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Cineverse Corp. - Quarter Report: 2022 December (Form 10-Q)

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal period ended: December 31, 2022

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____ to _____

 

Commission File Number: 001-31810

 

Cinedigm Corp.

(Exact name of registrant as specified in its charter)

 

Delaware

 

22-3720962

(State or Other Jurisdiction of
Incorporation or Organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

244 Fifth Avenue, Suite M289, New York, N.Y.

 

10001

(Address of principal executive offices)

 

(Zip Code)

 

(212) 206-8600

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol

 

Name of each exchange on
which registered

CLASS A COMMON STOCK, PAR VALUE $0.001 PER SHARE

 

CIDM

 

NASDAQ CAPITAL MARKET

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

Non-accelerated filer

 

Smaller reporting company

 

Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

 

As of February 10, 2023, 179,092,441 shares of Class A Common Stock, $0.001 par value, were outstanding.

 


 

CINEDIGM CORP

 

TABLE OF CONTENTS

 

 

 

Page

 

PART I - FINANCIAL INFORMATION

 

 

 

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets at December 31, 2022 (Unaudited) and March 31, 2022 (Audited)

1

 

Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months ended December 31, 2022 and 2021

2

 

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months ended December 31, 2022 and 2021

3

 

Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months ended December 31, 2022 and 2021

4

 

Unaudited Condensed Consolidated Statements of Equity for the Three and Nine Months ended December 31, 2022 and 2021

6

 

Notes to the Condensed Consolidated Financial Statements (Unaudited)

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

28

Item 4.

Controls and Procedures

36

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

38

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

38

Item 3.

Defaults Upon Senior Securities

38

Item 4.

Mine Safety Disclosures

38

Item 5.

Other Information

38

Item 6.

Exhibits

38

Exhibit Index

38

Signatures

39

 

 


 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

 

CINEDIGM CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

 

As of

 

 

 

December 31,
2022

 

 

March 31,
2022

 

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,796

 

 

$

13,062

 

Accounts receivable, net of allowance of $2,780 and $2,921, respectively

 

 

24,993

 

 

 

30,843

 

Unbilled revenue

 

 

2,681

 

 

 

2,349

 

Employee retention tax credit

 

 

2,475

 

 

 

 

Prepaid and other current assets

 

 

7,303

 

 

 

5,909

 

Total current assets

 

 

46,248

 

 

 

52,163

 

Equity investment in Metaverse, a related party, at fair value

 

 

5,200

 

 

 

7,028

 

Property and equipment, net

 

 

1,695

 

 

 

1,980

 

Intangible assets, net

 

 

18,864

 

 

 

20,034

 

Goodwill

 

 

21,025

 

 

 

21,084

 

Other long-term assets

 

 

1,863

 

 

 

2,347

 

Total assets

 

$

94,895

 

 

$

104,636

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

40,719

 

 

$

52,025

 

Line of credit, including unamortized debt issuance costs of $133 and $0, respectively

 

 

4,867

 

 

 

 

Current portion of deferred consideration on purchase of business

 

 

4,694

 

 

 

4,513

 

Other current liabilities

 

 

467

 

 

 

454

 

Total current liabilities

 

 

50,747

 

 

 

56,992

 

Deferred consideration on purchase of business – net of current portion

 

 

5,940

 

 

 

6,203

 

Other long-term liabilities

 

 

564

 

 

 

491

 

Total liabilities

 

 

57,251

 

 

 

63,686

 

Stockholders’ Equity

 

 

 

 

 

 

Preferred stock, 15,000,000 shares authorized; Series A 10% - $0.001 par value per share; 20 shares authorized; 7 shares issued and 7 shares outstanding at December 31, 2022 and March 31, 2022. Liquidation preference of $3,648

 

 

3,559

 

 

 

3,559

 

Class A Common stock, $0.001 par value; 275,000,000 shares authorized at December 31, 2022 and March 31, 2022, 180,225,330 and 176,629,435 shares issued and 178,909,479 and 175,313,584 shares outstanding at December 31, 2022 and March 31, 2022, respectively

 

 

177

 

 

 

174

 

Additional paid-in capital

 

 

526,402

 

 

 

522,601

 

Treasury stock, at cost; 1,315,851 shares

 

 

(11,608

)

 

 

(11,608

)

Accumulated deficit

 

 

(479,229

)

 

 

(472,310

)

Accumulated other comprehensive loss

 

 

(389

)

 

 

(163

)

Total stockholders’ equity of Cinedigm Corp.

 

 

38,912

 

 

 

42,253

 

Deficit attributable to noncontrolling interest

 

 

(1,268

)

 

 

(1,303

)

Total equity

 

 

37,644

 

 

 

40,950

 

Total liabilities and equity

 

$

94,895

 

 

$

104,636

 

 

See accompanying Notes to Condensed Consolidated Financial Statements

 

1


 

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except share and per share data)

 

 

 

Three Months Ended
December 31,

 

 

Nine Months Ended
December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues

 

$

27,882

 

 

$

14,084

 

 

$

55,478

 

 

$

39,202

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating

 

 

14,411

 

 

 

6,459

 

 

 

29,859

 

 

 

14,423

 

Selling, general and administrative

 

 

9,107

 

 

 

7,358

 

 

 

29,016

 

 

 

20,520

 

Depreciation and amortization

 

 

924

 

 

 

1,031

 

 

 

2,908

 

 

 

3,663

 

Total operating expenses

 

 

24,442

 

 

 

14,848

 

 

 

61,783

 

 

 

38,606

 

Operating income (loss)

 

 

3,440

 

 

 

(764

)

 

 

(6,305

)

 

 

596

 

Interest expense

 

 

(367

)

 

 

(97

)

 

 

(880

)

 

 

(277

)

Gain on forgiveness of PPP loan

 

 

 

 

 

 

 

 

 

 

 

2,178

 

Change in fair value of equity investment in Metaverse, a related party

 

 

 

 

 

453

 

 

 

(1,828

)

 

 

1,453

 

Employee retention tax credit

 

 

2,025

 

 

 

 

 

 

2,475

 

 

 

 

Other income (expense)

 

 

(76

)

 

 

(22

)

 

 

(82

)

 

 

69

 

Income (loss) before income taxes

 

 

5,022

 

 

 

(430

)

 

 

(6,620

)

 

 

4,019

 

Income tax benefit

 

 

 

 

 

26

 

 

 

 

 

 

576

 

Net income (loss)

 

 

5,022

 

 

 

(404

)

 

 

(6,620

)

 

 

4,595

 

Net (income) loss attributable to noncontrolling interest

 

 

(8

)

 

 

19

 

 

 

(35

)

 

 

23

 

Net income (loss) attributable to controlling interests

 

 

5,014

 

 

 

(385

)

 

 

(6,655

)

 

 

4,618

 

Preferred stock dividends

 

 

(88

)

 

 

(89

)

 

 

(264

)

 

 

(267

)

Net income (loss) attributable to common stockholders

 

$

4,926

 

 

$

(474

)

 

$

(6,919

)

 

$

4,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to common stockholders:

 

Basic

 

$

0.03

 

 

$

(0.00

)

 

$

(0.04

)

 

$

0.03

 

Diluted

 

$

0.03

 

 

$

(0.00

)

 

$

(0.04

)

 

$

0.03

 

Weighted average shares of common stock outstanding:

 

Basic

 

 

178,899,605

 

 

 

173,167,450

 

 

 

177,077,803

 

 

 

169,413,873

 

Diluted

 

 

178,899,605

 

 

 

173,167,450

 

 

 

177,077,803

 

 

 

173,017,364

 

 

See accompanying Notes to Condensed Consolidated Financial Statements

2


 

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands)

 

 

 

Three Months Ended
December 31,

 

 

Nine Months Ended
December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income (loss)

 

 

5,022

 

 

$

(404

)

 

$

(6,620

)

 

$

4,595

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation

 

 

88

 

 

 

(14

)

 

 

(226

)

 

 

(33

)

Comprehensive income (loss) attributable to noncontrolling interest

 

 

(8

)

 

 

19

 

 

 

(35

)

 

 

23

 

Comprehensive income (loss)

 

$

5,102

 

 

$

(399

)

 

$

(6,881

)

 

$

4,585

 

 

See accompanying Notes to Condensed Consolidated Financial Statements

3


 

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

Nine Months Ended
December 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net (loss) income

 

$

(6,620

)

 

$

4,595

 

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

2,908

 

 

 

3,663

 

Changes in fair value of equity investment in Metaverse

 

 

1,828

 

 

 

(1,464

)

Gain from forgiveness of PPP loan

 

 

 

 

 

(2,178

)

Impairment of advances

 

 

1,636

 

 

 

782

 

Provision (benefit) for doubtful accounts

 

 

54

 

 

 

(397

)

Amortization of debt issuance costs

 

 

138

 

 

 

 

Stock-based compensation

 

 

3,906

 

 

 

3,278

 

Interest expense for deferred consideration & earnouts

 

 

743

 

 

 

97

 

Non-monetary sale of content licenses

 

 

(1,022

)

 

 

 

Other

 

 

51

 

 

 

59

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Accounts receivable, net

 

 

5,795

 

 

 

(8,164

)

Unbilled revenue

 

 

(332

)

 

 

(1,449

)

Prepaids and other current and long-term assets

 

 

(2,747

)

 

 

(1,320

)

Employee retention tax credit

 

 

(2,475

)

 

 

 

Accounts payable, accrued expenses, and other liabilities

 

 

(11,764

)

 

 

7,244

 

Net cash (used in) provided by operating activities

 

 

(7,901

)

 

 

4,746

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(429

)

 

 

(292

)

Purchase of businesses

 

 

 

 

 

(4,750

)

Sale of investment securities

 

 

 

 

 

11

 

Net cash used in investing activities

 

 

(429

)

 

 

(5,031

)

Cash flows from financing activities:

 

 

 

 

 

 

Payments of notes payable and deferred consideration

 

 

(665

)

 

 

(7,786

)

Proceeds from line of credit

 

 

19,469

 

 

 

 

Payments on line of credit

 

 

(14,469

)

 

 

(1,956

)

Debt issuance costs

 

 

(271

)

 

 

 

Issuance of common stock

 

 

 

 

 

12,378

 

Net cash provided by financing activities

 

 

4,064

 

 

 

2,636

 

Net change in cash and cash equivalents

 

 

(4,266

)

 

 

2,351

 

Cash and cash equivalents at beginning of period

 

 

13,062

 

 

 

17,849

 

Cash and cash equivalents at end of period

 

$

8,796

 

 

$

20,200

 

 

See accompanying Notes to Condensed Consolidated Financial Statements

4


 

CINEDIGM CORP.

SUPPLEMENTAL CASH FLOW INFORMATION AND DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITY

(Unaudited)

(In thousands)

 

 

 

Nine Months Ended
December 31,

 

 

 

2022

 

 

2021

 

Cash interest paid

 

$

58

 

 

$

701

 

Income taxes paid

 

 

 

 

 

79

 

Noncash investing and financing activities:

 

 

 

 

 

 

Accrued dividends on preferred stock

 

 

88

 

 

 

89

 

Issuance of Class A common stock for payment of accrued preferred stock dividends

 

 

264

 

 

 

267

 

Issuance of Class A common stock for business combination

 

 

 

 

 

4,824

 

Deferred consideration in purchase of business

 

 

 

 

 

1,980

 

Earnout consideration in purchase of a business

 

 

 

 

 

1,461

 

Earnout consideration paid with common shares of Company

 

 

(238

)

 

 

 

Earnout consideration adjustment

 

 

80

 

 

 

 

Treasury shares acquired for withholding taxes

 

 

 

 

 

5

 

Issuance of common stock for Board of Director compensation

 

 

3

 

 

 

 

 

5


 

 

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands, except share data)

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Treasury

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

 

Non
Controlling

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

 

Interest

 

 

Total

 

Balances as of March 31, 2021 (Audited)

 

 

7

 

 

$

3,559

 

 

 

166,228,568

 

 

$

164

 

 

 

1,313,836

 

 

$

(11,603

)

 

$

499,272

 

 

$

(474,080

)

 

$

(68

)

 

$

17,244

 

 

$

(1,362

)

 

$

15,882

 

Foreign exchange translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(54

)

 

 

(54

)

 

 

 

 

 

(54

)

Stock-based compensation

 

 

 

 

 

 

 

 

35,714

 

 

 

 

 

 

 

 

 

 

 

 

983

 

 

 

 

 

 

 

 

 

983

 

 

 

 

 

 

983

 

Issuance of common stock in connection with a business combination

 

 

 

 

 

 

 

 

1,483,129

 

 

 

2

 

 

 

 

 

 

 

 

 

2,504

 

 

 

 

 

 

 

 

 

2,506

 

 

 

 

 

 

2,506

 

Preferred stock dividends paid with common stock

 

 

 

 

 

 

 

 

53,278

 

 

 

 

 

 

 

 

 

 

 

 

89

 

 

 

(89

)

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,187

 

 

 

 

 

 

5,187

 

 

 

7

 

 

 

5,194

 

Balances as of June 30, 2021

 

 

7

 

 

$

3,559

 

 

 

167,800,689

 

 

$

166

 

 

 

1,313,836

 

 

$

(11,603

)

 

$

502,848

 

 

$

(468,982

)

 

$

(122

)

 

$

25,866

 

 

$

(1,355

)

 

$

24,511

 

Foreign exchange translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

35

 

 

 

35

 

 

 

 

 

 

35

 

Stock-based compensation

 

 

 

 

 

 

 

 

132,630

 

 

 

 

 

 

 

 

 

 

 

 

946

 

 

 

 

 

 

 

 

 

946

 

 

 

 

 

 

946

 

Issuance of common stock in connection with business combinations

 

 

 

 

 

 

 

 

1,179,156

 

 

 

1

 

 

 

 

 

 

 

 

 

2,317

 

 

 

 

 

 

 

 

 

2,318

 

 

 

 

 

 

2,318

 

Treasury stock in connection with taxes withheld from employees

 

 

 

 

 

 

 

 

(2,015

)

 

 

 

 

 

2,015

 

 

 

(5

)

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

(5

)

Preferred stock dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(89

)

 

 

 

 

 

(89

)

 

 

 

 

 

(89

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(184

)

 

 

 

 

 

(184

)

 

 

(11

)

 

 

(195

)

Balances as of September 30, 2021

 

 

7

 

 

$

3,559

 

 

 

169,110,460

 

 

$

167

 

 

 

1,315,851

 

 

$

(11,608

)

 

$

506,111

 

 

$

(469,255

)

 

$

(87

)

 

$

28,887

 

 

$

(1,366

)

 

$

27,521

 

Foreign exchange translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14

)

 

 

(14

)

 

 

 

 

 

(14

)

Stock-based compensation

 

 

 

 

 

 

 

 

147,712

 

 

 

 

 

 

 

 

 

 

 

 

1,349

 

 

 

 

 

 

 

 

 

1,349

 

 

 

 

 

 

1,349

 

Issuance of common stock in connection with equity line purchase commitment

 

 

 

 

 

 

 

 

210,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends

 

 

 

 

 

 

 

 

102,697

 

 

 

 

 

 

 

 

 

 

 

178

 

 

 

 

 

 

 

 

 

178

 

 

 

 

 

 

178

 

Issuance of common stock in connection with performance stock units

 

 

 

 

 

 

 

263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock in connection with equity line, net

 

 

 

 

 

 

 

 

5,300,000

 

 

 

7

 

 

 

 

 

 

 

 

 

12,371

 

 

 

 

 

 

 

 

 

12,378

 

 

 

 

 

 

12,378

 

Preferred stock dividends accrued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

89

 

 

 

(89

)

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(385

)

 

 

 

 

 

(385

)

 

 

(19

)

 

 

(404

)

Balances as of December 31, 2021

 

 

7

 

 

$

3,559

 

 

 

174,871,216

 

 

$

174

 

 

 

1,315,851

 

 

$

(11,608

)

 

$

520,099

 

 

$

(469,729

)

 

$

(101

)

 

$

42,394

 

 

$

(1,385

)

 

$

41,009

 

 

See accompanying Notes to Condensed Consolidated Financial Statements

6


 

 

CINEDIGM CORP.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands, except share data)

 

 

Preferred Stock

 

 

Common Stock

 

 

Treasury

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders'

 

 

Non
Controlling

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

 

Interest

 

 

Total

 

Balances as of March 31, 2022 (Audited)

 

7

 

 

$

3,559

 

 

 

175,313,584

 

 

$

174

 

 

 

1,315,851

 

 

$

(11,608

)

 

$

522,601

 

 

$

(472,310

)

 

$

(163

)

 

$

42,253

 

 

$

(1,303

)

 

$

40,950

 

Foreign exchange translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

48

 

 

 

48

 

 

 

 

 

 

48

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

980

 

 

 

 

 

 

 

 

 

980

 

 

 

 

 

 

980

 

Preferred stock dividends paid with common stock

 

 

 

 

 

 

 

108,024

 

 

 

 

 

 

 

 

 

 

 

 

88

 

 

 

 

 

 

 

 

 

88

 

 

 

 

 

 

88

 

Preferred stock dividends accrued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(88

)

 

 

 

 

 

(88

)

 

 

 

 

 

(88

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,005

)

 

 

 

 

 

(6,005

)

 

 

18

 

 

 

(5,987

)

Balances as of June 30, 2022

 

7

 

 

$

3,559

 

 

 

175,421,608

 

 

$

174

 

 

 

1,315,851

 

 

$

(11,608

)

 

$

523,669

 

 

$

(478,403

)

 

$

(115

)

 

$

37,276

 

 

$

(1,285

)

 

$

35,991

 

Foreign exchange translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(362

)

 

 

(362

)

 

 

 

 

 

(362

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

791

 

 

 

 

 

 

 

 

 

791

 

 

 

 

 

 

791

 

Preferred stock dividends paid with common stock

 

 

 

 

 

 

 

178,572

 

 

 

 

 

 

 

 

 

 

 

 

88

 

 

 

 

 

 

 

 

 

88

 

 

 

 

 

 

88

 

Issuance of common stock in connection with performance stock units and annual incentive awards, net of employee payroll taxes

 

 

 

 

 

 

 

2,066,879

 

 

 

2

 

 

 

 

 

 

 

 

 

871

 

 

 

 

 

 

 

 

 

873

 

 

 

 

 

 

873

 

Issuance of common stock for BD Earnout commitment

 

 

 

 

 

 

 

334,037

 

 

 

 

 

 

 

 

 

 

 

 

238

 

 

 

 

 

 

 

 

 

238

 

 

 

 

 

 

238

 

Preferred stock dividends accrued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(88

)

 

 

 

 

 

(88

)

 

 

 

 

 

(88

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,664

)

 

 

 

 

 

(5,664

)

 

 

9

 

 

 

(5,655

)

Balances as of September 30, 2022

 

7

 

 

$

3,559

 

 

 

178,001,096

 

 

$

176

 

 

 

1,315,851

 

 

$

(11,608

)

 

$

525,657

 

 

$

(484,155

)

 

$

(477

)

 

$

33,152

 

 

$

(1,276

)

 

$

31,876

 

Foreign exchange translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

88

 

 

 

88

 

 

 

 

 

 

88

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

657

 

 

 

 

 

 

 

 

 

657

 

 

 

 

 

 

657

 

Preferred stock dividends paid with common stock

 

 

 

 

 

 

 

224,359

 

 

 

 

 

 

 

 

 

 

 

 

88

 

 

 

 

 

 

 

 

 

88

 

 

 

 

 

 

88

 

Issuance of common stock for Board of Director compensation

 

 

 

 

 

 

 

684,024

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Preferred stock dividends accrued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(88

)

 

 

 

 

 

(88

)

 

 

 

 

 

(88

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,014

 

 

 

 

 

 

5,014

 

 

 

8

 

 

 

5,022

 

Balances as of December 31, 2022

 

7

 

 

$

3,559

 

 

 

178,909,479

 

 

$

177

 

 

 

1,315,851

 

 

$

(11,608

)

 

$

526,402

 

 

$

(479,229

)

 

$

(389

)

 

$

38,912

 

 

$

(1,268

)

 

$

37,644

 

 

See accompanying Notes to Condensed Consolidated Financial Statements

7


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1. NATURE OF OPERATIONS AND LIQUIDITY

 

Cinedigm Corp. (“Cinedigm,” the “Company,” “we,” “us,” or similar pronouns) was incorporated in Delaware on March 31, 2000. We are (i) a distributor and aggregator of independent movie, television and other short form content managing a library of distribution rights to thousands of titles and episodes released across digital, physical, theatrical, home and mobile entertainment platforms (“Streaming”) and (ii) a servicer of digital cinema assets for movie screens in both North America and several international countries.

 

We report our financial results in two reportable segments as follows: (i) Cinema Equipment Business ("Cinema Equipment") and (ii) Content and Entertainment Business (“Content & Entertainment”). The Cinema Equipment segment consists of the non-recourse, financing vehicles and administrators for our digital cinema equipment (the “Systems”) installed in movie theatres throughout North America. Our Content & Entertainment segment operates in: (i) ancillary market aggregation and distribution of entertainment content and (ii) branded and curated over-the-top (“OTT”) digital network business providing entertainment channels and applications.

 

Financial Condition and Liquidity

 

As of December 31, 2022, the Company has an accumulated deficit of $479.2 million and negative working capital of $4.5 million. For the three and nine months ended December 31, 2022, the Company had net income (loss) attributable to common shareholders of $4.9 million and ($6.9) million, respectively. Net cash used in operating activities for the nine months ended December 31, 2022 was $7.9 million. We may continue to generate net losses for the foreseeable future.

 

The Company is party to a Loan, Guaranty, and Security Agreement with East West Bank (“EWB”) providing for a revolving line of credit (the “Line of Credit Facility”) of $5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries’ assets. The Line of Credit Facility bears interest at a rate equal to 1.5% above the prime rate, 9.0% as of December 31, 2022. The Line of Credit Facility expires on September 15, 2023 with a one-year extension available at EWB’s discretion. As of December 31, 2022, $5.0 million was outstanding on the Line of Credit Facility.

 

We believe our cash and cash equivalent balances, and availability under our credit facility, as of December 31, 2022 will be sufficient to support our operations for at least twelve months from the filing of this report. The Company may also undertake equity or debt offerings, if necessary and opportunistically available, for further capital needs.

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Consolidation

 

The accompanying interim Condensed Consolidated Financial Statements of Cinedigm Corp. have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended March 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on July 1, 2022. These Condensed Consolidated Financial Statements are unaudited and have been prepared by the Company following the rules and regulations of the SEC.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, the Company believes the disclosures are adequate to make the information presented not misleading.

8


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2022. Interim results are not necessarily indicative of the results for a full year.

 

The preparation of the Condensed 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, allowance for doubtful accounts, returns and recovery reserves, goodwill and intangible asset impairments, share-based compensation expense, valuation allowance for deferred income taxes and amortization of 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.

 

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 Condensed Consolidated Statements of Operations equal to 11% of outstanding profit interest units retained by the noncontrolling interests.

 

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended March 31, 2022.

 

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.

 

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.

 

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.

 

9


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

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 three months ended September 30, 2022 and December 31, 2022 for $0.5 million and $2.0 million, respectively. During the three and nine months ended December 31, 2022, the Company recorded an employee retention credit totaling $2.0 million and $2.5 million, respectively, in the Employee retention tax credit line on the Company’s Condensed Consolidated Statements of Operations. As of December 31, 2022, the tax credit receivable has been included in the Employee retention tax credit line on the Company's Condensed Consolidated Balance Sheet.

 

Property and Equipment, Net

 

Property and equipment, net 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

 

Digital cinema projection systems

 

 

10 years

 

Machinery and equipment

 

 

3 - 10 years

 

Furniture and fixtures

 

 

3 - 6 years

 

Internal-Use Software

 

 

5 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, net 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. We amortize internal-use software over its estimated useful life on a straight-line basis.

 

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 nine months ended December 31, 2022 and 2021, no impairment charges were recorded from operations for long-lived assets or finite-lived assets.

 

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. For intangible assets with indefinite lives, the assets are tested annually for impairment or sooner if a triggering event occurs.

 

10


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

Amortization lives of intangible assets are as follows:

 

Content Library

 

 

3 – 20 years

 

Advertiser Relationships and Channel

 

 

3 – 13 years

 

Customer Relationships

 

 

5 – 13 years

 

Software

 

 

10 years

 

Trademarks and Tradenames

 

 

2 – 15 years

 

Supplier Agreements

 

 

2 years

 

 

The Company’s intangible assets included the following (in thousands):

 

As of December 31, 2022

 

Cost Basis

 

 

Accumulated
Amortization

 

 

Impairment

 

 

Net

 

Content Library

 

$

23,685

 

 

$

(21,038

)

 

$

 

 

$

2,647

 

Advertiser Relationships and Channel

 

 

11,104

 

 

 

(759

)

 

 

 

 

 

10,345

 

Customer Relationships

 

 

10,658

 

 

 

(7,531

)

 

 

(1,968

)

 

 

1,159

 

Software

 

 

3,200

 

 

 

(480

)

 

 

 

 

 

2,720

 

Trademark and Tradenames

 

 

4,026

 

 

 

(2,033

)

 

 

 

 

 

1,993

 

Total Intangible Assets

 

$

52,673

 

 

$

(31,841

)

 

$

(1,968

)

 

$

18,864

 

 

 

As of March 31, 2022

 

Cost Basis

 

 

Accumulated
Amortization

 

 

Impairment

 

 

Net

 

Content Library

 

$

23,685

 

 

$

(20,665

)

 

$

 

 

$

3,020

 

Advertiser Relationships and Channel

 

 

10,081

 

 

 

(161

)

 

 

 

 

 

9,920

 

Customer Relationships

 

 

10,658

 

 

 

(7,327

)

 

 

(1,968

)

 

 

1,363

 

Software

 

 

3,200

 

 

 

(240

)

 

 

 

 

 

2,960

 

Trademark and Tradenames

 

 

4,026

 

 

 

(1,301

)

 

 

 

 

 

2,725

 

Supplier Agreements

 

 

11,430

 

 

 

(11,384

)

 

 

 

 

 

46

 

Total Intangible Assets

 

$

63,080

 

 

$

(41,078

)

 

$

(1,968

)

 

$

20,034

 

 

During the nine months ended December 31, 2022 and 2021, no impairment charge was recorded for intangible assets. During the three and nine months ended December 31, 2022, the Company had amortization expense of $0.7 million and $2.2 million, respectively. During the three and nine months ended December 31, 2021, the Company had amortization expense of $0.7 million and $2.2 million, respectively.

 

During the three months ended December 31, 2022, 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 licenses sold was determined to be $1.0 million which is included in Revenues in our Condensed Consolidated Statement of Operations for the three months ended December 31, 2022. The fair value of the content licenses purchased was determined to be $1.0 million and is recognized in Intangible Assets, Net on our Condensed Consolidated Balance Sheet as of December 31, 2022.

 

As of December 31, 2022, amortization expense is expected to be (in thousands):

 

 

 

Total

 

Remainder of fiscal year 2023

 

$

1,252

 

2024

 

 

3,343

 

2025

 

 

2,137

 

2026

 

 

1,745

 

2027

 

 

1,269

 

Thereafter

 

 

9,118

 

 

 

$

18,864

 

 

11


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

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 nine months ended December 31, 2022 and 2021.

 

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 following tables summarize the levels of fair value measurements of our financial assets and liabilities (in thousands):

 

 

 

As of December 31, 2022

 

 

 

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

 

$

 

 

$

 

 

$

768

 

 

$

768

 

Long-term portion of earnout consideration on purchase of a business

 

 

 

 

 

 

 

 

676

 

 

 

676

 

 

 

$

 

 

$

 

 

$

1,444

 

 

$

1,444

 

 

12


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

 

 

 

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 of a business

 

$

 

 

$

 

 

$

1,081

 

 

$

1,081

 

Long-term portion of earnout consideration on purchase of a business

 

 

 

 

 

 

 

 

603

 

 

 

603

 

 

 

$

 

 

$

 

 

$

1,684

 

 

$

1,684

 

 

The Company's equity investment in A Metaverse Company ("Metaverse") is in Hong Kong dollars and was translated into US dollars as of December 31, 2022 and March 31, 2022 at an exchange rate of 7.8 Hong Kong Dollars to 1 US Dollar. The fair value of this equity investment was measured by the quoted market price of Metaverse on the Stock Exchange of Hong Kong (SEHK: 1616) as of March 31, 2022. On April 1, 2022, trading of Metaverse’s ordinary shares was halted on the Hong Kong Stock Exchange. As of December 31, 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 $1.5 million for the nine months ended December 31, 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.

 

Our cash and cash equivalents, accounts receivable, unbilled revenue, accounts payable and accrued expenses are financial instruments and are recorded at cost in the Condensed Consolidated Balance Sheets. The estimated fair values of these financial instruments approximate their carrying amounts because of their short-term nature.

 

Prepaid and Other Current Assets

 

Prepaid and other current assets consisted of the following (in thousands):

 

 

 

As of

 

 

 

December 31,
2022

 

 

March 31,
2022

 

Advances

 

$

3,244

 

 

$

2,117

 

Due from producers

 

 

1,549

 

 

 

1,861

 

Other receivables

 

 

1,134

 

 

 

826

 

Inventory

 

 

209

 

 

 

116

 

Other prepaid expenses

 

 

1,167

 

 

 

989

 

Total prepaid and other current assets

 

$

7,303

 

 

$

5,909

 

 

Advances 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. Impairments related to advances were $1.0 million and $0.4 million for the three months ended December 31, 2022 and 2021, respectively. Impairments related to advances were $1.6 million and $0.8 million for the nine months ended December 31, 2022 and 2021, respectively.

 

13


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

Accounts Payable and Accrued Expenses

 

Accounts payable and accrued expenses consisted of the following (in thousands):

 

 

 

As of

 

 

 

December 31,
2022

 

 

March 31,
2022

 

Accounts payable

 

$

17,720

 

 

$

34,177

 

Amounts due to producers

 

 

15,967

 

 

 

10,430

 

Accrued compensation and benefits

 

 

3,390

 

 

 

3,507

 

Accrued other expenses

 

 

3,642

 

 

 

3,911

 

Total accounts payable and accrued expenses

 

$

40,719

 

 

$

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.

 

The following tables present the Company’s disaggregated revenue by segment and source (in thousands):

 

 

 

Three Months Ended
December 31,

 

 

Nine Months Ended
December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Cinema Equipment:

 

 

 

 

 

 

 

 

 

 

 

 

Deployment

 

$

7,458

 

 

$

220

 

 

$

9,340

 

 

$

1,263

 

Services

 

 

(316

)

 

 

506

 

 

 

(88

)

 

 

1,171

 

Digital system sales

 

 

44

 

 

 

1,334

 

 

 

1,966

 

 

 

9,110

 

Total Cinema Equipment revenue

 

$

7,186

 

 

$

2,060

 

 

$

11,218

 

 

$

11,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Content & Entertainment:

 

 

 

 

 

 

 

 

 

 

 

 

Base distribution business

 

$

8,121

 

 

$

3,668

 

 

$

11,145

 

 

$

6,368

 

OTT streaming and digital

 

 

12,575

 

 

 

8,356

 

 

 

33,115

 

 

 

21,290

 

Total Content & Entertainment revenue

 

$

20,696

 

 

$

12,024

 

 

$

44,260

 

 

$

27,658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

27,882

 

 

$

14,084

 

 

$

55,478

 

 

$

39,202

 

 

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.

 

14


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

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 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 Deployment's 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 and determined 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: (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. Cinedigm recognizes revenue once the customer takes possession of the Systems and Cinedigm receives the sale proceeds. Such sales were originally contemplated as the conclusion of the digital cinema deployment plan.

 

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 the 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.

 

During the three and nine months ended December 31, 2022, $7.4 million and $9.1 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 once the uncertainty associated with the variable consideration was resolved. As of December 31, 2022, approximately $1.0 million remains on our balance sheet in accounts payable as constrained variable consideration.

 

15


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

Content & Entertainment Segment

 

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) (“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.

 

Revenue from the sale of physical goods is recognized after deducting reserves for sales returns and other allowances. 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.

 

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 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 movie's or alternative content’s theatrical release date.

 

The Company follows the five-step model established by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC"), Revenue from contracts with customers ("ASC 606") 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.

 

16


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

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.

 

During the three and nine months ended December 31, 2022 and 2021, 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 segment 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 and non-current balances as of March 31, 2022 and December 31, 2022 was $0.2 million and $0.4 million, respectively. For the three and nine months ended December 31, 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.

 

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.

 

Concentrations

 

For the three months ended December 31, 2022, Iconic, Distribution Solutions, a division of Alliance Entertainment, Amazon.com, Inc., and Tubi represented 35%, 16%, 14% and 5%, respectively, of Content & Entertainment segment revenues, and approximately 16%, 7%, 14% and 6%, respectively, of our consolidated revenues.

 

For the nine months ended December 31, 2022, Iconic, Distribution Solutions, a division of Alliance Entertainment, Amazon.com, Inc., and Tubi, represented 27%, 19%, 25% and 10% respectively, of Content & Entertainment segment revenues, and approximately 8%, 5%, 11% and 5%, respectively, of our consolidated revenues.

 

For the three months ended December 31, 2021, Amazon.com, Inc., Distribution Solutions, a division of Alliance Entertainment and Tubi, represented 15%, 11% and 7%, respectively, of Content & Entertainment segment revenues and approximately 13%, 9% and 6%, respectively, of our consolidated revenues.

 

17


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

For the nine months ended December 31, 2021, Amazon.com, Inc. Distribution Solutions, a division of Alliance Entertainment and Roku, Inc., represented 24%, 9% and 10%, respectively, of Content & Entertainment segment revenues and approximately 17%, 6% and 7%, respectively, of our consolidated revenues.

 

Direct Operating Costs

 

Direct operating costs consist of cost of revenue, fulfillment expenses, shipping costs, property taxes and insurance on systems, royalty expenses, impairments of advances and marketing and direct personnel costs.

 

Stock-based Compensation

 

The Company issues stock-based awards to employees and non-employees, generally in the form of restricted stock, restricted stock units, stock appreciation rights ("SARs") and performance stock units ("PSUs"). The Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments, including grants of stock options and restricted stock units and modifications to existing stock options, to be recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) based on their fair values. The Company measures the compensation expense of employee and nonemployee services received in exchange for an award of equity instruments based on the fair value of the award on the grant date. That cost is recognized on a straight-line basis over the period during which the employee and nonemployee is required to provide service in exchange for the award. The fair values of options and SARs are calculated as of the date of grant using the Black-Scholes option pricing model based on key assumptions such as stock price, expected volatility, risk-free rate and expected term. The Company’s estimates of these assumptions are primarily based on the trading price of the Company’s stock, historical data, peer company data and judgment regarding future trends and factors. Forfeitures are recognized as they occur.

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to operating loss and tax credit carryforwards and for differences between the carrying amounts of existing assets and liabilities and their respective tax bases.

 

Valuation allowances are established when management is unable to conclude that it is more likely than not that some portion, or all, of the deferred tax asset will ultimately be realized. The Company is primarily subject to income taxes in the United States.

 

The Company accounts for uncertain tax positions in accordance with an amendment to ASC Topic 740-10, Income Taxes (Accounting for Uncertainty in Income Taxes), which clarified the accounting for uncertainty in tax positions. This amendment provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is “more-likely-than-not” to be sustained were it to be challenged by a taxing authority. The assessment of the tax position is based solely on the technical merits of the position, without regard to the likelihood that the tax position may be challenged. If an uncertain tax position meets the “more-likely-than-not” threshold, the largest amount of tax benefit that is more than 50% likely to be recognized upon ultimate settlement with the taxing authority is recorded. The Company has no uncertain tax positions as of December 31, 2022.

 

18


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

Earnings per Share

 

Basic net income (loss) per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include stock options and warrants outstanding during the period, using the treasury stock method. Potentially dilutive common shares are excluded from the computations of diluted income (loss) per share if their effect would be anti-dilutive. A net loss available to common stockholders causes all potentially dilutive securities to be anti-dilutive and are not included.

 

Basic and diluted net income (loss) per share are computed as follows (in thousands, except share and per share data):

 

 

 

Three Months Ended
December 31,

 

 

Nine Months Ended
December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Basic net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common stockholders

 

$

4,926

 

 

$

(474

)

 

$

(6,919

)

 

 

4,351

 

Shares used in basic computation:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of common stock outstanding

 

 

178,899,605

 

 

 

173,167,450

 

 

 

177,077,803

 

 

 

169,413,873

 

Basic net income (loss) per share

 

$

0.03

 

 

$

(0.00

)

 

$

(0.04

)

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in diluted computation:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of common stock outstanding

 

 

178,899,605

 

 

 

173,167,450

 

 

 

177,077,803

 

 

 

169,413,873

 

Stock options and SARs

 

 

 

 

 

 

 

 

 

 

 

3,603,491

 

Weighted-average number of shares

 

 

178,899,605

 

 

 

173,167,450

 

 

 

177,077,803

 

 

 

173,017,364

 

Diluted net income (loss) per share

 

$

0.03

 

 

$

(0.00

)

 

$

(0.04

)

 

$

0.03

 

 

The following table summarizes the potential shares of common stock excluded from the diluted calculation (in thousands):

 

 

 

Three Months Ended
December 31, 2022

 

 

Nine Months Ended
December 31, 2022

 

SARs

 

 

 

 

13,471,351

 

 

 

 

 

12,787,403

 

Stock options

 

 

 

 

12,500

 

 

 

 

 

12,500

 

 

 

 

 

 

13,483,851

 

 

 

 

 

12,799,903

 

 

For the three and nine months ended December 31, 2021, 12,088,473 and 8,484,982, respectively, potentially dilutive shares have been excluded from the diluted loss per share as their impact would have been antidilutive.

 

Recently Issued Accounting Pronouncements

 

In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). The amendments in this ASU provide temporary, optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met. The ASU primarily includes relief related to contract modifications and hedging relationships, as well as providing a one-time election for the sale or transfer of debt securities classified as held-to-maturity. This guidance is effective immediately and the amendments were originally to be applied prospectively through December 31, 2022. However, the FASB issued ASU 2022-06, deferring the sunset date to December 31, 2024. The adoption of this ASU is not expected to have a material impact on the Company's Condensed Consolidated Financial Statements.

 

19


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815). The amendments in this ASU clarify the guidance on ASC 815 on fair value hedge accounting of interest rate risk for portfolios and financial assets. Among other things, the amended guidance establishes the "last-of-layer" method for making the fair value hedge accounting for these portfolios more accessible and renames that method the "portfolio layer" method. The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We do not expect the amendments to have a material effect on our Condensed Consolidated Financial Statements.

 

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326). The amendments in this ASU eliminate the guidance on troubled debt restructurings while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors made to borrowers experiencing financial difficulties. The ASU also requires that entities disclose current-period gross charge-offs by year of origination for loans and leases. The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We do not expect the amendments to have a material effect on our Condensed Consolidated Financial Statements.

 

3. OTHER INTERESTS

 

Investment in CDF2 Holdings

 

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 Topic 810 (“ASC 810”), Consolidation. ASC 810 requires the consolidation of VIEs by an entity that has a controlling financial interest in the VIE which entity is thereby defined as the primary beneficiary of the VIE.

 

As of December 31, 2022 and March 31, 2022, our maximum exposure to loss, as it relates to the non-consolidated CDF2 Holdings entity, represents accounts receivable for service fees under a master service agreement with CDF2 Holdings. Such accounts receivable was $2.1 million and $0.8 million as of December 31, 2022 and March 31, 2022, respectively, which are included in accounts receivable, net on the accompanying Condensed Consolidated Balance Sheets.

 

The accompanying Condensed Consolidated Statements of Operations include $0.1 million and $0.2 million of digital cinema servicing revenue from CDF2 Holdings for the three months ended December 31, 2022 and 2021, respectively. The accompanying Condensed Consolidated Statements of Operations include $0.2 million and $0.5 million of digital cinema servicing revenue from CDF2 Holdings for the nine months ended December 31, 2022 and 2021, respectively.

 

Total Stockholders’ Deficit of CDF2 Holdings at December 31, 2022 and March 31, 2022 was $59.2 million and $55.6 million, respectively. We have no obligation to fund the operating loss or the stockholders’ deficit beyond our initial investment of $2.0 million and, accordingly, our investment in CDF2 Holdings as of December 31, 2022 and March 31, 2022 is carried at $0.

 

Investment in Roundtable

 

On March 15, 2022, the Company entered into a stock purchase agreement with Roundtable Entertainment Holdings, Inc. (“Roundtable”) pursuant to which the Company purchased 500 shares of Roundtable Series A Preferred Stock and warrants to purchase 100 shares of Roundtable Common Stock (together, the “Roundtable Securities”). The Company funded the purchase of the Roundtable Securities by issuing 316,937 shares of Common Stock to Roundtable. The Company recorded $0.2 million for the purchase of the Securities which is included in other long-term assets on the Condensed Consolidated Balance Sheets. The Roundtable investment was accounted for using the cost method and is included within other long-term assets.

20


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

 

4. STOCKHOLDERS’ EQUITY

 

COMMON STOCK

 

Authorized Common Stock

 

As of December 31, 2022, the number of shares of Common Stock authorized for issuance was 275,000,000 shares.

 

During the three months ended December 31, 2022, the Company issued 908,383 shares of Common Stock. This is comprised of 224,359 shares in payment of preferred stock dividends and 684,024 restricted shares issued in connection with Board of Director compensation.

 

During the nine months ended December 31, 2022, the Company issued 3,595,895 shares of Common Stock. This is comprised of 510,955 shares in payment of preferred stock dividends, 2,750,903 shares issued on August 18, 2022 in connection with the vesting of grants pursuant to the 2017 Equity Incentive Plan, and 334,037 shares issued in payment of the Bloody Disgusting earnout commitment.

 

During the nine months ended December 31, 2021, we issued 8,642,648 shares of Common Stock which consist of the sale of shares of our Class A common stock, issuance of Common Stock for business combination, the issuances of Common Stock in payment of preferred stock dividends and in payment of Board of Director retainer fees.

 

PREFERRED STOCK

 

Cumulative dividends in arrears on preferred stock were $0.1 million as of December 31, 2022 and 2021. In May, June and November 2022, we paid preferred stock dividends in arrears in the form of 510,955 shares of Class A Common Stock.

 

TREASURY STOCK

 

We have treasury stock, at cost, consisting of 1,315,851 shares of Common Stock at December 31, 2022 and March 31, 2022.

 

EQUITY INCENTIVE PLANS

 

Stock Based Compensation Awards

 

Awards issued under our 2000 Equity Incentive Plan (the “2000 Plan”) may be in any of the following forms (or a combination thereof) (i) stock option awards; (ii) SARs; (iii) stock or restricted stock or restricted stock units; or (iv) performance awards. The 2000 Plan provides for the granting of incentive stock options (“ISOs”) with exercise prices not less than the fair market value of our Common Stock on the date of grant. ISOs granted to shareholders having more than 10% of the total combined voting power of the Company must have exercise prices of at least 110% of the fair market value of our Common Stock on the date of grant. ISOs and non-statutory stock options granted under the 2000 Plan are subject to vesting provisions, and exercise is subject to the continuous service of the participant. The exercise prices and vesting periods (if any) for non-statutory options are set at the discretion of our compensation committee. On November 1, 2017, upon the consummation of the initial equity investment in Cinedigm by Bison, as a result of which there was a change of control of the Company, all stock options (incentive and non-statutory) and shares of restricted stock were vested immediately and the options became fully exercisable.

 

In connection with the grants of stock options and shares of restricted stock under the 2000 Plan, we and the participants have executed stock option agreements and notices of restricted stock awards setting forth the terms of the grants. The 2000 Plan provided for the issuance of up to 2,380,000 shares of Common Stock to employees, outside directors and consultants.

 

21


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

Options outstanding and exercisable under the 2000 Plan are as follows:

 

 

 

As of December 31, 2022:

 

Range of Prices

 

Options
Outstanding and
Exercisable

 

 

Weighted Average
Remaining Life in
Years

 

 

Weighted Average
Exercise Price

 

 

Aggregate
Intrinsic Value
(In thousands)

 

$1.16 - $7.40

 

 

5,000

 

 

 

2.50

 

 

$

7.40

 

 

$

 

$13.70 - $24.40

 

 

207,037

 

 

 

0.78

 

 

 

14.63

 

 

 

 

 

 

 

212,037

 

 

 

0.82

 

 

$

14.46

 

 

$

 

 

 

 

As of March 31, 2022:

 

Range of Prices

 

Options
Outstanding and
Exercisable

 

 

Weighted Average
Remaining Life in
Years

 

 

Weighted Average
Exercise Price

 

 

Aggregate
Intrinsic Value
(In thousands)

 

$7.40

 

 

5,000

 

 

 

3.25

 

 

$

7.40

 

 

$

 

$14.00 - $24.40

 

 

212,337

 

 

 

1.50

 

 

 

14.65

 

 

 

 

 

 

 

217,337

 

 

 

1.54

 

 

$

14.49

 

 

$

 

 

In August 2017, the Company adopted the 2017 Equity Incentive Plan (the “2017 Plan). The 2017 Plan replaced the 2000 Plan, and applies to employees and directors of, and consultants to, the Company. The 2017 Plan provides for the issuance of up to 18,098,270 shares of Common Stock, in the form of various awards, including stock options, SARs, restricted stock, restricted stock units, PSUs and cash awards.

 

SARs outstanding under the 2017 Plan are as follows:

 

 

 

As of December 31, 2022:

 

Range of Prices

 

SARs Outstanding

 

 

Weighted Average
Remaining Life in
Years

 

 

Weighted Average
Exercise Price

 

 

Aggregate
Intrinsic Value
(In thousands)

 

$0.33 - $0.74

 

 

8,650,000

 

 

 

8.61

 

 

$

0.56

 

 

$

 

$1.16 - $1.47

 

 

2,128,277

 

 

 

6.55

 

 

 

1.39

 

 

 

 

$1.71 - $2.10

 

 

2,237,493

 

 

 

8.36

 

 

 

1.92

 

 

 

 

$2.23 - $2.56

 

 

455,583

 

 

 

8.81

 

 

 

2.28

 

 

 

 

 

 

 

13,471,353

 

 

 

 

 

 

 

 

$

 

 

 

 

As of March 31, 2022:

 

Range of Prices

 

SARs Outstanding

 

 

Weighted Average
Remaining Life in
Years

 

 

Weighted Average
Exercise Price

 

 

Aggregate
Intrinsic Value
(In thousands)

 

$0.54 - $0.74

 

 

5,550,000

 

 

 

8.74

 

 

$

0.62

 

 

$

1,208

 

$1.16 - $1.47

 

 

2,283,610

 

 

 

7.90

 

 

 

1.37

 

 

 

 

$1.71 - $2.10

 

 

2,455,738

 

 

 

8.91

 

 

 

1.97

 

 

 

 

$2.23 - $2.56

 

 

604,250

 

 

 

9.60

 

 

 

2.32

 

 

 

 

 

 

 

10,893,598

 

 

 

 

 

 

 

 

$

1,208

 

 

An analysis of all SARs exercisable under the 2017 Plan as of December 31, 2022 is presented below:

 

SARs Exercisable

 

 

Weighted Average
Remaining Life in
Years

 

 

Weighted Average
Exercise Price

 

 

Aggregate
Intrinsic Value
(In thousands)

 

 

5,448,345

 

 

 

7.75

 

 

$

1.13

 

 

$

 

 

22


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

Total SARs outstanding are as follows:

 

 

 

Nine Months Ended December 31, 2022

 

SARs Outstanding - March 31, 2022

 

 

10,893,598

 

Issued

 

 

3,100,000

 

Forfeited

 

 

(522,245

)

Total SARs Outstanding - December 31, 2022

 

 

13,471,353

 

 

The following weighted average assumptions were used to estimate the fair value of SARs granted as follows:

 

 

 

Nine Months Ended December 31, 2022

 

Expected dividend yield

 

 

 

Expected equity volatility

 

 

111.89

%

Expected term (years)

 

 

6.50

 

Risk-free interest rate

 

 

4.49

%

Exercise price

 

$

0.49

 

Market price per share

 

$

0.49

 

Weighted average fair value per SAR

 

$

0.43

 

 

The risk-free rates are based on the implied yield available on U.S. Treasury constant maturities with remaining terms equivalent to the respective expected terms of the options.

 

In addition, the Company has granted PSU awards under the 2017 Plan to employees. These awards vest upon certain performance goals being achieved as of March 31, 2022 and 2023 and can be settled in cash or equity upon vesting. During the three and nine months ended December 31, 2022, the Company issued 482,628 shares of common stock, net of 199,498 shares withheld to pay taxes, related to the vesting of 682,126 of PSU awards. As of December 31, 2022, there were 696,280 of PSU awards outstanding that vest as of March 31, 2023 subject to achieving certain performance goals. No additional PSU awards were granted during the three and nine months ended December 31, 2022. During the nine months ended December 31, 2022, 482,628 shares were issued for vested awards.

 

Employee and director stock-based compensation expense related to our stock-based awards was as follows (in thousands):

 

 

 

Three Months Ended
December 31,

 

 

Nine Months Ended
December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Selling, general and administrative

 

$

708

 

 

$

1,349

 

 

$

3,906

 

 

$

3,278

 

 

There was $0.1 million of stock-based compensation expense for the three months ended December 31, 2022 and 2021, respectively, related to the Board. There was $0.3 million and $0.3 million of stock-based compensation for the nine months ended December 31, 2022 and 2021, respectively, related to Board of Directors compensation. During the nine months ended December 31, 2022, the Company issued 684,024 restricted shares to non-employee directors.

 

Options Granted Outside Cinedigm's Equity Incentive Plan

 

As of March 31, 2022, there were 12,500 options and 600,000 SARs granted to employees outside of Cinedigm's Equity Incentive Plan. During the three months ended December 31, 2022,100,000 SARs were granted as an inducement to a new employee.

23


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

 

5. LINE OF CREDIT FACILITY

 

On September 15, 2022, the Company entered into a Loan, Guaranty, and Security Agreement with EWB. The agreement provided for a Line of Credit Facility of $5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries’ assets. The Line of Credit Facility bears interest at a rate equal to 1.5% above the prime rate, 9.0% as of December 31, 2022. The Line of Credit Facility expires on September 15, 2023 with a one-year extension available at EWB’s discretion. As of December 31, 2022, $5.0 million was outstanding on the Line of Credit Facility. Under the Line of Credit Facility, the Company is subject to certain financial and nonfinancial covenants including terms which require the Company to maintain certain metrics and ratios, maintain certain minimum cash on hand, and to report financial information to our lender on a periodic basis. During the three and nine months ended December 31, 2022 the Company had interest expense of $0.1 million related to the Line of Credit Facility.

 

6. SEGMENT REPORTING

 

We operate in two reportable segments: Cinema Equipment and Content & Entertainment. Our segments were determined based on the economic characteristics of our products and services, our internal organizational structure, the manner in which our operations are managed and the criteria used by our Chief Operating Decision Maker ("CODM") to evaluate performance, which is generally the segment’s operating income (loss) before depreciation and amortization.

 

 

 

24


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

Operations of:

 

Products and services provided:

Cinema Equipment

 

Financing vehicles and administrators for 343 Systems installed nationwide in our first deployment phase (“Phase I Deployment”) to theatrical exhibitors and for 54 Systems installed domestically and internationally in our second deployment phase (“Phase II Deployment”).

 

We retain ownership of the Systems and the residual cash flows related to the Systems in Phase I Deployment after the repayment of all non-recourse debt at the expiration of exhibitor master license agreements. For certain Phase II Deployment Systems, we do not retain ownership of the residual cash flows and digital cinema equipment after the completion of cost recoupment and at the expiration of the exhibitor master license agreements.

 

Provides monitoring, collection, verification and management services as well as to exhibitors who purchase their own equipment, and also collects and disburses VPFs from motion picture studios, distributors and ACFs from alternative content providers, movie exhibitors and theatrical exhibitors (collectively, “Services”).

 

Content & Entertainment

 

Leading independent streaming company of content and channels. We collaborate with producers and other content owners to market, source, curate and distribute independent content to targeted and under-served audiences in theatres and homes, and via mobile and emerging platforms.

 

The following tables present certain financial information related to our reportable segments and Corporate (in thousands):

 

 

 

As of December 31, 2022

 

 

 

Intangible
Assets, Net

 

 

Goodwill

 

 

Total
Assets

 

 

Line
of Credit,
Net

 

Cinema Equipment

 

$

 

 

$

 

 

$

7,977

 

 

$

 

Content & Entertainment

 

 

18,638

 

 

 

21,025

 

 

 

77,118

 

 

 

 

Corporate

 

 

226

 

 

 

 

 

 

9,800

 

 

 

4,867

 

Total

 

$

18,864

 

 

$

21,025

 

 

$

94,895

 

 

$

4,867

 

 

 

 

As of March 31, 2022

 

 

 

Intangible
Assets, Net

 

 

Goodwill

 

 

Total
Assets

 

 

Line
of Credit,
Net

 

Cinema Equipment

 

$

 

 

$

 

 

$

24,445

 

 

$

 

Content & Entertainment

 

 

19,946

 

 

 

21,084

 

 

 

68,873

 

 

 

 

Corporate

 

 

88

 

 

 

 

 

 

11,318

 

 

 

 

Total

 

$

20,034

 

 

$

21,084

 

 

$

104,636

 

 

$

 

 

 

 

Condensed Consolidated Statement of Operations

 

 

 

Three Months Ended December 31, 2022

 

 

 

Cinema
Equipment

 

 

Content & Entertainment

 

 

Corporate

 

 

Consolidated

 

Revenues

 

$

7,186

 

 

$

20,696

 

 

$

 

 

$

27,882

 

Direct operating

 

 

89

 

 

 

14,322

 

 

 

 

 

 

14,411

 

Selling, general and administrative

 

 

912

 

 

 

3,794

 

 

 

4,401

 

 

 

9,107

 

Allocation of corporate overhead

 

 

88

 

 

 

2,407

 

 

 

(2,495

)

 

 

 

Depreciation and amortization

 

 

82

 

 

 

734

 

 

 

108

 

 

 

924

 

Total operating expenses

 

 

1,171

 

 

 

21,257

 

 

 

2,014

 

 

 

24,442

 

Operating income (loss)

 

$

6,015

 

 

$

(561

)

 

$

(2,014

)

 

$

3,440

 

 

25


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

The following employee and director stock-based compensation expense related to our stock-based awards is included in the above amounts as follows (in thousands):

 

 

 

Three Months Ended December 31, 2022

 

 

 

Cinema
Equipment

 

 

Content & Entertainment

 

 

Corporate

 

 

Consolidated

 

Direct operating

 

$

 

 

$

 

 

$

 

 

$

 

Selling, general and administrative

 

 

 

 

 

 

 

 

708

 

 

 

708

 

Total stock-based compensation

 

$

 

 

$

 

 

$

708

 

 

$

708

 

 

 

 

Condensed Consolidated Statement of Operations

 

 

 

Three Months Ended December 31, 2021

 

 

 

Cinema
Equipment

 

 

Content & Entertainment

 

 

Corporate

 

 

Consolidated

 

Revenues

 

$

2,060

 

 

$

12,024

 

 

$

 

 

$

14,084

 

Direct operating

 

 

139

 

 

 

6,320

 

 

 

 

 

 

6,459

 

Selling, general and administrative

 

 

99

 

 

 

3,720

 

 

 

3,539

 

 

 

7,358

 

Allocation of corporate overhead

 

 

143

 

 

 

964

 

 

 

(1,107

)

 

 

 

Depreciation and amortization

 

 

196

 

 

 

831

 

 

 

4

 

 

 

1,031

 

Total operating expenses

 

 

577

 

 

 

11,835

 

 

 

2,436

 

 

 

14,848

 

Operating income (loss)

 

$

1,483

 

 

$

189

 

 

$

(2,436

)

 

$

(764

)

 

The following employee and director stock-based compensation expense related to our stock-based awards is included in the above amounts as follows (in thousands):

 

 

 

Three Months Ended December 31, 2021

 

 

 

Cinema
Equipment

 

 

Content & Entertainment

 

 

Corporate

 

 

Consolidated

 

Direct operating

 

$

 

 

$

 

 

$

 

 

$

 

Selling, general and administrative

 

 

 

 

 

552

 

 

 

797

 

 

 

1,349

 

Total stock-based compensation

 

$

 

 

$

552

 

 

$

797

 

 

$

1,349

 

 

 

 

Condensed Consolidated Statement of Operations

 

 

 

Nine Months Ended December 31, 2022

 

 

 

Cinema
Equipment

 

 

Content & Entertainment

 

 

Corporate

 

 

Consolidated

 

Revenues

 

$

11,218

 

 

$

44,260

 

 

$

 

 

$

55,478

 

Direct operating

 

 

359

 

 

 

29,500

 

 

 

 

 

 

29,859

 

Selling, general and administrative

 

 

2,553

 

 

 

11,452

 

 

 

15,011

 

 

 

29,016

 

Allocation of corporate overhead

 

 

284

 

 

 

7,651

 

 

 

(7,935

)

 

 

 

Depreciation and amortization

 

 

303

 

 

 

2,282

 

 

 

323

 

 

 

2,908

 

Total operating expenses

 

 

3,499

 

 

 

50,885

 

 

 

7,399

 

 

 

61,783

 

Operating income (loss)

 

$

7,719

 

 

$

(6,625

)

 

$

(7,399

)

 

$

(6,305

)

 

26


CINEDIGM CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

The following employee and director stock-based compensation expense related to our stock-based awards is included in the above amounts as follows (in thousands):

 

 

 

Nine Months Ended December 31, 2022

 

 

 

Cinema
Equipment

 

 

Content & Entertainment

 

 

Corporate

 

 

Consolidated

 

Direct operating

 

$

 

 

$

 

 

$

 

 

$

 

Selling, general and administrative

 

 

 

 

 

 

 

 

3,906

 

 

 

3,906

 

Total stock-based compensation

 

$

 

 

$

 

 

$

3,906

 

 

$

3,906

 

 

 

 

Condensed Consolidated Statement of Operations

 

 

 

Nine Months Ended December 31, 2021

 

 

 

Cinema
Equipment

 

 

Content & Entertainment

 

 

Corporate

 

 

Consolidated

 

Revenues

 

$

11,544

 

 

$

27,658

 

 

$

 

 

$

39,202

 

Direct operating

 

 

560

 

 

 

13,863

 

 

 

 

 

 

14,423

 

Selling, general and administrative

 

 

856

 

 

 

10,081

 

 

 

9,583

 

 

 

20,520

 

Allocation of corporate overhead

 

 

412

 

 

 

2,763

 

 

 

(3,175

)

 

 

 

Depreciation and amortization

 

 

1,001

 

 

 

2,658

 

 

 

4

 

 

 

3,663

 

Total operating expenses

 

 

2,829

 

 

 

29,365

 

 

 

6,412

 

 

 

38,606

 

Operating income (loss)

 

$

8,715

 

 

$

(1,707

)

 

$

(6,412

)

 

$

596

 

 

The following employee and director stock-based compensation expense related to our stock-based awards is included in the above amounts as follows (in thousands):

 

 

 

Nine Months Ended December 31, 2021

 

 

 

Cinema
Equipment

 

 

Content & Entertainment

 

 

Corporate

 

 

Consolidated

 

Direct operating

 

$

 

 

$

 

 

$

 

 

$

 

Selling, general and administrative

 

 

 

 

 

1,063

 

 

 

2,215

 

 

 

3,278

 

Total stock-based compensation

 

$

 

 

$

1,063

 

 

$

2,215

 

 

$

3,278

 

 

7. INCOME TAXES

 

We calculate income tax expense upon an annual effective tax rate forecast, including estimates and assumptions. We recorded an income tax benefit (expense) of $0.0 million for the three and nine months ended December 31, 2022. We recorded an income tax benefit of approximately $0.0 million and $0.6 million for the three and nine months ended December 31, 2021, respectively. We have not recorded tax benefits on our loss before income taxes because we have provided for a full valuation allowance that offsets potential deferred tax assets resulting from net operating loss carry forwards, reflecting our inability to use such loss carry forwards.

 

Our effective tax rate for the three months ended December 31, 2022 and 2021 was 0% and 4%, respectively. Our effective tax rate for the nine months ended December 31, 2022 and 2021 was 0% and (14%), respectively.

27


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis should be read in conjunction with our historical Condensed Consolidated Financial Statements and the related notes included elsewhere in this report.

 

This report contains forward-looking statements within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies for the future, which are indicated by words or phrases such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “will,” “estimates,” and similar words. Forward-looking statements represent, as of the date of this report, our judgment relating to, among other things, future results of operations, growth plans, sales, capital requirements and general industry and business conditions applicable to us. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our control that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

 

OVERVIEW

 

Since our inception, we have played a significant role in the digital distribution revolution that continues to transform the media landscape. In addition to our pioneering role in transitioning approximately 12,000 movie screens from traditional analog film prints to digital distribution, we have become a leading distributor of independent content, both through organic growth and acquisitions. We distribute products for major brands such as Hallmark, Televisa, ITV, Nelvana, ZDF, Konami, NFL and Scholastic, as well as leading international and domestic content creators, movie producers, television producers and other short-form digital content producers. We collaborate with producers, major brands and other content owners to market, source, curate and distribute quality content to targeted audiences through (i) existing and emerging digital home entertainment platforms, including but not limited to Apple iTunes, Amazon Prime, Netflix, Hulu, Xbox, Pluto, Tubi and most video-on-demand (“VOD”) and free ad-supported television (“FAST”) streaming platforms, as well as (ii) physical goods, including DVD and Blu-ray Discs.

 

We report our financial results in two reportable segments as follows: (i) Cinema Equipment Business ("Cinema Equipment") and (ii) Content and Entertainment Business (“Content & Entertainment”). The Cinema Equipment segment consists of the non-recourse, financing vehicles and administrators for our digital cinema equipment (the “Systems”) installed in movie theatres throughout North America. It also provides fee-based support to over 465 movie screens as well as directly to exhibitors and other third-party customers in the form of monitoring, billing, collection and verification services. Our Content & Entertainment segment operates in: (i) ancillary market aggregation and distribution of entertainment content and (ii) branded and curated over-the-top (“OTT”) digital network business providing entertainment channels and applications.

 

Beginning in December 2015, certain of our cinema equipment began to reach the conclusion of their 10-year deployment payment period with certain distributors and, therefore, Virtual Print Fee (“VPF”) revenues ceased to be recognized on such Systems, related to such distributors. Furthermore, because the Phase I Deployment installation period ended in November 2007, a majority of the VPF revenue associated with the Phase I Deployment Systems has ended. The reduction in VPF revenue on Cinema Equipment systems approximately coincided with the conclusion of certain of our non-recourse debt obligations and, therefore, the reduced cash outflows related to such non-recourse debt obligations partially offset the reduced VPF revenue since November 2017.

 

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. Such sales were as originally contemplated as the conclusion of the digital cinema deployment plan.

 

We are structured so that our Cinema Equipment segment operates independently from our Content & Entertainment segment.

 

28


Financial Condition and Liquidity

 

As of December 31, 2022, the Company has an accumulated deficit of $479.2 million and negative working capital of $4.5 million. For the three and nine months ended December 31, 2022, the Company had net income (loss) attributable to common shareholders of $4.9 million and ($6.9) million, respectively. Net cash used in operating activities for the nine months ended December 31, 2022 was $7.9 million. We may continue to generate net losses for the foreseeable future.

 

The Company is party to a Loan, Guaranty, and Security Agreement with East West Bank (“EWB”) providing for a revolving line of credit (the “Line of Credit Facility”) of $5.0 million, guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and such subsidiaries’ assets. The Line of Credit Facility bears interest at a rate equal to 1.5% above the prime rate. The Line of Credit Facility expires on September 15, 2023 with a one-year extension available at EWB’s discretion. As of December 31, 2022, $5.0 million was outstanding on the Line of Credit Facility. Under the Line of Credit Facility, the Company is subject to certain financial and nonfinancial covenants including terms which require the Company to maintain certain metrics and ratios, maintain certain minimum cash on hand, and to report financial information to our lender on a periodic basis.

 

We believe our cash and cash equivalent balances, and availability under our credit facility, as of December 31, 2022 will be sufficient to support our operations for at least twelve months from the filing of this report. The Company may also undertake equity or debt offerings, if necessary and opportunistically available, for further capital needs.

 

Critical Accounting Estimates

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our Condensed Consolidated Financial Statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

 

Our significant accounting policies are discussed in Note 2 – Summary of Significant Accounting Policies, of the Notes to the Condensed Consolidated Financial Statements, included in Item 1, Condensed Consolidated Financial Statements (Unaudited), of this Quarterly Report on Form 10-Q. Management believes that fair value estimates, revenue recognition, asset acquisitions and business combinations are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors.

 

Results of Operations for the Three Months Ended December 31, 2022 and 2021 (in thousands):

 

Revenues

 

 

 

For the Three Months Ended December 31,

 

 

Change Period over Period

 

 

 

2022

 

 

% of Revenue

 

 

2021

 

 

% of Revenue

 

 

$ Change

 

 

% Change

 

Content & Entertainment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Streaming and Digital

 

$

12,576

 

 

 

45

%

 

$

8,357

 

 

 

59

%

 

$

4,219

 

 

 

50

%

Base Distribution

 

 

8,120

 

 

 

29

%

 

 

3,667

 

 

 

26

%

 

 

4,453

 

 

 

121

%

Cinema Equipment

 

 

7,186

 

 

 

26

%

 

 

2,060

 

 

 

15

%

 

 

5,126

 

 

 

249

%

 

 

$

27,882

 

 

 

100

%

 

$

14,084

 

 

 

100

%

 

$

13,798

 

 

 

98

%

 

29


 

Streaming and Digital experienced 79% growth in “FAST” and TV-VOD revenue due to the addition of six new streaming channels related to the Asian Media Rights, LLC d/b/a Digital Media Rights ("DMR") business acquisition and five managed channel additions of The Country Network, Real Madrid TV, El Rey, The Elvis Presley Channel and The Only Way is Essex. Additionally, Subscription revenue grew 38% primarily due to the Screambox platform performance driven by strong content acquisition strategies driving increasing subscriptions and the aforementioned DMR business acquisition. New releases such as Terrifier 2, MK Ultra, Chesapeake Shores, and continued success of Demon Slayer, Highlander and Short Circuit added to overall performance.

 

Revenue in Base Distribution increased by 121% for the three months ended December 31, 2022 compared to the three months ended December 31, 2021. The increase is driven by significant growth in box office theatrical performance bolstered by the Terrifier 2 release during the three months ended December 31, 2022.

 

Revenues generated by the Cinema Equipment business increased as a result of an increase in Phase II variable consideration of $7.4 million during the period offset by lower system revenue and eligible VPF systems. Total system revenue recognized was ($0.3) million and $1.3 million, during the three months ended December 31, 2022 and 2021, respectively. Blockbuster content released during the period ending December 31, 2022 was consistent with Studio output from the prior period, however VPF eligible theatres decreased significantly for the same period last year.

 

Direct Operating Expenses

 

 

 

For the Three Months Ended December 31,

 

 

Change Period over Period

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

Content & Entertainment

 

$

14,322

 

 

$

6,320

 

 

$

8,002

 

 

 

127

%

Cinema Equipment

 

 

89

 

 

 

139

 

 

 

(50

)

 

 

36

%

 

 

$

14,411

 

 

$

6,459

 

 

$

7,952

 

 

 

123

%

 

The increase in direct operating expenses for the three months ended December 31, 2022 for the Content & Entertainment segment compared to the prior year was primarily due to $6.6 million higher content and licensing costs including royalties and distribution expenses related to the continued growth in revenue noted above, coupled with a $1.2 million increase related to DVD manufacturing and fulfillment.

 

Selling, General and Administrative Expenses

 

 

 

For the Three Months Ended December 31,

 

 

Change Period over Period

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

Compensation expense

 

$

5,135

 

 

$

3,881

 

 

$

1,254

 

 

 

32

%

Public company expenses

 

 

1,780

 

 

 

1,560

 

 

 

220

 

 

 

14

%

Share-based compensation

 

 

709

 

 

 

1,349

 

 

 

(640

)

 

 

(47

)%

Insurance expense

 

 

625

 

 

 

391

 

 

 

234

 

 

 

60

%

Other operating expenses

 

 

858

 

 

 

177

 

 

 

681

 

 

 

385

%

 

 

$

9,107

 

 

$

7,358

 

 

$

1,749

 

 

 

24

%

 

Selling, general and administrative expenses for the three months ended December 31, 2022 increased by $1.7 million primarily due to a $1.3 million increase in compensation expense primarily from the acquisition of DMR partially offset by a reduction in payroll taxes in the prior year as a result of the CARES Act and $0.7 million increase in other operating expenses primarily from rent, direct marketing and subscriptions, offset by $0.6 million decrease related to stock-based compensation to management and employees.

 

Public company expenses include accounting, legal, audit, investor relations and other related public company costs.

 

30


Depreciation and Amortization Expense

 

 

 

For the Three Months Ended December 31,

 

 

Change Period over Period

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

Amortization of Intangible Assets

 

$

713

 

 

$

695

 

 

$

18

 

 

 

3

%

Depreciation of Property and Equipment

 

 

211

 

 

 

336

 

 

 

(125

)

 

 

(37

)%

 

 

$

924

 

 

$

1,031

 

 

$

(107

)

 

 

(10

)%

 

Depreciation expense decreased primarily due to the majority of our digital cinema projection systems reaching the conclusion of their ten-year useful lives during the three months ended December 31, 2022.

 

Interest expense, net

 

Interest expense, net increased by $0.3 million from $0.1 million for the three months ended December 31, 2021 to $0.4 million for the December 31, 2022 as a result of deferred and earnout consideration accretion related to the acquisitions of Bloody Disgusting, FoundationTV and DMR and interest expense associated with our new Line of Credit facility obtained in September 2022.

 

Employee retention tax credit

 

Employee retention tax credit was $2.0 million for the three months ended December 31, 2022 compared to no employee retention credit for the three months ended December 31, 2021. The employee retention tax credits were filed pursuant to the CARES Act.

 

Results of Operations for the Nine Months Ended December 31, 2022 and 2021

 

Revenues

 

 

 

For the Nine Months Ended December 31,

 

 

Change Period over Period

 

 

 

2022

 

 

% of Revenue

 

 

 

2021

 

 

% of Revenue

 

 

$ Change

 

 

% Change

 

Content & Entertainment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Streaming and Digital

 

$

33,115

 

 

 

60

%

 

 

$

21,292

 

 

 

54

%

 

$

11,823

 

 

 

56

%

Base Distribution

 

 

11,145

 

 

 

20

%

 

 

 

6,366

 

 

 

16

%

 

 

4,779

 

 

 

75

%

Cinema Equipment

 

 

11,218

 

 

 

20

%

 

 

 

11,544

 

 

 

30

%

 

 

(326

)

 

 

(3

)%

 

 

$

55,478

 

 

 

100

%

 

 

$

39,202

 

 

 

100

%

 

$

16,276

 

 

 

42

%

 

Streaming and Digital experienced 102% growth in “FAST” and TV-VOD revenue due to the addition of six new streaming channels related to the DMR business acquisition and five managed channel additions of The Country Network, Real Madrid TV, El Rey, The Elvis Presley Channel and The Only Way is Essex. Additionally, Subscription revenue grew 39% primarily due to the Screambox platform performance driven by strong content acquisition strategies driving increasing subscriptions and the aforementioned DMR business acquisition. Top performing titles, including new releases, such as the Terrifier 2, Demon Slayer, Boon, The Ravine, The Mulligan, Incarnation, 7 Days, Chesapeake Shores, When Calls the Heart and the classics, Short Circuit and Highlander added to overall performance.

 

Revenue in Base Distribution increased by 75% for the nine months ended December 31, 2022 compared to the nine months ended December 31, 2021. The increase is driven by significant growth in box office theatrical performance bolstered by the Terrifier 2 release during the nine months ended December 31, 2022.

 

31


Revenues generated by our Cinema Equipment business decreased slightly despite an increase in Phase II variable consideration of $9.1 million during the period. Total system revenue recognized was $2.0 million and $9.1 million during the nine months ended December 31, 2022 and 2021, respectively. Blockbuster content released during the period ending December 31, 2022 was consistent with Studio output from the prior period, however VPF eligible theatres decreased significantly for the same period last year.

 

Direct Operating Expenses

 

 

 

For the Nine Months Ended December 31,

 

 

Change Period over Period

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

Content & Entertainment

 

$

29,500

 

 

$

13,863

 

 

$

15,637

 

 

 

113

%

Cinema Equipment

 

 

359

 

 

 

560

 

 

 

(201

)

 

 

(36

)%

 

 

$

29,859

 

 

$

14,423

 

 

$

15,436

 

 

 

107

%

 

The increase in direct operating expenses in the nine months ended December 31, 2022 for the Content & Entertainment segment was primarily due to $11.0 million higher content and licensing costs including royalties and distribution expenses related to the continued growth in revenue noted above, coupled with a $2.4 million increase related to DVD manufacturing and fulfillment, a $1.2 million increase in delivery, platform and Software as a service (“SaaS”) and platform expenses, primarily due to the additive DMR acquisition, $0.7 million related to film restoration and conversion and website content production costs.

 

The decrease in direct operating expenses in the nine months ended December 31, 2022 for the Equipment business compared to the prior period was primarily due to a decrease in property taxes as a result of system sales.

 

Selling, General and Administrative Expenses

 

 

 

For the Nine Months Ended December 31,

 

 

Change Period over Period

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

Compensation expense

 

$

14,864

 

 

$

10,369

 

 

$

4,495

 

 

 

43

%

Public company expenses

 

 

5,193

 

 

 

4,214

 

 

 

979

 

 

 

23

%

Share-based compensation

 

 

3,906

 

 

 

3,277

 

 

 

629

 

 

 

19

%

Insurance expense

 

 

2,048

 

 

 

1,181

 

 

 

867

 

 

 

73

%

Other operating expenses

 

 

3,005

 

 

 

1,479

 

 

 

1,526

 

 

 

103

%

 

 

$

29,016

 

 

$

20,520

 

 

$

8,496

 

 

 

41

%

 

Selling, general and administrative expenses for the nine months ended December 31, 2022 increased by $8.5 million primarily due to $2.2 million increase in compensation expense from the acquisitions of Fandor, DMR, and Bloody Disgusting, $1.6 million increase in bonus, severance and insurance expense related to management and employees, $1.0 million increase related to legal expense and $1.1 million increase in other operating expenses primarily from rent, direct marketing and subscriptions.

 

Public company expenses include accounting, legal, audit, investor relations and other related public company costs.

 

Depreciation and Amortization Expense

 

 

 

For the Nine Months Ended December 31,

 

 

Change Period over Period

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

Amortization of Intangible Assets

 

 

2,193

 

 

 

2,238

 

 

 

(45

)

 

 

(2

)%

Depreciation of Property and Equipment

 

 

715

 

 

 

1,425

 

 

 

(710

)

 

 

(50

)%

 

 

$

2,908

 

 

$

3,663

 

 

$

(755

)

 

 

(21

)%

 

32


Depreciation expense decreased primarily due to the majority of our digital cinema projection systems reaching the conclusion of their ten-year useful lives during the nine months ended December 31, 2022.

 

Interest expense, net

 

Interest expense, net increased by $0.6 million to $0.9 million for the nine months ended December 31, 2022 as a result of deferred and earnout consideration accretion related to the acquisitions of Bloody Disgusting, FoundationTV and DMR and interest expense associated with our new Line of Credit facility obtained in September 2022.

 

Employee retention tax credit

 

Employee retention tax credit was $2.5 million for the nine months ended December 31, 2022 compared to no employee retention credit for the nine months ended December 31, 2021. The employee retention tax credits were filed pursuant to the CARES Act.

 

Changes in fair value 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, but with the trading of the shares being halted the Company needed to reassess the fair value level of the investment. Without an active market where the shares are being traded, the investment no longer qualifies as a level 1. The changes in the valuation resulted in a decrease in fair value of $1.8 million during the nine months ended December 31, 2022.

 

Adjusted EBITDA

 

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

 

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

 

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

 

We believe that Adjusted EBITDA is a performance measure and not a liquidity measure, and therefore a reconciliation between net income (loss) from continuing operations and Adjusted EBITDA has been provided in the financial results. Adjusted EBITDA should not be considered as an alternative to net income (loss) from operations as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of cash flows, in each case as determined in accordance with GAAP, or as a measure of liquidity. In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows. We do not intend the presentation of these non-GAAP measures to be considered in isolation or as a substitute for results prepared in accordance with GAAP. These non-GAAP measures should be read only in conjunction with our Condensed Consolidated Financial Statements prepared in accordance with GAAP.

 

33


Following is the reconciliation of our consolidated net loss to Adjusted EBITDA:

 

 

 

For the Three Months Ended
December 31,

 

 

 

2022

 

 

2021

 

Net income (loss)

 

$

5,022

 

 

$

(404

)

Add Back:

 

 

 

 

 

 

Income tax benefit

 

 

 

 

 

(26

)

Depreciation and amortization

 

 

924

 

 

 

1,031

 

Interest expense

 

 

367

 

 

 

97

 

Change in fair value on equity investment in Metaverse

 

 

 

 

 

(453

)

Other expense

 

 

91

 

 

 

107

 

Provision (recovery) for doubtful accounts

 

 

7

 

 

 

(378

)

Stock-based compensation

 

 

708

 

 

 

1,349

 

Employee retention tax credit

 

 

(2,025

)

 

 

 

Net (income) loss attributable to noncontrolling interest

 

 

(8

)

 

 

19

 

Adjusted EBITDA

 

$

5,086

 

 

$

1,342

 

 

 

 

 

 

 

 

Adjustments related to Cinema Equipment

 

 

 

 

 

 

Depreciation and amortization

 

$

(82

)

 

$

(196

)

Provision for doubtful accounts

 

 

(7

)

 

 

 

Income from operations

 

 

(5,948

)

 

 

(1,483

)

Adjusted EBITDA from non-Cinema Equipment

 

$

(951

)

 

$

(337

)

 

 

 

For the Nine Months Ended
December 31,

 

 

 

2022

 

 

2021

 

Net income (loss)

 

$

(6,620

)

 

$

4,595

 

Add Back:

 

 

 

 

 

 

Income tax benefit

 

 

 

 

 

(576

)

Depreciation and amortization

 

 

2,908

 

 

 

3,663

 

Gain on forgiveness of PPP loan

 

 

 

 

 

(2,178

)

Interest expense

 

 

880

 

 

 

277

 

Change in fair value on equity investment in Metaverse

 

 

1,828

 

 

 

(1,453

)

Other expense

 

 

661

 

 

 

283

 

Provision (recovery) for doubtful accounts

 

 

54

 

 

 

(418

)

Stock-based compensation

 

 

3,906

 

 

 

3,278

 

Employee retention tax credit

 

 

(2,475

)

 

 

 

Net (income) loss attributable to noncontrolling interest

 

 

(35

)

 

 

23

 

Adjusted EBITDA

 

$

1,107

 

 

$

7,494

 

 

 

 

 

 

 

 

Adjustments related to Cinema Equipment

 

 

 

 

 

 

Depreciation and amortization

 

$

(303

)

 

$

(1,001

)

Acquisition, integration and other expense

 

 

 

 

 

(11

)

Provision (recovery) for doubtful accounts

 

 

(54

)

 

 

500

 

Income from operations

 

 

(7,720

)

 

 

(8,715

)

Adjusted EBITDA from non-Cinema Equipment

 

$

(6,970

)

 

$

(1,733

)

 

Recent Accounting Pronouncements

 

See Note 2 - Summary of Significant Accounting Policies to our Condensed Consolidated Financial Statements included herein.

 

34


Cash Flow

 

Changes in our cash flows were as follows:

 

 

 

For the Nine Months Ended
December 31,

 

 

 

2022

 

 

2021

 

Net cash (used in) provided by operating activities

 

$

(7,901

)

 

$

4,746

 

Net cash used in investing activities

 

 

(429

)

 

 

(5,031

)

Net cash provided by financing activities

 

 

4,064

 

 

 

2,636

 

Net increase (decrease) in cash and cash equivalents

 

$

(4,266

)

 

$

2,351

 

 

For the nine months ended December 31, 2022, net cash used in operating activities is primarily driven by loss from operations, excluding non-cash expenses such as depreciation, amortization, recovery for doubtful accounts and stock-based compensation, including other changes in working capital. Additionally, during the nine months ended December 31, 2022, the Company decreased accounts payable by $11.8 million to vendors. Cash received from VPFs decreased from the previous period in alignment with the decrease in eligible VPF systems. Prepaid and other current assets increased by $2.7 million. Operating cash flows from the Content & Entertainment segment are typically seasonally lower during the first two fiscal quarters and higher during our fiscal third and fourth quarters, resulting from revenues earned during the holiday season. In addition, we made $1.1 million in advances for the nine months ended December 31, 2022, we make advances on theatrical releases and to certain home entertainment distribution clients for which initial expenditures are generally recovered within six to twelve months.

 

For the nine months ended December 31, 2021, net cash provided by operating activities was primarily driven by income from operations, excluding non-cash expenses such as depreciation, amortization, provision for doubtful accounts and stock-based compensation, gain on extinguishment of note payable, including other changes in working capital. Additionally, during the nine months ended December 31, 2021, the Company paid down $32.6 million to vendors at both the Content & Entertainment segment and Corporate. Operating cash flows from the Content & Entertainment segment are typically higher during our fiscal third and fourth quarters, resulting from revenues earned during the holiday season, and lower in the other two quarters as we pay royalties on such revenues. In addition, we make advances on theatrical releases and to certain home entertainment distribution clients for which initial expenditures are generally recovered within six to twenty four months. For the nine months ended December 31, 2021 revenues from the sale of digital projections Systems was $9.1 million.

 

Off-balance sheet arrangements

 

We are not a party to any off-balance sheet arrangements other than as discussed in Note 2 – Summary of Significant Accounting Policies, Basis of Presentation and Consolidation and Note 3 - Other Interests to the Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q, we hold a 100% equity interest in CDF2 Holdings, which is an unconsolidated variable interest entity (“VIE”), which wholly owns Cinedigm Digital Funding 2, LLC; however, we are not the primary beneficiary of the VIE.

 

35


Item 4. CONTROLS AND PROCEDURES

 

Definition and Limitations of Disclosure Controls and Procedures

 

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

 

Evaluation of Disclosure Controls and Procedures

 

The management of the Company, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in the Exchange Act), as of December 31, 2022. Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, on a timely basis, and (ii) accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures due to the material weaknesses identified in our internal control over financial reporting as of December 31, 2022.

 

Previously Reported Material Weakness on Internal Control Over Financial Reporting

 

In the Annual Report Form 10-K for the fiscal year ended March 31, 2022 filed with the SEC on July 1, 2022, management concluded that our internal control over financial reporting was not effective as of March 31, 2022. In the evaluation, management identified material weaknesses in the following:

 

a) Internal controls related to our financial close and reporting process;

 

b) Information and communication controls; and

 

c) Insufficient complement of corporate personnel with appropriate levels of accounting and controls knowledge and experience commensurate with our financial reporting requirements to appropriately analyze, record and disclose accounting matters completely and accurately.

 

As a result of this evaluation, management extensively used outside consultants who possessed the appropriate levels of accounting and controls knowledge.

 

Remediation. Following identification of this control deficiency, management has implemented modifications to better ensure that the Company has appropriate and timely reviews on all financial reporting analysis. In addition, as we continue to evaluate and work to improve our internal control over financial reporting, management may determine to take additional measures to address control deficiencies or determine to modify our remediation plan. Management will test and evaluate the implementation of these modifications to ascertain whether they are designed and operating effectively to provide reasonable assurance that they will prevent or detect a material misstatement in the Company’s financial statements.

 

36


The steps we took to address the deficiencies identified included:

 

 

we hired a new Chief Financial Officer;

 

 

we hired a new Executive Vice President (“EVP”) Finance & Accounting;

 

 

we have restructured accounting processes and revised organizational structures to enhance accurate accounting and appropriate financial reporting;

 

 

we have hired additional experienced accounting personnel in the corporate office to enhance the application of accounting standards and our financial closing and reporting process;

 

 

we have engaged external advisors to provide financial accounting and reporting assistance;

 

 

we have enhanced information and communication processes through information technology solutions to ensure that information needed for financial reporting is accurate, complete, relevant and reliable, and communicated in a timely manner; and

 

 

we have engaged external advisors to evaluate and document the design and operating effectiveness of our internal control over financial reporting and assist with the remediation and implementation of our internal control function.

 

As noted above, we believe that, as a result of management’s in-depth review of its accounting processes, and the additional procedures management has implemented, there are no material inaccuracies or omissions of material fact in this Form 10-Q and, to the best of our knowledge, we believe that the Condensed Consolidated Financial Statements in this Form 10-Q fairly present in all material respects our financial condition, results of operations and cash flows in conformity with GAAP.

 

We and our Board treat the controls surrounding, and the integrity of, our financial statements with the utmost priority. Management is committed to the planning and implementation of remediation efforts to address control deficiencies and any other identified areas of risk. These remediation efforts are intended to both address the identified material weakness and to enhance our overall financial control environment. We are committed to maintaining a strong internal control environment, and we believe the measures described above will strengthen our internal control over financial reporting and remediate the material weakness we have identified. Our remediation efforts have begun, and we will continue to devote significant time and attention to these remedial efforts. As we continue to evaluate and work to improve our internal control over financial reporting, management may determine to take additional measures to strengthen controls or to modify the remediation plan described above, which may require additional implementation time.

 

Changes in Internal Control Over Financial Reporting

 

There have been no changes, other than our remediation efforts discussed above, in the Company’s internal control over financial reporting during the three months ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

There have been no material changes to the Risk Factors disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2022 and Item 1A of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not Applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

EXHIBIT INDEX

 

Exhibit
Number

 

Description of Document

4.1

 

Trademark Security Agreement dated as of September 15, 2022 by and between East West Bank and each of Cinedigm Corp. and the Guarantors party thereto.

4.2

 

Copyright Security Agreement dated as of September 15, 2022 by and between East West Bank and each of Cinedigm Corp. and the Guarantors party thereto.

10.1

 

Amended and Restated Loan, Guaranty and Security Agreement dated as of September 15, 2022 by and between Cinedigm Corp., East West Bank and the Guarantors named therein.

31.1

 

Officer’s Certificate Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

 

Officer’s Certificate Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

 

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

 

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

 

Inline XBRL Instance Document.

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

 

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

 

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

 

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

38


SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

CINEDIGM CORP.

 

 

 

Date: February 14, 2023

By:

/s/ Christopher J. McGurk

 

 

Christopher J. McGurk
Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)

 

 

 

Date: February 14, 2023

By:

/s/ John K. Canning

 

 

John K. Canning
Chief Financial Officer
(Principal Financial Officer)

 

39