each $1,000 principal amount of Convertible Notes being converted a number of shares of our Class A common stock equal to the conversion rate, together with a cash payment in lieu of delivering any fractional share of Class A common stock. The conversion rate applicable to the Convertible Notes on the offering date was 824.5723 shares of Class A common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $1.21 per share of Class A common stock), which is subject to adjustment if certain events occur. Holders of the Convertible Notes may require us to repurchase all or a portion of the Convertible Notes on April 20, 2020, April 20, 2025 and April 20, 2030 and upon the occurrence of certain fundamental changes at a repurchase price in cash equal to 100% of the principal amount of the Convertible Notes to be repurchased plus accrued and unpaid interest, if any. The Convertible Notes will be redeemable by us at our option on or after April 20, 2018 upon the satisfaction of a sale price condition with respect to our Class A common stock and on or after April 20, 2020 without regard to the sale price condition, in each case, at a redemption price in cash equal to 100% of the principal amount of the notes to be repurchased plus accrued and unpaid interest, if any.

The net proceeds from the Convertible Note offering was $60.9 million, after deducting the initial purchaser's discount and estimated offering expenses payable by us. We used $18.6 million of the net proceeds from the offering to repay borrowings under and terminate one of our term loans under our 2013 Credit Agreement, of which $18.2 million was used to pay the remaining principal balance. Concurrently with the closing of the transaction, we repurchased 2.7 million shares of our Class A common stock from certain purchasers of Convertible Notes in privately negotiated transactions for $2.6 million. In addition, $11.4 million of the net proceeds was used to fund the cost of repurchasing 11.8 million shares of our Class A common stock pursuant to the forward stock purchase agreement described below. The remainder of the net proceeds of approximately $28.2 million is expected to be used for working capital and general corporate purposes.

Concurrently with the offering of Convertible Notes, we entered into an amendment to our 2013 Credit Agreement. The amendment extended the term of the revolving loans to March 31, 2018, provided for the release of the equity interests in our subsidiaries that were previously pledged as collateral, changed the interest rate as described below and replaced all financial covenants with a single debt service coverage ratio test commencing at June 30, 2016 as applied to the revolving loans and a $5.0 million minimum liquidity covenant. The revolving loans, as amended, bear interest at Base Rate (as defined in amendment) plus 3% or LIBOR plus 4%, at our election, but in no event may the elected rate be less than 1%.

In connection with the offering of the Convertible Notes, we entered into a privately negotiated forward stock purchase transaction with a financial institution, which is one of the lenders under our credit agreement (the "Forward Counterparty"), pursuant to which we paid $11.4 million to purchase 11.8 million shares of our Class A common stock for settlement that may be settled at any time prior to the fifth year anniversary of the issuance date of the notes. The forward stock purchase transaction is intended to facilitate privately negotiated derivative transactions between the Forward Counterparty and holders of the Convertible Notes, including swaps, relating to our Class A common stock.

Sageview Warrants

On April 29, 2015, the number of shares underlying the Sageview Warrants and their related exercise price were adjusted for the effect of an anti-dilution adjustment that was triggered by the issuance of the Convertible Notes. As a result, the number of shares underlying the Sageview Warrants was increased to 16,732,824 and the exercise price of the Sageview Warrants was decreased to $1.31.


F-42



PART II. OTHER INFORMATION


ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.


ITEM 9A.CONTROLS AND PROCEDURES

AsDefinition and Limitations of the end of the period covered by this report, we conducted an evaluation, under the supervisionDisclosure Controls and with the participation of our principal executive officer and principal financial officer, of the effectiveness of ourProcedures

Our disclosure controls and procedures (as defined in Rules 13a-1513a-15(e) and 15d-15 of15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”"Exchange Act")). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effectivedesigned to reasonably ensure that information required to be disclosed by us in our reports that we file or submitfiled under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SECSecurities and Exchange Commission's rules and forms and that such information is(ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.disclosures.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. These limitations include the possibility of human error, the circumvention or overriding of the controls and procedures and reasonable resource constraints. In addition, because we have designed our system of controls based on certain assumptions, which we believe are reasonable, about the likelihood of future events, our system of controls may not achieve its desired purpose under all possible future conditions. Accordingly, our disclosure controls and procedures provide reasonable assurance, but not absolute assurance, of achieving their objectives.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures at March 31, 2015, the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, at March 31, 2015, our disclosure controls and procedures were 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 management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Management's Report on Internal Control Over Financial Reporting

ManagementOur management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is identified(as defined in Rule 13a-15(f) under the Exchange Act Rules 13a-15(f)Act). InternalManagement conducted an evaluation of the effectiveness of our internal control over financial reporting is a process designed by, or under the supervision of, our Principal Executive Officer or Chief Executive Officer and Principal Financial & Accounting Officer or Chief Financial Officer, and effected by the Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. A company's control over financial reporting includes those policies and procedures that:

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of the assets of the company;
provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures of the company are being made only in accordance with authorizations of our management and our directors of the company; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effectbased on the financial statements.

Internal control over financial reporting has inherent limitations which may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changescriteria set forth in conditions or because the level of compliance with related policies or procedures may deteriorate.

In making the assessment, management used the 1992 framework in “InternalInternal Control - Integrated Framework” promulgatedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission commonly referred to as the “COSO” criteria.("COSO"). Based on that assessment, our Principal Executive Officer and Principal Financial & Accounting Officerthis evaluation, management has concluded that our internal controlscontrol over financial reporting werewas effective as of March 31, 2014.  This annual report on Form 10-K does not include an attestation report of the Company's2015.

Our independent registered public accounting firm, regardingEisnerAmper LLP, has audited our consolidated financial statements and the effectiveness of our internal control over financial reporting nor does it include considerationas of acquisitions by the Company during the fiscal year ended March 31, 2014.  2015. Their report is included in this Form 10-K.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the fiscal quarter ended March 31, 2015, which were identified in connection with themanagement's evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that occurred during this fiscal quarter ended March 31, 2014, hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.


ITEM 9B.OTHER INFORMATION

None.

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PART III

ITEM 10.     DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ExceptDirectors

Christopher J. McGurk, 58, has been the Company’s Chief Executive Officer and Chairman of the Board since January 2011. Mr. McGurk was the founder and Chief Executive Officer of Overture Films from 2006 until 2010 and also the Chief Executive Officer of Anchor Bay Entertainment, which distributed Overture Films’ products to the home entertainment industry. From 1999 to 2005, Mr. McGurk was Vice Chairman of the Board and Chief Operating Officer of Metro-Goldwyn-Mayer Inc. (“MGM”), acting as set forth below, the information required bycompany’s lead operating executive until MGM was sold for approximately $5 billion to a consortium of investors. Mr. McGurk joined MGM from Universal Pictures, where he served in various executive capacities, including President and Chief Operating Officer, from 1996 to 1999. From 1988 to 1996, Mr. McGurk served in several senior executive roles at The Walt Disney Studios, including Studios Chief Financial Officer and President of The Walt Disney Motion Picture Group. Mr. McGurk currently serves as a director of BRE Properties, Inc. and has previously served on the boards of DivX Inc., DIC Entertainment, Pricegrabber.com, LLC and MGM Studios, Inc. Mr. McGurk’s extensive career in various sectors of the theatrical production and exhibition industry will provide the Company with the benefits of his knowledge of and experience in this item will appearfield, as well as his wide-spread contacts within the industry.

Adam M. Mizel, 45, has been the Company’s Chief Operating Officer and, until June 9, 2014, was Chief Financial Officer, since October, 2011. He had previously served as Chief Financial Officer and Chief Strategy Officer since August 2009 and as Interim Co-Chief Executive Officer from June 2010 through December 2010, and has been a member of the Board since March 2009. From 2005 to 2012, Mr. Mizel was the Managing Principal at Aquifer Capital Group, LLC. Previously, Mr. Mizel was Managing Director and Chief Operating Officer of Azimuth Trust, LLC, an alternative asset management firm from 2001 until 2005. Prior to that, he was a partner at Capital Z Partners, L.P., a private equity and alternative investment firm, and Managing Director at Zurich Centre Investments, Inc., the North American private equity unit of Zurich Financial Services Group. Mr. Mizel began his investment career at Morgan Stanley Capital Partners in Cinedigm’s Proxy Statement1991. Mr. Mizel, having investment experience in the Company’s and other industries, is familiar with relevant financing structures and the financial environment of the Company.
Gary S. Loffredo, 50, has been the Company’s President of Digital Cinema, General Counsel and Secretary since October 2011. He had previously served as Senior Vice President -- Business Affairs, General Counsel and Secretary since 2000 and as Interim Co-Chief Executive Officer from June 2010 through December 2010, and has been a member of the Board since September 2000. From March 1999 to August 2000, he had been Vice President, General Counsel and Secretary of Cablevision Cinemas d/b/a Clearview Cinemas. At Cablevision Cinemas, Mr. Loffredo was responsible for our 2014 Annual Meetingall aspects of Stockholders (the "Proxy Statement")the legal function, including negotiating and drafting commercial agreements, with emphases on real estate, construction and lease contracts. He was also significantly involved in the business evaluation of Cablevision Cinemas’ transactional work, including site selection and analysis, negotiation and new theater construction oversight. Mr. Loffredo was an attorney at the law firm of Kelley Drye & Warren LLP from September 1992 to be heldFebruary 1999. Having been with the Company since its inception and with Clearview Cinemas prior thereto, Mr. Loffredo has over a decade of experience in the cinema exhibition industry, both on or aboutthe movie theatre and studio sides, as well as legal training and general business experience, which skills and understanding are beneficial to the Company.
Peter C. Brown, 56, has been a member of the Board since September 16, 2014,2010. He is Chairman of Grassmere Partners, LLC, a private investment firm, which will be filed pursuanthe founded in 2009. Prior to Regulation 14A underfounding Grassmere Partners, Mr. Brown served as Chairman of the Exchange ActBoard, Chief Executive Officer and President of AMC Entertainment Inc. (“AMC”), one of the world’s leading theatrical exhibition companies, from July 1999 until his retirement in February 2009. He joined AMC in 1990 and served as AMC’s President from January 1997 to July 1999 and Senior Vice President and Chief Financial Officer from 1991 to 1997. Mr. Brown founded Entertainment Properties Trust, served as Chairman of the Board of Trustees from 1997 to 2003 and is incorporated by referencecurrently a director. Mr. Brown also serves as a director of CenturyLink. During the past five years, Mr. Brown served on the boards of National CineMedia, Inc. and Midway Games, Inc. Mr. Brown’s extensive experience in this report pursuant to General Instruction G(3) of Form 10-K (other than the portions thereof not deemed to be “filed” fortheatrical exhibition and entertainment industry provides the purpose of Section 18Board with valuable knowledge and experience specifically compatible with the Company’s business.
Wayne L. Clevenger, 72, has been a member of the Exchange Act).Board since October 2001. He has more than 25 years of private equity investment experience. He has been a Managing Director of MidMark Investors, L.P. (“MidMark”), a private equity fund, since 2010 and its predecessor MidMark Equity Partners II, L.P. since 1989. Mr. Clevenger was President of Lexington Investment Company from 1985 to 1989, and, previously, had been employed by DLJ Capital Corporation (Donaldson, Lufkin & Jenrette) and INCO Securities Corporation, the venture capital arm of INCO Limited. Mr. Clevenger served as a director of Clearview Cinema from May 1996 to December 1998. Mr. Clevenger has financial expertise and experience with the Company as it has developed with the digital cinema industry and, as such, is able to provide the Company with unique insight and guidance.


43


Matthew W. Finlay, 48, has been a member of the Board since October 2001. Since 1997, Mr. Finlay has been a Managing Director of MidMark and a Director of its predecessor fund MidMark Equity Partners II, L.P. since 1997. Previously, he had been a Vice President with the New York merchant banking firm Juno Partners and its investment banking affiliate, Mille Capital, from 1995 to 1997. Mr. Finlay began his career in 1990 as an analyst with the investment banking firm Southport Partners. Mr. Finlay has financial expertise and experience with the Company as it has developed with the digital cinema industry and, as such, is able to provide the Company with unique insight and guidance.
Martin B. O’Connor II, 56, has been a member of the Board since March 2010. Mr. O’Connor is the Managing Partner of the law firm of O’Connor, Morss & O’Connor, P.C., where he has practiced law since 1985. He focuses on advising his clients and their business interests regarding strategic planning, ownership and wealth management issues, as well as advising their family offices. His varied professional experiences have resulted in a practice representing individuals and entities in the financial, real estate, entertainment, sport and agricultural sectors. During the past five years, Mr. O’Connor served as a director of Rentrak Corporation and Digital Cinema Destinations Corp. He brings to the Board a varied range of legal and professional experience and working relationships with global brands.
Laura Nisonger Sims, 36, has been a member of the Board since September 2009. Since 2008, Ms. Sims has been a principal of Sageview Capital L.P., whose affiliate, Sageview Capital Master, L.P., is one of the Company’s largest investors. Prior to joining Sageview, Ms. Sims was with TPG Capital L.P. from 2003 until 2006, where she focused on leveraged buyout transactions across a range of industries. Prior to joining TPG, Ms. Sims was an analyst at Goldman, Sachs & Co. in the Communications, Media and Entertainment group of the Investment Banking Division. Ms. Sims’ experience in investing in the entertainment industry, as well as her general financial and investment experience, is beneficial to the Board. In addition, as a principal of one of the Company’s largest investors, she brings to the Board the perspective of a major stakeholder.
Executive OfficerOfficers

The Company’s executive officers are Christopher J. McGurk, Chief Executive Officer and Chairman of the Board, Adam M. Mizel, Chief Operating Officer and a member of the Board, Jeffrey S. Edell, Chief Financial Officer, Gary S. Loffredo, President of Digital Cinema, General Counsel, Secretary and a member of the Board, and William S. Sondheim, President of Cinedigm Entertainment Corp. Biographical information for Messrs. McGurk, Mizel and Loffredo is included above.
Jeffrey S. Edell 56,, 57, joined the Company in June 2014 as Chief Financial Officer. Prior to this appointment, Mr. Edell was CEO of Edell Ventures, a company he founded in 2009 to invest in and provide strategic support to innovators in the social media and entertainment arenas. Previously, Mr. Edell was President of DIC Entertainment, a publicly-listed entertainment company and the largest independent producer of kid-centric content in the world. Before that, Mr. Edell was Chairman of Intermix Media, the parent company of popularthe social networking giantcompany MySpace, and CEO and President of Soundelux.  Mr. Edell also obtained extensive financial, audit and reporting experience while working at KPMG, The Transamerica Group and DF & Co.
Although Mr. EdellWilliam S. Sondheim, 54, joined the Company in October 2013 and is President of Cinedigm Entertainment Corp., our Content and Entertainment division. From 2010 to October 2013, Mr. Sondheim was the President of Gaiam Inc. (“Gaiam”), a provider of information, goods and services to customers who value the environment, a sustainable economy, healthy lifestyles, alternative healthcare and personal development. He previously served as Chief Financial Officer on June 9, 2014, duringGaiam’s President of Entertainment and Worldwide Distribution since April 2007. From 2005 until 2007, Mr. Sondheim was in charge of Global Dual Disc music format for Sony BMG, a recorded music company. Prior to 2005, Mr. Sondheim served as President of Retail at GoodTimes Entertainment, a home video company, and President of PolyGram Video at PolyGram Filmed Entertainment, a video distributor.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the fiscal year ended March 31, 2014 and the following months during which the audit for that fiscal year was conducted, the functions of Principal Financial Officer were performed by Adam M. Mizel,Exchange Act requires the Company’s Chief Operating Officer,directors, executive officers and persons who beneficially own more than 10% of its Class A common stock to file reports of ownership and changes in ownership with the functionsCommission and to furnish the Company with copies of Interim Principal Accounting Officer were performed by Matthew A. Snyder,all such reports they file. Based on the Company’s Vice President.review of the copies of such forms received by it, or written representations from certain reporting persons, the Company believes that none of its directors, executive officers or persons who beneficially own more than 10% of the Company’s Class A common stock failed to comply with Section 16(a) reporting requirements in the Company’s Last Fiscal Year.
Code of Business Conduct and Ethics

We have adopted a code of ethics applicable to all members of the Board, executive officers and employees. Such code of ethics is available on our Internet website, www.cinedigm.com. We intend to disclose any amendment to, or waiver of, a provision of our code of ethics by filing a Form 8-K with the SEC.

44


Shareholder Communications

The Board currently does not provide a formal process for stockholders to send communications to the Board. In the opinion of the Board, it is appropriate for the Company not to have such a process in place because the Board believes there is currently not a need for a formal policy due to, among other things, the limited number of stockholders of the Company. While the Board will, from time to time, review the need for a formal policy, at the present time, stockholders who wish to contact the Board may do so by submitting any communications to the Company’s Secretary, Mr. Loffredo, 902 Broadway, 9th Floor, New York, New York 10010, with an instruction to forward the communication to a particular director or the Board as a whole. Mr. Loffredo will receive the correspondence and forward it to any individual director or directors to whom the communication is directed.
MATTERS RELATING TO OUR GOVERNANCE
Board of Directors
The Board oversees the Company’s risk management including understanding the risks the Company faces and what steps management is taking to manage those risks, as well as understanding what level of risk is appropriate for the Company. The Board’s role in the Company’s risk oversight process includes receiving regular updates from members of senior management on areas of material risk to the Company, including operational, financial, legal and regulatory, human resources, employment, and strategic risks.
The Company’s leadership structure currently consists of the combined role of Chairman of the Board and Chief Executive Officer and a separate Lead Independent Director. Mr. Browncurrently serves as our Lead Independent Director. The Lead Independent Director’s responsibilities include presiding at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors, serving as a liaison between the Chairman and the independent directors, reviewing information sent to the Board, consulting with the Nominating Committee with regard to the membership and performance evaluations of the Board and Board committee members, calling meetings of and setting agendas for the independent directors, and serving as liaison for communications with stockholders. The Board recently determined to split the roles of Chairman of the Board and Chief Executive Officer, and expects to elect a new Chairman from the independent directors elected at the Company’s next annual meeting of stockholders. The non-executive Chairman’s responsibilities will include those described above for the current Lead Independent Director. Mr. McGurk and Mr. Brown will continue to serve as Directors.
The Board intends to meet at least quarterly and the independent directors serving on the Board intend to meet in executive session (i.e., without the presence of any non-independent directors and management) immediately following regularly scheduled Board meetings. During the fiscal year ended March 31, 2015 (the “Last Fiscal Year”), the Board held four (4) meetings and the Board members acted two (2) times by unanimous written consent in lieu of holding a meeting. Each current member of the Board, who was then serving, attended at least 75% of the total number of meetings of the Board and of the committees of the Board on which they served in the Last Fiscal Year. No individual may be nominated for election to the Board after his or her 73rd birthday. Messrs. Brown, Clevenger, Finlay and O’Connor and Ms. Sims are considered “independent” under the rules of the SEC and Nasdaq.
The Company does not currently have a policy in place regarding attendance by Board members at the Company’s annual meetings. However, each of the current directors, who was then serving, attended the 2014 Annual Meeting of Stockholders.
The Board has three standing committees, consisting of an Audit Committee, a Compensation Committee and a Nominating Committee.
Audit Committee
The Audit Committee consists of Messrs. Brown and Finlay and Ms. Sims. Mr. Finlay is the Chairman of the Audit Committee. The Audit Committee held five (5) meetings in the Last Fiscal Year. The Audit Committee has met with the Company’s management and the Company’s independent registered public accounting firm to review and help ensure the adequacy of its internal controls and to review the results and scope of the auditors’ engagement and other financial reporting and control matters. Mr. Finlay and Ms. Sims are financially literate, and Mr. Finlay and Ms. Sims are financially sophisticated, as those terms are defined under the rules of Nasdaq. Mr. Finlay and Ms. Simsare also financial experts, as such term is defined under the Sarbanes-Oxley Act of 2002. Messrs. Brown and Finlay and Ms. Sims are considered “independent” under the rules of the SEC and Nasdaq.
The Audit Committee has adopted a formal written charter (the “Audit Charter”). The Audit Committee is responsible for ensuring that the Company has adequate internal controls and is required to meet with the Company’s auditors to review these internal controls and to discuss other financial reporting matters. The Audit Committee is also responsible for the appointment, compensation and oversight of the auditors. Additionally, the Audit Committee is responsible for the review and oversight of all related party

45


transactions and other potential conflict of interest situations between the Company and its officers, directors, employees and principal stockholders. The Audit Charter is available on the Company’s Internet website at www.cinedigm.com.
Compensation Committee
The Compensation Committee consists of Messrs. Brown and Clevenger and Ms. Sims. Mr. Clevenger is the Chairman of the Compensation Committee. The Compensation Committee met five (5) times during the Last Fiscal Year. The Compensation Committee approves the compensation package of the Company’s Chief Executive Officer and,based on recommendations by the Company’sChief Executive Officer, approves the levels of compensation and benefits payable to the Company’s other executive officers, reviews general policy matters relating to employee compensation and benefits and recommends to the entire Board, for its approval, stock option and other equity-based award grants to its executive officers, employees and consultants and discretionary bonuses to its executive officers and employees. The Compensation Committee has the authority to appoint and delegate to a sub-committee the authority to make grants and administer bonus and compensation plans and programs. Messrs. Brown and Clevenger and Ms. Sims are considered “independent” under the rules of the SEC and the Nasdaq.
The Compensation Committee has adopted a formal written charter (the “Compensation Charter”). The Compensation Charter sets forth the duties, authorities and responsibilities of the Compensation Committee. The Compensation Charter is available on the Company’s Internet website at www.cinedigm.com.
The Compensation Committee, when determining executive compensation (including under the executive compensation program, as discussed below under the heading Compensation Discussion and Analysis), evaluates the potential risks associated with the compensation policies and practices. The Compensation Committee believes that the Company’s compensation programs are designed with an appropriate balance of risk and reward in relation to the Company’s overall compensation philosophy and do not encourage excessive or unnecessary risk-taking behavior. In general, the Company compensates its executives in a combination of cash and stock options. The stock options contain vesting provisions, typically of proportional annual vesting over a three- or four-year period which encourages the executives, on a long-term basis, to strive to enhance the value of such compensation as measured by the trading price of the Class A Common Stock. The Compensation Committee does not believe that this type of compensation encourages excessive or unnecessary risk-taking behavior. As a result, we do not believe that risks relating to our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on the Company. The Company intends to recapture compensation as required under the Sarbanes-Oxley Act. However, there have been no instances where it needed to recapture any compensation.
During the Last Fiscal Year, the Compensation Committee engaged Aon Hewitt, a compensation consulting firm. The consultant met with the Compensation Committee multiple times during the Last Fiscal Year and provided guidance for cash and equity bonus compensation to executive officers and directors, which the Compensation Committee considered in reaching its determinations of such compensation. In addition, the consultant was available to respond to specific inquiries throughout the year.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Messrs. Brown and Clevenger and Ms. Sims. Mr. Clevenger is the Chairman of the Compensation Committee. None of such members was, at any time during the Last Fiscal Year or at any previous time, an officer or employee of the Company.
None of the Company's directors or executive officers serves as a member of the board of directors or compensation committee of any other entity that has one or more of its executive officers serving as a member of the Company’s board of directors. No member of the Compensation Committee had any relationship with us requiring disclosure under Item 404 of Securities and Exchange Commission Regulation S-K.
Nominating Committee
The Nominating Committee consists of Messrs. Brown, Clevenger and O’Connor and Ms. Sims. Mr. O’Connor is the Chairman of the Nominating Committee. The Nominating Committee held four (4) meetings during the Last Fiscal Year. The Nominating Committee evaluates and approves nominations for annual election to, and to fill any vacancies in, the Board and recommends to the Board the directors to serve on committees of the Board. The Nominating Committee also approves the compensation package of the Company’s directors. Messrs. Brown, Clevenger and O’Connor and Ms. Sims are considered “independent” under the rules of the SEC and the Nasdaq.

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The Nominating Committee has adopted a formal written charter (the “Nominating Charter”). The Nominating Charter sets forth the duties and responsibilities of the Nominating Committee and the general skills and characteristics that the Nominating Committee employs to determine the individuals to nominate for election to the Board. The Nominating Charter is available on the Company’s Internet website at www.cinedigm.com.
The Nominating Committee will consider any candidates recommended by stockholders. In considering a candidate submitted by stockholders, the Nominating Committee will take into consideration the needs of the Board and the qualifications of the candidate. Nevertheless, the Board may choose not to consider an unsolicited recommendation if no vacancy exists on the Board and/or the Board does not perceive a need to increase the size of the Board.
There are no specific minimum qualifications that the Nominating Committee believes must be met by a Nominating Committee-recommended director nominee. However, the Nominating Committee believes that director candidates should, among other things, possess high degrees of integrity and honesty; have literacy in financial and business matters; have no material affiliations with direct competitors, suppliers or vendors of the Company; and preferably have experience in the Company’s business and other relevant business fields (for example, finance, accounting, law and banking). The Nominating Committee considers diversity together with the other factors considered when evaluating candidates but does not have a specific policy in place with respect to diversity.
Members of the Nominating Committee meet in advance of each of the Company’s annual meetings of stockholders to identify and evaluate the skills and characteristics of each director candidate for nomination for election as a director of the Company. The Nominating Committee reviews the candidates in accordance with the skills and qualifications set forth in the Nominating Charter and the rules of the Nasdaq. There are no differences in the manner in which the Nominating Committee evaluates director nominees based on whether or not the nominee is recommended by a stockholder.
Stock Ownership Guidelines
During the Last Fiscal Year, the Board adopted stock ownership guidelines for its non-employee directors, pursuant to which the non-employee directors are required to acquire, within three (3) years, and maintain until separation from the Company, shares equal in value to a minimum of three (3) times the aggregate value of the annual cash and stock retainer (not including committee or per-meeting fees) payable to such director. Shares acquired as Board retainer fees and shares owned by an investment entity with which a non-employee director is affiliated may be counted toward the stock ownership requirement. All of the Company’s non-employee directors are currently in compliance with the stock ownership guidelines.

ITEM 11.     EXECUTIVE COMPENSATION

InformationCOMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy and Objectives and Compensation Program Overview
Cinedigm’s executive compensation philosophy is focused on enabling the Company to hire and retain qualified and motivated executives, while meeting its business needs and objectives. To be consistent with this philosophy, the executive compensation program (the “Compensation Program”) has been designed around the following objectives:
Provide competitive compensation levels to enable the recruitment and retention of highly qualified executives.
Design incentive programs that strengthen the link between pay and corporate and business unit performance to encourage and reward excellence and contributions that further Cinedigm’s success
Align the interests of executives with those of shareholders through grants of equity-based compensation that also provide opportunities for ongoing executive share ownership.

An overriding principle in delivering on these objectives is to ensure that compensation decisions are made in the Company’s best financial interests such that incentive awards are both affordable and reasonable, taking into account Company performance and considering the interests of all stakeholders.
As the Company has evolved, so too has the Compensation Program. Going forward, the Company is focused on improving both shareholder returns and its cash position. To help achieve this goal, the Compensation Program is intended to reward the Chief Executive Officer (“CEO”) for achieving strategic goals and increasing shareholder value and includes a formal performance-based Management Annual Incentive Plan (MAIP) based on predetermined, specific target award levels and performance metrics and goals. The MAIP is predicated on attaining goals that are critical to Cinedigm’s future success and is designed to reward the

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level of collaboration across divisions and segments required to achieve corporate financial goals. No MAIP bonuses were paid to the Named Executives for fiscal 2015.
The Compensation Program consists of base salary, annual incentives, and long-term equity compensation. In addition, all Named Executives receive some modest personal benefits and perquisites. Retirement benefits are accumulated through the Company’s 401(k) plan which is open to all employees. The Company does not provide supplemental retirement benefits for Named Executives. Two of our Named Executives have employment agreements. Mr. Mizel’s employment agreement expired March 2015 and has not been renewed to date.
The Compensation Committee annually reviews the executive compensation elements and assesses the integrity of the Compensation Program as a whole to ensure that it continues to be aligned with the Company’s compensation objectives and supports the attainment of Company goals. Periodically, the Company reviews competitive compensation levels, mix of pay, and practices to ensure all Compensation Program features continue to be in line with the market, while still reflecting the unique needs of our business model. Additionally, in response to business and talent needs, executive management brings compensation proposals to the Compensation Committee, which then reviews the proposal and either approves or denies them.
The Compensation Committee has engaged Aon Hewitt to provide guidance with respect to executive compensation, including bonuses, incentives and compensation for new hires.
Competitive Positioning and Mix of Pay
Competitive Assessment
The Compensation Committee has not defined a target pay positioning for the CEO or other Named Executives, nor does it commit to providing a specific percentile or pay range. In the most recent competitive assessment analysis conducted in connection with the renewal of our Named Executive employment agreements, the CEO’s total direct compensation (total cash compensation plus long-term incentives and equity awards) was below the peer group median. The Compensation Committee viewed such positioning as reasonably appropriate because of Cinedigm’s size relative to the peer group and its performance during the fiscal year.
The compensation for Mr. Mizel was assessed in 2013 as well (at the time of his employment agreement renewal) and for Mr. Sondheim in 2014 (at the time of his initial employment agreement); pay positioning for those roles is also conservative relative to the peer group median for the same reasons as noted in the CEO discussion above. It is the belief of the Compensation Committee that the available talent pool to fill these positions is broader than the pool for the CEO and therefore, that their pay levels, and potential opportunity for wealth creation through stock grants, are robust enough to retain and motivate them.
As the Company’s performance improves and the business stabilizes, the competitiveness of Cinedigm’s executive compensation for Named Executives should improve.
The Cinedigm executive compensation peer group includes 12 companies of comparable scale to Cinedigm (with a median revenue of $234 million), similar, but smaller, media businesses, and some technology/software companies. The companies in the Cinedigm peer group used in the competitive compensation assessment at the time of the employment agreement renewals (for Messrs. McGurk and Mizel) and initial employment agreement (for Mr. Sondheim) are listed below.
PEER GROUP FOR 2013/2014 FISCAL YEAR
Avid TechnologyDts Inc.
Demand Media Inc.Harmonic Inc.
Dg Fastchannel Inc.Limelight Networks Inc.
Dial GlobalRealD
Digimarc Corp.Rentrack Corp.
Digital RiverSeachange International


Competitive analysis was also conducted for the CFO position in 2014 in conjunction with the hiring of Mr. Edell based on the peer group listed above.

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In addition to competitive pay level information from the companies listed above, the Committee also considered pay practices at Imax, National Cinema, NetFlix, Lions Gate, and Rovi Corp., although these companies are not part of Cinedigm’s executive compensation peer group.
Pay Mix
The Company’s pay philosophy has been evolving from an emphasis on fixed pay to one that believes a substantial portion of each executive’s compensation should be at risk and dependent upon performance. While the Compensation Committee has not adopted a targeted mix of either long-term to short-term, fixed to variable, or equity and non-equity compensation, it has taken steps to increase the portion of variable compensation. Steps in this direction include the introduction of the Management Annual Incentive Plan and more regular equity grants.
Elements of Compensation
Base Salary
Base salaries are fixed compensation with the primary function of aiding in attraction and retention. These salaries are reviewed periodically, as well as at the time of a promotion, change in responsibilities, or when employment agreements are renewed or entered into. Any increases are based on an evaluation of the previous year’s performance of the Company and the executive, the relative strategic importance of the position, market conditions, and competitive pay levels (though, as noted earlier, the Compensation Committee does not target a specific percentile or range). None of the Named Executives received a salary increase during fiscal 2015.
Named Executive salaries will remain at current levels throughout the new fiscal year, with no salary increases planned, unless an increase is determined as a result of the negotiated renewal of a Named Executive’s employment agreement. The decision to maintain salaries at current levels and forgo salary increases reflects the Compensation Committee’s plan to deliver a greater proportion of compensation through variable components over time.
Annual Incentive Awards
Commencing with the 2010 fiscal year, the Compensation Committee implemented a formal annual incentive plan. This plan was used for the 2015 fiscal year and covered 33 Cinedigm employees including the Named Executives. The plan established threshold and maximum levels of incentive awards defined as a percentage of a participant’s salary.
Executive Officer
Threshold MAIP as a
Percent of Salary
Target MAIP as a Percent of Salary
Maximum MAIP as a
Percent of Salary
Chris McGurk37.5%75%150%
Adam M. Mizel25%50%100%
William S. Sondheim17.5%35%70%

Payouts for Named Executives were determined based on achievement of consolidated adjusted EBITDA and other performance targets. Participants who were part of a specific business segment or division have a portion of their award determined by business segment or division’s EBITDA performance as compared to EBITDA goals established at the beginning of the fiscal year. We do not disclose segment and division targets, or individual goals, as we believe that such disclosure would result in competitive harm. Based on our experience in the segments and divisions, we believe these targets were set sufficiently high to provide incentive to achieve a high level of performance. We believe it is difficult, although not unattainable, for the targets to be reached and, therefore, no more likely than unlikely that the targets will be reached. Twenty percent of the award opportunity is determined based on individual performance for Named Executives.
For Mr. McGurk and Mr. Mizel, 80% of their fiscal 2015 MAIP award is determined based on achievement of consolidated adjusted EBITDA and 20% based on individual performance. For Mr. Sondheim, 60% of his fiscal 2015 MAIP award is determined based on the achievement of consolidated adjusted EBITDA, 20% is based on achievement of division EBITDA, and 20% is based on individual performance.
For the Last Fiscal Year, the Named Executives did not receive an MAIP award.

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Long-Term Incentive Awards
The Compensation Committee annually considers long-term incentive awards, for which it has the authority to grant a variety of equity-based awards. The primary objective of such awards is to align the interests of executives with those of shareholders by increasing executive share ownership and fostering a long-term focus. In recent years, such awards have been made after fiscal year end in order to permit consideration of year-end performance.
Long-term incentive awards for the Named Executives have historically consisted of stock options and, on occasion, RSUs. These grants were designed to aid in retention, provide a discretionary reward for performance, increase executive ownership, and focus Named Executives on improving share price. No long-term incentive awards were granted in fiscal 2015.
No RSUs are currently outstanding for any Named Executives.
Mr. McGurk’s Compensation Arrangements
Mr. McGurk joined Cinedigm in January 2011 as CEO and Chairman of the Board. Accordingly, Mr. McGurk’s compensation package was created in line with the Company’s current compensation philosophy of a base salary coupled with variable compensation including a large portion of equity-based compensation, through stock options, linked to stock price performance. When negotiating Mr. McGurk’s employment agreement, the Company sought for salary and bonus amounts that were in line with peer group amounts and that would provide incentive for Mr. McGurk with a view toward increasing stockholder value. The Company determined that stock options would align Mr. McGurk’s interests with stockholders and, further, that the escalating exercise price structure of the options (the options are grouped in three tranches which have exercise prices of $1.50, $3.00 and $5.00 per share, respectively) would provide a strong incentive for Mr. McGurk to improve stock performance. Mr. McGurk and the Company entered into a new employment agreement in August 2013, pursuant to which, among other things, Mr. McGurk received a bonus of $250,000 and a grant of stock options to purchase 1,500,000 shares of Class A Common Stock with a price of $1.40 per share and vesting in three equal annual installments.
A summary of Mr. McGurk’s compensation package is located under the heading “Employment agreements and arrangements between the Company and Named Executives” of this Item.
Personal Benefits and Perquisites
In addition to the benefits provided to all employees and grandfathered benefits (provided to all employees hired before January 1, 2005), Named Executives are eligible for an annual physical and supplemental life insurance coverage of $200,000.
It is the Company’s policy to provide minimal and modest perquisites to the Named Executives. With the new employment agreements, most perquisites previously provided, including automobile allowances, have been eliminated.

Employment Agreements for other Named Executives
The Company provides employment agreements to Mr. Mizel and Mr Sondheim, for retention during periods of uncertainty and operational challenge. Additionally, the employment agreements include non-compete and non-solicitation provisions. The provisions for severance benefits are at typical competitive levels. See “Employment agreements and arrangements between the Company and Named Executives” of this Item for a description of the material terms of Mr. Mizel’s and Mr. Sondheim’s employment agreements.
Stock Ownership Guidelines
The Company does not maintain formal stock ownership guidelines for its executive officers.
Policy on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the deductibility of compensation in excess of $1 million paid to certain executive officers named in this proxy statement, unless certain requirements are met. No element of the Company’s compensation, including the annual incentive awards and restricted stock, meets these requirements. Given the Company’s net operating losses, Section 162(m) is not currently a material factor in designing compensation.

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Recapture Policy
The Company intends to recapture compensation as currently required under the Sarbanes-Oxley Act and as may be required by this item will appearthe rules promulgated in Cinedigm’s Proxy Statementresponse to Dodd-Frank. However, there have been no instances to date where it needed to recapture any compensation.
Restriction on Speculative Transactions
The Company’s Insider Trading and Disclosure Policy restricts employees and directors of the Company from engaging in speculative transactions in Company securities, including short sales, and discourages employees and directors of the Company from engaging in hedging transactions, including “cashless” collars, forward sales, and equity swaps, that may indirectly involve short sales. Pre-clearance by the Company is required for any such transaction.
COMPENSATION COMMITTEE REPORT
The following report does not constitute soliciting material and is not considered filed or incorporated by reference into any other filing by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis that precedes this Report as required by Item 402(b) of the SEC’s Regulation S-K. Based on its review and discussions with management, the Compensation Committee recommended to the Board the inclusion of the Compensation Discussion and Analysis in this reportProxy Statement.
The Compensation Discussion and Analysis discusses the philosophy, principles, and policies underlying the Company’s compensation programs that were in effect during the Last Fiscal Year and which will be applicable going forward until amended.
Respectfully submitted,
The Compensation Committee of the Board of Directors
Wayne L. Clevenger, Chairman
Peter C. Brown
Laura Nisonger Sims

Named Executives
The following table sets forth certain information concerning compensation received by the Company’s Named Executives, consisting of the Company’s Chief Executive Officer and its two other most highly compensated individuals who were serving as executive officers at the end of the Last Fiscal Year, for services rendered in all capacities during the Last Fiscal Year.

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SUMMARY COMPENSATION TABLE
Name and Principal Position(s)YearSalary ($)Bonus ($)Stock Awards ($)Option Awards ($)(1)Nonequity Incentive Plan Compensation ($)(2)All Other Compensation ($)(3)Total ($)
Christopher J. McGurk2015600,000250,000
__
__
__
31,009881,009
Chief Executive Officer and Chairman2014600,000250,000
__
1,253,322
—
29,2312,132,553
2013600,000—
—
—
—
28,235628,235
         
Adam M. Mizel2015425,000—
—
—
—
234,755659,755
Chief Operating Officer2014400,000150,000
—
548,738
—
30,8691,129,607
2013375,000—
—
—
100,000
31,416506,416
         
William Sondheim2015412,380—
—
—
—
26,442438,882
President, Cinedigm Entertainment Corp.        

(1)The amounts in this column reflect the grant date fair value for the fiscal years ended March 31, 2015, 2014 and 2013, in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in footnote 2 to the Company’s audited financial statements for the fiscal year ended March 31, 2015, included in this Annual Report on Form 10-K (the “Form 10-K”).
(2)The amounts in this column reflect amounts earned under annual incentive awards. See below for a description of the material terms of the annual incentive plan for each Named Executive.
(3)Includes automobile allowances, additional life insurance premiums paid by the Company, certain medical expenses paid by the Company, and the premiums for group term life insurance paid by the Company for each Named Executive, and for Mr. Mizel certain relocation expenses, as follows for the fiscal year ended March 31, 2015: for Mr. McGurk $0, $718, $29,001 and $1,290, for Mr. Mizel $0, $718, $29,001, $450 and $204,587, and for Mr. Sondheim $0, $718, $25,034 and $690; for the fiscal year ended March 31, 2014: for Mr. McGurk, $0, $718, $27,223 and $1,290 and for Mr. Mizel, $8,500, $718, $21,351 and $300; and for the fiscal year ended March 31, 2013: for Mr. McGurk, $0, $718, $26,227 and $1,290 and for Mr. Mizel, $12,000, $718, $18,398 and $300.

Employment agreements and arrangements between the Company and Named Executives
Christopher J. McGurk. On December 23, 2010, the Company entered into an employment agreement with Mr. McGurk (the “2010 McGurk Employment Agreement”), pursuant to General Instruction G(3)which Mr. McGurk served as the Chief Executive Officer of Form 10-K (other than the portions thereof not deemedCompany. The term of the 2010 McGurk Employment Agreement commenced on January 3, 2011 and was scheduled to terminate on March 31, 2014. Pursuant to the 2010 McGurk Employment Agreement, Mr. McGurk received an annual base salary of $600,000. In addition, Mr. McGurk received a bonus of $112,500, payable in shares of Class A Common Stock, on March 31, 2011, and was eligible for bonuses for each of the fiscal years ending March 31, 2012 through March 31, 2014, with the target bonus for such years of $450,000, which bonuses shall be based on Company performance with goals to be “filed”established annually by the Compensation Committee. If the Company terminates Mr. McGurk’s employment without cause or he resigns with good reason (as these terms are defined in the 2010 McGurk Employment Agreement), the 2010 McGurk Employment Agreement provided that he was entitled to continued payment of his base salary (and earned bonus) through March 31, 2014, as well as the accelerated vesting of any unvested options granted to him under the 2010 McGurk Employment Agreement. However, if the Company terminated Mr. McGurk’s employment without cause or he resigned with good reason following a change in control of the Company, the 2010 McGurk Employment Agreement provided that he was entitled to a lump sum payment equal to his base salary (and earned bonus) times the greater of (i) two or (ii) the number of months remaining under his employment term divided by 12, as well as the accelerated vesting of any unvested options granted to him under the 2010 McGurk Employment Agreement. Also pursuant to the 2010 McGurk Employment Agreement, Mr. McGurk received an inducement grant of non-statutory options to purchase 4,500,000 shares of Class A Common Stock, which options are grouped in three tranches, consisting of options for 1,500,000 shares having an exercise price of $1.50 per share, options for 2,500,000 shares having an exercise price of $3.00 per share and options for 500,000 shares having an exercise price of $5.00 per share. One-third of the options in each tranche vested on December 23 of each of 2011, 2012 and 2013 and all of the options have a term of ten (10) years.
On August 22, 2013, the Company entered into a new employment agreement with Mr. McGurk (the “2013 McGurk Employment Agreement”), pursuant to which McGurk will continue to serve as the Chief Executive Officer and Chairman of the Board of the Company. The term of the 2013 McGurk Employment Agreement continues from January 3, 2011 and will end on March 31,

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2017. The 2013 McGurk Employment Agreement supersedes the 2010 McGurk Employment Agreement. Pursuant to the 2013 McGurk Employment Agreement, Mr. McGurk will receive an annual base salary of $600,000 subject to annual reviews and increases in the sole discretion of the Compensation Committee. Mr. McGurk was entitled to receive a bonus of $250,000. In addition, Mr. McGurk is entitled to receive a retention bonus of $750,000, payable in three equal installments on March 31 of each of 2015, 2016 and 2017 in cash or shares of Class A Common Stock, or a combination thereof, at the Compensation Committee’s discretion. In addition, Mr. McGurk will be eligible for bonuses for each fiscal year, with target bonus for fiscal years 2012, 2013 and 2014 of $450,000 and target bonus for fiscal years 2015, 2016 and 2017 of $600,000, which bonuses shall be based on Company performance with goals to be established annually by the Compensation Committee.

Also pursuant to the 2013 McGurk Employment Agreement, Mr. McGurk received a grant of non-statutory options to purchase 1,500,000 shares of Common Stock, which options have an exercise price of $1.40 and a term of ten (10) years, and one-third (1/3) of which vest on March 31 of each of 2015, 2016 and 2017.

The 2013 McGurk Employment Agreement further provides that Mr. McGurk is entitled to participate in all benefit plans provided to senior executives of the Company. If the Company terminates Mr. McGurk’s employment without cause or he resigns with good reason, the 2013 McGurk Employment Agreement provides that he is entitled to receive his base salary through the later of March 31, 2017 or twelve (12) months following such termination as well as bonus earned and approved by the Compensation Committee, reimbursement of expenses incurred and benefits accrued prior to the termination date. If such termination or resignation occurs within two years after a change in control, then in lieu of receiving his base salary as described above, Mr. McGurk would be entitled to receive a lump sum payment equal to the sum of his then base salary and target bonus amount, multiplied by the greater of (i) two, or (ii) a fraction, the numerator of which is the number of months remaining in the term (but no less than twelve (12), and the denominator of which is twelve. Upon a change in control, any unvested options shall immediately vest provided that Mr. McGurk is an employee of the Company on such date.

Adam M. Mizel. On October 19, 2011, the Company entered into an employment agreement with Adam M. Mizel (the “2011 Mizel Employment Agreement). Pursuant to the 2011 Mizel Employment Agreement, Mr. Mizel served as the Chief Operating Officer and Chief Financial Officer of the Company. The term of the 2011 Mizel Employment Agreement commenced on October 3, 2011 and, after two extensions, ended on October 1, 2013. Pursuant to the 2011 Mizel Employment Agreement, Mr. Mizel received an annual base salary of $375,000, subject to increase for subsequent years at the Compensation Committee’s discretion, and was eligible for a bonus based on overall Company performance with goals established by the Compensation Committee. The 2011 Mizel Employment Agreement provided that Mr. Mizel was entitled to participate in all benefit plans provided to senior executives of the Company. If the Company terminated Mr. Mizel’s employment without cause or he resigned with good reason (as these terms are defined in the 2011 Mizel Employment Agreement), the 2011 Mizel Employment Agreement provided that he was entitled to continued payment of his base salary (and earned bonus) for 12 months following his termination as well as the accelerated vesting of any unvested options granted to him under the 2011 Mizel Employment Agreement. However, if the Company terminated Mr. Mizel’s employment without cause or he resigned with good reason following a change in control of the Company, the 2011 Mizel Employment Agreement provided that he was entitled to a lump sum payment equal to his base salary (and earned bonus) times the greater of (i) two or (ii) the number of months remaining under his employment term divided by 12,as well as the accelerated vesting of any unvested options granted to him under the 2011 Mizel Employment Agreement.
On October 15, 2013, the Company entered into a new employment agreement with Mr. Mizel (the “2013 Mizel Employment Agreement”). Pursuant to the 2013 Mizel Employment Agreement, Mr. Mizel will continue to serve as the Chief Operating Officer and Chief Financial Officer of the Company. The Mizel Agreement continues the 2011 Mizel Employment Agreement as amended until September 30, 2014. Pursuant to the 2013 Mizel Employment Agreement, Mizel will receive an annual base salary of $425,000 effective as of October 1, 2013, subject to annual reviews and increases in the sole discretion of the Compensation Committee. Mr. Mizel will be eligible for bonuses for each fiscal year, with target bonus for fiscal years 2014 and 2015 of $212,500, which bonuses shall be based on Company performance with goals to be established annually by the Compensation Committee. In addition, Mr. Mizel was entitled to receive a bonus of $150,000.

Also pursuant to the 2013 Mizel Employment Agreement, Mr. Mizel received a grant of non-statutory options to purchase 600,000 shares of Class A Common Stock , which options have an exercise price of $1.53 and a term of ten (10) years, and one-third (1/3) of which vest on October 15 of each of 2014, 2015 and 2016.

The 2013 Mizel Employment Agreement further provides that Mr. Mizel is entitled to participate in all benefit plans provided to senior executives of the Company. If the Company terminates Mr. Mizel’s employment without cause or he resigns with good reason, the Employment Agreement provides that he is entitled to receive his base salary for twelve (12) months following such termination as well as earned bonuses, reimbursement of expenses incurred and benefits accrued prior to the termination date. If such termination or resignation occurs within two years after a change in control, then in lieu of receiving his base salary as

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described above, Mr. Mizel would be entitled to receive a lump sum payment equal to two times the sum of his then base salary and target bonus amount.
On November 14, 2014, the Company and Mr. Mizel entered into an amendment pursuant to which, effective as of October 1, 2013, the 2013 Mizel Employment Agreement was extended through March 31, 2015.
William S. Sondheim. On December 4, 2014, Cinedigm Entertainment Corp., a wholly-owned subsidiary of Cinedigm, entered into an employment agreement with William Sondheim (the “Sondheim Employment Agreement”), pursuant to which Mr. Sondheim will serve as President of Cinedigm Entertainment Corp. and President of Cinedigm Home Entertainment, LLC, a wholly-owned indirect subsidiary of Cinedigm. The term of the Sondheim Employment Agreement is from October 1, 2014 through September 30, 2016. Pursuant to the Sondheim Employment Agreement, Mr. Sondheim will receive an annual base salary of $412,000 subject to increase at the discretion of the Compensation Committee. In addition, Mr. Sondheim will be eligible for bonuses for each fiscal year, with target bonus for fiscal years 2015 and 2016 of $144,200, which bonuses shall be based on Company performance with goals to be established annually by the Compensation Committee.
The Sondheim Employment Agreement further provides that Mr. Sondheim is entitled to participate in all benefit plans provided to senior executives of the Company. If the Company terminates Mr. Sondheim’s employment without cause or he resigns with good reason, the Sondheim Employment Agreement provides that he is entitled to receive his base salary for the longer of the remainder of the term or the (twelve) 12 months following the termination as well as earned salary and bonus(es), reimbursement of expenses incurred and benefits accrued prior to the termination date. If such termination or resignation occurs within two years after a change in control, then in lieu of receiving his base salary as described above, Mr. Sondheim would be entitled to receive a lump sum payment equal to two times the sum of his then base salary and target bonus amount.
Equity Compensation Plans
The following table sets forth certain information, as of March 31, 2015, regarding the shares of Cinedigm’s Class A Common Stock authorized for issuance under Cinedigm’s equity compensation plan.
PlanNumber of shares of common stock issuable upon exercise of outstanding options (1)Weighted average of exercise price of outstanding optionsNumber of shares of common stock remaining available for future issuance
Cinedigm Second Amended and Restated 2000 Equity Incentive Plan (“the Plan”) approved by shareholders5,908,670$1.725,312,307
Cinedigm compensation plans not approved by shareholders (2)5,015,000$2.62—

(1)Shares of Cinedigm Class A Common Stock.
(2)
Reflects stock options which were not granted under the Plan.

Our Board originally adopted the Plan on June 1, 2000 and our shareholders approved the Plan by written consent in July 2000. Certain terms of the Plan were last amended and approved by our shareholders in September 2014. Under the Plan, we may grant incentive and non-statutory stock options, stock, restricted stock, restricted stock units (RSUs), stock appreciation rights, performance awards and other equity-based awards to our employees, non-employee directors and consultants. The primary purpose of Section 18the Plan is to enable us to attract, retain and motivate our employees, non-employee directors and consultants. The term of the Exchange Act)Plan expires on June 1, 2020. As of March 31, 2015, there were 5,908,670 stock options outstanding to purchase shares of Class A Common Stock and there were 5,312,307shares of Class A Common Stock available for issuance under the Plan.
As of June 22, 2015, stock options outstanding covering 6,033,670 shares of the Company’s Class A Common Stock had been granted under the Plan. During the Last Fiscal Year, 141,000 stock options were exercised.
Options granted under the Plan expire ten years following the date of grant (or such shorter period of time as may be provided in a stock option agreement or five years in the case of incentive stock options granted to stockholders who own greater than 10% of the total combined voting power of the Company) and are subject to restrictions on transfer. Options granted under the Plan generally vest over periods of up to three or four years. The Plan is administered by the Compensation Committee, and may be amended or terminated by the Board, although no amendment or termination may adversely affect the right of any individual with respect to any outstanding option without the consent of such individual. The Plan provides for the granting of incentive stock

54


options with exercise prices of not less than 100% of the fair market value of the Company’s Class A Common Stock on the date of grant. Incentive stock options granted to stockholders of more than 10% of the total combined voting power of the Company must have exercise prices of not less than 110% of the fair market value of the Company’s Class A Common Stock on the date of grant. Incentive and non-statutory stock options granted under the Plan are subject to vesting provisions, and exercise is generally subject to the continuous service of the optionee, except for consultants. The exercise prices and vesting periods (if any) for non-statutory options may be set at the discretion of the Board or the Compensation Committee. Upon a change of control of the Company, all options (incentive and non‑statutory) that have not previously vested will vest immediately and become fully exercisable. Options covering no more than 500,000 shares may be granted to one participant during any calendar year unless pursuant to a multi-year award, in which case no more than options covering 500,000 shares per year of the award may be granted, and during which period no additional options may be granted to such participant.
Grants of restricted stock and restricted stock units are subject to vesting requirements, generally vesting over periods up to three years, determined by the Compensation Committee and set forth in notices to the participants. Grants of stock, restricted stock and restricted stock units shall not exceed 40% of the total number of shares available to be issued under the Plan.
Stock appreciation rights (“SARs”) consist of the right to the monetary equivalent of the increase in value of a specified number of shares over a specified period of time. Upon exercise, SARs may be paid in cash or shares of Class A Common Stock or a combination thereof. Grants of SARs are subject to vesting requirements, similar to those of stock options, determined by the Compensation Committee and set forth in agreements between the Company and the participants. RSUs shall be similar to restricted stock except that no Class A Common Stock is actually awarded to the Participant on the grant date of the RSUs and the Compensation Committee shall have the discretion to pay such RSUs upon vesting in cash or shares of Class A Common Stock or a combination thereof.
Performance awards consist of awards of stock and other equity-based awards that are valued in whole or in part by reference to, or are otherwise based on, the market value of the Class A Common Stock, or other securities of the Company, and may be paid in shares of Class A Common Stock, cash or another form of property as the Compensation Committee may determine. Grants of performance awards shall entitle participants to receive an award if the measures of performance established by the Committee are met. Such measures shall be established by the Compensation Committee but the relevant measurement period for any performance award must be at least 12 months. Grants of performance awards shall not cover the issuance of shares that would exceed 20% of the total number of shares available to be issued under the Plan, and no more than 500,000 shares pursuant to any performance awards shall be granted to one participant in a calendar year unless pursuant to a multi-year award. The terms of grants of performance awards would be set forth in agreements between the Company and the participants. Our Class A Common Stock is listed for trading on the Nasdaq under the symbol “CIDM”.
The following table sets forth certain information concerning outstanding equity awards of the Company’s Named Executives at the end of the Last Fiscal Year. All outstanding stock awards reported in this table represent restricted stock that vests in equal annual installments over three years. At the end of the Last Fiscal Year, there were no unearned equity awards under performance-based plans.


55


OUTSTANDING EQUITY AWARDS AT MARCH 31, 2015
OPTION AWARDS (1) STOCK AWARDS
Name
Number of Securities
Underlying Unexercised
Options Exercisable (#)
 
Number of
Securities
Underlying Unexercised
Options
Unexercisable
(#)
 
Option Exercise Price
($)
Option
Expiration
Date
 
Number of Shares or Units of Stock That Have Not Vested
(#)
 
Market Value of Shares or Units of Stock That Have Not Vested
($)
Christopher J.1,500,000(2)—
 1.5012/23/2020 —
 —
McGurk2,500,000(2)—
 3.0012/23/2020 —
 —
 500,000(2)—
 5.0012/23/2020 —
 —
 1,000,000(3)500,000
(3)1.408/22/2023 —
 —
           
Adam M.450,000(4)—
 1.378/11/2015 —
 —
Mizel281,250(5)93,750
(5)1.498/17/2021 —
 —
 93,750(5)31,250
(5)3.008/17/2021 —
 —
 200,000(6)400,000
(6)1.5310/15/2023 —
 —
           
William S. Sondheim187,500(7)62,500
(7)1.7510/21/2023 —
 —
           
(1)Reflects stock options granted under the Company’s Second Amended and Restated 2000 Equity Incentive Plan, except certain options granted to Mr. McGurk and Mr. Sondheim.
(2)Reflects stock options not granted under the Plan. Of such options, 1/3 in each tranche vested on December 23 of each of 2011, 2012 and 2013.
(3)Of such total options, 1/3 vest on March 31 of each 2015, 2016 and 2017.
(4)Such options vested on August 11, 2012.
(5)Of such total options, 1/4 vest on August 17 of each 2012, 2013, 2014 and 2015.
(6)Of such total options, 1/3 vest on October 15 of each of 2014, 2015 and 2016.
(7)Reflects stock options not granted under the Plan. Of such total options, 1/4 vest on October 21 of each of 2015, 2016 and 2017.

Directors
The following table sets forth certain information concerning compensation earned by the Company’s Directors for services rendered as a director during the Last Fiscal Year.
Name
Fees Earned or Paid in Cash
($)
Stock Awards ($)
Total
($)
Peter C. Brown23,00050,00073,000 
Wayne L. Clevenger (1)13,00050,00063,000 
Matthew W. Finlay (1)13,00050,00063,000 
Martin B. O’Connor13,00050,00063,000 
Laura Nisonger Sims (2)13,00050,00063,000 

(1)Such payments were paid to MidMark Investments.
(2)Such payments were paid to Sageview Capital.

Each director who is not an employee of the Company is compensated for services as a director by receiving an annual cash retainer for Board service of $8,000; an annual stock retainer of $50,000 in Common Stock (based on grant date stock price); a committee retainer of $1,000 for participation on one or more committees (maximum of $1,000); and a per meeting fee for in-person attendance at Board meetings of $1,000. In addition to the cash and stock retainers paid to all non-employee Directors for Board service, the Lead Independent Director receives a fixed amount to be determined by the Nominating and Governance Committee, in lieu of committee fees. Additional compensation as a chairperson is paid if the Lead Independent Director chairs a committee. The Company requires that Directors agree to retain 100% of their net after tax shares received for board service until separation from the Company. In addition, the Directors are reimbursed by the Company for expenses of traveling on Company business, which to date has consisted of attending Board and Committee meetings.

56


The Company has adopted Stock Ownership Guidelines for its non-employee directors as discussed in Part III, Item 10 of this Report on Form 10-K.

ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS

Information requiredAs of June 22, 2015, the Company’s directors, executive officers and principal stockholders beneficially own, directly or indirectly, in the aggregate, approximately 49.5% of its outstanding Class A Common. These stockholders have significant influence over the Company’s business affairs, with the ability to control matters requiring approval by this item will appearthe Company’s stockholders, including the two proposals set forth in Cinedigm’sthis Proxy Statement and is incorporated by reference in this report pursuantas well as approvals of mergers or other business combinations.
The following table sets forth as of June 22, 2015, certain information with respect to General Instruction G(3) of Form 10-K (other than the portions thereof not deemed to be “filed” for the purpose of Section 18beneficial ownership of the Exchange Act).Class A Common Stock as to (i) each person known by the Company to beneficially own more than 5% of the outstanding shares of the Company’s Class A Common Stock, (ii) each of the Company’s directors, (iii) each of the Company’s Chief Executive Officer and its two other most highly compensated individuals who were serving as executive officers at the end of the Last Fiscal Year, for services rendered in all capacities during the Last Fiscal Year (the “Named Executives”), and (iv) all of the Company’s directors and executive officers as a group.

57


CLASS A COMMON STOCK
Name (a)Shares Beneficially Owned (b)
Number  Percent
Christopher J. McGurk5,367,400
 (c)6.8%
Adam M. Mizel1,470,708
 (d)1.9%
William S. Sondheim62,500
 (e)*
Gary S. Loffredo596,612
 (f)*
Peter C. Brown635,566
 (g)*
Wayne L. Clevenger
c/o MidMark Equity Partners II, L.P.,
177 Madison Avenue
Morristown, NJ 07960
2,193,575
 (h)2.9%
Matthew W. Finlay
c/o MidMark Equity Partners II, L.P.,
177 Madison Avenue
Morristown, NJ 07960
2,171,989
 (i)2.9%
Martin B. O’Connor II187,382
  *
Laura Nisonger Sims
c/o Sageview Capital Master, L.P.
245 Lytton Avenue, Suite 250
Palo Alto, CA 94301
—
  —
Sageview Capital Master, L.P.
245 Lytton Avenue, Suite 250
Palo Alto, CA 94301		17,001,511
 (j)(p)18.7%
Peak6 Capital Management LLC
141 W. Jackson Blvd, Suite 500
Chicago, IL 60604
16,491,446
 (k)(p)18.2%
HighbridgeCapital Management, LLC
40 West 57th Street, 33rd Floor
New York, NY 10019
7,628,531
 (l)(p)9.4%
Ronald L. Chez
291 E. Lake Shore Drive
Chicago, IL 60611
6,583,498
 (m)(p)8.7%
Wolverine Asset Management, LLC
175 West Jackson Blvd., Suite 340
Chicago, IL 60604
4,947,434
 (n)(p)6.3%
     
All directors and executive officers as a group
(10 persons)
10,627,913
 (o)13.1%
____________
*Less than 1%
(a)
Unless otherwise indicated, the business address of each person named in the table is c/o Cinedigm Corp., 902 Broadway, 9th Floor, New York, New York 10010.
(b)Applicable percentage of ownership is based on 74,491,762 shares of Class A Common Stock outstanding as of June 22, 2015 together with all applicable options, warrants and other securities convertible into shares of our Class A Common Stock for such stockholder. Beneficial ownership is determined in accordance with the rules of the SEC, and includes voting and investment power with respect to shares. Shares of Class A Common Stock subject to options, warrants or other convertible securities exercisable within 60 days after June 22, 2015 are deemed outstanding for computing the percentage ownership of the person holding such options, warrants or other convertible securities, but are not deemed outstanding for computing the percentage of any other person. Except as otherwise noted, the named beneficial owner has the sole voting and investment power with respect to the shares of Class A Common Stock shown.
(c)Includes 5,000,000 shares of Class A Common Stock underlying options that may be acquired upon exercise of such options.
(d)Includes 1,025,000 shares of Class A Common Stock underlying options that may be acquired upon exercise of such options.
(e)Includes 62,500 shares of Class A Common Stock underlying options that may be acquired upon exercise of such options.
(f)Includes 406,612 shares of Class A Common Stock underlying options that may be acquired upon exercise of such options.

58


(g)Includes 528,382 shares owned by Grassmere Partners LLC, of which Mr. Brown is Chairman. Mr. Brown disclaims beneficial ownership of such shares except to the extent of any pecuniary interest therein.
(h)
Mr. Clevenger is Managing Director of MidMark and of MidMark Investments, Inc. (“MidMark Investments”) and a managing member of MidMark Advisors II, LLC. Includes 73,256 shares of Class A Common Stock owned directly, 60,000shares of Class A Common Stock underlying options that may be acquired upon exercise of such options held by MidMark and MidMark Investments and 2,080,319 shares owned by MidMark. Other than the 73,256 shares first described, Mr. Clevenger disclaims beneficial ownership of such shares except to the extent of any pecuniary interest therein.
(i)Mr. Finlay is Managing Director of MidMark and of MidMark Investments. Includes 51,670 shares of Class A Common Stock owned directly, 60,000 shares of Class A Common Stock underlying options that may be acquired upon exercise of such options held by MidMark and MidMark Investments and 2,080,319 shares owned by MidMark. Other than the 51,670 shares first described, Mr. Finlay disclaims beneficial ownership of such shares except to the extent of any pecuniary interest therein.
(j)Includes 16,732,824 shares of Class A Common Stock subject to issuance upon exercise of currently exercisable warrants owned by Sageview Capital Master Fund, L.P. (“Sageview Master”). Sageview Capital Partners (A), L.P. (“Sageview A”), Sageview Capital Partners (B), L.P. (“Sageview B”) and Sageview Capital Partners (C) (Master), L.P. (“Sageview C”) are the sole shareholders of Sageview Master. Sageview Capital GenPar, Ltd. (“Sageview Ltd.”) is the sole general partner of each of Sageview A, Sageview B and Sageview C. Sageview Capital GenPar, L.P. (“Sageview GenPar”) is the sole shareholder of Sageview Ltd. Sageview Capital MGP, LLC (“Sageview MGP”) is the sole general partner of Sageview GenPar. Edward A. Gilhuly and Scott M. Stuart are managing and controlling persons of Sageview MGP. Messrs. Gilhuly and Stuart have shared voting and dispositive power with respect to the securities beneficially owned by Sageview Master. Each of Sageview A, Sageview B, Sageview C, Sageview Ltd., Sageview GenPar, Sageview MGP and Messrs. Gilhuly and Stuart disclaims beneficial ownership of such securities, except to the extent of its or his pecuniary interest therein, if any.
(k)Includes 16,491,446 shares underlying 5.5% Convertible Senior Notes due 2035. Peak6 Capital Management LLC (“Peak6”) is owned by Peak6 Investments, L.P., which is primarily owned by Aleph6 LLC. Matthew Hulsizer and Jennifer Just own and control Aleph6 LLC. Each of these entities and individuals has shared power to vote or direct the vote of, and to dispose or direct the disposition of such shares.
(l)Includes 7,628,531 shares underlying 5.5% Convertible Senior Notes due 2035. Highbridge Capital Management, LLC (“Highbridge”) is the trading manager of Highbridge International LLC and Highbridge Tactical Credit & Convertibles Master Fund, L.P. (collectively, the “Highbridge Funds”), which hold the 5.5% Convertible Senior Notes due 2035. Highbridge may be deemed to be the beneficial owner of such shares.
(m)Includes 975,000 shares of Class A Common Stock subject to issuance upon exercise of currently exercisable warrants.
(n)Includes 4,947,434 shares underlying 5.5% Convertible Senior Notes due 2035. The sole member and manager of Wolverine Asset Management (“WAM”) is Wolverine Holdings, L.P. (“Wolvering Holdings”). Robert R. Bellick and Christopher L. Gust may be deemed to control Wolverine Trading Partners, Inc. (“WTP”), the general partner of Wolvering Holdings.
(o)Includes 6,596,612 shares of Class A Common Stock underlying options that may be acquired upon exercise of such options.
(p)Based on the numbers of shares reported in the most recent Schedule 13D or Schedule 13G, as amended, as applicable, and filed by such stockholder with the SEC through June 22, 2015 and information provided by the holder or otherwise known to the Company.

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information required by this item will appear in Cinedigm’s Proxy Statement and is incorporated by reference in this reportRelated Party Transactions
The Audit Committee, pursuant to General Instruction G(3)its charter, it is responsible for the review and oversight of Form 10-K (other than the portions thereofall related party transactions and other potential conflict of interest situations, by review in advance or ratification afterward. The Audit Committee charter does not deemedset forth specific standards to be “filed” forapplied; rather, the purpose of Section 18 of the Exchange Act).Audit Committee reviews each transaction individually on a case-by-case, facts and circumstances basis.



59


ITEM 14.     PRINCIPAL ACCOUNTANT FEES AND SERVICES

InformationREPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited financial statements in the Form 10-K, including a discussion of the acceptability of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements.
The Audit Committee reviewed and discussed with the independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of those audited financial statements with the standards of the Public Company Accounting Oversight Board, the matters required to be discussed by Statements on Auditing Standards (SAS 61), as may be modified or supplemented, and their judgments as to the acceptability of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under the standards of the Public Company Accounting Oversight Board.
In addition, the Audit Committee has discussed with the independent registered public accounting firm their independence from management and the Company, including receiving the written disclosures and letter from the independent registered public accounting firm as required by this itemthe Independence Standards Board Standard No. 1, as may be modified or supplemented, and has considered the compatibility of any non-audit services with the auditors’ independence.
The Audit Committee discussed with the Company’s independent registered public accounting firm the overall scope and plans for their audit. The Audit Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of their examinations and the overall quality of the Company’s financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, that the audited financial statements be included in the Form 10-K for the year ended March 31, 2014 for filing with the SEC.
Respectfully submitted,
The Audit Committee of the Board of Directors
Matthew W. Finlay, Chairman
Peter C. Brown
Laura Nisonger Sims
THE FOREGOING AUDIT COMMITTEE REPORT SHALL NOT BE “SOLICITING MATERIAL” OR BE DEEMED “FILED” WITH THE SEC, NOR SHALL SUCH INFORMATION BE INCORPORATED BY REFERENCE INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY INCORPORATES IT BY REFERENCE INTO SUCH FILING.
EisnerAmper LLP served as the independent registered public accounting firm to audit the Company’s consolidated financial statements since the fiscal year ended March 31, 2005 and the Board has appointed EisnerAmper LLP to do so again for the fiscal year ending March 31, 2016.
The Company’s Audit Committee has adopted policies and procedures for pre-approving all non-audit work performed by EisnerAmper LLP for the fiscal years ended March 31, 2015 and 2014. In determining whether to approve a particular audit or permitted non-audit service, the Audit Committee will appearconsider, among other things, whether the service is consistent with maintaining the independence of the independent registered public accounting firm. The Audit Committee will also consider whether the independent registered public accounting firm is best positioned to provide the most effective and efficient service to our Company and whether the service might be expected to enhance our ability to manage or control risk or improve audit quality. Specifically, the Audit Committee has pre-approved the use of EisnerAmper LLP for detailed, specific types of services within the following categories of non-audit services: acquisition due diligence and audit services; tax services; and reviews and procedures that the Company requests EisnerAmper LLP to undertake on matters not required by laws or regulations. In each case, the Audit Committee has required management to obtain specific pre-approval from the Audit Committee for any engagements.

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The aggregate fees billed for professional services by EisnerAmper LLP for these various services were:
 
For the fiscal years ended
March 31,
Type of Fees20152014
(1) Audit Fees$575,380
 $627,860
(2) Audit-Related Fees—  —
(3) Tax Fees—  —
(4) All Other Fees—  —
 $575,380
 $627,860

In the above table, in Cinedigm’s Proxy Statementaccordance with the SEC’s definitions and isrules, “audit fees” are fees the Company paid EisnerAmper LLP for professional services for the audit of the Company’s consolidated financial statements for the fiscal years ended March 31, 2015 and 2014 included in Form 10-K and review of consolidated financial statements incorporated by reference into Form S-3 and Form S-8 and included in this report pursuantForm 10-Qs and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements; “audit-related fees” are fees for assurance and related services that are reasonably related to General Instruction G(3) of Form 10-K (other than the portions thereof not deemed to be “filed” for the purpose of Section 18performance of the Exchange Act).audit or review of the Company’s consolidated financial statements; “tax fees” are fees for tax compliance, tax advice and tax planning; and “all other fees” are fees for any services not included in the first three categories. All of the services set forth in sections (1) through (4) above were approved by the Audit Committee in accordance with the Audit Committee Charter.
For the fiscal years ended March 31, 2015 and 2014, the Company retained a firm other than EisnerAmper LLP for tax compliance, tax advice and tax planning.


3961


PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements
See Index to Financial Statements on page 37 herein.

(a)(2) Financial Statement Schedules
None.

(a)(3) Exhibits
The exhibits are listed in the Exhibit Index beginning on page 43 herein.

40


SIGNATURES

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.

CINEDIGM CORP.

    
Date:June 25, 201430, 2015By: /s/ Christopher J. McGurk
   
Christopher J. McGurk
Chief Executive Officer and Chairman of the Board of Directors
(Principal Executive Officer)
    
Date:June 25, 201430, 2015By: /s/ Adam M. MizelJeffrey S. Edell
   Chief OperatingFinancial Officer (Principal Financial Officer and Principal Accounting Officer)
    

41


POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears below hereby constitutes and appoints Christopher J. McGurk and Gary S. Loffredo, and each of them individually, his or her true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments to this Report together with all schedules and exhibits thereto, (ii) act on, sign and file with the Securities and Exchange Commission any and all exhibits to this Report and any and all exhibits and schedules thereto, (iii) act on, sign and file any and all such certificates, notices, communications, reports, instruments, agreements and other documents as may be necessary or appropriate in connection therewith and (iv) take any and all such actions which may be necessary or appropriate in connection therewith, granting unto such agents, proxies and attorneys-in-fact, and each of them individually, full power and authority to do and perform each and every act and thing necessary or appropriate to be done, as fully for all intents and purposes as he or she might or could do in person, and hereby approving, ratifying and confirming all that such agents, proxies and attorneys-in-fact, any of them or any of his, her or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURES(S) TITLE(S) DATE
     
/s/ Christopher J. McGurk Chief Executive Officer June 25, 201430, 2015
Christopher J. McGurk and Chairman of the Board of Directors  
  (Principal Executive Officer)  
     
/s/ Jeffrey S. EdellChief Financial OfficerJune 30, 2015
Jeffrey S. Edell

 (Principal Financial Officer and Principal Accounting Officer)
/s/ Adam M. Mizel Chief Operating Officer and Director June 25, 201429, 2015
Adam M. Mizel Director (Principal Financial Officer)  
     
/s/ Gary S. Loffredo President of Digital Cinema, General Counsel, June 25, 201430, 2015
Gary S. Loffredo Secretary and Director  
     
/s/ Matthew A. SnyderVice President (Interim Principal Accounting Officer)June 25, 2014
Matthew A. Snyder
/s/ Peter C. Brown Director June 25, 201430, 2015
Peter C. Brown    
     
/s/ Wayne L. Clevenger Director June 25, 201430, 2015
Wayne L. Clevenger    
     
/s/ Matthew W. Finlay Director June 25, 201430, 2015
Matthew W. Finlay    
     
/s/ Martin B. O'Connor II Director June 25, 201430, 2015
Martin B. O'Connor II    
     
/s/ Laura Nisonger Sims Director June 25, 201430, 2015
Laura Nisonger Sims    
     


42



EXHIBIT INDEX

Exhibit
Number
 
Description of Document
2.1‑‑
Membership Interest Purchase Agreement, dated as of October 17, 2013, by and between the Company, Holdings, Gaiam Americas, Inc. and Gaiam, Inc. (29)

(26)
2.2‑‑Common Stock Purchase Agreement among Cinedigm Digital Cinema Corp. and the Investors party thereto dated July 5, 2011. (20)[intentionally omitted]
2.3‑‑Stock Purchase Agreement, dated as of April 19, 2012, by and among the Company, Steve Savage, Susan Margolin and Aimee Connolly. (21)(19) (Confidential treatment granted under Rule 24b-2 as to certain portions which are omitted and filed separately with the SEC.)
3.1‑‑Fourth Amended and Restated Certificate of Incorporation of the Company, as amended. (26)(23)
3.2‑‑Bylaws of the Company. (15)
3.2.1‑‑Amendment No. 1 to Bylaws of the Company. (16)
4.1‑‑Specimen certificate representing Class A common stock. (1)
4.2‑‑Specimen certificate representing Series A Preferred Stock. (10)
4.3‑‑Limited Recourse Pledge Agreement, dated as of February 28, 2013, made by Cinedigm Digital Cinema Corp. in favor of Prospect Capital Corporation, as Collateral Agent. (25)(22)
4.4‑‑Guaranty, Pledge and Security Agreement, dated as of February 28, 2013, made by Cinedigm DC Holdings, LLC, Access Digital Media, Inc. and Access Digital Cinema Phase 2, Corp., in favor of Prospect Capital Corporation, as Collateral Agent. (25)(22)
4.5‑‑Limited Recourse Guaranty Agreement, dated as of February 28, 2013, made by Cinedigm Digital Cinema Corp. in favor of Prospect Capital Corporation, as Collateral Agent and as Administrative Agent. (25)(22)
4.6‑‑
Guaranty Agreement, dated as of October 17, 2013, by each of the signatories thereto and each of the other entities which becomes a party thereto, in favor of Société Générale, as Administrative Agent for the lenders. (29)

(26)
4.7‑‑Security Agreement, dated as of October 20, 2013, by and among the Company, the other Loan Parties signatory thereto, certain subsidiaries of the Company that may become party thereto from time to time, and Société Générale, as Collateral Agent for the Secured Parties. (29)(26)
4.7.1‑Amended and Restated Security Agreement, dated as of April 29, 2015 to Security Agreement, dated as of October 20, 2013, by and among the Company, the loan parties party thereto and the Company’s subsidiaries party thereto in favor of the Collateral Agent, and OneWest Bank, FSB as Collateral Agent for the Secured Parties. (32)
4.8‑Indenture (including Form of Note), dated as of April 29, 2015, with respect to the Company’s 5.5% Convertible Senior Notes due 2035, by and between the Company and U.S. Bank National Association, as Trustee. (32)
4.9‑‑Form of Note issued on October 21, 2013. (29)(26)
4.10‑‑Form of Warrant issued on October 21, 2013. (29)(26)
4.11‑‑Form of Warrant issued to the Purchaser pursuant to the Securities Purchase Agreement, dated August 11, 2009, by and among the Company and Sageview Capital Master L.P. (11)
4.12‑‑Registration Rights Agreement, dated as of August 11, 2009, by and among the Company and Sageview Capital Master L.P. (11)
4.13‑[intentionally omitted]
4.14‑[intentionally omitted]
4.15‑[intentionally omitted]
4.16‑‑Amended and Restated Guaranty and Security Agreement, dated as of February 28, 2013, among Cinedigm Digital Funding I, LLC and each Grantor from time to time party thereto and Société Générale, New York Branch, as Collateral Agent. (25)(22)
4.17‑‑Amended and Restated Pledge Agreement, dated as of February 28, 2013, between Access Digital Media, Inc. and Société Générale, New York Branch, as Collateral Agent. (25)(22)
4.18‑‑Amended and Restated Pledge Agreement, dated as of February 28, 2013, between Christie/AIX, Inc. and Société Générale, New York Branch, as Collateral Agent. (25)(22)
4.19‑‑Registration Rights Agreement among Cinedigm Digital Cinema Corp. and the Investors party thereto dated July 7, 2011. (20)(18)

43


4.20‑‑Guaranty and Security Agreement, dated as of October 18, 2011, among Cinedigm Digital Funding 2, LLC, each Grantor from time to time party thereto and Société Générale, New York Branch, as Collateral Agent. (22)(20)
4.21‑‑Security Agreement, dated as of October 18, 2011, between CHG-MERIDIAN U.S. Finance, Ltd. And Société Générale, New York Branch, as Collateral Agent. (22)(20)
4.22‑‑Security Agreement, dated as of October 18, 2011, among CDF2 Holdings, LLC and each Grantor from time to time party thereto and Société Générale, New York Branch, as Collateral Agent for the Lenders and each other Secured Party. (22)

43


(20)
4.23‑‑Security Agreement, dated as of October 18, 2011, among CDF2 Holdings, LLC and each Grantor from time to time party thereto and Société Générale, New York Branch, as Collateral Agent for CHG-Meridian U.S. Finance, Ltd. And any other CHG Lease Participants. (22)(20)
4.24‑‑Pledge Agreement, dated as of October 18, 2011, between Access Digital Cinema Phase 2 Corp. and Société Générale, as Collateral Agent. (22)(20)
4.25‑‑Pledge Agreement, dated as of October 18, 2011, between CDF2 Holdings, LLC and Société Générale, as Collateral Agent. (22)(20)
10.1‑‑Separation Agreement between Cinedigm Digital Cinema Corp. and A. Dale Mayo dated as of June 22, 2010. (17)[intentionally omitted]
10.2‑‑
Employment Agreement between Cinedigm Digital Cinema Corp. and Adam M. Mizel dated as of October 19, 2011. (23)
10.2.1‑‑Employment Agreement between Cinedigm Corp. and Adam M. Mizel dated as of October 1, 2013. (25)
10.2.1‑Amendment to Employment Agreement between Cinedigm Corp. and Adam M. Mizel dated as of November 14, 2014. (28)
10.3‑‑Second Amended and Restated 2000 Equity Incentive Plan of the Company. (6)
10.3.1‑‑Amendment dated May 9, 2008 to the Second Amended and Restated 2000 Equity Incentive Plan of the Company. (8)
10.3.2‑‑Form of Notice of Restricted Stock Award. (6)
10.3.3‑‑Form of Non-Qualified Stock Option Agreement. (7)
10.3.4‑‑Form of Restricted Stock Unit Agreement (employees). (8)
10.3.5‑‑Form of Stock Option Agreement. (3)
10.3.6‑‑Form of Restricted Stock Unit Agreement (directors). (8)
10.3.7‑‑Amendment No. 2 dated September 4, 2008 to the Second Amended and Restated 2000 Equity Incentive Plan of the Company. (9)
10.3.8‑‑Amendment No. 3 dated September 30, 2009 to the Second Amended and Restated 2000 Equity Incentive Plan of the Company. (12)
10.3.9‑‑Amendment No. 4 dated September 14, 2010 to the Second Amended and Restated 2000 Equity Incentive Plan of the Company. (18)(17)
10.3.10‑‑Amendment No. 5 dated April 20, 2012 to the Second Amended and Restated 2000 Equity Incentive Plan of the Company. (21)(19)
10.3.11‑‑Amendment No. 6 dated September 12, 2012 to the Second Amended and Restated 2000 Equity Incentive Plan of the Company. (24)(21)
10.3.12‑Amendment No. 7 dated September 16, 2014 to the Second Amended and Restated 2000 Equity Incentive Plan of the Company. (29)
10.4‑‑Cinedigm Corp. Management Incentive Award Plan. (13)
10.5‑[intentionally omitted]
10.6‑‑Employment Agreement between Cinedigm Corp. and Jeffrey S. Edell dated as of June 9, 2014 (30)2014. (27)
10.5‑‑Form of Indemnification Agreement for non-employee directors. (14)
10.7‑‑Agreement of Lease, dated as of July 18, 2000, between the Company and 1-10 Industry Associates, LLC. (2)
10.8‑Employment Agreement between Cinedigm Corp. and William Sondheim dated as of December 4, 2014. (30)
10.9‑[intentionally omitted]
10.10‑‑Lease Agreement, dated as of August 9, 2002, by and between OLP Brooklyn Pavilion LLC and Pritchard Square Cinema LLC. (5)
10.10.1‑‑First Amendment to Contract of Sale and Lease Agreement, dated as of August 9, 2002, by and among Pritchard Square LLC, OLP Brooklyn Pavilion LLC and Pritchard Square Cinema, LLC. (5)
10.10.2‑‑Second Amendment to Contract of Sale and Lease Agreement, dated as of April 2, 2003, by and among Pritchard Square LLC, OLP Brooklyn Pavilion LLC and Pritchard Square Cinema, LLC. (5)
10.10.3‑‑Third Amendment to Contract of Sale and Lease Agreement, dated as of November 1, 2003, by and among Pritchard Square LLC, OLP Brooklyn Pavilion LLC and Pritchard Square Cinema, LLC. (5)

44


10.10.4‑‑Fourth Amendment to Lease Agreement, dated as of February 11, 2005, between ADM Cinema Corporation and OLP Brooklyn Pavilion LLC. (4)
10.11‑‑Employment Agreement between Cinedigm Digital Cinema Corp. and Gary S. Loffredo dated as of October 19, 2011. (23)
10.11.1‑‑Employment Agreement between the Cinedigm Corp. and Gary S. Loffredo dated as of October 13, 2013. (28)(25)
10.12‑‑Term Loan Agreement, dated as of February 28, 2013, by and among Cinedigm DC Holdings, LLC, Access Digital Media, Inc., Access Digital Phase 2, Corp., the Guarantors party thereto, the Lenders party thereto and Prospect Capital Corporation as Administrative Agent and Collateral Agent. (25) (Confidential treatment granted under Rule 24b-2 as to certain portions which are omitted and filed separately with the SEC.)

44


10.19‑‑Credit Agreement, dated as of October 17, 2013, among the Company, the Lenders party thereto, and Société Générale, as Administrative Agent and Collateral Agent. (29)(22) (Confidential treatment granted under Rule 24b-2 as to certain portions which are omitted and filed separately with the SEC.)
10.19.110.13‑Purchase Agreement dated as of April 23, 2015 between the Company and Piper Jaffray & Co., as Initial Purchaser, relating to the Company’s private offering of 5.5% Convertible Senior Notes due 2035. (32)
10.14‑Forward Stock Purchase Confirmation, dated April 24, 2015, by and between the Company and Société Générale, relating to the Company’s private offering of 5.5% Convertible Senior Notes due 2035. (32)
10.15‑[intentionally omitted]
10.16‑[intentionally omitted]
10.17‑[intentionally omitted]
10.18‑[intentionally omitted]
10.19‑
Amended and Restated Credit Agreement, dated as of January 7, 2014, among the Company, the Lenders party thereto, and Société Générale, as Administrative Agent and OneWest Bank, FXB, Collateral Agent.* (Specific (31) (Confidential treatment granted under Rule 24b-2 as to certain portions of this agreement have beenwhich are omitted and have been filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Securities Exchange Act of 1934.SEC.)
10.19.1‑Second Amended and Restated Credit Agreement, dated as of April 29, 2015, among the Company, the Lenders party thereto, Société Générale, as Administrative Agent, and OneWest Bank, FSB, as Collateral Agent. (32)
10.19.2‑Amendment No. 1 to the Second Amended and Restated Credit Agreement, dated as of June 16, 2015, among Cinedigm Corp and Société Générale as Administrative Agent.*
10.20‑‑Amended and Restated Credit Agreement, dated as of February 28, 2013, among Cinedigm Digital Funding I, LLC, the Lenders party thereto and Société Générale, New York Branch, as administrative agent and collateral agent for the lenders and secured parties thereto. (25)(22)
10.21.110.21‑‑2002 ISDA Master Agreement between Natixis and Cinedigm Digital Funding I, LLC dated as of June 7, 2010. (19)[intentionally omitted]
10.21.210.22‑‑Schedule to the 2002 ISDA Master Agreement between Natixis and Cinedigm Digital Funding I, LLC dated as of June 7, 2010. (19)[intentionally omitted]
10.21.310.23‑‑Swap Transaction Confirmation from Natixis to Cinedigm Digital Funding I, LLC dated as of June 14, 2010. (19)
10.22.1‑‑2002 ISDA Master Agreement between HSBC Bank USA and Cinedigm Digital Funding I, LLC dated as of July 20, 2010. (19)
10.22.2‑‑Schedule to the 2002 ISDA Master Agreement between HSBC Bank USA and Cinedigm Digital Funding I, LLC dated as of July 20, 2010. (19)
10.22.3‑‑Swap Transaction Confirmation from HSBC Bank USA to Cinedigm Digital Funding I, LLC dated as of June 8, 2010. (19)
10.23.1‑‑2002 ISDA Master Agreement between Société Générale and Cinedigm Digital Funding I, LLC dated as of May 28, 2010. (19)
10.23.2‑‑Schedule to the 2002 ISDA Master Agreement between Société Générale and Cinedigm Digital Funding I, LLC dated as of June 7, 2010. (19)
10.23.3‑‑Swap Transaction Confirmation from Société Générale to Cinedigm Digital Funding I, LLC dated as of June 7, 2010. (19)[intentionally omitted]
10.24‑‑Securities Purchase Agreement, dated October 17, 2013, among Cinedigm Corp. and the Investors party thereto. (29)(26)
10.25‑‑Common Stock Purchase Agreement, dated October 17, 2013, among Cinedigm Corp. and the Investor party thereto. (29)(26)
10.26‑‑Employment Agreement between Cinedigm Digital Cinema Corp. and Christopher J. McGurk dated as of December 23, 2010. (16)
10.26.1‑‑Employment Agreement between Cinedigm Digital Cinema Corp. and Christopher J. McGurk dated as of August 22, 2013. (27)(24)
10.27‑‑Stock Option Agreement between Cinedigm Digital Cinema Corp. and Christopher J. McGurk dated as of December 23, 2010. (16)
10.28‑‑Credit Agreement, dated as of October 18, 2011, among Cinedigm Digital Funding 2, LLC, as the Borrower, Société Générale, New York Branch, as Administrative Agent and Collateral Agent, Natixis New York Branch, as Syndication Agent and the Lenders party thereto. (22)(20)
10.29‑‑Multiparty Agreement, dated as of October 18, 2011, among Cinedigm Digital Funding 2, LLC, as Borrower, Access Digital Cinema Phase 2, Corp., CDF2 Holdings, LLC, Cinedigm Digital Cinema Corp., CHG-MERIDIAN U.S. Finance, Ltd., Société Générale, New York Branch, as Senior Agent and Ballantyne Strong, Inc., as Approved Vendor. (22)(20)
10.30‑‑Master Equipment Lease No. 8463, effective as of October 18, 2011, by and between CHG- MERIDIAN U.S. Finance, Ltd. and CDF2 Holdings, LLC. (22)(20)
10.31‑‑Master Equipment Lease No. 8465, effective as of October 18, 2011, by and between CHG-MERIDIAN U.S. Finance, Ltd. and CDF2 Holdings, LLC. (22)(20)
10.32‑‑Sale and Leaseback Agreement, dated as of October 18, 2011, by and between CDF2 Holdings, LLC and CHG-MERIDIAN U.S. Finance, Ltd. (22)(20)
10.33‑‑Sale and Contribution Agreement, dated as of October 18, 2011, among Cinedigm Digital Cinema Corp., Access Digital Cinema Phase 2, Corp., CDF2 Holdings, LLC and Cinedigm Digital Funding 2, LLC. (22)(20)
21.1‑‑List of Subsidiaries.*
23.1‑‑Consent of EisnerAmper LLP.*
24.1‑‑Powers of Attorney.* (Contained on signature page)

45


24.1‑Powers of Attorney.* (Contained on signature page)
31.1‑‑Officer's Certificate Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2‑‑Officer's Certificate Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1‑‑Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2‑‑Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS‑‑XBRL Instance Document.*
101.SCH‑‑XBRL Taxonomy Extension Schema.*
101.CAL‑‑XBRL Taxonomy Extension Calculation.*
101.DEF‑‑XBRL Taxonomy Extension Definition.*
101.LAB‑‑XBRL Taxonomy Extension Label.*
101.PRE‑‑XBRL Taxonomy Extension Presentation.*

* Filed herewith.

Documents Incorporated Herein by Reference:

(1) Previously filed with the Securities and Exchange Commission on November 4, 2003 as an exhibit to the Company's Amendment No. 3 to Registration Statement on Form SB-2 (File No. 333-107711).

(2) Previously filed with the Securities and Exchange Commission on August 6, 2003 as an exhibit to the Company's Registration Statement on Form SB-2 (File No. 333-107711).

(3) Previously filed with the Securities and Exchange Commission on April 25, 2005 as an exhibit to the Company's
Registration Statement on Form S-8 (File No. 333-124290).

(4) Previously filed with the Securities and Exchange Commission on April 29, 2005 as an exhibit to the Company's Form 8- K (File No. 001-31810).

(5) Previously filed with the Securities and Exchange Commission on June 29, 2006 as an exhibit to the Company's Form 10- KSB for the fiscal year ended March 31, 2006 (File No. 001-31810).

(6) Previously filed with the Securities and Exchange Commission on September 24, 2007 as an exhibit to the Company's Form 8-K (File No. 000-51910).

(7) Previously filed with the Securities and Exchange Commission on April 3, 2008 as an exhibit to the Company's Form 8-K (File No. 000-51910).

(8) Previously filed with the Securities and Exchange Commission on May 14, 2008 as an exhibit to the Company's Form 8-K (File No. 000-51910).

(9) Previously filed with the Securities and Exchange Commission on September 10, 2008 as an exhibit to the Company's Form 8-K (File No. 000-51910).

(10) Previously filed with the Securities and Exchange Commission on February 9, 2009 as an exhibit to the Company's Form 8-K (File No. 000-51910).

(11) Previously filed with the Securities and Exchange Commission on August 13, 2009 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(12) Previously filed with the Securities and Exchange Commission on October 6, 2009 as an exhibit to the Company's Form 10-K8-K (File No. 001-31810).


46


(13) Previously filed with the Securities and Exchange Commission on October 27, 2009 as an exhibit to the Company's Form 8-K (File No. 001-31810).


46


(14) Previously filed with the Securities and Exchange Commission on September 21, 2009 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(15) Previously filed with the Securities and Exchange Commission on February 10, 2011 as an exhibit to the Company's Form 10-Q for the quarter ended December 31, 2010 (File No. 001-31810).

(16) Previously filed with the Securities and Exchange Commission on January 3, 2011 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(17) Previously filed with the Securities and Exchange Commission on June 25, 2010 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(18) Previously filed with the Securities and Exchange Commission on September 16, 2010 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(19) Previously filed with the Securities and Exchange Commission on August 13, 2010 as an exhibit to the Company's Form 10-Q for the quarter ended June 30, 2010 (File No. 001-31810).

(20)(18) Previously filed with the Securities and Exchange Commission on July 7, 2011 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(21)(19) Previously filed with the Securities and Exchange Commission on April 24, 2012 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(22)(20) Previously filed with the Securities and Exchange Commission on October 24, 2011 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(23) Previously filed with the Securities and Exchange Commission on October 21, 2011 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(24)(21) Previously filed with the Securities and Exchange Commission on September 14, 2012 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(25)(22) Previously filed with the Securities and Exchange Commission on March 4, 2013 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(26)(23) Previously filed with the Securities and Exchange Commission on August 14, 2013November 13, 2014 as an exhibit to the Company's Form 10-Q for the quarter ended September 30, 20132014 (File No. 001-31810).

(27)(24) Previously filed with the Securities and Exchange Commission on August 28, 2013 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(28)(25) Previously filed with the Securities and Exchange Commission on October 17, 2013 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(29)(26) Previously filed with the Securities and Exchange Commission on October 23, 2013 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(30)(27) Previously filed with the Securities and Exchange Commission on June 13, 2014 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(28) Previously filed with the Securities and Exchange Commission on November 14, 2014 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(29) Previously filed with the Securities and Exchange Commission on September 17, 2014 as an exhibit to the Company's Form 8-K (File No. 001-31810).

(30) Previously filed with the Securities and Exchange Commission on February 12, 2015 as an exhibit to the Company's Form 10-Q for the quarter ended December 31, 2014 (File No. 001-31810).

(31) Previously filed with the Securities and Exchange Commission on June 26, 2015 as an exhibit to the Company's Form 10-K for the fiscal year ended March 31, 2014 (File No. 001-31810).

(32) Previously filed with the Securities and Exchange Commission on April 29, 2015 as an exhibit to the Company's Form 8-K (File No. 001-31810).

47