| BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation The accompanying consolidated financial statements of Cineverse Corp. have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). These consolidated financial Statements have been prepared by the Company following the rules and regulations of the SEC. All intercompany transactions and balances have been eliminated in consolidation. We own an 85 % interest in CON TV, LLC ("CONtv"), a worldwide digital network that creates original content, and sells and distributes on-demand digital content on the internet and other consumer digital distribution platforms, such as gaming consoles, set-top boxes, handsets, and tablets. We evaluated the investment under the voting interest entity model and determined that the entity should be consolidated as we have a controlling financial interest in the entity through our ownership of outstanding voting shares, and that other equity holders do not have substantive voting, participating or liquidation rights. We recorded net loss attributable to noncontrolling interest in our Consolidated Statements of Operations equal to 11 % of outstanding profit interest units retained by the noncontrolling interests. We indirectly own 100 % of the common equity of CDF2 Holdings, LLC (“CDF2 Holdings”), which was created for the purpose of capitalizing on the conversion of the exhibition industry from film to digital technology. CDF2 Holdings assists its customers in procuring the equipment necessary to convert their systems to digital technology by providing financing, equipment, installation and related ongoing services. CDF2 Holdings is a Variable Interest Entity (“VIE”), as defined in ASC 810, Consolidation ("ASC 810") . ASC 810 requires the consolidation of VIEs by an entity that has a controlling financial interest in the VIE which entity is thereby defined as the primary beneficiary of the VIE. To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, among other factors. Although we indirectly, wholly own CDF2 Holdings, we, a third party that also has a variable interest in CDF2 Holdings, and an independent third party manager must mutually approve all business activities and transactions that significantly impact CDF2 Holdings’ economic performance. We have therefore assessed our variable interests in CDF2 Holdings and determined that we are not the primary beneficiary of CDF2 Holdings. As a result, CDF2 Holdings’ financial position and results of operations are not consolidated in our financial position and results of operations. In completing our assessment, we identified the activities that we consider most significant to the economic performance of CDF2 Holdings and determined that we do not have the power to direct those activities, and therefore we account for our investment in CDF2 Holdings under the equity method of accounting. Use of Estimates The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include revenue recognition, share-based compensation expense, valuation allowance for deferred income taxes, recovery of advances, fair value for asset acquisitions and business combinations, goodwill and intangible asset impairments, the fair value of our investment in Metaverse, and the assessment of amortization lives to intangible assets. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. On a regular basis, the Company evaluates the assumptions, judgments and estimates. Actual results may differ from these estimates. Reclassifications Certain amounts have been reclassified to conform to the current presentation. Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less to be “cash equivalents.” We maintain bank accounts with major banks, which from time to time may exceed the Federal Deposit Insurance Corporation’s insured limits. We periodically assess the financial condition of the institutions and believe that the risk of any loss is minimal. Non-monetary Transactions During the year ended March 31, 2023, the Company entered into a non-monetary transaction for the purchase and sale of content licenses with an unrelated third party. The fair value of the content was based on a market approach and determined to be $ 1.0 million which is included in Revenues in our Consolidated Statements of Operations. No gain or loss was recognized, as the fair value of the content licenses purchased was determined to be $ 1.0 million and recognized within Intangible Assets, Net on our Consolidated Balance Sheets, and will be amortized over its three year estimated life. For the year ended March 31, 2023, $ 85 thousand of related amortization expense had been recognized. Accounts Receivable, Net We maintain reserves for potential credit losses on accounts receivable. We review the composition of accounts receivable and analyze historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. During the year ended March 31, 2023, the Company had written off $ 2.8 million of previously reserved accounts receivable balances. Employee Retention Tax Credit The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") provided an employee retention credit which was a refundable tax credit against certain employment taxes. The Consolidated Appropriations Act (the "Appropriations Act") extended and expanded the availability of the employee retention credit through December 31, 2021. The Appropriations Act amended the employee retention credit to be equal to 70 % of qualified wages paid to employees during the 2021 fiscal year. The Company qualified for the employee retention credit beginning in June 2020 for qualified wages through September 2021 and filed a cash refund claim during the twelve months ended March 31, 2023 for $ 2.5 million. Accordingly, the Company recorded an employee retention credit totaling $ 2.5 million, respectively, in the Employee retention tax credit line on the Company’s Consolidated Statements of Oper ations. As of March 31, 2023, the tax credit receivable of $ 2.1 million has been included in the Employee retention tax credit line on the Company's Consolidated Balance Sheet. Advances Advances, which are recorded within prepaid and other current assets on the Consolidated Balance Sheets, represent amounts prepaid to studios or content producers for which we provide content distribution services for which we may have the right to recoup over the term of those services. We evaluate advances regularly for recoverability and record an allowance o n a specific identification basis for amounts that we expect may not be recoverable as of the Consolidated Balance Sheet dates. The provision for allowances related to advances were $ 1.3 million and $ 1.2 million , for the years ended March 31, 2023 and 2022 , respectively. Intangible Assets, Net Intangible assets are stated at cost less accumulated amortization. For intangible assets that have finite lives, the assets are amortized using the straight-line method over the estimated useful lives of the related assets. We review the recoverability of our Intangible Assets when events or conditions occur that indicate a possible impairment exists. An assessment for recoverability is based primarily on our ability to recover the carrying value of our long-lived and finite-lived assets from expected future undiscounted net cash flows. If the total of expected future undiscounted net cash flows is less than the total carrying value of the asset, the asset is deemed not to be recoverable and possibly impaired. We then estimate the fair value of the asset to determine whether an impairment loss should be recognized. An impairment loss will be recognized if the asset’s fair value is determined to be less than its carrying value. Fair value is determined by computing the expected future discounted cash flows. During the years ended March 31, 2023 and 2022 , we recorded an impairment of $ 0 and $ 2.0 million for our customer relationships, respectively. Amortization expense is recorded using the straight-line method over the estimated useful lives of the respective assets as follows:
Content Library 3 – 20 years
Trademarks and Tradenames 2 – 15 years
Customer Relationships 5 – 13 years
Theatre Relationship 12 years
Software 10 years
Intangible Assets 3 – 4 years
Patents 3 years
Advertiser Relationships and Channel 2 – 3 years
Supplier Agreements 2 years The Company’s intangible assets include the following (in thousands):
As of March 31, 2023
Cost Basis Accumulated Impairment Net
Content Library $ 23,970 $ ( 21,126 ) - $ 2,844
Advertiser Relationships and Channel 12,604 ( 1,062 ) - 11,542
Supplier Agreements 11,430 ( 11,430 ) - -
Customer Relationships 10,658 ( 7,599 ) ( 1,968 ) 1,090
Trademarks and Tradenames 4,026 ( 2,274 ) - 1,752
Software 3,200 ( 560 ) - 2,640
Total Intangible Assets $ 65,888 $ ( 44,052 ) $ ( 1,968 ) $ 19,868
As of March 31, 2022
Cost Basis Accumulated Impairment Net
Content Library $ 23,685 $ ( 20,665 ) $ - $ 3,020
Advertiser Relationships and Channel 10,081 ( 161 ) - 9,920
Software 3,200 ( 240 ) - 2,960
Trademarks and Tradenames 4,026 ( 1,301 ) - 2,725
Customer Relationships 10,658 ( 7,327 ) ( 1,968 ) 1,363
Supplier Agreements 11,430 ( 11,384 ) - 46
Intangible Assets $ 63,080 $ ( 41,078 ) $ ( 1,968 ) $ 20,034 As of March 31, 2023, amortization expense for each of the successive five years is expected to be (in thousands):
Total
2024 $ 3,378
2025 2,474
2026 1,822
2027 1,401
2028 1,291
Thereafter 9,501
Total $ 19,868 Property and Equipment, Net Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation expense is recorded using the straight-line method over the estimated useful lives of the respective assets, with useful life ranges by major asset class as follows:
Computer equipment and software 3 - 5 years
Internal use software 5 years
Digital cinema projection systems 10 years
Machinery and equipment 3 - 10 years
Furniture and fixtures 3 - 7 years We capitalize costs associated with software developed or obtained for internal use when the preliminary project stage is completed, and it is determined that the software will provide significantly enhanced capabilities and modifications. These capitalized costs are included in property and equipment and include external direct cost of services procured in developing or obtaining internal-use software and personnel and related expenses for employees who are directly associated with, and who devote time to internal-use software projects. Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended use. Once the software is ready for its intended use, the costs are amortized over the useful life of the software on a straight-line basis. Post-configuration training and maintenance costs are expensed as incurred. Our Property and Equipment is considered for impairment if a triggering event occurs, following the same methodology described in the Intangible Assets, net section. As of March 31, 2023, the Company's gross Property and Equipment of $ 68.1 million had $ 66.3 million of associated accumulated depreciation. As of March 31, 2022, the Company's gross Property and Equipment of $ 111.7 million had $ 109.7 million of associated accumulated depreciation. Goodwill Goodwill is the excess of the purchase price paid over the fair value of the net assets of an acquired business. Goodwill is tested for impairment on an annual basis or more often if warranted by events or changes in circumstances indicating that the carrying value may exceed fair value, also known as impairment indicators. Inherent in the fair value determination for each reporting unit are certain judgments and estimates relating to future cash flows, including management’s interpretation of current economic indicators and market conditions, and assumptions about our strategic plans with regard to its operations. To the extent additional information arises, market conditions change, or our strategies change, it is possible that the conclusion regarding whether our remaining goodwill is impaired could change and result in future goodwill impairment charges that will have a material effect on our consolidated financial position or results of operations. The Company has the option to assess goodwill for possible impairment by performing a qualitative analysis to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount or to perform the quantitative impairment test. The Company reassessed goodwill impairment on its annual measurement date of March 31, 2023 by performing a qualitative analysis and determined that it was not more likely than not that the fair value of its reporting unit is greater than its carrying amount. During the year ended March 31, 2023, the Company recorded a purchase price adjustment to reduce Goodwill by $ 260 thousand. No goodwill impairment charge was recorded in the years ended March 31, 2023 and 2022 . Fair Value Measurements The authoritative guidance on fair value measurements establishes a framework with respect to measuring assets and liabilities at fair value on a recurring basis and non-recurring basis, within ASC 820, Fair Value Measurement . Under the framework, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as of the measurement date. The framework also establishes a three-tier hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability and are developed based on the best information available in the circumstances. The hierarchy consists of the following three levels: • Level 1 – quoted prices in active markets for identical investments • Level 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs) • Level 3 – significant unobservable inputs (including our own assumptions in determining the fair value of investments) The following tables summarize the levels of fair value measurements of our financial assets and liabilities (in thousands):
As of March 31, 2023
Level 1 Level 2 Level 3 Total
Assets:
Equity investment in Metaverse, at fair value $ — $ — $ 5,200 $ 5,200
$ — $ — $ 5,200 $ 5,200
Liabilities:
Current portion of earnout consideration on purchase $ — $ — $ 1,444 $ 1,444
Long term portion of earnout consideration on purchase — — — —
$ — $ — $ 1,444 $ 1,444
As of March 31, 2022
Level 1 Level 2 Level 3 Total
Assets:
Equity investment in Metaverse, at fair value $ 7,028 $ — $ — $ 7,028
$ 7,028 $ — $ — $ 7,028
Liabilities:
Current portion of earnout consideration on purchase $ — $ — $ 1,081 $ 1,081
Long term portion of earnout consideration on purchase — — 603 603
$ — $ — $ 1,684 $ 1,684 On February 14, 2020, the Company acquired an approximate 11.5 % interest in A Metaverse Company (“Metaverse”), a publicly traded Chinese entertainment company, formerly Starrise Media Holdings Limited, whose ordinary shares are listed on the Stock Exchange of Hong Kong. The Company acquired such interest as a strategic investment and in a private transaction from a shareholder of Metaverse that is related to our major shareholders. Our major shareholders also maintain a significant beneficial interest ownership in Metaverse. On April 10, 2020, the Company purchased an additional 15 % interest in Metaverse in a private transaction from shareholders of Metaverse that are affiliated with the major shareholder of the Company. The Company recorded an additional equity investment of approximately $ 28.2 million, which was the fair market value of the Metaverse shares on the transaction date on the Stock Exchange of Hong Kong, in exchange for the Company’s common stock of $ 11.0 million, valued at the date of the issuance of the Common Stock of the Company. The difference in the value of shares received in Metaverse and shares issued by the Company is deemed as contributed capital and recorded in additional paid-in capital. This transaction was also recorded as an equity investment in Metaverse. The Company has accounted for this investment under the equity method of accounting as the Company can exert significant influence over Metaverse with its direct ownership and affiliation with the Company’s majority shareholders. The Company has made an irrevocable election to apply the fair value option under ASC 825-10, Financial Instruments , as it relates to its equity investment in Metaverse. As of March 31, 2022, the value of our equity investment in Metaverse of $ 7.0 million, using the quoted trading price of the Stock Exchange of Hong Kong, resulting in an increase in fair value of $ 0.6 million for the year ended March 31, 2022. Following the halting of Metaverse stock trading on the Stock Exchange of Hong Kong in April 2022, the Company valued our equity investment in Metaverse using a market approach and is categorized as a Level 3 valuation based on unobservable inputs. The Company estimated the fair value of Metaverse based on the last known enterprise value, adjusting for trends in enterprise valuations for comparable companies. As of March 31, 2023, the fair value was $ 5.2 million, resulting in a decrease in fair value of $ 1.8 million for the year ended March 31, 2023. The Company estimated the fair value of its earnout liability using contractual inputs from the related business combination, which established specific fiscal year 2023 revenue growth, profitability and EBITDA targets. The Company utilizes the most up to date forecast to estimate the outcome against these targets to determine the ultimate estimated payout. The amounts recognized are not discounted. During the fiscal year ended March 31, 2023, the Company increased the estimated earnout liability by $ 80 thousand and made payments of $ 238 thousand to reduce this liability, partially offset by $ 83 thousand of interest accrued. Our cash and cash equivalents, accounts receivable, unbilled revenue and accounts payable and accrued expenses are financial instruments and are recorded at cost in the consolidated balance sheets. The estimated fair values of these financial instruments approximate their carrying amounts because of their short-term nature. Asset Acquisitions An asset acquisition is an acquisition of an asset, or a group of assets, that does not meet the definition of a business. Asset acquisitions are accounted for by using the cost accumulation model whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of relative fair values. Prepaid and Other Current Assets Prepaid and other current assets consisted of the following (in thousands):
As of March 31,
2023 2022
Advances and Due from Producers $ 3,724 $ 3,978
Other receivables 420 826
Inventory 207 116
Other prepaid expenses 1,107 989
Total prepaid and other current assets $ 5,458 $ 5,909 Advances and amounts due from producers represent amounts prepaid to studios or content producers for which we provide content distribution services. We evaluate advances and amounts due from producers regularly for recoverability and an allowance for amounts that we expect may not be recoverable. The provision for allowances and accelerated amortization related to advances and amounts due from producers were $ 1.3 million and $ 1.2 million for the years ended March 31, 2023 and 2022 , respectively. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following (in thousands):
As of March 31,
2023 2022
Accounts payable $ 15,042 $ 34,177
Amounts due to producers 13,114 10,430
Accrued compensation and benefits 2,532 3,507
Accrued other expenses 3,843 3,911
Total accounts payable and accrued expenses $ 34,531 $ 52,025 Revenue Recognition Payment terms and conditions vary by customer and typically provide net 30 to 90 day terms. We do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to our customer and payment for that product or service will be one year or less. We have in the past entered into arrangements in connection with activation fees due from our System deployments that had extended payment terms. The outstanding balances on these arrangements are insignificant and hence the impact of significant financing would be insignificant. Cinema Equipment Segment Our Cinema Equipment segment consists of financing vehicles and administrators for Systems installed nationwide in our first deployment phase (“Phase I Deployment”) to theatrical exhibitors and for Systems installed domestically and internationally in our second deployment phase (“Phase II Deployment”). We retain ownership of our Systems and the residual cash flows related to the Systems in Phase I Deployment after the end of the 10-year deployment payment period. For certain Phase II Deployment Systems, we do not retain ownership of the residual cash flows and digital cinema equipment in Phase II Deployment after the completion of cost recoupment and at the expiration of the exhibitor master license agreements. The Cinema Equipment segment also provides monitoring, data collection, serial data verification and management services to this segment, as well as to exhibitors who purchase their own equipment, in order to collect virtual print fees (“VPFs”) from motion picture studios and distributors and Alternative Content Fees (“ACFs”) from alternative content providers, and to distribute those fees to theatrical exhibitors (collectively, “Services”). VPFs are earned, net of administrative fees, pursuant to contracts with movie studios and distributors, whereby amounts are payable by a studio to Phase I Deployment and to Phase II Deployment when movies distributed by the studio are displayed on screens utilizing our Systems installed in movie theatres. VPFs are earned and payable to Phase I Deployment based on a defined fee schedule until the end of the VPF term. One VPF is payable for every digital title initially displayed per System. The amount of VPF revenue is dependent on the number of movie titles released and displayed using the Systems in any given accounting period. VPF revenue is recognized in the period the title first plays for general audience viewing in a digital projector equipped movie theatre. The Phase 1 Deployment’s and Phase 2 Deployments performance obligations for revenue recognition are met at this time. Phase II Deployment’s agreements with distributors require the payment of VPFs, according to a defined fee schedule, for ten years from the date each system is installed; however, Phase II Deployment may no longer collect VPFs once “cost recoupment,” as defined in the contracts with movie studios and distributors, is achieved. Cost recoupment will occur once the cumulative VPFs and other cash receipts collected by Phase II Deployment have equaled the total of all cash outflows, including the purchase price of all Systems, all financing costs, all “overhead and ongoing costs”, as defined, and including service fees, subject to maximum agreed upon amounts during the three-year rollout period and thereafter. Further, if cost recoupment occurs before the end of the eighth contract year, the studios will pay us a one-time “cost recoupment bonus.” Under the terms of our standard cinema equipment licensing agreements, exhibitors will continue to have the right to use our Systems through the end of the term of the licensing agreement, after which time, they have the option to: (i) return the Systems to us; (ii) renew their license agreement for successive one-year terms; or (iii) purchase the Systems from us at fair market value. As permitted by these agreements, we typically pursue the sale of the Systems to such exhibitors. Cineverse recognizes revenue once the customer takes possession of the Systems and Cineverse received the sale proceeds. Such sales were originally contemplated as the conclusion of the digital cinema deployment plan. For the Fiscal Years ended March 31, 2023 and 2022, the Company recognized revenue of $ 2.6 million and $ 9.6 million from Digital Cinema System Sales, respectively. The Cinema Equipment segment earns an administrative fee of approximately 5 % of VPFs collected and, in addition, earns an incentive service fee equal to 2.5 % of the VPFs earned by Phase 1 Deployment. This administrative fee is related to the collection and remittance of the VPF’s and the performance obligation is satisfied at that time the related VPF fees are due which is at the time the movies are displayed on screens utilizing our Systems installed in movie theatres. The service fees are recognized at a point in time revenue when the corresponding VPF fees are due from the movie studios and distributors. A limited number of systems from our Phase I deployment remain eligible for VPF's from certain distributors where Phase I exhibitors have renewed their term on an annual basis. We continue to pursue system sales for these remaining exhibitors. For the year ended March 31, 2023 and 2022, $ 9.1 million and $ 4.8 million of revenue was recognized that was included in the accounts payable balance as constrained variable consideration at the beginning of the year. Certain agreements with studios contain the right to audit VPF fees. As a result, the Company recognized these amounts as constrained variable consideration until audit conclusion or the expiration of the associated audit rights. The Company recognized the revenue once the uncertainty associated with the variable considerations was resolved. As of March 31, 2023, approximatel y $ 1.0 million remains on our Consolidated Balance Sheet in accounts payable as constrained variable consideration. Content & Entertainment Segment Our Content & Entertainment segment earns fees for the distribution of content in the home entertainment markets via several distribution channels, including digital, video on demand (“VOD” or “OTT Streaming and Digital”), and physical goods (e.g., DVDs and Blu-ray Discs) (“Base Distribution”). Fees earned are typically a percentage based on the net amounts received from our customers. Depending upon the nature of the agreements with the platform and content providers, the fee rate that we earn varies. The Company’s performance obligations include the delivery of content for transactional, subscription and ad supported/free ad-supported streaming TV (“FAST”) on the digital platforms, and shipment of DVDs and Blu-ray Discs. Revenue is recognized at the point in time when the content is available for subscription on the digital platform (the Company’s digital content is considered functional IP), at the time of shipment for physical goods, or point-of-sale for transactional and VOD services as the control over the content or the physical title is transferred to the customer. The Company considers the delivery of content through various distribution channels to be a single performance obligation. Base Distribution Revenue from the sale of physical goods is recognized after deducting the reserves for sales returns and other allowances, which are accounted for as variable consideration. Base Distribution is recognized after deducting reserves for sales returns and other allowances. Reserves for potential sales returns and other allowances are recorded based upon historical experience. If actual future returns and allowances differ from past experience, adjustments to our allowances may be required. The Content & Entertainment segment also has contracts for the theatrical distribution of third party feature movies and alternative content. The Content & Entertainment segment's distribution fee revenue and participation in box office receipts are recognized at the time a feature movie and alternative content are viewed. The Content & Entertainment segment has the right to receive or bill a portion of the theatrical distribution fee in advance of the exhibition date, and therefore such amount is recorded as a receivable at the time of execution, and all related distribution revenue is deferred until the third party feature movies’ or alternative content’s theatrical release date. The Company follows the five-step model established by ASC 606, Revenue from Contracts with Customers when preparing its assessment of revenue recognition. Principal Agent Considerations Revenue earned by our Content & Entertainment segment from the delivery of digital content and physical goods may be recognized gross or net depending on the terms of the arrangement. We determine whether revenue should be reported on a gross or net basis based on each revenue stream. Key indicators that we use in evaluating gross versus net treatment include, but are not limited to, the following: • which party is primarily responsible for fulfilling the promise to provide the specified good or service; and • which party has discretion in establishing the price for the specified good or service. Shipping and Handling Shipping and handling costs are incurred to move physical goods (e.g., DVDs and Blu-ray Discs) to customers. We recognize all shipping and handling costs as an expense in direct operating expenses because we are responsible for delivery of the product to our customers prior to transfer of control to the customer. Credit Losses We maintain reserves for potential credit losses on accounts receivable. We review the composition of accounts receivable and analyze historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. Our Content & Entertainment segment recognizes accounts receivable, net of an estimated allowance for product returns and customer chargebacks, at the time that it recognizes revenue from a sale. Reserves for product returns and other allowances is variable consideration as part of the transaction price. If actual future returns and allowances differ from past experience, adjustments to our allowances may be required. We record accounts receivable, long-term in connection with activation fees that we earn from Systems deployments that have extended payment terms. Such accounts receivable are discounted to their present value at prevailing market rates. Contract Liabilities We generally record a receivable related to revenue when we have an unconditional right to invoice and receive payment, and we record deferred revenue (contract liability) when cash payments are received or due in advance of our performance, even if amounts are refundable. Deferred revenue pertaining to our Content & Entertainment includes amounts related to the sale of DVDs with future release dates. Deferred revenue relating to our Cinema Equipment segment pertains to revenues earned in connection with up front exhibitor contributions that are deferred and recognized over the expected cost recoupment period. It also includes unamortized balances in connection with activation fees due from the Systems deployments that have extended payment terms. The ending deferred revenue balance, including current as of March 31, 2023 and 2022 was $ 0.2 million . For the year ended March 31, 2023, the additions to our deferred reve |
