| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION AND CONSOLIDATION Our consolidated financial statements include the accounts of Cinedigm
and its wholly-owned and majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Investments in which we do not have a controlling interest or are not
the primary beneficiary, but have the ability to exert significant influence, are accounted for under the equity method of accounting.
Noncontrolling interests for which we have been determined to be the primary beneficiary are consolidated and recorded as net loss attributable
to noncontrolling interest. See Note 3 - Other Interests USE OF ESTIMATES The preparation of consolidated financial statements in conformity
with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and assumptions
that affect the assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenue and expenses during the reporting period. Such estimates include the accrual of digital revenue, accounts
receivable reserves, return reserves, inventory reserves, recovery of advances, assessment of goodwill impairment, intangible asset impairment
and estimated amortization lives, fair value for asset acquisitions and business combinations, valuation allowances for income taxes and
stock based compensation awards. Actual results could differ from these estimates. 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. Cash and cash equivalents consisted of the following:
As of
(in thousands) September 30, March 31,
Cash and Cash Equivalents $ 9,676 $ 13,062 EQUITY INVESTMENT IN A METAVERSE COMPANY, A RELATED PARTY On February 14, 2020, the Company acquired an approximately 11.5% interest
in A Metaverse Company (“Metaverse”), a leading publicly traded Chinese entertainment company, formerly Starrise Media Holdings
Limited, whose ordinary shares are listed on the Stock Exchange of Hong Kong. The Company acquired such interest as a strategic investment
and in a private transaction from a shareholder of Metaverse that is related to our major shareholder. Our major shareholder also maintains
a significant beneficial interest ownership in Metaverse. Upon consummation of the transaction on February 14, 2020, the Company recorded
an initial investment of approximately $25.1 million, which is the fair market value of the Metaverse shares on the transaction date on
the Stock Exchange of Hong Kong, in exchange for the Company’s Class A common stock, par value of $0.001 per share (the “Common
Stock”) of $11.2 million, valued as of the date of the issuance of the Common Stock of the Company. The difference in value of shares
received in Metaverse and shares issued by the Company is deemed as contributed capital and recorded in additional paid-in capital. On April 10, 2020, the Company purchased an additional 15% interest
in Metaverse in a private transaction from shareholders of Metaverse that are affiliated with the major shareholder of the Company. The
Company recorded an additional equity investment of approximately $28.2 million, which is the fair market value of the Metaverse shares
on the transaction date on the Stock Exchange of Hong Kong, in exchange for the Company’s common stock of $11.0 million, valued
at the date of the issuance of the Common Stock of the Company. The difference in the value of shares received in Metaverse and shares
issued by the Company is deemed as contributed capital and recorded in additional paid-in capital. This transaction was also recorded
as an equity investment in Metaverse. The Company has accounted for these investments under the equity method
of accounting as the Company can exert significant influence over Metaverse with its direct ownership and affiliation with the Company’s
majority shareholders. The Company has made an irrevocable election to apply the fair value option under ASC 825-10, Financial Instruments,
as it relates to its equity investment in Metaverse. On April 1, 2022, trading of Metaverse’s ordinary shares was
halted on the Hong Kong Stock Exchange. This investment was previously a Level 1 investment as the shares were being actively traded in
a marketplace. The investment is recorded at fair value as a Level 3 as there is not an active market or observable inputs. As of September
30, 2022, Metaverse’s stock valuation is based on an independent valuation based on the market approach is categorized as Level
3 based on unobservable inputs. ACCOUNTS RECEIVABLE 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. 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. We evaluate advances regularly for recoverability and record impairment charges for amounts that we expect may not be recoverable
as of the consolidated balance sheet date. Impairments related to advances were $0.6 million and $0.2 million, for the three
months ended September 30, 2022 and 2021, respectively. Impairments related to advances were $0.6 million and $0.4 million, for
the six months ended September 30, 2022 and 2021, respectively. PROPERTY AND EQUIPMENT Property and equipment are stated at cost, less accumulated depreciation
and amortization. Depreciation expense is recorded using the straight-line method over the estimated useful lives of the respective assets
as follows:
Computer equipment and software 3 - 5 years
Internal use software 5 years
Digital cinema projection systems 10 years
Machinery and equipment 3 - 10 years
Furniture and fixtures 3 - 6 years 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. Post-configuration training and maintenance costs are expensed as incurred. Leasehold improvements are amortized over the shorter of the lease
term or the estimated useful life of the leasehold improvements. Repair and maintenance costs are charged to expense as incurred. Major
renewals, improvements and additions are capitalized. Upon the sale or other disposition of any property and equipment, the cost and related
accumulated depreciation and amortization are removed from the accounts and the gain or loss on disposal is included in the consolidated
statements of operations. IMPAIRMENT OF LONG-LIVED AND FINITE-LIVED ASSETS We review the recoverability of our long-lived assets and finite-lived
intangible assets, when events or conditions occur that indicate a possible impairment exists. The 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 three and six months
ended September 30, 2022 and 2021, no impairment charge was recorded from operations for long-lived assets or finite-lived assets. INTANGIBLE ASSETS 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. For intangible assets with indefinite lives, the assets are tested annually for impairment or sooner if a triggering
event occurs. During the three and six months ended September 30, 2022 and 2021, no impairment charge was recorded for intangible assets.
During the three months ended September 30, 2022 and 2021, the Company had an amortization expense of $0.7 million and $0.7 million, respectively.
During the six months ended September 30, 2022 and 2021, the Company had an amortization expense of $1.5 million and $1.5 million, respectively. Amortization lives of the respective assets as follows:
Trademark 3 years
Content Library 3 – 20 years
Customer Relationships 5 – 13 years
Tradename 2 – 15 years
Supplier Agreements 2 years
Advertiser relationships and Channel 3-13 years
Software 10 years The Company’s intangible assets included the following on September
30, 2022:
Cost Basis Accumulated Impairment Net
Trademark $ 1,925 $ (1,076 ) $ - $ 849
Content Library 23,685 (20,938 ) - 2,747
Customer Relationships 10,658 (7,455 ) (1,968 ) 1,235
Tradename 2,101 (714 ) - 1,387
Theatre Relationship 550 (550 ) - -
Patents 17 (17 ) - -
Supplier Agreements 11,430 (11,415 ) - 15
Advertiser relationships and Channel 10,081 (560 ) - 9,521
Software 3,200 (400 ) - 2,800
Total Intangible Assets $ 63,647 $ (43,125 ) $ (1,968 ) $ 18,554 The Company’s intangible assets included
the following on March 31, 2022:
Cost Basis Accumulated Impairment Net
Trademark $ 1,925 $ (776 ) $ - 1,149
Content Library 23,685 (20,665 ) - 3,020
Customer Relationships 10,658 (7,327 ) (1,968 ) 1,363
Tradename 2,101 (525 ) - 1,576
Theatre Relationship 550 (550 ) - -
Patents 17 (17 ) - -
Supplier Agreements 11,430 (11,384 ) - 46
Advertiser relationships and Channel 10,081 (161 ) - 9,920
Software 3,200 (240 ) - 2,960
Total Intangible Assets $ 63,647 $ (41,645 ) $ (1,968 ) 20,034 Below is the amortization expense per year for the intangible assets:
Total
2023 $ 1,811
2024 3,048
2025 1,796
2026 1,489
2027 1,269
Thereafter 9,141
Total $ 18,554 FAIR VALUE MEASUREMENTS The fair value measurement disclosures are grouped into three levels
based on valuation factors:
● Level 1 – quoted prices in active markets for identical investments
● Level 2 – other significant observable inputs (including quoted
prices for similar investments and market corroborated inputs)
● Level 3 – significant unobservable inputs (including our own
assumptions in determining the fair value of investments) The equity investment in Metaverse is in Hong Kong dollars and was
translated into US dollars as of September 30, 2022 and March 31, 2022 at an exchange rate of 7.8 and 7.8 Hong Kong Dollars to 1 US Dollar,
respectively. The fair value of this equity investment was measured by the quoted market price of Metaverse on the Stock Exchange of Hong
Kong as of March 31, 2022. On April 1, 2022, trading of Metaverse’s ordinary shares was halted on the Hong Kong Stock Exchange and
as of September 30, 2022, Metaverse’s stock valuation is based on an independent valuation based on the market approach and is categorized
as Level 3 based on unobservable inputs. The Company estimated the fair value based on the market approach based on the last known enterprise
value adjusting for trends in value from comparable companies. The adjustment to fair value of this investment resulted in a loss of $1.8
million and gain of $1.0 million for the six months ended September 30, 2022 and 2021, respectively. As the value of the investment in
Metaverse is determined based on unobservable inputs, company and industry fluctuations, as well as general economic, political, regulatory
and market conditions such as recessions, interest rate changes or international currency fluctuations, changes to these assumptions may
have a significant impact on the fair value of our investment in Metaverse. The following tables summarize the levels of fair value measurements
of our financial assets and liabilities as of September 30, 2022 and March 31, 2022: As of September 30, 2022
(in thousands) Level 1 Level 2 Level 3 Total
Assets:
Equity investment in Metaverse, at fair value $ — $ — $ 5,200 $ 5,200
$ — $ — $ 5,200 $ 5,200
Liabilities:
Current portion of earnout consideration on purchase of a business $ — $ — $ 741 $ 741
Long term portion of earnout consideration on purchase of a business — — 651 651
$ — $ — $ 1,392 $ 1,392 As of March 31, 2022
(in thousands) 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 of a business $ — $ — $ 1,081 $ 1,081
Long term portion of earnout consideration on purchase of a business — — 603 603
$ — $ — $ 1,684 $ 1,684 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. 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, 2022 by performing a qualitative analysis and determined that it was not more likely than not that
the fair value of its reporting unit is less than its carrying amount. No goodwill
impairment charge was recorded in the three and six months ended September 30, 2022 and 2021. During the six months ended September 30,
2022, the Company recorded a $59 thousand reduction in goodwill as a result from working capital true-up related to DMR. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted
of the following:
As of
(In thousands) September 30, March 31,
Accounts payable $ 28,262 $ 34,177
Amounts due to producers 9,314 10,430
Accrued compensation and benefits 5,291 3,507
Accrued other expenses 4,401 3,911
Total accounts payable and accrued expenses $ 47,268 $ 52,025 PREPAID AND OTHER CURRENT ASSETS Prepaid and other current assets consisted of
the following:
As of
(In thousands) September 30, March 31,
Other receivables $ 1,004 $ 826
Advances 3,587 2,117
Due from producers 2,340 1,861
Other prepaid expenses 1,149 989
Total prepaid and other current assets $ 8,080 $ 5,793 Prepaid and other assets increased by $2.3 million primarily related
to a $1.5 million increase in advances paid to Hallmark and digital streaming TV partners and a $0.5 increase in distribution related
expenses to be reimbursed by the licensors. 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. Seasonality Revenues from our Cinema Equipment Business derived from the collection
of VPFs from motion picture studios are seasonal, coinciding with the timing of releases of movies by the motion picture studios. Generally,
motion picture studios release the most marketable movies during the summer and the winter holiday season. The unexpected emergence of
a hit movie during other periods can alter the traditional trend. The timing of movie releases can have a significant effect on our results
of operations, and the results of one quarter are not necessarily indicative of results for the next quarter or any other quarter. While
Content Entertainment & Business benefits from the winter holiday season, we believe the seasonality of motion picture exhibition
is becoming less pronounced as the motion picture studios are releasing movies somewhat more evenly throughout the year. Cinema Equipment Business Our Cinema Equipment Business consists of financing
vehicles and administrators for Systems installed nationwide in our first deployment phase (“Phase I Deployment”) to theatrical
exhibitors and for Systems installed domestically and internationally in our second deployment phase (“Phase II Deployment”). We retain ownership of our Systems and the residual cash flows related
to the Systems in Phase I Deployment after the end of the 10-year deployment payment period. For certain Phase II Deployment Systems, we do not retain ownership
of the residual cash flows and digital cinema equipment in Phase II Deployment after the completion of cost recoupment and at the expiration
of the exhibitor master license agreements. The Cinema Equipment Business also provides monitoring, data collection,
serial data verification and management services to this segment, as well as to exhibitors who purchase their own equipment, in order
to collect virtual print fees (“VPFs”) from distributors and Alternative Content Fees (“ACFs”) from alternative
content providers, and to distribute those fees to theatrical exhibitors (collectively, “Services”). VPFs are earned, net of administrative fees, pursuant to contracts
with distributors, whereby amounts are payable by a distributor to Phase I Deployment and to Phase II Deployment when distributor's movies
are displayed on screens utilizing our Systems installed in movie theatres. VPFs are earned and payable to us with respect to Phase I
Deployment based on a defined fee schedule until the end of the VPF term. One VPF is payable for every digital title initially displayed
per System. The amount of VPF revenue is dependent on the number of movie titles released and displayed using the Systems in any given
accounting period. VPF revenue is recognized in the period the title first plays for general audience viewing in a digital projector equipped
movie theatre. The Phase 1 Deployment’s and Phase 2 Deployments performance obligations for revenue recognition are met at this
time. Phase II Deployment’s agreements with distributors require the
payment of VPFs, according to a defined fee schedule, for ten years from the date each system is installed; however, Phase II Deployment
may no longer collect VPFs once “cost recoupment,” as defined in the contracts with distributors, is achieved. Cost recoupment
will occur once the cumulative VPFs and other cash receipts collected by Phase II Deployment have equaled the total of all cash outflows,
including the purchase price of all Systems, all financing costs, all “overhead and ongoing costs”, as defined, and including
service fees, subject to maximum agreed upon amounts during the three-year rollout period and thereafter. The
Company evaluated the constraining estimates related to the variable consideration, that it is not probable to conclude at this point
in time that a significant reversal in the amount of cumulative revenue recognized will occur when the uncertainty associated with the
variable consideration is subsequently resolved. Under the terms of our standard cinema equipment licensing agreements,
exhibitors will continue to have the right to use our Systems through the end of the term of the licensing agreement, after which time,
they have the option to: (1) return the Systems to us; (2) renew their license agreement for successive one-year terms; or (3) purchase
the Systems from us at fair market value. As permitted by these agreements, we typically pursue the sale of the Systems to such exhibitors.
Cinedigm recognizes revenue once the customer takes possession of the Systems and Cinedigm received the sale proceeds. Such sales were
originally contemplated as the conclusion of the digital cinema deployment plan. The Cinema Equipment Business earns an administrative fee of approximately 5%
of VPFs collected and, in addition, earns an incentive service fee equal to 2.5% of the VPFs earned by Phase 1 DC. This administrative
fee is related to the collection and remittance of the 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 as a point in time revenue when the corresponding VPF fees are due from the distributors. A limited number of systems from our Phase I deployment remain eligible
for VPFs from certain distributors where Phase I exhibitors have renewed their term on an annual basis. We continue to pursue system sales
for these remaining exhibitors. Our Phase II deployment currently consists of a limited number of exhibitors who purchased their own systems
and have not yet reached recoupment or the end of their contractual term. We continue to administer VPFs for these limited systems from
certain distributors. Content & Entertainment Business Content & Entertainment Business earns fees for the distribution
of content in the home entertainment markets via several distribution channels, including digital, video on demand (“VOD”
or “OTT Streaming and Digital”), and physical goods (e.g., DVDs and Blu-ray Discs) (“Physical Revenue” or “Base
Distribution Business”). Fees earned are typically a percentage based on the net amounts received from our customers. Depending
upon the nature of the agreements with the platform and content providers, the fee rate that we earn varies. The Company’s performance
obligations include the delivery of content for transactional, subscription and ad supported/free ad-supported streaming TV (“FAST”)
on the digital platforms, and shipment of DVDs and Blu-ray Discs. Revenue is recognized at the point in time when the 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.
Physical 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. Reserves for potential sales returns of physical goods and other allowances
are recorded based upon historical experience. If actual future returns and allowances differ from past experience, adjustments to our
allowances may be required. Content & Entertainment Business also has contracts for the theatrical
distribution of third party feature movies and alternative content. Content & Entertainment Business’s distribution fee revenue
and Content & Entertainment Business’s participation in box office receipts are recognized at the time a feature movie and alternative
content are viewed. Content & Entertainment Business has the right to receive or bill a portion of the theatrical distribution fee
in advance of the exhibition date, and therefore such amount is recorded as a receivable at the time of execution, and all related distribution
revenue is deferred until the third party feature movies’ or alternative content’s theatrical release date. The Company follows the five-step model established by ASC 606 when
preparing its assessment of revenue recognition We have omitted disclosure on the transaction price allocated to remaining
performance obligations and estimated timing of revenue recognition as our contracts with customers that have a duration of more than
one year are immaterial. Principal Agent Considerations Revenue earned by our Content & Entertainment Business 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 cost of goods sold 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 Business recognizes accounts receivable,
net of an estimated allowance for product returns and customer chargebacks, at the time that it recognizes revenue from a sale. Reserves
for product returns and other allowances is variable consideration as part of the transaction price. If actual future returns and allowances
differ from past experience, adjustments to our allowances may be required. During the three and six months ended September 30, 2021 and 2022,
we did not recognize any credit losses or reversals of previously recorded provisions, and did not have any write-offs charged against
the allowance. 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 Business
includes amounts related to the sale of DVDs with future release dates. Deferred revenue relating to our Cinema & Equipment Business pertains
to revenues earned in connection with up front exhibitor contributions that are deferred and recognized over the expected cost recoupment
period. It also includes unamortized balances in connection with activation fees due from the Systems deployments that have extended payment
terms. The ending deferred revenue balance, including current and non-current
balances, as of September 30, 2022 was $0.3 million. For the three and six months ended September 30, 2022, the additions to our
deferred revenue balance were primarily due to cash payments received or due in advance of satisfying performance obligations, while the
reductions to our deferred revenue balance were primarily due to the recognition of revenue upon fulfillment of our performance obligations,
both of which were in the ordinary course of business. Revenue
recognized as of the six months ended September 30, 2022 and 2021 that was included in deferred revenue at the beginning of the year was
$0.2 million and $0.8 million, respectively. Revenue recognized as of the three months ended September 30, 2022 and 2021 that was included
in deferred revenue at the beginning of the quarter was $0.4 million and $0.3 million, respectively. We expect to recognize substantially
all of the deferred revenue as of September 30, 2022 as revenue in the next three months ending December 31, 2022. During the quarter
ended September 30, 2022, $1.7 million of revenue was recognized that was included in the accounts payable balance as constrained variable
consideration at the beginning of the year. The Company recognized the revenue related once the uncertainty associated with the variable
consideration was resolved Participations and royalties payable When we use third parties to distribute company owned content, we record
participations payable, which represent amounts owed to the distributor under revenue-sharing arrangements. When we provide content distribution
services, we record accounts payable and accrued expenses to studios or content producers for royalties owed under licensing arrangements.
We identify and record as a reduction to the liability any expenses that are to be reimbursed to us by such studios or content producers. Disaggregation of Revenue The Company disaggregates revenue into different revenue categories
for the Cinema Equipment and Content & Entertainment Businesses. The Cinema Equipment Business revenue categories are: Phase I Deployment
revenue, Phase II Deployment revenue, Services, and Digital System Sales, and the Content & Entertainment Business revenue categories
are: Base Distribution Business and OTT Streaming and Digital. The following tables present the Company’s revenue categories
for the three and six months ended September 30, 2022 and 2021 (in thousands):
Three Months Ended Six
Months Ended
2022 2021 2022 2021
Cinema Equipment Business:
Phase I Deployment $ 59 $ 148 $ 172 $ 239
Phase II Deployment 1,710 375 1,710 761
Services 108 486 228 665
Digital System Sales 728 2,244 1,922 7,819
Total Cinema Equipment Business revenue $ 2,605 $ 3,253 $ 4,032 $ 9,484
Content & Entertainment Business:
Base Distribution Business $ 820 $ 922 $ 3,024 $ 2,700
OTT Streaming and Digital 10,581 5,928 20,540 12,934
Total Content & Entertainment Business revenue $ 11,401 $ 6,850 $ 23,564 $ 15,634 Concentrations For the three months ended September 30, 2022, three customers, Amazon.com,
Inc., Distribution Solutions, a division of Alliance Entertainment, and Tubi, represented 35% and 11%, and 10% respectively, of Content
& Entertainment Business revenues, and approximately 19%, and 2% and 11%, respectively, of our consolidated
revenues. For the six months ended September 30, 2022, three customers, Amazon.com, Inc., Di |
