Access Integrated Technologies, Inc. d/b/a Cinedigm Digital Cinema Corp. was incorporated in Delaware on March 31, 2000 and began doing business as Cinedigm Digital Cinema Corp. on November 25, 2008 (“Cinedigm”, and collectively with its subsidiaries, the “Company”).  On September 30, 2009, the Company’s stockholders approved a change in the Company’s name from Access Integrated Technologies, Inc., to Cinedigm Digital Cinema Corp. and such change was effected October 5, 2009.  The Company provides fully managed storage,technology solutions, financial services and advice, software services, electronic delivery and softwarecontent distribution services and technology solutions forto owners and distributors of digital content to movie theatres and other venues.  Beginning September 1, 2009, the Company made changes to its organizational structure which impacted its reportable segments, but did not impact its consolidated financial position, results of operations or cash flows. The Company has threerealigned its focus to five primary businesses mediaas follows: the first digital cinema deployment (“Phase I Deployment”), the second digital cinema deployment (“Phase II Deployment”), services (“Media Services”), media content and entertainment (“Content & Entertainment”) and other (“Other”).  The Company’s MediaPhase I Deployment and Phase II Deployment segments are the non-recourse, financing vehicles and administrators for the Company’s digital cinema equipment (the “Systems”) installed in movie theatres nationwide.  The Company’s Services businesssegment provides software, services and technology solutionssupport to the Phase I Deployment and Phase II Deployment segments as well as to other third party customers.  Included in these services are asset management services for a specified fee via service agreements with Phase I Deployment and Phase II Deployment; software license, maintenance and consulting services; and electronic content delivery services via satellite and hard drive to the motion picture and television industries,industry.  These services primarily to facilitate the conversion from analog (film) to digital cinema and have positioned the Company at what the Companyit believes to be the forefront of ana rapidly developing industry relating to the delivery and management of digital cinema and other content to entertainmenttheatres and other remote venues worldwide.  The Company’s Content & Entertainment businesssegment provides content distribution services to alternative and theatrical content owners and to theatrical exhibitors and in-theatre advertising.  The Company’s Other segment provides motion picture exhibition to the general public, information technology consulting and cinema advertisingmanaged network monitoring services and film distribution services to movie exhibitors.  The Company’s Other business provides hosting services and network access for other web hosting services (“Access Digital Server Assets”).  Overall, the Company’s goal is to aid in the transformation of movie theatres to entertainment centers by providing a platform of hardware, software and content choices. Additional information related to the Company’s reporting segments can be found in Note 9.

The Company has incurred net losses historically and through the current period, and until recently, has used cash in operating activities, and has an accumulated deficit of $128,714$146,474 as of December 31, 2008.September 30, 2009. The Company also has significant contractual obligations related to its recourse and non-recourse debt for the remaining part of fiscal year 20092010 and beyond. Management expects that the Company will continue to generate net losses for the foreseeable future.  Certain of the Company’s costs could be reduced if the Company’s working capital requirements increased. Based on the Company’s cash position at December 31, 2008,September 30, 2009, and expected cash flows from operations, management believes that the Company has the ability to meet its obligations through December 31, 2009.September 30, 2010. In August 2009, the Company entered into a private placement of a senior secured note and extinguished its existing senior notes, which provided net proceeds after repayment of existing debt, funding of an interest reserve and transactions fees and expenses of approximately $11,300 of working capital funding.  The Company is seeking to raisehas signed commitment letters for additional non-recourse debt capital, to refinance certain outstanding debt,primarily to meet equipment requirements related to the Company’s second digital cinema deployment (the “PhasePhase II Deployment”) and for working capital as necessary.Deployment (see Note 11). Although the Company recently entered into certain agreements related to the Phase II Deployment (see Note 7), there is no assurance that financing for the Phase II Deployment will be completed as contemplated or under terms acceptable to the Company or its existing shareholders.stockholders. Failure to generate additional revenues, raise additional capital or manage discretionary spending could have a material adverse effect on the Company’s ability to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not reflect any adjustments which may result from the Company’s inability to continue as a going concern.

The condensed consolidated balance sheet as of March 31, 2008,2009, which has been derived from audited financial statements, and the unaudited condensed consolidated financial statements were prepared following the interim reporting requirements of the Securities and Exchange Commission (“SEC”).  As permitted under those rules, certain footnotes or otherThey do not include all disclosures normally

made in financial information that are normally required bystatements contained in Form 10-K. In management’s opinion, all adjustments necessary for a fair presentation of financial position, the results of operations and cash flows in accordance with accounting principles generally accepted in the United States of America (“GAAP”),(GAAP) for the periods presented have been made. The results of operations for the respective interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying condensed or omitted.  Inconsolidated financial statements should be read in conjunction with the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessaryfinancial statements and notes thereto included in the Company’s Annual Report on Form 10-K for a fair presentation have been included.the fiscal year ended March 31, 2009 filed with the SEC on June 15, 2009 (the “Form 10-K”).

The Company’s unaudited condensed consolidated financial statements include the accounts of Cinedigm, Access Digital Media, Inc. (“AccessDM”), Hollywood Software, Inc. d/b/a AccessIT Software (“AccessIT SW”Software”), Core Technology Services, Inc. (“Managed Services”), FiberSat Global Services, Inc. d/b/a AccessIT Satellite and Support Services (“AccessIT Satellite”), ADM Cinema Corporation (“ADM Cinema”) d/b/a the Pavilion Theatre (the “Pavilion Theatre”), Christie/AIX, Inc. d/b/a AccessIT Digital Cinema (“AccessITPhase 1 DC”), PLX Acquisition Corp., UniqueScreen Media, Inc. (“USM”),  Vistachiara Productions, Inc. d/b/f/k/a The Bigger Picture, currently d/b/a Cinedigm Content and Entertainment Group  (“The Bigger Picture”CEG”),Access Digital Cinema Phase 2 Corp. (“Phase 2 DC”) and Access Digital Cinema Phase 2 B/AIX Corp.

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. On an on-going basis, the Company evaluates its estimates, including those related to the carrying values of its long-lived assets, intangible assets and goodwill, the valuation of deferred tax assets, the valuation of assets acquired and liabilities assumed in purchase business combinations, stock-based compensation expense, revenue recognition and capitalization of software development costs. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. ActualBecause of the uncertainty inherent in such estimates, actual results could differ materially from these estimates under different assumptions or conditions.

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

For software multi-element licensing arrangements that do not require significant production, modification or customization of the licensed software, revenue is recognized for the various elements as follows: Revenuerevenue for the licensed software element is recognized upon delivery and acceptance of the licensed software product, as that represents the culmination of the earnings process and the Company has no further obligations to the customer, relative to the software license. Revenue earned from consulting services is recognized upon the performance and completion of these services. Revenue earned from annual software maintenance is recognized ratably over the maintenance term (typically one year).

Managed Services’ revenues, which consistRevenues from the delivery of monthly recurring billings pursuant to network monitoringdata via satellite and maintenance contracts,hard drive are recognized upon delivery, as revenues in the month earned, and other non-recurring billings are recognized on a time and materials basis as revenues in the period in which the services were provided.DMS’ performance obligations have been substantially met at that time.

USM has contracts with exhibitors to display pre-show advertisements on their screens, in exchange for certain fees paid to the exhibitors. USM then contracts with businesses of various types to place their advertisements in select theatre locations, designs the advertisement, and places it on-screen for specific periods of time, generally ranging from three to twelve months.  Cinema advertising service revenue, and the associated direct selling, production and support cost, is recognized on a straight-line basis over the period the related in-theatre advertising is displayed, pursuant to the specific terms of each advertising contract. USM has the right to receive or bill the entire amount of the advertising contract upon execution, and therefore such amount is recorded as a receivable at the time of execution, and all related advertising revenue and all direct costs actually incurred are deferred until such time as the aan in-theatre advertising is displayed.

The right to sell and display such advertising, or other in-theatre programs, products and services, is based upon advertising contracts with exhibitors which stipulate payment terms to such exhibitors for this right. Payment terms generally consist of either fixed annual payments or annual minimum guarantee payments, plus a revenue share of the excess of a percentage of advertising revenue over the minimum guarantee, if any.  The Company recognizes the cost of fixed and minimum guarantee payments on a straight-line basis over each advertising contract year, and the revenue share cost, if any, in accordance with the terms of the advertising contract.

CEG has contracts for the theatrical distribution of third party feature films and alternative content.   CEG’s distribution fee revenue is recognized at the time a feature film and alternative content is viewed, based on net loss.CEG’s participation in box office receipts.  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

Other revenues, attributable to the Access Digital Server Assets, were generatedwhich consist of monthly recurring billings for hosting and network access fees, are recognized as follows:

Since May 1, 2007, the Company’s three internet data centers (“IDCs”) have been operated by FiberMedia AIT, LLC and Telesource Group, Inc. (together, “FiberMedia”), unrelated third parties, pursuant to a master collocation agreement.  Although the Company is still the lessee of the IDCs, substantially all of the revenues and expenses were being realized by FiberMedia and not the Company and since May 1, 2008, 100% of the revenues and expenses are being realized by FiberMedia. In June 2009, one of the IDC leases expired, leaving two IDC leases with the Company as lessee.

Deferred costs primarily consist of the unamortized debt issuance costs related to the credit facility with General Electric Capital Corporation (“GECC”) and, the $55,000 of 10% Senior Notes issued in August 2007 up to August 2009 (see Note 5) and the $75,000 Senior Secured Note issued in August 2009 (see Note 5), which are amortized on a straight-line basis over the term of the respective debt.debt (see Note 5 for extinguishment of debt).  The straight-line basis is not materially different from the effective interest method.  Also included in deferred costs is advertising production, post production and technical support costs related to developing and displaying advertising in the amount of $778, which are capitalized and amortized on a straight-line basis over the same period as the related cinema advertising revenues of $4,704 are recognized.

Direct operating costs consistsconsist of facility operating costs such as rent, utilities, real estate taxes, repairs and maintenance, insurance and other related expenses, direct personnel costs, film rent expense, amortization of capitalized software development costs, exhibitors payments for displaying cinema advertising and other deferred expenses, such as advertising production, post production and technical support related to developing and displaying advertising. These other deferred expenses are capitalized and amortized on a straight-line basis over the same period as the related cinema advertising revenues are recognized.

For the three months ended December 31, 2007September 30, 2008 and 2008,2009, the Company recorded stock-based compensation expense of $162$200 and $295,$441, respectively, and $361$358 and $653,$766, for the ninesix months ended December 31, 2007September 30, 2008 and 2008,2009, respectively.  The Company estimatedestimates that the stock-based compensation expense related to current

The weighted-average grant-date fair value of options granted during the three months ended December 31, 2007September 30, 2008 and 2008September 30, 2009 was $2.56$0.55 and $0,$0.57, respectively, and during$0.58 and $0.57, for the ninesix months ended December 31, 2007September 30, 2008 and 2008 was $2.90 and $0.58, respectively. The total intrinsic value of options exercised during the nine months ended December 31, 2007 and 2008 was approximately $25 and $0,2009, respectively. There were no stock options exercised during the three months and ninesix months ended December 31, 2008.September 30, 2008 and 2009.

The Company estimated the fair value of stock options at the date of each grant using a Black-Scholes option valuation model with the following assumptions:

The risk-free interest rate used in the Black-Scholes option pricingvaluation model for options granted under Cinedigm’s equity incentivethe Company’s stock option plan awards is the historical yield on U.S. Treasury securities with equivalent remaining lives. The Company does not currently anticipate paying any cash dividends on its common stock in the foreseeable future. Consequently, an expected dividend yield of zero is used in the Black-Scholes option pricingvaluation model.  The Company estimates the expected life of options granted under the Company’s stock option plans using both exercise behavior and post-vesting termination behavior.behavior, as well as consideration of outstanding options.   The Company estimates expected volatility for options granted under Cinedigm’s equity incentive planthe Company’s stock option plans based on a measure of historical volatility in the trading market for the Company’s shares of Class A Common Stock.common stock.

The Company accounts for these software development costs under SFAS No. 86, “Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed” (“SFAS No. 86”).  SFAS No. 86 states that software development costs that are incurred subsequent to establishing technological feasibility are capitalized until the product is available for general release. Amounts capitalized as software development costs are amortized using the greater of revenues during the period compared to the total estimated revenues to be earned or on a straight-line basis over estimated lives ranging from three to five years. The Company reviews capitalized software costs for impairment on a periodic basis. To the extent that the carrying amount exceeds the estimated net realizable value of the capitalized software cost, an impairment charge is recorded. No impairment charge was recorded for the nine months ended December 31, 2007 and 2008, respectively.basis with other long-lived assets.  Amortization of capitalized software development costs, included in direct operating costs, for the three months ended December 31, 2007September 30, 2008 and 20082009 amounted to $153$194 and

The carryingGoodwill is the excess of the purchase price paid over the fair value of goodwill and other intangiblethe net assets with indefinite lives are reviewed for possible impairment in accordance with SFAS No. 142 “Goodwill and Other Intangible Assets” (“SFAS No. 142”).   SFAS No. 142 addressesof the recognition and measurement of goodwill and other intangible assets subsequent to their acquisition.acquired business. The Company testsassesses its goodwill for impairment at least annually and in interim periods if certain triggering events occur indicating that the carrying value of goodwill may be impaired. The Company also reviews possible impairment of finite lived intangible assets in accordance with SFAS No. 144, “Accounting forannually. During the Impairment or Disposalsix months ended September 30, 2008 and 2009, no impairment charge was recorded.

As of Long-Lived Assets”. The Company records goodwill andSeptember 30, 2009, the Company’s finite-lived intangible assets resultingconsisted of customer relationships and agreements, theatre relationships, covenants not to compete, trade names and trademarks and Federal Communications Commission licenses (for satellite transmission services), which are estimated to have useful lives ranging from past business combinations.

Property and equipment are stated at cost, less accumulated depreciation.depreciation and amortization. Depreciation expense is recorded using the straight-line method over the estimated useful lives of the respective assets. 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.  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 is included in the condensed consolidated statement of operations.

The Company reviews the recoverability of its long-lived assets on a periodic basis in order to identify businesswhen events or conditions which mayexist that indicate a possible impairment.impairment exists. The assessment for potential impairmentrecoverability is based primarily on the Company’s ability to recover the carrying value of its long-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 athe asset is deemed not to be recoverable and possibly impaired.  The Company then estimates the fair value of the asset to determine whether an impairment loss isshould be recognized.  An impairment loss will be recognized if for the difference between the fair value (computed based upon the expected future discounted cash flows)upon) and the carrying value of the assets.asset exceeds its fair value.  Fair value is estimated by computing the expected future discounted cash flows.  During the ninesix months ended December 31, 2007September 30, 2008 and 2008,2009, no impairment charge for long-lived assets was recorded.

Computations of basic and diluted net loss per share of the Company’s Class A common stock (“Class A Common Stock”) and Class B common stock (“Class B Common Stock”, and together with the Class A Common Stock, the “Common Stock”) have been made in accordance with SFAS No. 128, “Earnings Per Share”. Basic and diluted net loss per share havehas been calculated as follows:

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

The Company incurred net losses for each of the three and ninesix months ended December 31, 2007September 30, 2008 and 20082009 and, therefore, the impact of dilutive potential common shares from outstanding stock options, warrants, restricted stock, and restricted stock units, totaling 2,934,1684,360,882 shares and 4,335,38223,451,352 shares as of December 31, 2007September 30, 2008 and 2008,2009, respectively, were excluded from the computation as it would be anti-dilutive.

In April 2008, the Company executed an interest rate swap agreement (the “Interest Rate Swap”) (see Note 5) to limit the Company’s exposure to changes in interest rates.  The Interest Rate Swap is a derivative financial instrument, which the Company accounts for pursuant to Statement of Financial Accounting Standards (“SFAS”) No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended and interpreted ("SFAS No. 133").  SFAS No. 133 establishes accounting and reporting standards for derivative instruments and requires that all derivatives be recorded at fair value on the balance sheet.  Changes in fair value of derivative financial instruments are either recognized in other comprehensive income (a component of stockholders' equity) or in the condensed consolidated statement of operations depending on whether the derivative is being used to hedge changes in cash flows or fair value.  The Company has determined that this is not a hedging transaction and changes in the value of its Interest Rate Swap were recorded in the condensed consolidated statementstatements of operations (see Note 5).

In September 2006,Effective July 1, 2009, the Financial Accounting Standards BoardBoard’s (“FASB”) Accounting Standards Codification (“ASC”) became the single official source of authoritative, nongovernmental generally accepted accounting principles (“GAAP”) in the United States.  The historical GAAP hierarchy was eliminated and the ASC became the only level of authoritative GAAP, other than guidance issued SFAS No. 157 “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair valueby the SEC.  Our accounting policies were not affected by the conversion to ASC.  However, references to specific accounting standards in GAAP, and expands disclosures about fair value measurements. SFAS 157 appliesthe footnotes to derivatives and other financial instruments measured at fair value under SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”) at initial recognition and in all subsequent periods. Therefore, SFAS 157 nullifies the guidance in footnote 3 of the Emerging Issues Task Force (“EITF”) Issue No. 02-3, “Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities” (“EITF 02-3”). SFAS 157 also amends SFAS 133 to remove the similar guidance to that in EITF 02-3, which was added by SFAS 155. SFAS 157 is effective forour condensed consolidated financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.

In March 2006, in connection with AccessITPhase 1 DC’s Phase I Deployment (see Note 7),deployment, the Company issued to a certain motion picture exhibitor issued to the Company a 7.5% note receivable for $231 (the “Exhibitor Note”), in return for the Company’s payment for certain financed digital projectors.  The Exhibitor Note requires monthly principal and interest payments through September 2010.  As of December 31, 2008,September 30, 2009, the outstanding balance of the Exhibitor Note was $104.$64.

In connection with AccessITPhase 1 DC’s Phase I Deployment (see Note 7),deployment, the Company agreed to provide financing to certain motion picture exhibitors upon the billing to the motion picture exhibitors by Christie Digital Systems USA, Inc. (“Christie”) for the installation costs associated with the placement of digital cinema projection systems (the “Systems”)Systems in movie theatres.  In April 2006, certain motion picture exhibitors agreed to issue to the Company two 8% notes receivable for an aggregate of $1,287 (the “Exhibitor Install Notes”). Under the Exhibitor Install Notes, the motion picture exhibitors are required to make

monthly interest only payments through October 2007 and quarterly principal and interest payments thereafter through August 2009 and August 2017, respectively.  As of December 31, 2008,September 30, 2009, the aggregate outstanding balance of the Exhibitor Install Notes was $1,046.

In November 2008, FiberMedia issued to the Company a 10% note receivable for $631 (the “FiberMedia Note”) related to certain expenses FiberMedia is required to repay to the Company under a master collocation agreement of the IDCs. FiberMedia is required to make monthly principal and interest payments beginning in January 2009 through July 2009.  As of December 31, 2008, the aggregate outstanding balance ofSeptember 30, 2009, the FiberMedia Install NotesNote was $631.repaid in full.

The Company has not experienced a default by any party to any of their obligations in connection with any of the above notes.

*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 by the debt.  The Vendor Note and the GE Credit Facility are not guaranteed by the Company or its other subsidiaries, other than AccessITPhase 1 DC. The KBC Related Facility, the P2 Vendor Note and the P2 Exhibitor Notes are not guaranteed by the Company or its other subsidiaries, other than Phase 2 DC.

In November 2003, the Company issued two 5-year, 8% notes payable aggregating $3,000 (the “HS Notes”) to the founders of AccessIT SW asAs part of the consideration for the purchase price for AccessIT SW.  In March 2007, one of the holders of the HS Notes agreed to reduce their note by $150 for 30,000 shares of unregistered Class A Common Stock and forego $150 of principal payments at the end of their note term.  During the nine months ended December 31, 2008, the Company repaid principal of $450 on the HS Notes.  As of December 31, 2008, the outstanding principal balance of the HS Notes was $90.

Prior to the Company’s acquisition of USM, USM had purchased substantially all the assets of SilverScreen Advertising Incorporated (“SilverScreen”) and issued a 3-year, 4% note payable in the principal amount of $333 (the “SilverScreen Note”) as part of the purchase price for SilverScreen. The SilverScreen Note iswas payable in equal monthly installments until May 2009.  During the ninesix months ended December 31,September 30, 2008 and 2009, the Company repaid principal of $86$28 and $20, respectively, on the SilverScreen Note.  As of December 31, 2008, the outstanding principal balance ofSeptember 30, 2009, the SilverScreen Note was $47.

In August 2007, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with the purchasers party thereto (the “Purchasers”) pursuant to which the Company issued 10% Senior Notes (the “2007 Senior Notes”) in the aggregate principal amount of $55,000 (the “August 2007 Private Placement”). The term of

the 2007 Senior Notes iswas three years which may be extended for one 6 month period at the discretion of the Company if certain conditions arewere met.  Interest on the 2007 Senior Notes iswas payable on a quarterly basis in cash or, at the Company’s option and subject to certain conditions, in shares of its Class A Common Stock (“Interest Shares”). In addition, each quarter, the Company issuesissued shares of Class A Common Stock to the Purchasers as payment of additional interest owed under the 2007 Senior Notes based on a formula (“Additional Interest”).  The Company may prepay the 2007 Senior Notes in whole or in part following the first anniversary of issuance of the 2007 Senior Notes, subject to a penalty of 2% of the principal if the 2007 Senior Notes are prepaid prior to the two year anniversary of the issuance and a penalty of 1% of the principal if the 2007 Senior Notes are prepaid thereafter, and subject to paying the number of shares as Additional Interest that would be due through the end of the term of the 2007 Senior Notes.  The net proceeds of approximately $53,200 from the August 2007 Private Placement were used for expansion of digital cinema rollout plans, to pay off the existing obligations under the $22,000 of One Year Senior Notes, to pay off certain other outstanding debt obligations, for investment in Systems and for working capital and other general corporate purposes. The Purchase Agreement also requires the 2007 Senior Notes to be guaranteed by each of the Company’s existing and, subject to certain exceptions, future subsidiaries (the “Guarantors”), other than AccessIT DC and its respective subsidiaries. Accordingly, each of the Guarantors entered into a subsidiary guaranty (the “Subsidiary Guaranty”) with the Purchasers pursuant to which it guaranteed the obligations of the Company under the 2007 Senior Notes.  The Company also entered into a Registration Rights Agreement with the Purchasers pursuant to which the Company agreed to register the resale of any shares of its Class A Common Stock issued pursuant to the 2007 Senior Notes at any time and from time to time.  As of December 31, 2007, all shares issued to the holders of the 2007 Senior Notes were registered for resale (see Note 6).  Under the 2007 Senior Notes the Company agreed (i) to limit its total indebtedness to an aggregate of $315,000 until certain conditions were met, which conditions have been met allowing the Company to incur indebtedness in excess of $315,000 in the aggregate and (ii) not to, and not to cause its subsidiaries (except for AccessIT DC and its subsidiaries) to, incur indebtedness, with certain exceptions, including an exception for $10,000; provided that no more than $5,000 of such indebtedness is incurred by AccessDM or AccessIT Satellite or any of their respective subsidiaries except as incurred by AccessDM pursuant to a guaranty entered into in accordance with the GE Credit Facility (see below).  At the present time, the Company and its subsidiaries, other than AccessITPhase 1 DC and its subsidiaries, arewere prohibited from paying dividends under the terms of the 2007 Senior Notes.  Interest expense on the 2007 Senior Notes for the three and nine months ended December 31,September 30, 2008 and 2009 amounted to $1,375 and $4,092,$621, respectively and $2,717 and $1,996 for the six months ended September 30, 2008 and 2009, respectively.  AsIn August 2009, in connection with the consummation of December 31, 2008, the 2009 Private Placement (see below), the Company consummated purchase agreements (the “Note Purchase Agreements”) with the holders of all of its outstanding principal balance2007 Senior Notes pursuant to which the Company purchased all of the 2007 Senior Notes, in satisfaction of the principal and any accrued and unpaid interest thereon, for an aggregate purchase price of $42,500 in cash.  The source of such aggregate cash payment was $55,000.the proceeds of the 2009 Private Placement discussed below.  Upon such purchase, the 2007 Senior Notes were canceled and the remaining principal of $12,500 along with unamortized debt issuance costs of $(2,377) and accrued interest of $621 resulted in a $10,744 gain on extinguishment of debt included in the condensed consolidated statements of operations.

In August 2006, AccessITPhase 1 DC entered into an agreement with General Electric Capital Corporation (“GECC”)GECC pursuant to which GECC and certain other lenders agreed to provide to AccessITPhase 1 DC a $217,000 Senior Secured Multi Draw Term Loan (the “GE Credit Facility”). Proceeds from the GE Credit Facility were used for the purchase and installation of up to 70% of the aggregate purchase price, including all costs, fees or other expenses associated with the purchase acquisition, receipt, delivery, construction and installation of Systems in connection with AccessITPhase 1 DC’s Phase I Deployment (see Note 7)deployment and to pay transaction fees and expenses related to the GE Credit Facility, and for certain other specified purposes. The remaining cost of the Systems was funded from other sources of capital including contributed equity. Each of the borrowings by AccessITPhase 1 DC bears interest, at the option of AccessITPhase 1 DC and subject to certain conditions, based on the bank prime loan rate in the United States or the

other equity interests in AccessITPhase 1 DC and its subsidiaries, subject to specified exceptions. The GE Credit Facility is not guaranteed by the Company or its other subsidiaries, other than AccessITPhase 1 DC. During the ninesix months ended December 31,September 30, 2008 and 2009, the Company repaid principal of $9,644$3,858 and $18,868, respectively, on the GE Credit Facility.  The 2009 payments include a prepayment of $5,000 in accordance with the GE Fifth Amendment described below, and an additional voluntary prepayment of $2,000.  As of December 31, 2008,September 30, 2009, the outstanding principal balance of the GE Credit Facility was $191,635$166,980 at a weighted average interest rate of 7.1%10.7%.

Under the GE Credit Facility, as amended, AccessIT DC is required to maintain compliance with certain financial covenants. Material covenants include a leverage ratio, and an interest coverage ratio.  In September 2007, AccessITMay 2009, Phase 1 DC entered into the thirdfourth amendment (the “GE Fourth Amendment”) with respect to the GE Credit Facility to (1) lowerincrease the interest reserverate from 4.5% to 6% above the Eurodollar Base Rate; (2) set the Eurodollar Base Rate floor at 2.5%; (3) reduce the required amount to be reserved for the payment of interest from 9 months of forward cash interest to a fixed $6,900, and permitted a one-time payment of $2,600 to be made from Phase 1 DC to its parent Company, AccessDM; (4) increase the quarterly maximum consolidated leverage ratio covenants that Phase 1 DC is required to meet on a trailing 12 months to 9 months; (2) modifybasis; (5) increase the definition of total equity ratio to count as capital contributions (x) up to $23,300 of permitted subordinated indebtedness and (y) up to $4,000 of previously paid and approved expenses that were incurred during the deployment of Systems; (3) change the leverage ratio covenant; (4) add a newmaximum consolidated senior leverage ratio covenant; and (5) changecovenants that Phase 1 DC is required to meet on a trailing 12 months basis; (6) reduce the quarterly minimum consolidated fixed charge coverage ratio covenant.

In April 2008, AccessITPhase 1 DC executed the Interest Rate Swap otherwise known as an “arranged hedge transaction” or "synthetic fixed rate financing" with a counterparty for a notional amount of approximately 90% of the amounts outstanding under the GE Credit Facility or an initial amount of $180,000. Under the Interest Rate Swap, AccessITPhase 1 DC will effectively pay a fixed rate of 7.3%, to guard against AccessITPhase 1 DC’s exposure to increases in the variable interest rate under the GE Credit Facility. GE Corporate Financial Services arranged the transaction, which took effect commencing August 1, 2008 as required by the GE Credit Facility and will remain in effect until August 2010.  As principal repayments of the GE Credit Facility occur, the notional amount will decrease by a pro rata amount, such that approximately 90% of the remaining principal amount will be covered by the Interest Rate Swap at any time.

Previously, the Interest Rate Swap was classified as an asset, however as a result from the recent decline in Libor rates and the outlook for Libor to remain below the Company’s 2.8% fixed Libor rate, the Interest Rate Swap is currently being shown as a liability.  Upon any refinance of the GE Credit Facility or other early termination or at the maturity date of the Interest Rate Swap, the fair value of the Interest Rate Swap, whether favorable to the Company or not, would be settled in cash with the counter party.  Thecounterparty.  As of September 30, 2009, the fair value of the Interest Rate Swap liability was $3,846 at December 31, 2008 and a loss$3,306.  The change in fair value of $5,411 and $3,846 was recorded in the consolidated statement of operationsinterest rate swap for the three months ended September 30, 2008 and nine2009 amounted to a loss of $687and a gain of $540, respectively and gains of $1,565 and $1,223 for the six months ended December 31,September 30, 2008 and 2009, respectively.

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, entered into a credit facility with KBC Bank NV (the “Barco“KBC Related Facility”) with a bank to fund the purchase of Systems from Barco, N.V.Inc. (“Barco”), to be installed in movie theatres as part of the Company’s Phase II Deployment.  The BarcoKBC Related Facility provides for borrowings of up to a totalmaximum of $8,900 in tranches as necessary through December 31, 2009 (the “Draw Down Period”) and requires interest-only payments at 7.3% per annum during the Draw Down Period.  TheFor any funds drawn, the principal is to

In August 2004, the Company’s Board authorized the repurchase of up to 100,000 shares of Class A Common Stock, which may be purchased at prevailing prices from time-to-time in the open market depending on market conditions and other factors.    Under the terms of the 2007 Senior Notes (see Note 5), the Company is currentlywas previously precluded from purchasing shares of its Class A Common Stock.  As of December 31, 2008,In a prior year, the Company has repurchased 51,440 shares of Class A Common Stock for an aggregate purchase price of $172, including fees, which have been recorded as treasury stock.

Pursuant to the 2007 Senior Notes, in August 2007 the Company issued 715,000 shares of Class A Common Stock (the “Advance Additional Interest Shares”) covering the first 12 months of Additional Interest (see Note 5).  The Company registered the resale of these shares of Class A Common Stock and also registered the resale of an additional 1,249,875 shares of Class A Common Stock for future Interest Shares and Additional Interest.  The Company filed a registration statement on Form S-3 on September 26, 2007, which was declared effective by the SEC on November 2, 2007.  The Company is recording the value of the Advance Additional Interest Shares of $4,676 to interest expense over the 36 month term of the 2007 Senior Notes.  For the ninethree months ended December 31, 2007September 30, 2008 and 2008,2009, the Company recorded $267$401 and $1,202,$134, respectively, ofand $802 and $534 for the six months ended September 30, 2008 and 2009, respectively, to interest expense in connection with the Advance Additional Interest Shares. See Note 5 on extinguishment of debt.

Commencing with the quarter ended December 31, 2008 and through the maturity of the 2007 Senior Notes in the quarter ended September 30, 2010, the Company iswas obligated to issue a minimum of 132,000 shares or a maximum of 220,000 shares of Class A Common Stock per quarter as Additional Interest (the “Additional Interest Shares”).  The Company estimated the initial value of the Additional Interest Shares to be $5,244 and is recordingamortizing that amount over the 36 month term of the 2007 Senior Notes.    For the ninethree months ended December 31, 2007September 30, 2008 and 2008,2009, the Company recorded $437 and $0, respectively, and $1,311,$874 and $0 for the six months ended September 30, 2008 and 2009, respectively, to interest expense in connection with the Additional Interest

In December 2007, March 2008 and June 2008, the Company issued 345,944, 548,572 and 635,847 shares of Class A Common Stock, respectively, as Interest Shares pursuant to the 2007 Senior Notes (see Note 5), which were part of the 1,249,875 shares of Class A Common Stock previously registered for resale on the registration statement on Form S-3 filed on September 26, 2007, which was declared effective by the SEC on November 2, 2007 and part of anthe additional 500,000 shares of Class A Common Stock the resale of which was registered on the registration statement on Form S-3 which was filed on May 6, 2008, andwhich was declared effective by the SEC on June 30, 2008.  The resale of an additional 750,000 shares of Class A Common Stock issued as future Interest Shares and Additional Interest Shares were registered onFor the registration statement on Form S-3, which was filed onthree months ended September 12,30, 2008 and has2009, the Company did not yet been declared effective.record any non-cash interest expense in connection with the Interest Shares.  For the ninesix months ended December 31, 2007September 30, 2008 and 2008,2009, the Company recorded $1,546$1,342 and $1,342, respectively,$186 as non-cash interest expense in connection with the Interest Shares.

In connection with the acquisition of The Bigger PictureCEG in January 2007, The Bigger PictureCEG entered into a services agreement (the “SD Services Agreement”) with SD Entertainment, Inc. (“SDE”) to provide certain services, such as the provision of shared office space and certain shared administrative personnel.  The SD Services Agreement is on a month-to-month term and requires the Company to pay approximately $17$18 per month, of which 70% may be paid periodically in the form of Cinedigm Class A Common Stock, at the Company’s option.  In JuneSeptember 2008 and September 2008,January 2009, the Company issued 24,57922,010 and 22,01070,432 shares of unregistered Class A Common Stock, respectively, with a value of $60$33 and $33,$49, respectively, to SDE as partial payment for such services and resources.

In September 2008,August 2009, in connection with the 2009 Private Placement (see Note 5), the Purchaser agreed with the Company that, subject to limited exceptions, the Purchaser and its affiliates would not, without the Company’s consent, acquire, offer to acquire or join or participate in any group, as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended, that would result in Purchaser and its Fourth Amended and Restated Certificateaffiliates beneficially owning more than 42.5% of Incorporation to designate asthe Class A Common Stock and the 25,000,000Company’s Class B Common Stock outstanding.  This agreement will terminate upon the earliest of August 11, 2011, a change of control, an event of default (each as defined in the 2009 Note) and the date when the Purchaser and its affiliates own less than 10% of the outstanding Class A Common Stock and the Company’s Class B Common Stock.

In August 2009, in connection with the 2009 Private Placement (see Note 5), the Company entered into an agreement (the “Aquifer Agreement”) with Aquifer Capital Group, LLC (“Aquifer Capital”) pursuant to which Aquifer Capital provided financial advisory services to the Company in connection with the purchase of the 2007 Senior Notes in exchange for the issuance of 200,000 shares of undesignated common stock.unregistered Class A Common Stock to designees of Aquifer Capital.   In August 2009, 200,000 shares were issued to designees of Aquifer Capital, with a value of $198 as payment for such services and were recorded as a debt issuance cost associated with the 2009 Note.

In December 2008,February 2009, the Company received subscription proceedsissued eight shares of $2,000 from an investor for Series A 10% Non-Voting Cumulative Preferred Stock (“Preferred Stock”) to two investors.  There is no public trading market for the Preferred Stock. The Preferred Stock has the designations, preferences and rights set forth in the certificate of designations filed with the Secretary of State for the State of Delaware on February 3, 2009 (the “Certificate of Designations”). Pursuant to the Certificate of Designations, holders of Preferred Stock shall have the following rights among others: (1) the holders are entitled to receive dividends at the rate of 10% of the Preferred Stock original issue price per annum on each outstanding share of Preferred Stock (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares). Such dividends shall begin to accrue commencing upon the first date such share is issued and becomes outstanding and shall be issued.payable in cash or, at the Company’s option, by converting the cash amount

In connection with the issuance of Preferred Stock, the Company issued warrants to purchase 700,000 shares of Class A Common Stock, to each holder of Preferred Stock, at an exercise price of $0.63 per share (the “Preferred Warrants”). The Preferred Warrants are exercisable beginning on March 12, 2009 for a period of five years thereafter. The Preferred Warrants are callable by the Company, provided that the closing price of the Company’s Class A Common Stock is $1.26 per share, 200% of the applicable exercise price, for twenty consecutive trading days.  The Company recordedallocated $537 of the $2,000 as a liability at December 31, 2008.  See Note 10 for subsequent events.proceeds from the Preferred Stock issuance to the estimated fair value of the Preferred Warrants.

The Plan also provides for the issuance of restricted stock and restricted stock unit awards.  During the ninesix months ended December 31, 2008,September 30, 2009, the Company granted 723,700504,090 restricted stock units.units, of which 274,750 will vest equally

There were 1,101,356 restricted stock units granted which have not vested as of September 30, 2009.  The Company may pay such restricted stock units upon vesting in cash or shares of Class A Common Stock or a combination thereof at the Company’s discretion.

AccessDM’s separateIn August 2009, in connection with the 2009 Private Placement (see Note 5), AccessDM terminated its stock option plan (the “AccessDM Plan”) providesand all stock options outstanding thereunder.  In exchange for the issuance of options to purchase up to 2,000,000 shares of AccessDM common stock to employees. During the nine months ended December 31, 2008, there were no AccessDM options granted.  As of December 31, 2008, the weighted average exercise price for outstanding stock options is $0.95 and the weighted average remaining contractual life is 5.1 years.

Warrants outstanding consistedconsist of the following:

In July 2005, in connection with the July 2005 Private Placement, the Company issued warrants to purchase 477,275 shares of Class A Common Stock at an exercise price of $11.00 per share (the “July 2005 Private Placement Warrants”). The July 2005 Private Placement Warrants were exercisable beginning on February 18, 2006 for a period of five years thereafter. The July 2005 Private Placement Warrants are conditionally callable by the Company, provided that the closing price of the Company’s Class A Common Stock is $22.00 per share, 200% of the applicable exercise price, for twenty consecutive trading days.Company. The Company agreed to register the resale of theunderlying shares of Class A Common Stock underlying thethese warrants are registered for resale.  As of September 30, 2009, 467,275 July 2005 Private PlacementPlacements Warrants with the SEC. The Company filed a Form S-3 on August 18, 2005, which was declared effective by the SEC on August 31, 2005.remained outstanding.

In August 2005, in connection with a conversion agreement, certain then outstanding warrants were exercised for $2,487 and the Company issued to the investors 560,196 shares of Class A Common Stock and warrants to purchase 760,196 shares of Class A Common Stock at an exercise price of $11.39 per share (the “August 2005 Warrants”). The underlying shares of these warrants are registered for resale.  As of September 30, 2009, all 760,196 of the August 2005 Warrants were immediatelyremained outstanding.

In February 2009, in connection with the issuance of Preferred Stock, the Company issued warrants to purchase 700,000 shares of Class A Common Stock, to each holder of Preferred Stock, at an exercise price of $0.63 per share (the “Preferred Warrants”). The Preferred Warrants are exercisable upon issuance andbeginning on March 12, 2009 for a period of five years thereafter. The Preferred Warrants are conditionally callable by the Company.  The Company was requiredallocated $537 of the proceeds from the Preferred Stock issuance to the estimated fair value of the Preferred Warrants.  As of September 30, 2009, all 1,400,000 of the Preferred Warrants remained outstanding.

In August 2009, in connection with the 2009 Private Placement (see Note 5), the Company issued warrants to purchase 16,000,000 shares of Class A Common Stock at an exercise price of $1.37 per share (the “Sageview Warrants”).  The Sageview Warrants are exercisable beginning on September 30, 2009 and contain customary cashless exercise provision and anti-dilution adjustments, and expire on August 11, 2016 (subject to extension in limited circumstances).   The Company also entered into a Registration Rights Agreement with the Purchaser pursuant to which the Company agreed to register the resale of the underlying shares of the Sageview Warrants from time to time in accordance with the terms of the Registration Rights Agreement.  The fair value of the Sageview Warrants at the date of issuance was $10,732, using a Black-Scholes option valuation model and was recorded as a liability in the condensed consolidated financial statements.  The change in fair value of a $3,576 loss was recognized in the condensed consolidated statement of operations and resulted in a warrant liability fair value of $14,308 at September 30, 2009.  All 16,000,000 of the Sageview Warrants remained outstanding and the underlying shares have not yet been registered.

In August 2009, in connection with the 2009 Private Placement (see Note 5), the Company engaged Imperial Capital, LLC (“Imperial”) to provide financial advisory services.  As partial consideration for such services, the Company issued warrants to Imperial to purchase 750,000 shares of Class A Common Stock (the “Imperial Warrants”).  The Imperial Warrants have a customary cashless exercise feature and a strike price of $1.37 per share, become exercisable on February 11, 2010 and expire on August 11, 2014.  In connection with the issuance of the Imperial Warrants, the Company and Imperial entered into a registration rights agreement (the “Imperial Registration Rights Agreement”) pursuant to which the Company agreed to register the shares of Class A Common Stock underlying the August 2005Imperial Warrants withfrom time to time if other registrations are filed, as defined in the SEC.terms of the Imperial Registration Rights Agreement.  The Company filedfair value of the Imperial Warrants at the date of issuance was $427, using a Form S-3 on November 16, 2005, whichBlack-Scholes option valuation model and was declared effective byrecorded in debt issuance costs and stockholders’ equity in the SEC on December 2, 2005.condensed consolidated financial statements at September 30, 2009.  As of September 30, 2009, all 750,000 of the Imperial Warrants remained outstanding.

In October 2008,As of September 30, 2009, in connection with the Phase II Deployment, Phase 2 DC entered into digital cinema deployment agreements with fivesix motion picture studios for the distribution of digital movie releases to motion picture exhibitors equipped with Systems, and providing for payment of VPFs to Phase 2 DC.  As of September 30, 2009, Phase 2 DC also entered into master license agreements with threefour exhibitors covering a total of 493503 screens, whereby the exhibitors agreed to the placement of Systems as part of the Phase II Deployment.  As of September 30, 2009 the Company has installed 160 Systems.  Installation of additional Systems in the Phase II Deployment is still contingent upon the completion of appropriate vendor supply agreements and financing for the purchase of Systems.  As of December 31, 2008, there were 47 Systems, which had been previously installed by exhibitors and are part of

In September 2009, in connection with the Company’s Phase II Deployment.Deployment, Phase 2 DC entered into master license agreements with two additional exhibitors covering a total of 457 screens, bringing the number of screens licensed by Phase 2 DC to 960.  Both exhibitors will purchase its own equipment through their own financing and pay an upfront activation fee to the Company.  The Company will purchase these Systems which have an aggregate costmanage the billing and collection of approximately $3,400.VPFs and the remittance of a percentage of the VPFs collected, less a servicing fee, to the exhibitors for a ten-year term.

In November 2008, in connection with the Phase II Deployment, Phase 2 DC entered into a supply agreement with Christie, for the purchase of up to 10,000 Systems from Christie at agreed upon pricing, as part of the Phase II Deployment.  As of December 31, 2008,September 30, 2009, the Company had nothas purchased any12 Systems under this agreement.agreement for $898.

In November 2008, in connection with the Phase II Deployment, Phase 2 DC entered into a supply agreement with Barco, Inc. (“Barco”), for the purchase of up to 5,000 Systems from Barco at agreed upon pricing, as part of the Phase II Deployment.  As of December 31, 2008,September 30, 2009, the Company had nothas purchased any138 Systems under this agreement.agreement for $10,096.

In the complaint, Landlord alleges that ADM Cinema violated its obligations under Article 12 of the lease in that

ADM Cinema failed to comply with an Order of the Fire Department of the City of New York issued on September 24, 2007 calling for the installation of a sprinkler system in the Pavilion Theatre and that such violation constitutes an event of default under the lease.  Landlord seeks to terminate the lease and evict ADM Cinema from the premises and to recover its attorneys’ fees and damages for ADM Cinema’s alleged “holding over” by remaining on the premises. The Company believes that it has meritorious defenses against these claims andIn July 2009, the Company intendsentered into an agreement with Landlord to defend its position vigorously. However, ifsettle this matter whereby the Company does not prevail,would be responsible for 25% of the cost and expenses related to the installation of a sprinkler system. The Company’s share of the cost to install a sprinkler system is estimated to be $100.   As an additional condition of this agreement, any significant loss resulting in eviction may have a material effectoption to renew or extend this lease has been eliminated.  This lease ends on the Company’s business, results of operations and cash flows.July 31, 2022.

Segment information has been preparedDuring the quarter ended September 30, 2009, the Company modified how its decision makers review and allocate resources to operating segments, which resulted in accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.”revised reportable segments.  The Company is comprised of three primaryfive reportable segments: MediaPhase I Deployment, Phase II Deployment, Services, Content & Entertainment and Other. The segments were determined based on the products and services provided by each segment. Accounting policies of the segments are the same as those described in Note 2.segment and how management reviews and makes decisions regarding segment operations. Performance of the segments is evaluated on operating income (loss) from operations before interest, taxes, depreciation and amortization.  As a result of the change in the Company’s reportable segments, the Company has restated the segment information for the prior periods.  Future changes to this organization structure may result in changes to the reportable segments disclosed.

The Media Services segment consists of the following:

The Content & Entertainment segment consists of the following:

The Other segment consists of the following:

Since May 1, 2007, the Company’s IDCs have been operated by FiberMedia, consisting of unrelated third parties,

pursuant to a master collocation agreement.  Although the Company is still the lessee of the IDCs, substantially all of the revenues and expenses were being realized by FiberMedia and not the Company and since May 1, 2008,

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