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 technology solutions, financial services and advice, software services, electronic delivery and content distribution services to 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 three segments, mediarealigned its focus to five primary businesses as 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 segment provides technology solutions,services and support 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 services, digitallicense, maintenance and consulting services; and electronic content electronic 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 hashave positioned the Company at what it believes to be the forefront of ana rapidly developing industry relating to the delivery and management of digital cinema and other content to theatres and other remote venues worldwide.  The Company’s Content & Entertainment segment provides content distribution services to alternative and theatrical content owners and to theatrical exhibitors and in-theatre advertising andadvertising.  The Company’s Other segment provides motion picture exhibition to the general public.  The Company’s Other segment providespublic, information technology consulting and managed network monitoring services and 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 has an accumulated deficit of $145,256$146,474 as of JuneSeptember 30, 2009. The Company also has significant contractual obligations related to its recourse and non-recourse debt for the remaining part of fiscal year 2010 and beyond. Management expects that the Company will continue to generate net losses for the foreseeable future.  Based on the Company’s cash position at JuneSeptember 30, 2009, and expected cash flows from operations, management believes that the Company has the ability to meet its obligations through JuneSeptember 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 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, 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. f/k/a The Bigger Picture, currently d/b/a Cinedigm Content and Entertainment Group  (“CEG”), Access Digital Cinema Phase 2 Corp. (“Phase 2 DC”) and

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 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. Because of the uncertainty inherent in such estimates, actual results could differ materially from these estimates under different assumptions or conditions.

Phase 2 DC’s agreements with distributors require the payment of VPFs, according to a fixeddefined fee schedule, for 10 years from the date each system is installed,installed; however, Phase 2 DC may no longer collect VPFs once “cost recoupment”,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

Alternative content fees (“ACFs”) are earned pursuant to contracts with movie exhibitors, whereby amounts are payable to AccessITPhase 1 DC and 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

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.

Barter advertising revenue is recognized for the fair value of the advertising time surrendered in exchange for alternative content.  The Company includes the value of such exchanges in both Content & Entertainment’s net revenues and direct operating expenses.  There may be a timing difference between the screening of alternative content and the screening of the underlying advertising used to acquire the content.  In accordance with EITF 99-17, theThe acquisition cost is being recorded and recognized as a direct operating expense by CEG when the alternative content is screened, and the underlying advertising is being deferred and recognized as revenue ratably over the period such advertising is screened by USM.  The Company has not recorded any net revenues or direct operating expenses related to barter advertising during the three and six months ended JuneSeptember 30, 2008 and 2009.

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 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

all related distribution revenue is deferred until the third party feature films’ or alternative content’s theatrical release date.

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 consist 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 JuneSeptember 30, 2008 and 2009, the Company recorded stock-based compensation expense of $158$200 and $325,$441, respectively, and $358 and $766, for the six months ended September 30, 2008 and 2009, respectively.  The Company estimates that the stock-based compensation expense related to current outstanding stock options, using a Black-Scholes option valuation model, and current outstanding restricted stock awards will be approximately $1,300$1,432 in fiscal 2010.

The weighted-average grant-date fair value of options granted during the three months ended JuneSeptember 30, 2008 and September 30, 2009 was $2.41. There were no options granted during$0.55 and $0.57, respectively, and $0.58 and $0.57, for the threesix months ended JuneSeptember 30, 2009.2008 and 2009, respectively. There were no stock options exercised during the three and six months ended JuneSeptember 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 the 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 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, as well as consideration of outstanding options.   The Company estimates expected volatility for options granted under the Company’s stock option plans based on a measure of historical volatility in the trading market for the Company’s common stock.

The Company accounts for these software development costs under Statement of Financial Accounting Standard (“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

Goodwill is the excess of the purchase price paid over the fair value of the net assets of the acquired business. The Company assesses 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. The Company records goodwillassets annually. During the six months ended September 30, 2008 and intangible assets resulting from past business combinations.  At June 30, 2009, the Company concluded that no triggering events had occurred and no impairment charge was recorded for goodwill.recorded.

As of JuneSeptember 30, 2009, the Company’s finite-lived intangible assets consisted 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 two to ten years.  At JuneNo intangible assets were acquired during the three and six months ended September 30, 2009.  During the six months ended September 30, 2008 and 2009, no impairment charge was recorded for intangible assets.recorded.

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 threesix months ended JuneSeptember 30, 2008 and 2009, no impairment charge for long-lived assets was recorded.

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 six months ended JuneSeptember 30, 2008 and 2009 and, therefore, the impact of dilutive potential common shares from outstanding stock options, warrants, restricted stock, and restricted stock units, totaling 3,385,0704,360,882 shares and 6,106,08323,451,352 shares as of JuneSeptember 30, 2008 and 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.  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 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 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 JuneSeptember 30, 2009, the outstanding balance of the Exhibitor Note was $78.$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 JuneSeptember 30, 2009, the aggregate outstanding balance of the Exhibitor Install Notes was $1,005.$952.

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 JuneSeptember 30, 2009, the aggregate outstanding balance of the FiberMedia Note was $131.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 July 2006, in connection withAs part of the acquisitionconsideration for the purchase price of USM in 2006,  the Company issued an 8% note payable in the principal amount of $1,204 (the “First USM“USM Note”) and an 8% note payable in the principal amount of $4,000 (the “Second USM Note”), both in favor of the stockholders of USM. The First USM Note iswas payable in twelve equal quarterly installments commencing on October 1, 2006 until July 1, 2009. The Second USM Note was payable on November 30, 2006 or earlier if certain conditions were met, and was paid by the Company in October 2006. The First USM Note may be prepaid in whole or from time to time in part without penalty provided that the Company pays all accrued and unpaid interest. During the threesix months ended JuneSeptember 30, 2008 and 2009, the Company repaid principal of $100$204 and $109,$221, respectively, on the First USM Note.  As of JuneSeptember 30, 2009, the outstanding principal balance of the First USM Note was $112.repaid in full.

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 threesix months ended JuneSeptember 30, 2008 and 2009, the Company repaid principal of $28 and $20, respectively, on the SilverScreen Note.  As of JuneSeptember 30, 2009, the SilverScreen Note was repaid in full.

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

In August 2006, AccessITPhase 1 DC entered into an agreement with 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 Eurodollar rate, plus a margin ranging from 2.75% to 4.50%, depending on, among other things, the type of rate chosen, the amount of equity contributed into AccessITPhase 1 DC and the total debt of AccessITPhase 1 DC. Under the GE Credit Facility, AccessITPhase 1 DC must pay interest only through July 31, 2008. Beginning August 31, 2008, in addition to the interest payments, AccessITPhase 1 DC must repay approximately 71.5% of the principal amount of the borrowings over a five-year period with a balloon payment for the balance of the principal amount, together with all unpaid interest on such borrowings and any fees incurred by AccessITPhase 1 DC pursuant to the GE Credit Facility on the maturity date of August 1, 2013. In addition, AccessITPhase 1 DC may prepay borrowings under the GE Credit Facility in whole or in part, after July 31, 2007 and before August 1, 2010, subject to paying certain prepayment penalties ranging from 3% to 1%, depending on when the prepayment is made. The GE Credit Facility is required to be guaranteed by each of AccessITPhase 1 DC’s existing and future direct and indirect domestic subsidiaries (the “Guarantors”) and secured by a first priority perfected security interest on all of the collective assets of AccessITPhase 1 DC and the Guarantors, including real estate owned or leased, and all capital stock or

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 threesix months ended JuneSeptember 30, 2008 and 2009, the Company repaid principal of $0$3,858 and $6,056,$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 JuneSeptember 30, 2009, the outstanding principal balance of the GE Credit Facility was $179,792$166,980 at a weighted average interest rate of 10.7%.

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.

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.counterparty.  As of JuneSeptember 30, 2009, the fair value of the Interest Rate Swap liability was $3,846.  During$3,306.  The change in fair value of the interest rate swap for the three months ended JuneSeptember 30, 2008 and 2009 amounted to a loss of $687and a gain of $540, respectively and gains of $1,565 and $1,223 for the change in fair value recorded in the consolidated statements of operations was $2,252six months ended September 30, 2008 and $683,2009, 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, 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 maximum of $8,900 through December 31, 2009 (the “Draw Down Period”) and requires interest-only payments at 7.3% per annum during the Draw Down Period.  For any funds drawn, the principal is to be repaid in twenty-eight equal quarterly installments commencing in March 2010 (the “Repayment Period”) at an interest rate of 8.5% per annum during the Repayment Period.  The BarcoKBC Related Facility may be prepaid at any time without penalty and is not guaranteed by the Company or its other subsidiaries.subsidiaries, other than Phase 2 DC.  As of JuneSeptember 30, 2009, $4,394$8,885 has been drawn down on the BarcoKBC Related Facility.  Interest expense on the BarcoKBC Related Facility for the three months ended JuneSeptember 30, 2008 and 2009 amounted to $0 and $66,$152, respectively and $0 and $218 for the six months ended September 30, 2008 and 2009, respectively.  As of JuneSeptember 30, 2009, the outstanding principal balance of the BarcoKBC Related Facility was $4,394.$8,885.

At JuneSeptember 30, 2009, the Company was in compliance with all of its debt covenants.

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 June 30, 2009,In a prior year, the Company has

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 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.  TheFor the three months ended September 30, 2008 and 2009, the Company recorded $401 ofand $134, respectively, and $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 for eachShares. See Note 5 on extinguishment of the three months ended June 30, 2008 and 2009.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 amortizing that amount over the 36 month term of the 2007 Senior Notes.    For the three months ended JuneSeptember 30, 2008 and 2009, the Company recorded $437 and $186,$0, respectively, and $874 and $0 for the six months ended September 30, 2008 and 2009, respectively, to interest expense in connection with the Additional Interest Shares.  In March 2009 and June 2009, the Company issued 220,000 shares of Class A Common Stock, each period, as Additional Interest Shares with a value of $136 and $220, respectively.  No Additional Interest Shares were issued in September 2009, as the 2007 Senior Notes were cancelled in August 2009.

In March 2008 and June 2008, the Company issued 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 previously registered 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 the additional 500,000 shares registered on the registration statement on Form S-3 filed on May 6, 2008, which was declared effective by the SEC on June 30, 2008.  For the three months ended JuneSeptember 30, 2008 and 2009, the Company did not record any non-cash interest expense in connection with the Interest Shares.  For the six months ended September 30, 2008 and 2009, the Company recorded $1,342 and $0$186 as non-cash interest expense in connection with the Interest Shares.  No Interest Shares The Companywere issued and no interest was paid such interest in cash forin September 2009, as the three months ended June 30,2007 Senior Notes were cancelled in August 2009.

In connection with the acquisition of CEG in January 2007, CEG 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 $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 June 2008, September 2008 and January 2009, the Company issued 24,579, 22,010 and 70,432 shares of unregistered Class A Common Stock, respectively, with a value of $60, $33 and $49, respectively, to SDE as partial payment for such services and resources.

In February 2009, the Company issued eight shares of Series A 10% Non-Voting Cumulative Preferred Stock (“Preferred Stock”) to two investors.  There is no public trading market for ourthe 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 our 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 payable in cash or, at the Company’s option, by converting the cash amount

of such dividends into Class A Common Stock, and will not be paid until September 30, 2010, as the Company iswas not permitted to do so under the terms of the 2007 Senior Notes and is not so permitted under the 2009 Note, (2) the holders will not have the right to vote on matters brought before the stockholders of the Corporation, (3) upon any liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, before any distribution or payment shall be made to the holders of any Junior Stock (as defined in the Certificate of Designations), subject to the rights of any series of preferred stock that may from time-to-time come into existence and which is expressly senior to the rights of the Preferred Stock, the holders of Preferred Stock shall be entitled to be paid in cash out of the assets of the Company an amount per share of Preferred Stock equal to 100% of the Preferred Stock original issue price (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares), plus accrued but unpaid dividends

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 allocated $537 of the proceeds from the Preferred Stock issuance to the estimated fair value of the Preferred Warrants.

AccessIT’s stock optionThe Company’s equity incentive plan (“the Plan”) provides for the issuance of up to 3,700,0005,000,000 shares of Class A Common Stock to employees, outside directors and consultants. The Company intends to seekobtained stockholder approval to expand the size of the Plan to 5,000,000, from the previously authorized 3,700,000, shares of Class A Common Stock at the Company’s 2009 Annual Meeting of Stockholders to be held on September 10,30, 2009.

The Plan also provides for the issuance of restricted stock and restricted stock unit awards.  During the threesix months ended JuneSeptember 30, 2009, the Company granted 504,090 restricted stock units, of which 274,750 will vest equally

over a three year period and 229,340 will vest at the end of the third year or sooner depending on the Company’s stock price.

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.

As of June 30,In August 2009, AccessDM’s separatein 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 three months ended June 30, 2009, there were no AccessDM options issued.

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 the July 2005 Private Placement 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.these warrants are registered for resale.  As of JuneSeptember 30, 2009, 467,275 July 2005 Private Placements Warrants 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 August 2005 Warrants were immediately exercisable upon issuance and for a period of five years thereafter. The Company was required to register the resale of theunderlying shares of Class A Common Stock underlying the August 2005 Warrants with the SEC. The Company filed a Form S-3 on November 16, 2005, which was declared effective by the SEC on December 2, 2005.these warrants are registered for resale.  As of JuneSeptember 30, 2009, all 760,196 of the August 2005 Warrants remained 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 beginning on March 12, 2009 for a period of five years thereafter. The Preferred Warrants are conditionally 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.Company.  The Company allocated $537 of the proceeds from the Preferred Stock issuance to the

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 Imperial Warrants from time to time if other registrations are filed, as defined in the terms of the Imperial Registration Rights Agreement.  The fair value of the Imperial Warrants at the date of issuance was $427, using a Black-Scholes option valuation model and was recorded in debt issuance costs and stockholders’ equity in the 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 six 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 JuneSeptember 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 JuneSeptember 30, 2009 the Company has installed 139160 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.

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 at agreed upon pricing, as part of the Phase II Deployment.  As of JuneSeptember 30, 2009, the Company has purchased 12 Systems under this agreement for $898, which is included in accounts payable and accrued expenses.$898.

In November 2008, in connection with the Phase II Deployment, Phase 2 DC entered into a supply agreement with Barco, for the purchase of up to 5,000 Systems at agreed upon pricing, as part of the Phase II Deployment.  As of JuneSeptember 30, 2009, the Company has purchased 127138 Systems under this agreement for $9,357, of which $4,205 is included in accounts payable and accrued expenses.$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. In July 2009, wethe Company entered into an agreement with Landlord to settle this matter where wewhereby the Company 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 option to renew or extend this lease has been eliminated.  This lease ends on July 31, 2022.

During the quarter ended September 30, 2009, the Company modified how its decision makers review and allocate resources to operating segments, which resulted in revised reportable segments.  The Company is comprised of threefive 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 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 MediaPhase I Deployment and Phase II Deployment segments consist of the following:

The 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, 100% of the revenues and expenses are being realized by FiberMedia.

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