Edgar Filing: Cinedigm Corp.

CIDM-03.31.15-10K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark One)

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

For the fiscal period ended: March 31, 2015

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

For the transition period from --- to ---

Commission File Number: 000-31810

___________________________________

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.)

902 Broadway, 9th Floor New York, NY		10010
(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		Name of each exchange on which registered
CLASS A COMMON STOCK, PAR VALUE $0.001 PER SHARE		NASDAQ GLOBAL MARKET

Securities registered pursuant to Section 12(g) of the Act:		NONE



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.	Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.	Yes o No x

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).	Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.	x

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



Large accelerated filer o	Accelerated filer x	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the issuer based on a price of $1.55 per share, the closing price of such common equity on the Nasdaq Global Market, as of September 30, 2014, was $100,593,799. For purposes of the foregoing calculation, all directors, officers and shareholders who beneficially own 10% of the shares of such common equity have been deemed to be affiliates, but the Company disclaims that any of such persons are affiliates.

As of June 22, 2015, 74,491,762 shares of Class A Common Stock, $0.001 par value were outstanding, which number includes 11,791,384 shares subject to our forward purchase transaction.

DOCUMENTS INCORPORATED BY REFERENCE

None.

CINEDIGM CORP.

TABLE OF CONTENTS



		Page
FORWARD-LOOKING STATEMENTS		1

PART I
ITEM 1.	Business	1
ITEM 1A.	Risk Factors	7
ITEM 2.	Property	19
ITEM 3.	Legal Proceedings	20
ITEM 4.	Mine Safety Disclosures	20

PART II
ITEM 5.	Market for Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	21
ITEM 6.	Selected Financial Data	22
ITEM 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
ITEM 8.	Financial Statements and Supplementary Data	41
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	42
ITEM 9A.	Controls and Procedures	42
ITEM 9B.	Other Information	42

PART III
ITEM 10.	Directors, Executive Officers and Corporate Governance	43
ITEM 11.	Executive Compensation	47
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	57
ITEM 13.	Certain Relationships and Related Transactions	59
ITEM 14.	Principal Accountant Fees and Services	60

PART IV
ITEM 15.	Exhibits, Financial Statement Schedules	40

SIGNATURES		41

FORWARD-LOOKING STATEMENTS

Various statements contained in this report or incorporated by reference into this report constitute “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are based on current expectations and are indicated by words or phrases such as “believe,” “expect,” “may,” “will,” “should,” “seek,” “plan,” “intend” or “anticipate” or the negative thereof or comparable terminology, or by discussion of strategy. 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. Such forward-looking statements are based largely on our current expectations and are inherently subject to risks and uncertainties. Our actual results could differ materially from those that are anticipated or projected as a result of certain risks and uncertainties, including, but not limited to, a number of factors, such as:


•	successful execution of our business strategy, particularly for new endeavors;


•	the performance of our targeted markets;


•	competitive product and pricing pressures;


•	changes in business relationships with our major customers;


•	successful integration of acquired businesses;


•	the content we distribute through our in-theatre, on-line and mobile services may expose us to liability;


•	general economic and market conditions;


•	the effect of our indebtedness on our financial condition and financial flexibility, including, but not limited to, the ability to obtain necessary financing for our business; and


•	the other risks and uncertainties that are set forth in Item 1, “Business”, Item 1A "Risk Factors" and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results. Except as otherwise required to be disclosed in periodic reports required to be filed by public companies with the Securities and Exchange Commission (“SEC”) pursuant to the SEC's rules, we have no duty to update these statements, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, we cannot assure you that the forward-looking information contained in this report will in fact transpire.

In this report, “Cinedigm,” “we,” “us,” “our” and the “Company” refers to Cinedigm Corp. and its subsidiaries unless the context otherwise requires.

PART I

ITEM 1. BUSINESS

OVERVIEW

Cinedigm Corp. was incorporated in Delaware on March 31, 2000 (“Cinedigm”, and collectively with its subsidiaries, the “Company”). We are (i) a leading distributor and aggregator of independent movie, television and other short form content managing a library of distribution rights to close to 50,000 titles and episodes released across digital, physical, and home and mobile entertainment platforms as well as (ii) a leading servicer of digital cinema assets on over 12,000 domestic and foreign movie screens.

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 over 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 the Discovery Networks, National Geographic 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, iTunes, Amazon Prime, Netflix, Hulu, Xbox, PlayStation, and cable video-on-demand ("VOD") and (ii) physical goods, including DVD and Blu-ray Discs. In addition, we operate a growing number of branded and curated over-the-top ("OTT") entertainment channels, including Docurama, CONtv and Dove Entertainment Channel, which is expected to launch in late summer 2015.

and entertainment group (“Content & Entertainment” or "CEG"). The Phase I Deployment and Phase II Deployment segments are the non-recourse, financing vehicles and administrators for our digital cinema equipment (the “Systems”) installed in movie theatres throughout the United States and Canada, and in Australia and New Zealand. Our Services segment provides fee-based support to over 12,000 movie screens in our Phase I Deployment and Phase II Deployment segments 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 is a market leader in: (1) ancillary market aggregation and distribution of entertainment content, and (2) branded and curated OTT digital network business providing entertainment channels and applications.

We are structured so that our digital cinema business (collectively, our Phase I Deployment, Phase II Deployment and Services segments) operates independently from our Content & Entertainment business. As of March 31, 2015, we had approximately $157.5 million of non-recourse outstanding debt principal that relates to and is serviced by, our digital cinema business. We also have approximately $47.5 million of outstanding debt principal, as of March 31, 2015 that is attributable to our Content & Entertainment and Corporate segments.

CONTENT & ENTERTAINMENT

Content Distribution and our OTT Entertainment Channels and Applications

Cinedigm Entertainment Group, or CEG, is a leading independent content distributor in the United States as well as an innovator and leader in the quickly evolving OTT digital network business. We are unique among most independent distributors because of our direct relationships with thousands of physical retail locations and digital platforms, including Walmart, Target, iTunes, Netflix and Amazon, as well as the national Video on Demand platforms. Our library of films and television episodes encompass award-winning documentaries from Docurama Films®, next-gen Indies from Flatiron Film Company®, acclaimed independent films and festival picks through partnerships with the Sundance Institute and Tribeca Films, and a wide range of content from brand name suppliers, including National Geographic, Discovery, Scholastic, NFL, Shout! Factory, Hallmark and Jim Henson.

Additionally, we are leveraging our infrastructure, technology, content and distribution expertise to rapidly and cost effectively build and expand our OTT digital network business. Our first channel, Docurama, launched in May 2014 as an advertising-supported video on demand service ("AVOD") across most Internet connected devices and now contains nearly 800 documentary films for download. In March 2015, Wizard World, Inc. and we launched CONtv, a targeted lifestyle channel and "Freemium" service with both AVOD and subscription video on demand offerings ("SVOD"). Our Freemium business model provides users with free content and the ability to upgrade to a selection of premium services by paying subscription fees. CONtv is one of the largest Freemium OTT channels available in terms of hours of content, with thousands of hours of content, including original programs and behind the scenes footage direct from Wizard World Comic Con gatherings. Docurama and CONtv are available across most major platforms, including Apple iOS, Google Android, Roku players and TV, Samsung SmartHub devices and we expect more devices to come to market. In the fall of 2015, we expect to introduce our third OTT channel, Dove Entertainment Channel, which will be a freemium service targeted to families and kids seeking high quality and family friendly content approved by the Dove Foundation. In early 2015, we also announced a partnership with TV4 Entertainment to diversify our OTT offerings and we continue to search for other branded partners to launch additional channels.

CEG has focused its activities in the areas of: (1) ancillary market aggregation and distribution of entertainment content, and (2) branded and curated over-the-top OTT digital network business providing entertainment channels and applications. With these complementary entertainment distribution capabilities, we believe that we are capitalizing on the key drivers of value that we believe are critical to success in content distribution going forward.

In April 2012, we acquired New Video Group, Inc. ("New Video"), an independent home entertainment distributor of quality packaged and digital content that provided distribution services in the DVD, Blu-ray, Digital and VOD channels for more than 500 independent rights holders.

In October 2013, we acquired a division of Gaiam Americas, Inc. and Gaiam, Inc. (together, “Gaiam”) that maintained exclusive distribution rights agreements with large independent studios/content providers, and distributed entertainment content through home video, digital and television distribution channels (“GVE” or the “GVE Acquisition”).

Our acquisitions of New Video and GVE have made our CEG segment one of the leading independent content distributors in the United States, holding direct relationships with thousands of physical storefronts and digital retailers, including Walmart, Target, iTunes, Netflix, and Amazon, as well as all the national cable and satellite television VOD platforms.

Our Strategy

Direct to consumer digital distribution of film and television content over the Internet is rapidly growing. We believe that our large library of film and television episodes, long-standing digital relationships with platforms, and up-to-date technologies, will allow us to build and successfully launch a diversified portfolio of narrowcast OTT channels that generate recurring revenue streams from advertising, merchandising and subscriptions. We plan to launch niche channels that make use of our existing library of titles, while partnering with strong brands that bring name recognition, marketing support and an existing customer base.

Rapid changes in the entertainment landscape require that we continually refine our strategy to adapt to new technologies and consumer behaviors. For example, we have shifted our acquisitions of home entertainment content to focus on long-term partnerships with producers of high quality, cast-driven, genre content, rather than traditional catalog based titles. In fiscal year 2015, we acquired the distribution rights to a variety of new and original films. In addition, we have accelerated our efforts to be a leader in the OTT digital network business, where we can leverage our existing infrastructure and library, in partnership with well-known brands, to distribute our content direct-to-consumers.

To market the films that we distribute, we have the films appear in a limited number of theatres, while simultaneously being available on VOD. This non-traditional, film-releasing model has allowed us to maximize publicity and make the film available to a large national audience.

We believe that we are well positioned to succeed in the OTT channel business for several key reasons:


•	The enormous depth and breadth of our almost 50,000 title film and television episode library,


•	Our digital assets and deep, long-standing relationships as launch partners that cover the major digital platforms and devices,


•	Our marketing expertise,


•	Our flexible releasing strategies, which differ from larger entertainment companies that need to protect their legacy businesses, and


•	Our strengthened capital base

Intellectual Property

We own certain copyrights, trademarks and Internet domain names in connection with the Content & Entertainment business. We view these proprietary rights as valuable assets. We maintain registrations, where appropriate, to protect them and monitor them on an ongoing basis.

Customers

For the fiscal year ended March 31, 2015, two customers, Walmart and Amazon, represented 10% or more of CEG's revenues and one of these customers represented approximately 12% of our consolidated revenues.

Competition

Numerous companies are engaged in various forms of producing and distributing independent movies and alternative content. These competitors may have significantly greater financial, marketing and managerial resources than we do, may have generated greater revenue and may be better known than we are at this time.

Competitors to our Content & Entertainment segment are as follows:


•	Anchor Bay Entertainment


•	Crunchyroll


•	Entertainment One (eOne) Ltd.


•	Image Entertainment, Inc.


•	IFC Entertainment


•	Lions Gate Entertainment


•	Magnolia Pictures


•	Roadside Attractions LLC


•	The Weinstein Company

DEPLOYMENT

Our Phase I Deployment and Phase II Deployment segments consist of the following:



Operations of:		Products and services provided:
Cinedigm Digital Funding I, LLC (“Phase 1 DC”)		Financing vehicles and administrators for our 3,724 Systems installed nationwide in Phase 1 DC's deployment to theatrical exhibitors, for which we retain ownership of the Systems and the residual cash flows related to the Systems after the repayment of all non-recourse debt at the expiration of exhibitor, master license agreements.
Access Digital Cinema Phase 2 Corp. (“Phase 2 DC”)		Financing vehicles and administrators for our 8,904 Systems installed in the second digital cinema deployment and international deployments, through Phase 2 DC. We retain no 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.

In June 2005, we formed our Phase I Deployment segment in order to purchase up to 4,000 Systems under an amended framework agreement with Christie Digital Systems USA, Inc. (“Christie”). As of March 31, 2015, Phase I Deployment had 3,724 Systems installed.

In October 2007, we formed our Phase II Deployment segment for the administration of up to 10,000 additional Systems. As of March 31, 2015, Phase II Deployment had 8,904 of such Systems installed.

Our Phase I Deployment and Phase II Deployment segments own and license Systems to theatrical exhibitors and collect virtual print fees ("VPFs") from motion picture studios and distributors, as well as alternative content fees ("ACFs") from alternative content providers and theatrical exhibitors, when content is shown on exhibitors' screens. We have licensed the necessary software and technology solutions to the exhibitor and have facilitated the industry's transition from analog (film) to digital cinema. As part of the Phase I Deployment of our Systems, we have agreements with nine motion picture studios and certain smaller independent studios and exhibitors, allowing us to collect VPFs and ACFs when content is shown in theatres, in exchange for having facilitated and financed the deployment of Systems. Phase 1 DC has agreements with sixteen theatrical exhibitors that license our Systems in order to show digital content distributed by the motion picture studios and other providers, including Content & Entertainment, which is described below.

Our Phase II Deployment segment has entered into digital cinema deployment agreements with eight motion picture studios, and certain smaller independent studios and exhibitors, to distribute digital movie releases to exhibitors equipped with our Systems, for which we and our wholly owned, non-consolidated subsidiary Cinedigm Digital Funding 2, LLC ("CDF2 Holdings") earn VPFs. As of March 31, 2015, our Phase II Deployment segment also entered into master license agreements with 434 exhibitors and CDF2 covering 8,992 screens, whereby the exhibitors agreed to install our Systems. As of March 31, 2015, we had 8,904 Phase 2 DC Systems installed, including 6,414 screens under the exhibitor-buyer structure ("Exhibitor-Buyer Structure"), 1,046 screens covering 10 exhibitors through non-recourse financing provided by KBC Bank NV (“KBC”), 1,421 screens covering 179 exhibitors through CDF2, and 23 screens under other arrangements with two exhibitors.

Exhibitors paid us an installation fee of up to $2.0 thousand per screen out of the VPFs collected by our Services segment. We manage the billing and collection of VPFs and remit to exhibitors all VPFs collected, less an administrative fee of approximately 10%. For Phase 2 DC Systems we own and finance on a non-recourse basis, we typically received a similar installation fee of up to $2.0 thousand and an ongoing administrative fee of approximately 10% of VPFs collected. We have recorded no debt, property and equipment, financing costs or depreciation in connection with Systems covered under the Exhibitor-Buyer Structure and CDF2 Holdings.

VPFs are earned pursuant to contracts with movie studios and distributors, whereby amounts are payable to our Phase I and Phase II deployment businesses according to fixed fee schedules, when movies distributed by studios are displayed in movie theatres using our installed Systems. One VPF is payable to us upon the initial booking of a movie, for every movie title displayed per System. Therefore, the amount of VPF revenue that we earn depends on the number of unique movie titles released and displayed using our Systems. Our Phase II Deployment segment earns VPF revenues only for Systems that it owns.

Our Phase II Deployment agreements with distributors require payment of VPFs for ten years from the date that each system is installed; however, we may no longer collect VPFs once “cost recoupment”, as defined in the contracts with movie studios and distributors, is achieved. Cost recoupment will occur once the cumulative VPFs and other cash receipts collected by us 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, subject to maximum agreed upon amounts during the four-year roll-out period and thereafter. Furthermore, if

cost recoupment occurs before the end of the eighth contract year, a one-time “cost recoupment bonus” is payable to us by the studios. Cash flows, net of expenses, received by our Phase II Deployment business, following the achievement of cost recoupment, must be returned to the distributors on a pro-rata basis. At this time, we cannot estimate the timing or probability of the achievement of cost recoupment.

Customers

Phase I and Phase II Deployment customers are mainly motion picture studios and theatrical exhibitors. For the fiscal year ended March 31, 2015, six customers, 20^th Century Fox, Warner Brothers, Disney Worldwide Services, Universal Pictures, Sony Pictures Releasing Corporation and Lions Gate Entertainment, each represented 10% or more of Phase 1 DC's revenues and together generated 69%, 71% and 35% of Phase 1 DC's, Phase 2 DC's and consolidated revenues, respectively. No single Phase 1 DC or Phase 2 DC customer comprised more than 10% of our consolidated accounts receivable. We expect to continue to conduct business with each of these customers during the fiscal year ending March 31, 2016.

Seasonality

Revenues earned by our Phase I and Phase II Deployment segments from the collection of VPFs from motion picture studios are seasonal, coinciding with the timing of releases of movies by the motion picture studios. Generally, motion picture studios release the most marketable movies during the summer and the winter holiday season. The unexpected emergence of a hit movie during other periods can alter the traditional trend. The timing of movie releases can have a significant effect on our results of operations, and the results of one quarter are not necessarily indicative of results for the next quarter or any other quarter. The seasonality of motion picture exhibition; however, has become less pronounced as the motion picture studios are releasing movies somewhat more evenly throughout the year.

SERVICES

Our Services segment provides monitoring, billing, collection, verification and other management services to Phase 1 DC and Phase 2 DC as well as to exhibitor-buyers who purchase their own equipment. Our Services segment provides such services to the 3,724 screens in the Phase 1 Deployment for a monthly service fee equal to 5% of the VPFs earned by Phase 1 DC and an incentive service fee equal to 2.5% of the VPFs earned by Phase 1 DC. The Services segment also provides services to the 8,904 Phase 2 Systems deployed, for which we typically receive a monthly fee of approximately 10% of the VPFs earned by Phase 2 DC. The total Phase 2 service fees are subject to an annual limitation under the terms of our agreements with motion picture studios, and are determined based upon the respective Exhibitor-Buyer Structure, KBC or CDF2 agreements. Unpaid services fees in any period remain an obligation to Phase 2 DC in the cost recoupment framework. Such fees are not recognized as income or accrued as an asset on our balance sheet given the uncertainty of the receipt and the timing thereof as future movie release and bookings are not known. Service fees are accrued and recognized only on deployed Phase 2 Systems. As a result, the annual service fee limitation is variable until these fees are paid.

In February 2013, we (i) assigned to our wholly owned subsidiary, Cinedigm DC Holdings LLC (“DC Holdings ”), the right and obligation to service the digital cinema projection systems from the Phase I Deployment and certain systems that were part of the Phase II Deployment, (ii) delegated to DC Holdings the right and obligation to service certain other systems that were part of the Phase II Deployment and (iii) assigned to DC Holdings the right to receive servicing fees from the Phase I and Phase II Deployments. We also transferred to DC Holdings certain of our operational staff whose responsibilities and activities relate solely to the operation of the servicing business and to provide DC Holdings with the right to use the supporting software and other intellectual property associated with the operation of the servicing business.

Our Services segment also has international servicing partnerships in Australia and New Zealand with the Independent Cinema Association of Australia and is currently servicing 530 screens as of March 31, 2015.

Customers

For the fiscal year ended March 31, 2015, no customer comprised more than 10% of Services' revenues or accounts receivable.

Competition

Our Services segment faces limited competition domestically in its digital cinema services business as the major Hollywood movie studios have only signed digital cinema deployment agreements with five entities, including us, and the deployment period in North America is now complete. Competitors include: Digital Cinema Implementation Partners (“DCIP”), a joint venture of three large exhibitors (Regal Entertainment Group, AMC Entertainment Holdings, Inc. and Cinemark Holdings, Inc. focused on

managing the conversions of those three exhibitors; Sony Digital Cinema, to support the deployment of Sony projection equipment; Christie Digital USA, Inc., to support the deployment of Christie equipment; and GDC, Inc., to support the deployment of GDC equipment. We have a significantly greater market share than all other competitors except for the DCIP consortium, which services approximately 16,000 total screens representing its consortium members.

As we expand our servicing platform internationally, an additional competitors beyond those listed above consist of Arts Alliance, Inc., a leading digital cinema servicer focused on the European markets, GDC, as well as other potential local start-ups seeking to service a specific international market. We typically seek to partner with a leading local entity to combine our efficient servicing infrastructure and strong studio relationships with the necessary local market expertise and exhibitor relationships.

DISCONTINUED OPERATIONS

During the fiscal year ended March 31, 2014, we made the strategic decision to discontinue and exit our software business, Hollywood Software, Inc. d/b/a Cinedigm Software (“Software”), our direct, wholly owned subsidiary, in order to focus on our CEG segment. Furthermore, we believe that Software, which was previously included in our Services segment, no longer complemented our continuing operations because we were often in competition with Software customers.

On September 23, 2014, we completed the sale of Software to a third party. See Note 1 - Nature of Operations and Note 3 - Discontinued Operations to the Consolidated Financial Statements within Item 8, Financial Statements and Supplementary Data for further information.

ENVIRONMENTAL

The nature of our business does not subject us to environmental laws in any material manner.

EMPLOYEES

As of March 31, 2015, we had 141 employees, with 14 part-time and 127 full-time, of which 33 are in sales and marketing, 43 are in operations, and 51 are in executive, finance, technology and administration functions.

AVAILABLE INFORMATION

Our Internet website address is www.cinedigm.com. We will make available, free of charge at the “About Us - Investor Relations - Financial Information” section of its website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and all amendments to those reports and statements filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC.

In addition, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding companies that file electronically with the Commission. This information is available at www.sec.gov, the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549 or by calling 1-800-SEC-0330.

ITEM 1A. RISK FACTORS

Risks Related to our Business

An inability to obtain necessary financing may have a material adverse effect on our financial position, operations and prospects if unanticipated capital needs arise.

Our capital requirements may vary significantly from what we currently project and be affected by unforeseen delays and expenses. We may experience problems, delays, expenses and difficulties frequently encountered by similarly situated companies, as well as difficulties as a result of changes in economic, regulatory or competitive conditions. If we encounter any of these problems or difficulties or have underestimated our operating losses or capital requirements, we may require significantly more financing than we currently anticipate. We cannot assure you that we will be able to obtain any required additional financing on terms acceptable to us, if at all. An inability to obtain necessary financing could have a material adverse effect on our financial position, operations and prospects.

Our credit agreement (the “Cinedigm Credit Agreement”) with Société Générale (“SG”) and certain other lenders contains a debt service, coverage ratio test and a $5.0 million minimum liquidity covenant. The Cinedigm Credit Agreement is with full recourse to us.

Our Phase I credit agreement (the “Phase I Credit Agreement”) with SG and certain other lenders contains certain restrictive covenants that restrict our indirect subsidiary, Cinedigm Digital Funding I, LLC (“CDF I”) and its subsidiaries from, among other things, (with certain specified exceptions) making certain capital expenditures, incurring other indebtedness or liens, engaging in a new line of business, selling certain assets, acquiring, consolidating with, or merging with or into other companies and entering into transactions with affiliates. The Phase I Credit Agreement is non-recourse to Cinedigm and our other subsidiaries.

In February 2013, Cinedigm DC Holdings LLC (“DC Holdings LLC”), our wholly owned subsidiary to which we transferred our business of servicing digital cinema projection systems, entered into a term loan agreement (the “Prospect Loan”) with Prospect Capital Corporation (“Prospect”) which restricts DC Holdings LLC and its subsidiaries (including CDF I) from, among other things, (with certain specified exceptions) making certain capital expenditures, incurring other indebtedness or liens, engaging in a new line of business, selling certain assets, acquiring, consolidating with, or merging with or into other companies and entering into transactions with affiliates. The Prospect Loan is non-recourse to Cinedigm and our other subsidiaries, except for Access DM (which is a wholly owned subsidiary of DC Holdings LLC) and Access Digital Cinema Phase 2, Corp. (“ADCP2”), each of which guaranteed the obligations of DC Holdings LLC to Prospect. In addition, Cinedigm provided a limited recourse guaranty pursuant to which Cinedigm guaranteed certain representations and warranties and performance obligations with respect to the Prospect Loan in favor of the collateral agent and the administrative agent for the Prospect Loan.

Our indirect subsidiary, Phase 2 B/AIX has entered into several credit agreements (the “KBC Agreements”) with KBC pursuant to which KBC has financed the acquisition of digital cinema projection systems purchased from Barco, Inc. to be installed at various theatre locations. The KBC Agreements are non-recourse to us and our subsidiaries other than Phase 2 B/AIX and are consolidated by us similarly to CDF I. The KBC Agreements restrict Phase 2 B/AIX from, among other things, (with certain specified exceptions) incurring liens, disposing of certain assets outside the ordinary course of business, merging or consolidating with other entities, changing its line of business and making payments (including dividends) to affiliates. In October 2011, we began earning fees under a management services agreement with CDF2 Holdings, an indirect wholly owned, non-consolidated variable interest entity that is intended to be a special purpose, bankruptcy remote entity, and CDF2, a wholly owned subsidiary of CDF2 Holdings. The revenues under this management service agreement were assigned to DC Holdings LLC as of February 28, 2013. CDF2 financed certain digital systems under its credit agreement with SG and certain other lenders (the “Phase II Credit Agreement”). The Phase II Credit Agreement contains certain restrictive covenants that restrict CDF2 Holdings, CDF2 and their subsidiaries from, among other things, (with certain specified exceptions) making certain capital expenditures, incurring other indebtedness or liens, engaging in a new line of business, selling certain assets, acquiring, consolidating with, or merging with or into other companies and entering into transactions with affiliates. The Phase II Credit Agreement is non-recourse to us and our other subsidiaries. The digital cinema projection systems that CDF2 partially finances by borrowing under the Phase II Credit Agreement are acquired directly from the manufacturers and are sold to and leased back by CDF2 Holdings from CHG-Meridian U.S. Finance, Ltd. (“CHG”) pursuant to a Master Lease Agreement and related documents (the “CHG Lease”). The CHG Lease contains certain restrictive covenants that restrict CDF2 Holdings from, among other things, (with certain specified exceptions) incurring liens on the leased digital cinema systems and from subleasing, assigning, modifying or altering such systems. The CHG Lease is non-recourse to us and our other subsidiaries. CDF2 Holdings is not consolidated by us, as we do not exercise control over CDF2 Holdings. CDF2 Holdings is managed and controlled exclusively by the three managers, including, a third party, which also has a variable interest in CDF2 Holdings, along with an independent third party manager, that must approve, among other

things, the annual operating budget and capital budget, engaging in new business or activities and certain transactions that significantly impact CDF2 Holdings’ economic performance. Our risk is limited to our initial investment and revenues that could be earned under the management services agreement (which revenues have, as mentioned above, been assigned to DC Holdings LLC), and constitutes part of the non-recourse debt.

We face the risks of doing business in new and rapidly evolving markets and may not be able successfully to address such risks and achieve acceptable levels of success or profits.

We have encountered and may continue to encounter the challenges, uncertainties and difficulties frequently experienced in new and rapidly evolving markets, including:


•	limited operating experience;


•	net losses;


•	lack of sufficient customers or loss of significant customers;


•	a changing business focus; and


•	difficulties in managing potentially rapid growth.

We expect competition to be intense. If we are unable to compete successfully, our business and results of operations will be seriously harmed.

The markets for the digital cinema business and the content distribution business are competitive, evolving and subject to rapid technological and other changes. We expect the intensity of competition in each of these areas to increase in the future. Companies willing to expend the necessary capital to create facilities and/or capabilities similar to ours may compete with our business. Increased competition may result in reduced revenues and/or margins and loss of market share, any of which could seriously harm our business. In order to compete effectively in each of these fields, we must differentiate ourselves from competitors.

Many of our current and potential competitors have longer operating histories and greater financial, technical, marketing and other resources than we do, which may permit them to adopt aggressive pricing policies. As a result, we may suffer from pricing pressures that could adversely affect our ability to generate revenues and our results of operations. Many of our competitors also have significantly greater name and brand recognition and a larger customer base than us. If we are unable to compete successfully, our business and results of operations will be seriously harmed.

Our plan to acquire additional businesses involves risks, including our inability to complete an acquisition successfully, our assumption of liabilities, dilution of your investment and significant costs.

Strategic and financially appropriate acquisitions are a key component of our growth strategy. Although there are no other acquisitions identified by us as probable at this time, we may make further acquisitions of similar or complementary businesses or assets. Even if we identify appropriate acquisition candidates, we may be unable to negotiate successfully the terms of the acquisitions, finance them, integrate the acquired business into our then existing business and/or attract and retain customers. Completing an acquisition and integrating an acquired business may require a significant diversion of management time and resources and involves assuming new liabilities. Any acquisition also involves the risks that the assets acquired may prove less valuable than expected and/or that we may assume unknown or unexpected liabilities, costs and problems. If we make one or more significant acquisitions in which the consideration consists of our capital stock, your equity interest in the Company could be diluted, perhaps significantly. If we were to proceed with one or more significant acquisitions in which the consideration included cash, we could be required to use a substantial portion of our available cash, or obtain additional financing to consummate them.

Our previous acquisitions involve risks, including our inability to integrate successfully the new businesses and our assumption of certain liabilities.

Our acquisition of these businesses and their respective assets also involved the risks that the businesses and assets acquired may prove to be less valuable than we expected and/or that we may assume unknown or unexpected liabilities, costs and problems. In addition, we assumed certain liabilities in connection with these acquisitions and we cannot assure you that we will be able to satisfy adequately such assumed liabilities. Other companies that offer similar products and services may be able to market and sell their products and services more cost-effectively than we can.

We have recorded goodwill impairment charges and may be required to record additional charges to future earnings if our goodwill becomes further impaired or our intangible assets become impaired.

We are required under generally accepted accounting principles to review our goodwill and definite-lived intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill must be tested for impairment at least annually. Factors that may be considered a change in circumstances indicating that the carrying value of our reporting units and intangible assets may not be recoverable include a decline in stock price and market capitalization, slower growth rates in our industry or our own operations, and/or other materially adverse events that have implications on the profitability of our business. In the fourth quarter of the fiscal year ended March 31, 2015, we recorded a goodwill impairment charge of $6.0 million in our Content & Entertainment operating segment. See Note 2 - Summary of Significant Accounting Policies of our financial statements included in Item 8 of this Annual Report on Form 10-K for details. We may be required to record additional charges to earnings during any period in which a further impairment of our goodwill or other intangible assets is determined which could adversely affect our results of operations.

If we do not manage our growth, our business will be harmed.

We may not be successful in managing our growth. Past growth has placed, and future growth will continue to place, significant challenges on our management and resources, related to the successful integration of the newly acquired businesses. To manage the expected growth of our operations, we will need to improve our existing, and implement new, operational and financial systems, procedures and controls. We may also need to expand our finance, administrative, client services and operations staffs and train and manage our growing employee base effectively. Our current and planned personnel, systems, procedures and controls may not be adequate to support our future operations. Our business, results of operations and financial position will suffer if we do not effectively manage our growth.

If we are not successful in protecting our intellectual property, our business will suffer.

We depend heavily on technology to operate our business. Our success depends on protecting our intellectual property, which is one of our most important assets. We have intellectual property consisting of:


•	rights to certain domain names;


•	registered service marks on certain names and phrases;


•	various unregistered trademarks and service marks;


•	know-how; and


•	rights to certain logos.

If we do not adequately protect our intellectual property, our business, financial position and results of operations would be harmed. Our means of protecting our intellectual property may not be adequate. Unauthorized parties may attempt to copy aspects of our intellectual property or to obtain and use information that we regard as proprietary. In addition, competitors may be able to devise methods of competing with our business that are not covered by our intellectual property. Our competitors may independently develop similar technology, duplicate our technology or design around any intellectual property that we may obtain.

Although we hold rights to various web domain names, regulatory bodies in the United States and abroad could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. The relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights is unclear. We may be unable to prevent third parties from acquiring domain names that are similar to or diminish the value of our proprietary rights.

Our substantial debt and lease obligations could impair our financial flexibility and restrict our business significantly.

We now have, and will continue to have, significant debt obligations. In October 2013, we entered into the Cinedigm Credit Agreement pursuant to which we borrowed Term Loans in the aggregate amount of $25.0 million and may borrow revolving loans and have letters of credit issued in an aggregate amount at any one time outstanding not to exceed $30.0 million. In April 2015, we repaid and terminated the term loan in its entirety. The obligations under the Cinedigm Credit Agreement, as amended and restated, are with full recourse to Cinedigm. As of March 31, 2015, principal amount outstanding under the Cinedigm Credit Agreement was $18.2 million. Additionally, in October 2013, we issued $5.0 million aggregate principal amount of subordinated notes (the “2013 Notes”), which debt is unsecured and subordinate to the debt under the Cinedigm Credit Agreement. In April 2015, Cinedigm issued $64.0 million aggregate principal amount of 5.5% Convertible Senior Notes due 2035 (the “Convertible Notes”), which debt is unsecured, subordinate to the debt under the Cinedigm Credit Agreement and senior to the 2013 Notes.

As of March 31, 2015, total indebtedness of our consolidated subsidiaries (not including guarantees of our debt) was $157.3 million, none of which is guaranteed by Cinedigm Corp. or our subsidiaries, other than CDF I with respect to the Phase I Credit Agreement, DC Holdings LLC, AccessDM and ADCP2 with respect to the Prospect Loan, Phase 2 B/AIX with respect to the KBC Agreements. In connection with the Prospect Loan, we provided a limited recourse guaranty pursuant to which Cinedigm guaranteed certain representations and warranties and performance obligations with respect to the Prospect Loan in favor of the collateral agent and the administrative agent for the Prospect Loan. Cinedigm Corp. has provided a limited recourse guaranty in respect of a portion of this indebtedness ($68.0 million as of March 31, 2015) pursuant to which it agreed to become a primary obligor of such indebtedness in certain specified circumstances, none of which have occurred as of the date hereof.

We also had capital lease obligations covering a facility and computer equipment with an aggregate principal amount of $5.5 million as of March 31, 2015. In May 2011,we completed the sale of certain assets and liabilities of the Pavilion Theatre and from that point forward, it has not been operated by us. We have remained the primary obligor on the Pavilion capital lease and therefore, the capital lease obligation and the related assets under the capital lease continue to remain on our Consolidated Balance Sheets as of March 31, 2015 and 2014. However, we have entered into a sub-lease agreement with the unrelated third party purchaser that makes all payments related to the lease and as such, we have no continuing involvement in the operation of the Pavilion Theatre.

In February 2013, DC Holdings LLC, our wholly owned subsidiary, entered into the Prospect Loan in the aggregate principal amount of $70.0 million. Additionally, in February 2013, CDF I, our indirect wholly owned subsidiary that is intended to be a special purpose, bankruptcy remote entity, amended and restated the Phase I Credit Agreement, pursuant to which it borrowed $130.0 million of which $5.0 million was assigned to DC Holding LLC. Phase 2 B/AIX, our indirect wholly owned subsidiary, has entered into the KBC Agreements pursuant to which it has borrowed $65.3 million in the aggregate. As of March 31, 2015, the outstanding principal balance under the KBC Agreements was $27.0 million in the aggregate.

The obligations and restrictions under the Cinedigm Credit Agreement, the Phase I Credit Agreement, the Prospect Loan, the KBC Agreements and our other debt obligations could have important consequences for us, including:


•	limiting our ability to obtain necessary financing in the future; and


•	requiring us to dedicate a substantial portion of our cash flow to payments on our debt obligations, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other corporate requirements or expansion of our business.

CDF2 and CDF2 Holdings are our indirect wholly owned, non-consolidated VIEs that are intended to be special purpose, bankruptcy remote entities. CDF2 has entered into the Phase II Credit Agreement, pursuant to which it borrowed $63.2 million in the aggregate. As of March 31, 2015, the outstanding balance under the Phase II Credit Agreement, which includes interest payable, was $44.4 million. CDF2 Holdings has entered into the CHG Lease pursuant to which CHG provided sale/leaseback financing for digital cinema projection systems that were partially financed by the Phase II Credit Agreement in an amount of approximately $57.2 million in the aggregate. These facilities are non-recourse to Cinedigm and our subsidiaries, excluding our VIE, CDF2 and CDF2 Holdings, as the case may be. Although the Phase II financing arrangements undertaken by CDF2 and CDF2 Holdings are important to us with respect to the success of our Phase II Deployment, our financial exposure related to the debt of CDF2 and CDF2 Holdings is limited to the $2.0 million initial investment it made into CDF2 and CDF2 Holdings. CDF2 Holding’s total stockholder’s deficit at March 31, 2015 was $6.7 million. We have no obligation to fund the operating loss or the deficit beyond its initial investment, and accordingly, we carried our investment in CDF2 Holdings at $0.

The obligations and restrictions under the Phase II Credit Agreement and the CHG Lease could have important consequences for CDF2 and CDF2 Holdings, including:


•	Limiting our ability to obtain necessary financing in the future; and


•	requiring them to dedicate a substantial portion of their cash flow to payments on their debt obligations, thereby reducing the availability of their cash flow for other uses.

If we are unable to meet our lease and debt obligations, we could be forced to restructure or refinance our obligations, to seek additional equity financing or to sell assets, which we may not be able to do on satisfactory terms or at all. As a result, we could default on those obligations and in the event of such default, our lenders could accelerate our debt or take other actions that could restrict our operations.

The foregoing risks would be intensified to the extent we borrow additional money or incur additional debt.

The agreements governing the financing of our Phase I Deployment and part of our Phase II Deployment, the Cinedigm Credit Agreement and the Prospect Loan impose certain limitations on us.

The Cinedigm Credit Agreement restricts our ability and the ability of our subsidiaries that have guaranteed the obligations under the Cinedigm Credit Agreement, subject to certain exceptions, to, among other things:


•	make certain capital expenditures and investments;


•	incur other indebtedness or liens;


•	create or acquire subsidiaries which do not guarantee the obligations or foreign subsidiaries;


•	engage in a new line of business;


•	pay dividends;


•	sell assets;


•	amend certain agreements;


•	acquire, consolidate with, or merge with or into other companies; and


•	enter into transactions with affiliates.

The Phase I Credit Agreement governing the financing of our Phase I Deployment restricts the ability of CDF I and its existing and future subsidiaries to, among other things:


•	make certain capital expenditures and investments;


•	incur other indebtedness or liens;


•	engage in a new line of business;


•	sell assets;


•	acquire, consolidate with, or merge with or into other companies; and


•	enter into transactions with affiliates.

One or more of the KBC Agreements governing part of the financing of our Phase II Deployment restrict the ability of Phase 2 B/AIX to, among other things:


•	dispose of or incur other liens on the digital cinema projection systems financed by KBC;


•	engage in a new line of business;


•	sell assets outside the ordinary course of business or on other than arm’s length terms;


•	make payments to majority owned affiliated companies; and


•	consolidate with, or merge with or into other companies.

The agreements governing the Prospect Loan restrict the ability of DC Holdings LLC and its subsidiaries, subject to certain exceptions, to, among other things:


•	make certain capital expenditures and investments;


•	incur other indebtedness or liens;


•	engage in a new line of business;


•	sell assets;


•	acquire, consolidate with, or merge with or into other companies; and


•	enter into transactions with affiliates.

The agreements governing the financing of other parts of our Phase II Deployment impose certain limitations, which may affect our Phase 2 deployment.

The Phase II Credit Agreement governing part of the financing of part of our Phase II Deployment that has not been financed by the KBC Agreements restricts the ability of CDF2, CDF2 Holdings and their existing and future subsidiaries to, among other things:


•	make certain capital expenditures and investments;


•	incur other indebtedness or liens;


•	engage in a new line of business;


•	sell assets;


•	acquire, consolidate with, or merge with or into other companies; and


•	enter into transactions with affiliates.

The CHG Lease governing part of the financing of part of our Phase II Deployment restricts the ability of CDF2 Holdings to, among other things:


•	incur liens on the digital cinema projection systems financed; and


•	sublease, assign or modify the digital cinema projection systems financed.

We may not be able to generate the amount of cash needed to fund our future operations.

Our ability either to make payments on or to refinance our indebtedness, or to fund planned capital expenditures and research and development efforts, will depend on our ability to generate cash in the future. Our ability to generate cash is in part subject to general economic, financial, competitive, regulatory and other factors that are beyond our control.

Based on our current level of operations, we believe our cash flow from operations, available borrowings and loan and credit agreement terms will be adequate to meet our future liquidity needs through at least March 31, 2016. Significant assumptions underlie this belief, including, among other things, that there will be no material adverse developments in our business, liquidity or capital requirements. If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as:


•	reducing capital expenditures;


•	reducing research and development efforts;


•	selling assets;


•	restructuring or refinancing our remaining indebtedness; and


•	seeking additional funding.

We cannot assure you, however, that our business will generate sufficient cash flow from operations, or that we will be able to make future borrowings in amounts sufficient to enable us to pay the principal and interest on our current indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all.

We have incurred losses since our inception.

We have incurred losses since our inception in March 2000 and have financed our operations principally through equity investments and borrowings. As of March 31, 2015, we had negative working capital, defined as current assets less current liabilities, of $30.9 million, and cash and cash equivalents and restricted cash totaling $25.8 million; we had an accumulated deficit of $19.1 million; however, during the fiscal year ended March 31, 2015, we generated $9.2 million of net cash from operating activities.

Our net losses and cash outflows may increase as and to the extent that we increase the size of our business operations, increase our sales and marketing activities, increase our content distribution rights acquisition activities, enlarge our customer support and professional services and acquire additional businesses. These efforts may prove to be more expensive than we currently anticipate which could further increase our losses. We must continue to increase our revenues in order to become profitable. We cannot reliably predict when, or if, we will become profitable. Even if we achieve profitability, we may not be able to sustain it. If we cannot generate operating income or positive cash flows in the future, we will be unable to meet our working capital requirements.

Many of our corporate actions may be controlled by our officers, directors and principal stockholders; these actions may benefit these principal stockholders more than our other stockholders.

As of March 31, 2015, our directors, executive officers and principal stockholders, those known by us to beneficially own more than 5% of the outstanding shares of the Class A common stock, beneficially own, directly or indirectly, in the aggregate, approximately 27.1% of our outstanding Class A common stock. In particular, Chris McGurk, our Chairman and Chief Executive Officer, owns 367,400 shares of Class A common stock and has stock options to purchase 6,000,000 shares of Class A common stock, of which 5,000,000 options are vested and 1,000,000 options vest in equal amounts in March of each of 2016 and 2017. If all the options were exercised, Mr. McGurk would own 6,367,400 shares or approximately 7.6% of the then-outstanding Class A common stock. In addition, an affiliate of Sageview Capital L.P. (“Sageview”) owns 268,687 shares of Class A common stock and warrants to purchase 16,000,000 shares of Class A common stock. If such warrants were exercised, Sageview would own 16,268,687 shares or approximately 17.4% of the then-outstanding Class A common stock. Laura Nisonger Sims, a member of our board of directors, is a principal of Sageview.

These stockholders will have significant influence over our business affairs, with the ability to control matters requiring approval by our security holders, including elections of directors and approvals of mergers or other business combinations. In addition, certain corporate actions directed by our officers may not necessarily inure to the proportional benefit of our other stockholders.

Our success will significantly depend on our ability to hire and retain key personnel.

Our success will depend in significant part upon the continued performance of our senior management personnel and other key technical, sales and creative personnel. We do not currently have significant “key person” life insurance policies for any of our employees. We have entered into employment agreements with four of our top executive officers. If we lose one or more of our key employees, we may not be able to find a suitable replacement(s) and our business and results of operations could be adversely affected. In addition, competition for key employees necessary to create and distribute our entertainment content and software products is intense and may grow in the future. Our future success will also depend upon our ability to hire, train, integrate and retain qualified new employees and our inability to do so may have an adverse impact upon our business, financial condition, operating results, liquidity and prospects for growth.

While we believe we currently have effective internal control over financial reporting, we are required to assess our internal control over financial reporting on an annual basis and any future adverse results from such assessment could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price.

Section 404 of the Sarbanes-Oxley Act of 2002 and the accompanying rules and regulations promulgated by the SEC to implement it required us to include in our Form 10-K annual reports by our management regarding the effectiveness of our internal control over financial reporting. The report included, among other things, an assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year. The assessment did not result in the disclosure of any material weaknesses in our internal control over financial reporting identified by management. During this process, if our management identified one or more material weaknesses in our internal control over financial reporting that cannot be remediated in a timely manner, we would not be unable to assert such internal control as effective. While we currently believe our internal control over financial reporting is effective, the effectiveness of our internal controls in future periods is subject to the risk that our controls may become inadequate because of changes in conditions, and, as a result, the degree of compliance of our internal control over financial reporting with the applicable policies or procedures may deteriorate. If, in the future, we are unable to conclude that our internal control over financial reporting is effective (or if our independent auditors disagree with our conclusion), we could lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our stock price.

If we do not respond to future advances in technology and changes in customer demands, our financial position, prospects and results of operations may be adversely affected.

The demand for our Systems and other assets in connection with our digital cinema business (collectively, our “Digital Cinema Assets”) may be affected by future advances in technology and changes in customer demands. We cannot assure you that there will be continued demand for our Digital Cinema Assets. Our profitability depends largely upon the continued use of digital presentations at theatres. Although we have entered into long term agreements with major motion picture studios and independent studios (the “Studio Agreements”), there can be no assurance that these studios will continue to distribute digital content to movie theatres. If the development of digital presentations and changes in the way digital files are delivered does not continue or technology is used that is not compatible with our Systems, there may be no viable market for our Systems and related products. Any reduction in the use of our Systems and related products resulting from the development and deployment of new technology may negatively impact our revenues and the value of our Systems.

The demand for DVD products is declining, and we anticipate that this decline will continue. We anticipate, however, that the distribution of DVD products will continue to generate positive cash flows for the Company. Should a decline in consumer demand be greater than we anticipate, our business could be adversely affected.

We have concentration in our digital cinema business with respect to our major motion picture studio customers, and the loss of one or more of our largest studio customers could have a material adverse effect on us.

Our Studio Agreements account for a significant portion of our revenues within Phase 1 DC and Phase 2 DC. Together these studios generated 69%, 71%, and 35% of Phase 1 DC’s, Phase 2 DC’s and our consolidated revenues, respectively, for the fiscal year ended March 31, 2015.

The Studio Agreements are critical to our business. If some of the Studio Agreements were terminated prior to the end of their terms or found to be unenforceable, or if our Systems are not upgraded or enhanced as necessary, or if we had a material failure of our Systems, it may have a material adverse effect on our revenue, profitability, financial condition and cash flows. The Studio

Agreements also generally provide that the VPF rates and other material terms of the agreements may not be more favorable to one studio as compared to the others.

One content provider represents a significant portion of our Content & Entertainment business.

Our Content & Entertainment business has an exclusive agreement, with one content provider, to distribute certain non-music related video products, in physical format only, the sales of which represent approximately 11% of the segment's revenues. A change in this arrangement, or the failure to renew this agreement when it expires, could have an adverse effect on the Content & Entertainment business.

Termination of the MLAs and MLAAs could damage our revenue and profitability.

The master license agreements with each of our licensed exhibitors (the “MLAs”) are critical to our business as are master license administrative agreements (the “MLAAs”). The MLAs have terms, which expire in 2020 through 2022 and provide the exhibitor with an option to purchase our Systems or to renew for successive one-year periods up to ten years thereafter. The MLAs also require our suppliers to upgrade our Systems when technology necessary for compliance with DCI Specification becomes commercially available and we may determine to enhance the Systems, which may require additional capital expenditures. If any one of the MLAs were terminated prior to the end of its term, not renewed at its expiration or found to be unenforceable, or if our Systems are not upgraded or enhanced as necessary, it would have a material adverse effect on our revenue, profitability, financial condition and cash flows. Additionally, termination of MLAAs could adversely impact our servicing business.

We have concentration in our business with respect to our major licensed exhibitors, and the loss of one or more of our largest exhibitors could have a material adverse effect on us.

Approximately 64% of Phase 1 DC’s Systems and 19% of total systems are under MLA in theatres owned or operated by one large exhibitor. The loss of this exhibitor or another of our major licensed exhibitors could have a negative impact on the aggregate receipt of VPF revenues as a result of the loss of any associated MLAs. Although we do not receive revenues from licensed exhibitors and we have attempted to limit our licenses to only those theatres, which we believe are successful, each MLA with our licensed exhibitors is important, depending on the number of screens, to our business since VPF revenues are generated based on screen turnover at theatres. If the MLA with a significant exhibitor was terminated prior to the end of its term, it would have a material adverse effect on our revenue, profitability, financial condition and cash flows. There can be no guarantee that the MLAs with our licensed exhibitors will not be terminated prior to the end of its term.

An increase in the use of alternative movie distribution channels and other competing forms of entertainment could drive down movie theatre attendance, which, if causing significant theatre closures or a substantial decline in motion picture production, may lead to reductions in our revenues.

Various exhibitor chains, which are our distributors, face competition for patrons from a number of alternative motion picture distribution channels, such as DVD, network and syndicated television, VOD, pay-per-view television and downloading utilizing the Internet. These exhibitor chains also compete with other forms of entertainment competing for patrons’ leisure time and disposable income such as concerts, amusement parks and sporting events. An increase in popularity of these alternative movie distribution channels and competing forms of entertainment could drive down movie theatre attendance and potentially cause certain of our exhibitors to close their theatres for extended periods of time. Significant theatre closures could in turn have a negative impact on the aggregate receipt of our VPF revenues, which in turn may have a material adverse effect on our business and ability to service our debt.

An increase in the use of alternative movie distribution channels could also cause the overall production of motion pictures to decline, which, if substantial, could have an adverse effect on the businesses of the major studios with which we have Studio Agreements. A decline in the businesses of the major studios could in turn force the termination of certain Studio Agreements prior to the end of their terms. The Studio Agreements with each of the major studios are critical to our business, and their early termination may have a material adverse effect on our revenue, profitability, financial condition and cash flows.

Our success depends on external factors in the motion picture and television industry.

Our success depends on the commercial success of movies and television programs, which is unpredictable. Operating in the motion picture and television industry involves a substantial degree of risk. Each movie and television program is an individual artistic work, and inherently unpredictable audience reactions primarily determine commercial success. Generally, the popularity of movies and television programs depends on many factors, including the critical acclaim they receive, the format of their initial release, for example, theatrical or direct-to-video, the actors and other key talent, their genre and their specific subject matter. The

commercial success of movies and television programs also depends upon the quality and acceptance of movies or programs that our competitors release into the marketplace at or near the same time, critical reviews, the availability of alternative forms of entertainment and leisure activities, general economic conditions and other tangible and intangible factors, many of which we do not control and all of which may change. We cannot predict the future effects of these factors with certainty, any of which could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects. In addition, because a movie’s or television program’s performance in ancillary markets, such as home video and pay and free television, is often directly related to its box office performance or television ratings, poor box office results or poor television ratings may negatively affect future revenue streams. Our success will depend on the experience and judgment of our management to select and develop new content acquisition and investment opportunities. We cannot make assurances that movies and television programs will obtain favorable reviews or ratings, will perform well at the box office or in ancillary markets or that broadcasters will license the rights to broadcast any of our television programs in development or renew licenses to broadcast programs in our library. The failure to achieve any of the foregoing could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Our business involves risks of liability claims for media content, which could adversely affect our business, results of operations and financial condition.

As a distributor of media content, we may face potential liability for:


•	defamation;


•	invasion of privacy;


•	negligence;


•	copyright or trademark infringement (as discussed above); and


•	other claims based on the nature and content of the materials distributed.

These types of claims have been brought, sometimes successfully, against producers and distributors of media content. Any imposition of liability that is not covered by insurance or is in excess of insurance coverage could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Our revenues and earnings are subject to market downturns.

Our revenues and earnings may fluctuate significantly in the future. General economic or other conditions could cause lower than expected revenues and earnings within our digital cinema, technology or content and entertainment businesses. The global economic turmoil of recent years has caused a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, an unprecedented level of intervention from the U.S. federal government and other foreign governments, decreased consumer confidence, overall slower economic activity and extreme volatility in credit, equity and fixed income markets. While the ultimate outcome of these events cannot be predicted, a decrease in economic activity in the U.S. or in other regions of the world in which we do business could adversely affect demand for our movies, thus reducing our revenue and earnings. While stabilization has continued, it remains a slow process and the global economy remains subject to volatility. Moreover, financial institution failures may cause us to incur increased expenses or make it more difficult either to financing of any future acquisitions, or financing activities. Any of these factors could have a material adverse effect on our business, results of operations and could result in significant additional dilution to shareholders.

Changes in economic conditions could have a material adverse effect on our business, financial position and results of operations.

Our operations and performance could be influenced by worldwide economic conditions. Uncertainty about current global economic conditions poses a risk as consumers and businesses may postpone spending in response to tighter credit, negative financial news and/or declines in income or asset values, which could have a material negative effect on the demand for the our products and services. Other factors that could influence demand include continuing increases in fuel and other energy costs, conditions in the residential real estate and mortgage markets, labor and healthcare costs, access to credit, consumer confidence, and other macroeconomic factors affecting consumer-spending behavior. These and other economic factors could have a material adverse effect on demand for our products and services and on our financial condition and operating results. Uncertainty about current global economic conditions could also continue to increase the volatility of our stock price.

Changes to existing accounting pronouncements or taxation rules or practices may affect how we conduct our business and affect our reported results of operations.

New accounting pronouncements or tax rules and varying interpretations of accounting pronouncements or taxation practice have occurred and may occur in the future. A change in accounting pronouncements or interpretations or taxation rules or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective. Changes to existing rules and pronouncements, future changes, if any, or the questioning of current practices or interpretations may adversely affect our reported financial results or the way we conduct our business.

We are subject to counterparty risk with respect to a forward stock purchase transaction entered into subsequent to March 31, 2015.

The forward counterparty to the forward stock purchase transaction that we are party to is one of the lenders under the Cinedigm Credit Agreement, and we are subject to the risk that it might default under the forward stock purchase transaction. Our exposure to the credit risk of the forward counterparty will not be secured by any collateral. Global economic conditions have in the recent past resulted in, and may again result in, the actual or perceived failure or financial difficulties of many financial institutions. If the forward counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings, with a claim equal to our exposure at that time under our transaction with that counterparty. Our exposure will depend on many factors, but, generally, an increase in our exposure will be correlated to an increase in the market price of our Class A common stock. In addition, upon default by the forward counterparty, we may suffer more dilution than we currently anticipate with respect to our Class A common stock. We can provide no assurances as to the financial stability or viability of the forward counterparty to the forward stock purchase transaction.

Risks Related to our Class A Common Stock

If the market price of the Class A common stock declines, we may not be able to maintain our listing on the Nasdaq Global Market, which may impair our financial flexibility and restrict our business significantly.

The stock markets have experienced extreme price and volume fluctuations that have affected the market prices of equity securities of many companies that may be unrelated or disproportionate to the operating results of such companies. These broad market movements may adversely affect the market price of the Class A common stock. The Class A common stock is presently listed on Nasdaq. The Class A common stock has been trading below $1 per share in recent months and we cannot assure you that we will meet the criteria for continued listing, in which case the Class A common stock could become delisted. Any such delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the loss of confidence in our financial stability by suppliers, customers and employees. If the Class A common stock is delisted from Nasdaq, we may face a lengthy process to re-list the Class A common stock, if we are able to re-list the Class A common stock at all, and the liquidity that Nasdaq provides will no longer be available to investors.

The acquisition restrictions contained in our certificate of incorporation, which are intended to help preserve our net operating losses, may not be effective or may have unintended negative effects.

We have experienced, and may continue to experience, substantial operating losses, and under Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”), and rules promulgated by the Internal Revenue Service, we may “carry forward” these net operating losses (“NOLs”) in certain circumstances to offset any current and future earnings and thus reduce our federal income tax liability, subject to certain requirements and restrictions. To the extent that the NOLs do not otherwise become limited, we believe that we will be able to carry forward a significant amount of the NOLs, and therefore these NOLs could be a substantial asset to us. If, however, we experience a Section 382 ownership change, our ability to use the NOLs will be substantially limited, and the timing of the usage of the NOLs could be substantially delayed, which could therefore significantly impair the value of that asset.

To reduce the likelihood of an ownership change, we have established acquisition restrictions in our certificate of incorporation. The acquisition restrictions in our certificate of incorporation are intended to restrict certain acquisitions of the Class A common stock to help preserve our ability to utilize our NOLs by avoiding the limitations imposed by Section 382 and the related Treasury regulations. The acquisition restrictions are generally designed to restrict or deter direct and indirect acquisitions of the Class A common stock if such acquisition would result in a shareholder becoming a “5-percent shareholder” (as defined by Section 382 and the related Treasury regulations) or increase the percentage ownership of Company stock that is treated as owned by an existing 5-percent shareholder.

Although the acquisition restrictions are intended to reduce the likelihood of an ownership change that could adversely affect us, we can give no assurance that such restrictions would prevent all transfers that could result in such an ownership change. In particular, we have been advised by our counsel that, absent a court determination, there can be no assurance that the acquisition restrictions will be enforceable against all of our shareholders, and that they may be subject to challenge on equitable grounds. In particular, it is possible that the acquisition restrictions may not be enforceable against the shareholders who voted against or abstained from voting on the restrictions at our 2009 annual meeting of stockholders.

Under certain circumstances, our Board may determine it is in our best interest to exempt certain 5-percent shareholders from the operation of the acquisition restrictions, if a proposed transaction is determined not to be detrimental to the utilization of our NOLs.

The acquisition restrictions also require any person attempting to become a holder of 5% or more of the Class A common stock, as determined under Section 382, to seek the approval of our Board. This may have an unintended “anti-takeover” effect because our Board may be able to prevent any future takeover. Similarly, any limits on the amount of stock that a stockholder may own could have the effect of making it more difficult for stockholders to replace current management. Additionally, because the acquisition restrictions have the effect of restricting a stockholder’s ability to dispose of or acquire the Class A common stock, the liquidity and market value of the Class A common stock might suffer. The acquisition restrictions may be waived by our Board. Stockholders are advised to monitor carefully their ownership of the Class A common stock and consult their own legal advisors and/or Company to determine whether their ownership of the Class A common stock approaches the proscribed level.

The occurrence of various events may adversely affect our ability to fully utilize NOLs.

We have a substantial amount of NOLs for U.S. federal income tax purposes that are available both currently and in the future to offset taxable income and gains. Events outside of our control may cause us to experience a Section 382 ownership change, and limit our ability to fully utilize such NOLs.

In general, an ownership change occurs when, as of any testing date, the percentage of stock of a corporation owned by one or more “5-percent shareholders,” as defined in the Section 382 and the related Treasury regulations, has increased by more than 50 percentage points over the lowest percentage of stock of the corporation owned by such shareholders at any time during the three-year period preceding such date. In general, persons who own 5% or more of a corporation’s stock are 5-percent shareholders, and all other persons who own less than 5% of a corporation’s stock are treated, together, as a single, public group 5-percent shareholder, regardless of whether they own an aggregate of 5% or more of a corporation’s stock. If a corporation experiences an ownership change, it is generally subject to an annual limitation, which limits its ability to use its NOLs to an amount equal to the equity value of the corporation multiplied by the federal long-term tax-exempt rate.

If we were to experience an ownership change, we could potentially have, in the future, higher U.S. federal income tax liabilities than we would otherwise have had and it may also result in certain other adverse consequences to us. Therefore, we have adopted the acquisition restrictions set forth in Article Fourth of our certificate of incorporation in order to reduce the likelihood that we will experience an ownership change under Section 382. There can be no assurance, however, that these efforts will deter or prevent the occurrence of an ownership change and the adverse consequences that may arise therefrom, as described above under the risk factor titled “The acquisition restrictions contained in our certificate of incorporation, which are intended to help preserve our net operating losses, may not be effective or may have unintended negative effects.”

Our stock price has been volatile and may continue to be volatile in the future and this volatility may affect the price at which you could sell our Class A common stock.

The trading price of the Class A common stock has been volatile and may continue to be volatile in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on an investment in the Class A common stock:


•	actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;


•	changes in the market’s expectations about our operating results;


•	success of competitors;


•	our operating results failing to meet the expectation of securities analysts or investors in a particular period;


•	changes in financial estimates and recommendations by securities analysts concerning us, the market for digital and physical content, content distribution and entertainment in general;


•	operating and stock price performance of other companies that investors deem comparable to us;


•	our ability to market new and enhanced products on a timely basis;


•	changes in laws and regulations affecting our business or our industry;


•	commencement of, or involvement in, litigation involving us;


•	changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;


•	the volume of shares of the Class A common stock available for public sale;


•	any major change in our board of directors or management;


•	sales of substantial amounts of Class A common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and


•	general economic and political conditions such as recessions, interest rates, international currency fluctuations and acts of war or terrorism.

Broad market and industry factors may materially harm the market price of the Class A common stock irrespective of our operating performance. The stock market in general, and Nasdaq in particular, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of the Class A common stock, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies that investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of the Class A common stock also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

Our fourth amended and restated certificate of incorporation, as amended, and bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our management without the consent of our board of directors. These provisions include:


•	a restriction on certain acquisitions of our common stock to help preserve our ability to utilize our significant NOLs by avoiding the limitations imposed by Section 382 of the Code;


•	no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;


•	the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;


•	the ability of our board of directors to determine to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;


•	the requirement that an annual meeting of stockholders may be called only by the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;


•	limiting the liability of, and providing indemnification to, our directors and officers;


•	controlling the procedures for the conduct and scheduling of stockholder meetings; and


•	providing that directors may be removed prior to the expiration of their terms by the Board of Directors only for cause.

These provisions, alone or together, could delay hostile takeovers and changes in control of the Company or changes in our management.

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the DGCL, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock. Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for the Class A common stock.

ITEM 2. PROPERTY

We operated from the following leased properties at March 31, 2015.



Continuing operations
Location	Square Feet (Approx.)	Lease Expiration Date	Primary Use
Century City, California	25,800	July 2021	Primary operations, sales, marketing and administrative offices for our Content & Entertainment Group. In addition, certain operations and administration for our other business segments.
Manhattan Borough of New York City	16,500	April 2016	Corporate executive and administrative headquarters assumed following our acquisition of New Video in April 2012. Shared between all business segments.

Discontinued operations
Location	Square Feet (Approx.)	Lease Expiration Date	Primary Use
Brooklyn Borough of New York City	31,100	July 2022	Nine-screen digital movie theatre formerly operated by us prior to a sale of assets in May 2011. We have sublet the property to an independent third party and we no longer make payments on such lease; however, we remain the primary obligor.
Brooklyn Borough of New York City	30,500	January 2016	Leased data center facility, for which payment is made by a discontinued subsidiary. We remain the primary obligor on the lease. There is no renewal provision with this lease.

We believe that we have sufficient space to conduct our business for the foreseeable future. All of our leased properties are, in the opinion of our management, in satisfactory condition and adequately covered by insurance.

We do not own any real estate or invest in real estate or related investments.

ITEM 3. LEGAL PROCEEDINGS

Gaiam Dispute

In August 2014, we initiated mediation with Gaiam with respect to certain claims resulting from the GVE Acquisition in accordance with the requirements of the Membership Interest Purchase Agreement (the ”MIPA”). On January 13 and 16, 2015, Gaiam and we participated in a two-day mediation to determine whether the parties’ disputes could be resolved informally without arbitration. The mediation was not successful, and, therefore, we are pursuing our claims against Gaiam through arbitration.

We believe that (i) Gaiam materially breached its representations and warranties under the MIPA, including a representation that the financial statements provided to us were consistent with GAAP; (ii) Gaiam engaged in fraud and tortious acts in connection with the sale; (iii) the amount of working capital in the business unit was substantially below the working capital target identified in the MIPA and is subject to a working capital adjustment; (iv) Gaiam breached the Transition Services Agreement, resulting in additional costs to us and potential losses associated with the non-collection our accounts receivable; and (v) Gaiam breached the terms of other agreements related to the transfer of cash from collected accounts receivable, including mishandling post-closing collections. Among other things, we believe that significant sections of the financial statements that Gaiam provided to us, both before and after the GVE Acquisition, were not consistent with GAAP, despite Gaiam’s contractual obligations to ensure GAAP compliance, and that Gaiam’s financial statements did not fairly present the financial position and results of GVE as of the date of the transaction. Our investigation of these issues is ongoing as of the date of this Report on Form 10-K.

We demanded that Gaiam agree to participate in an expedited arbitration before a nationally recognized accounting firm to determine the value of the working capital in accordance with the relevant procedures set forth in the MIPA (“the Working Capital Arbitration”). We also demanded that Gaiam agree simultaneously to participate in a separate arbitration before the American Arbitration Association (“the AAA Arbitration”) to resolve the parties’ non-working capital disputes. Gaiam initially asserted that the AAA Arbitration should occur prior to the Working Capital Arbitration and refused to proceed with the Working Capital Arbitration until after the AAA Arbitration was completed. Therefore, we commenced legal proceedings against Gaiam to comply with the MIPA and to compel Gaiam to participate in the Working Capital Arbitration without further delay.

By Order dated May 5, 2015, the United States District Court for the Central District of California ordered Gaiam to proceed with the Working Capital Arbitration forthwith. Although Gaiam initially filed an appeal of the Order with the Ninth Circuit, that appeal has been dismissed. The parties are proceeding with the Working Capital Arbitration currently and expect to receive an initial decision on the working capital claims at issue in the Working Capital Arbitration by approximately mid-July 2015. In addition, the parties are proceeding with their respective non-working capital claims in the AAA Arbitration.

The relief requested by us exceeds $30.0 million and includes unspecified compensatory damages, attorneys’ fees, costs and interest, and all other appropriate relief including punitive damages. Gaiam has disputed our allegations and asserted its own claims against us, including seeking working capital reimbursement from us of over $6.0 million.

We believe that the claims that we have asserted against Gaiam in the Working Capital Arbitration and the AAA Arbitration have merit, and we intend to pursue our claims vigorously. Conversely, we believe that Gaiam’s claims are without merit. At this early stage, there can be no assurance as to the likelihood of success on the merits.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

CLASS A COMMON STOCK

Our Class A Common Stock trades publicly on the Nasdaq Global Market (“Nasdaq”), under the trading symbol “CIDM”. The following table shows the high and low sales prices per share of our Class A Common Stock as reported by Nasdaq for the periods indicated:



	For the Fiscal Year Ended March 31,
	2015		2014
	HIGH	LOW	HIGH	LOW
April 1 – June 30	$2.97	$2.32	$1.63	$1.40
July 1 – September 30	$2.55	$1.52	$1.54	$1.36
October 1 – December 31	$1.97	$1.39	$2.31	$1.46
January 1 – March 31	$1.72	$1.44	$3.19	$2.05

The last reported closing price per share of our Class A Common Stock as reported by Nasdaq on June 22, 2015 was $0.88 per share. As of June 22, 2015, there were 81 holders of record of our Class A Common Stock, not including beneficial owners of our Class A Common Stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.

CLASS B COMMON STOCK

No shares of Class B Common Stock are currently outstanding. On September 13, 2012, we amended our Fourth Amended and Restated Certificate of Incorporation to eliminate any authorized but unissued shares of Class B Common Stock. Accordingly, no further Class B Common Stock will be issued.

DIVIDEND POLICY

We have never paid any cash dividends on our Class A Common Stock or Class B Common Stock and do not anticipate paying any on our Class A Common Stock in the foreseeable future. Any future payment of dividends on our Class A Common Stock will be in the sole discretion of our board of directors. The holders of our Series A 10% Non-Voting Cumulative Preferred Stock are entitled to receive dividends. There were $89 of cumulative dividends in arrears on the Preferred Stock at March 31, 2015.

SALES OF UNREGISTERED SECURITIES

None.

PURCHASE OF EQUITY SECURITIES

There were no purchases of shares of our Class A Common Stock made by us or on our behalf during the three months ended March 31, 2015.

On April 29, 2015, we issued $64.0 million aggregate principal amount of 5.5% convertible senior notes (the "Convertible Notes"), due April 15, 2035. We used $11.4 million of the net proceeds from the Convertible Notes issuance to enter into a forward stock purchase transaction to acquire approximately 11.8 million shares of our Class A common stock for settlement at any time prior to the fifth anniversary of the issuance date of the Convertible Notes and approximately $2.6 million to repurchase approximately 2.7 million shares of our Class A common stock from certain purchasers of the Convertible Notes in privately negotiated transactions on April 30, 2015.

The shares to be purchased under the forward stock purchase transaction will be treated as retired for certain accounting purposes, beginning with the financial statements for the quarter ending June 30, 2015, but will remain outstanding for corporate law purposes, including for purposes of any future stockholder votes, until the forward stock purchase transaction is settled and such shares are delivered to the Company to be retired to treasury.

ITEM 6. SELECTED FINANCIAL DATA

The following tables set forth our historical selected financial and operating data for the periods indicated. The selected financial and operating data should be read together with the other information contained in this document, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 7 and the audited historical financial statements and the notes thereto included elsewhere in this document. The historical results here are not necessarily indicative of future results.



	For the Fiscal Years Ended March 31,
Statement of Operations Data	(In thousands, except for share and per share data)
Related to Continuing Operations:	2015			2014			2013			2012			2011
Revenues	$	105,484		$	104,328		$	81,092		$	68,363		$	54,225
Direct operating (exclusive of depreciation and amortization shown below)	30,109			28,920			8,515			3,468			2,327
Selling, general and administrative	32,402			26,333			20,805			13,625			10,904
(Benefit) provision for doubtful accounts	(206		)	394			478			459			117
Restructuring, transition and acquisitions expenses, net	2,638			1,533			857			1,811			1,403
Goodwill impairment	6,000			—			—			—			—
Depreciation and amortization of property and equipment	37,519			37,289			36,359			35,715			31,771
Amortization of intangible assets	5,864			3,473			1,538			278			315
Total operating expenses	114,326			97,942			68,552			55,356			46,837
(Loss) income from operations	(8,842		)	6,386			12,540			13,007			7,388

Interest income	101			98			48			140			154
Interest expense	(19,899		)	(19,755		)	(28,314		)	(29,899		)	(26,991		)
Debt prepayment fees	—			—			(3,725		)	—			—
Loss on extinguishment of notes payable	—			—			(7,905		)	—			(4,448		)
(Loss) income on investment in non-consolidated entity	—			(1,812		)	322			(510		)	—
Other income (expense), net	105			444			654			912			(419		)
Change in fair value of warrant liability	—			—			—			—			3,142
Change in fair value of interest rate derivatives	(441		)	679			1,231			200			(1,326		)
Loss from continuing operations before benefit from income taxes	(28,976		)	(13,960		)	(25,149		)	(16,150		)	(22,500		)
Benefit from income taxes	—			—			4,944			—			—
Loss from continuing operations	(28,976		)	(13,960		)	(20,205		)	(16,150		)	(22,500		)
Income (loss) from discontinued operations	100			(11,904		)	(861		)	(3,194		)	(7,358		)
(Loss) gain on sale of discontinued operations	(3,293		)	—			—			(3,696		)	622
Net loss	(32,169		)	(25,864		)	(21,066		)	(23,040		)	(29,236		)
Net loss attributable to noncontrolling interest	861			—			—			—			—
Net loss attributable to Cinedigm Corp.	(31,308		)	(25,864		)	(21,066		)	(23,040		)	(29,236		)
Preferred stock dividends	(356		)	(356		)	(356		)	(356		)	(394		)
Net loss attributable to common shareholders	$	(31,664	)	$	(26,220	)	$	(21,422	)	$	(23,396	)	$	(29,630	)
Basic and diluted net loss per share from continuing operations	$	(0.37	)	$	(0.25	)	$	(0.43	)	$	(0.46	)	$	(0.74	)
Shares used in computing basic and diluted net loss per share ⁽¹⁾	76,785,351			57,084,319			47,517,167			36,259,036			30,794,102


⁽¹⁾	For all periods presented, we incurred net losses and, therefore, the impact of dilutive potential common stock equivalents and convertible notes are anti-dilutive and are not included in the weighted shares.



	For the Fiscal Years Ended March 31,
	(In thousands)
Balance Sheet Data (At Period End):	2015			2014			2013			2012			2011
Cash and cash equivalents, restricted available-for-sale investments and restricted cash	$	25,750		$	56,966		$	20,199		$	33,071		$	22,979
Working (deficit) capital	$	(30,871	)	$	(5,002	)	$	(17,497	)	$	2,755		$	2,110
Total assets	$	279,705		$	345,998		$	281,459		$	287,517		$	292,997
Notes payable, non-recourse	$	157,298		$	198,604		$	237,909		$	170,989		$	192,554
Total stockholders' (deficit) equity of Cinedigm Corp.	$	(18,959	)	$	10,227		$	(17,314	)	$	(11,473	)	$	1,787
Other Financial Data:
Net cash provided by operating activities	$	9,211		$	39,594		$	29,369		$	39,938		$	30,075
Net cash provided by (used in) investing activities	$	1,197		$	(52,009	)	$	(4,250	)	$	(17,315	)	$	(41,067	)
Net cash (used in) provided by financing activities	$	(41,624	)	$	49,182		$	(29,514	)	$	(15,528	)	$	12,646

ITEM 7. 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 consolidated financial statements and the related notes included elsewhere in this document.

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 over 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 the Discovery Networks, National Geographic 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, iTunes, Amazon Prime, Netflix, Hulu, Xbox, PlayStation, and cable video-on-demand ("VOD"), and (ii) physical goods, including DVD and Blu-ray Discs.

We report our financial results in four primary segments as follows: (1) the first digital cinema deployment (“Phase I Deployment”), (2) the second digital cinema deployment (“Phase II Deployment”), (3) digital cinema services (“Services”) and (4) media content and entertainment group (“Content & Entertainment” or "CEG"). The Phase I Deployment and Phase II Deployment segments are the non-recourse, financing vehicles and administrators for our digital cinema equipment (the “Systems”) installed in movie theatres throughout the United States, and in Australia and New Zealand. Our Services segment provides fee based support to over 12,000 movie screens in our Phase I Deployment, Phase II Deployment segments 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 is a market leader in: (1) ancillary market aggregation and distribution of entertainment content and; (2) branded and curated over-the-top ("OTT") digital network business providing entertainment channels and applications.

We are structured so that our digital cinema business (collectively, our Phase I Deployment, Phase II Deployment and Services segments) operates independently from our Content & Entertainment business. As of March 31, 2015, we had approximately $157.5 million of non-recourse outstanding debt principal that relates to, and is serviced by, our digital cinema business. We also have approximately $47.5 million of outstanding debt principal, as of March 31, 2015 that is attributable to our Content & Entertainment and Corporate segments.

The following organizational chart provides a graphic representation of our business and our four reporting segments:

We have incurred consolidated net losses of $32.2 million, $25.9 million and $21.1 million for the fiscal years ended March 31, 2015, 2014 and 2013 respectively, and we have an accumulated deficit of $300.4 million as of March 31, 2015. Included in our consolidated net losses were net restructuring, transition and acquisition expenses of $2.6 million, $1.5 million and $0.9 million for the fiscal years ended March 31, 2015, 2014 and 2013, respectively, and a goodwill impairment charge of $6.0 million in the fiscal year ended March 31, 2015. We also have significant contractual obligations related to our non-recourse and recourse debt for the fiscal year ended March 31, 2016 and beyond. In addition and as discussed further in Management's Discussion and Analysis - Liquidity and Capital Resources, on April 29, 2015, we issued $64.0 million aggregate principal amount of 5.5% convertible senior notes (the "Convertible Notes"), due April 15, 2035. We used $18.6 million of the net proceeds from the offering to repay borrowings and terminate one of our term loans under our 2013 Credit Agreement, of which $18.2 million was used to pay the remaining principal balance. We also repurchased 2.7 million shares of our Class A common stock from certain purchasers of Convertible Notes in privately negotiated transactions for $2.6 million. In addition, $11.4 million of the net proceeds was used to fund the cost of repurchasing 11.8 million shares of our Class A common stock pursuant to a forward purchase contract that may be settled at any time prior to the fifth anniversary of the issuance of the Convertible Notes.

We may continue generating consolidated net losses for the foreseeable future. Based on our cash position at March 31, 2015, expected cash flows from operations, and the net proceeds from the April 2015 offering of Convertible Notes we believe that we have the ability to meet our obligations through at least June 30, 2016. Failure to generate additional revenues, raise additional capital or manage discretionary spending could have an adverse effect on our financial position, results of operations or liquidity.

Critical Accounting Policies and Estimates

Our consolidated 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 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 Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Management believes that the following accounting policies 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.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation expense is recorded using the straight-line method over the estimated useful lives of the respective assets as follows:



Computer equipment and software	3-5 years
Digital cinema projection systems	10 years
Machinery and equipment	3-10 years
Furniture and fixtures	3-6 years

Leasehold improvements are being amortized over the shorter of the lease term or the estimated useful life of the improvement. Maintenance and repair costs are charged to expense as incurred. Major renewals, improvements and additions are capitalized.

Useful lives are determined based on an estimate of either physical or economic obsolescence, or both. During the fiscal years ended March 31, 2015 and 2014, we have neither made any revisions to estimated useful lives, nor recorded any impairment charges from continuing operations on our property and equipment.

FAIR VALUE ESTIMATES

Goodwill and Intangible and Long-Lived Assets

We must estimate the fair value of assets acquired and liabilities assumed in a business combination. Our assessment of the estimated fair value of each of these can have a material effect on our reported results as intangible assets are amortized over various lives. Furthermore, a change in the estimated fair value of an asset or liability often has a direct influence on the amount to recognize as goodwill, which is an asset that is not amortized. Often determining the fair value of these assets and liabilities assumed requires an assessment of expected use of the assets and the expected costs to extinguish the liabilities. Such estimates are inherently difficult and subjective and can have a material influence on our consolidated financial statements.

We use either the income, cost or market approach to aid in our conclusions of such fair values and asset lives. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life of the asset, discounted to present value. The cost approach presumes that an investor would pay no more for an asset than its replacement or reproduction cost. The market approach estimates value based on what other participants in the market have paid for reasonably similar assets. Although each valuation approach is considered in valuing the assets acquired, the approach ultimately selected is based on the characteristics of the asset and the availability of information.

We evaluate our goodwill annually for impairment or whenever events or changes in circumstances indicate the fair value of a reporting unit is below its carrying amount. The determination of whether or not goodwill has become impaired involves a significant level of judgment in the assumptions underlying the approach used to determine the value of our reporting units. 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 our operations. To the extent additional information arises, market conditions change or our strategies change, it is possible that the conclusion regarding whether goodwill is impaired could change and result in future goodwill impairment charges that could have a material effect on our consolidated financial position or results of operations.

When testing goodwill for impairment we are permitted to make a qualitative assessment of whether goodwill is impaired, or choose to bypass the qualitative assessment, and proceed directly to performing the first step of the two-step impairment test. If we perform a qualitative assessment and conclude it is more likely than not that the fair value of a reporting unit exceeds its carrying value, goodwill is not considered impaired and the two-step impairment test is unnecessary. However, if we conclude otherwise, we are then required to perform the first step of the two-step impairment test.

During the annual testing of goodwill for impairment in the fourth quarter of the fiscal year ended March 31, 2015, we performed the quantitative assessment for our CEG reporting unit, the only reporting unit with goodwill, and determined that the CEG reporting unit had a fair value less than the unit's carrying amount. As a result, we recorded a goodwill impairment charge of $6.0 million in the year ended March 31, 2015. In determining fair value we used various assumptions, including expectations of future cash flows based on projections or forecasts derived from analysis of business prospects, economic or market trends and any regulatory changes that may occur. We estimated the fair value of the reporting unit using a net present value methodology, which is dependent on significant assumptions related to estimated future discounted cash flows, discount rates and tax rates. Certain of the estimates and assumptions that we used in determining the value of our CEG reporting unit are discussed in Note 2 - Summary of Significant Accounting Policies of Item 8 - Financial Statements and Supplementary Data of this Report on Form 10-K.

The goodwill impairment was primarily a result of reduced expectations of future cash flows to be generated by our CEG reporting unit, reflecting the continuing decline in consumer demand for packaged goods in favor of films in downloadable form. As a result, we have shifted our operating focus to devote more resources to our OTT channel business, which we expect to build upon significantly in fiscal years ending March 31, 2016 through 2018. Launching OTT channels requires that we make significant up-front investments to build the infrastructure, acquire content and develop partnerships, in exchange for anticipated revenue streams, which we also took into account in our discounted cash flow analysis. Beyond 2018, however, we expect that increased cash flows from our OTT channel business will more than offset decreases in cash flows from the sale of packaged goods. In addition, we applied a higher discount rate to expected future cash flows, reflecting a higher implied cost of debt financing. Future decreases in the fair value of our CEG reporting unit may require us to record additional goodwill impairment, particularly if our expectations of future cash flows are not achieved.

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. Determining whether impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount and the asset's residual value, if any. The assessment for recoverability is based primarily on our ability to recover the carrying value of its 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 assets 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.

Stock-based Compensation

Stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized as expense over the vesting period. Determining the fair value of stock-based awards at the grant date requires judgment in estimating expected stock volatility and the amount of stock-based awards that are expected to be forfeited. If actual results differ significantly from these estimates, stock-based compensation expense and our results of operations could be materially affected.

REVENUE RECOGNITION

Phase I Deployment and Phase II Deployment

VPFs are earned, net of administrative fees, pursuant to contracts with movie studios and distributors, whereby amounts are payable by a studio to Phase 1 DC, CDF I and to Phase 2 DC when movies distributed by the studio are displayed on screens utilizing our Systems installed in movie theatres. VPFs are earned and payable to Phase 1 DC and CDF I based on a defined fee schedule with a reduced VPF rate year over year until the sixth year (calendar 2011) at which point the VPF rate remains unchanged through the tenth year. One VPF is payable for every digital title 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 in which the digital title first plays on a System for general audience viewing in a digitally equipped movie theatre, as Phase 1 DC’s, CDF I’s and Phase 2 DC’s performance obligations have been substantially met at that time.

Phase 2 DC’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 2 DC may no longer collect VPFs once “cost recoupment,” as defined in the contracts with movie studios and distributors, is achieved. Cost recoupment will occur once the cumulative VPFs and other cash receipts collected by Phase 2 DC have equaled the total of all cash outflows, including the purchase price of all Systems, all financing costs, all “overhead and ongoing costs”, as defined, and including service fees, subject to maximum agreed upon amounts during the three-year rollout period and thereafter. Further, if cost recoupment occurs before the end of the eighth contract year, the studios will pay us a one-time “cost recoupment bonus.” Any other cash flows, net of expenses, received by Phase 2 DC following the achievement of cost recoupment are required to be returned to the distributors on a pro-rata basis. At this time, we cannot estimate the timing or probability of the achievement of cost recoupment.

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

Revenues earned in connection with up front exhibitor contributions are deferred and recognized over the expected cost recoupment period.

Services

Exhibitors who purchased and own Systems using their own financing in the Phase II Deployment paid us an upfront activation fee of approximately $2.0 thousand per screen (the “Exhibitor-Buyer Structure”). Upfront activation fees were recognized in the period in which these Systems were delivered and ready for content, as we had no further obligations to the customer after that time and collection was reasonably assured. In addition, we recognize activation fee revenue of between $1.0 thousand and $2.0 thousand on Phase 2 DC Systems and for Systems installed by CDF2 Holdings upon installation and such fees are generally collected upfront upon installation. Our Services segment manages and collects VPFs on behalf of exhibitors, for which it earns an administrative fee equal to 10% of the VPFs collected.

Our Services segment earns an administrative fee of approximately 5% of Phase I Deployment VPFs collected and earns an incentive service fee equal to 2.5% of the VPFs earned by Phase 1 DC. This administrative fee is recognized in the period in which the billing of VPFs occurs, as performance obligations have been substantially met at that time.

Content & Entertainment

CEG earns fees for the distribution of content in the home entertainment markets via several distribution channels, including digital, video-on-demand, and physical goods (e.g. DVD and Blu-ray Discs). Fees earned are typically based on the gross amounts billed to our customers less the amounts owed to the media studios or content producers under distribution agreements, and gross media sales of owned or licensed content. Depending upon the nature of the agreements with the platform and content providers, the fee rate that we earn varies. Generally, revenues are recognized when content is available for subscription on the digital platform, at the time of shipment for physical goods, or point-of-sale for transactional and video-on-demand services. Reserves for sales returns and other allowances are provided based upon past experience. If actual future returns and allowances differ from past experience, adjustments to our allowances may be required. Sales returns and allowances are reported net in accounts receivable and as a reduction of revenues.

CEG also has contracts for the theatrical distribution of third party feature movies and alternative content. CEG’s distribution fee revenue and CEG's participation in box office receipts is recognized at the time a feature movie and alternative content are viewed. CEG has the right to receive or bill a portion of the theatrical distribution fee in advance of the exhibition date, and therefore such amount is recorded as a receivable at the time of execution, and all related distribution revenue is deferred until the third party feature movies’ or alternative content’s theatrical release date.

Revenue is deferred in cases where a portion or the entire contract amount cannot be recognized as revenue due to non-delivery of services. Such amounts are classified as deferred revenue and are recognized as earned revenue in accordance with our revenue recognition policies described above.

In connection with revenue recognition for CEG, the following are also considered critical accounting policies:

Advances

Advances, which are recorded within prepaid and other current assets within the Consolidated Balance Sheets, represent amounts prepaid to studios or content producers for which we provide distribution services. We evaluate advances regularly for recoverability and record impairment charges for amounts that we expect may not be recoverable as of the Consolidated Balance Sheet date.

Participations payable

Royalties owed to studios or content producers under licensing agreements for which we provide content distribution are recorded as liabilities within accounts payable and accrued expenses on the Consolidated Balance Sheet. Expenses that are to be reimbursed to us by such studios or content producers are recorded as a reduction to the liability.

Results of Continuing Operations for the Fiscal Years Ended March 31, 2015 and 2014

Revenues



	For the Fiscal Year Ended March 31,
($ in thousands)	2015		2014		$ Change			% Change
Phase I Deployment	$	36,161	$	36,309	$	(148	)	—	%
Phase II Deployment	12,347		12,146		201			2	%
Services	11,876		12,558		(682		)	(5	)%
Content & Entertainment	45,100		43,315		1,785			4	%
	$	105,484	$	104,328	$	1,156		1	%

Revenues in our Phase I and Phase II Deployment businesses increased slightly compared to the prior year as total VPFs, the number of Systems deployed, wide-release titles and screen utilization rates, which is the ratio of active screens displaying content versus total installed screens, were consistent with the prior fiscal year.

Revenue generated by our Services segment decreased primarily due to an expected reduction of revenues earned from activation fees. We deployed Systems in Australia and New Zealand in the fiscal year ended March 31, 2014, which contributed $0.9 million of non-recurring activation fee revenue to the prior year.

Revenues at our CEG business increased, reflecting the full year contribution of our October 2013 acquisition of GVE, compared to five months of revenue from the GVE Acquisition included in the prior year period. Offsetting the increase in revenue were higher than anticipated returns of DVDs and Blu-ray discs in the current year in connection with our integration of GVE, as we transferred to a new physical goods replication, distribution and fulfillment partner. In addition, we terminated several non-profitable customer contracts during the third fiscal quarter of 2015 and experienced delays in signing certain new movie co-production partnerships that are now expected to contribute to revenue in the fiscal year ending March 31, 2016. Furthermore, as discussed in Item 3 - Legal Proceedings, certain issues arising in connection with the GVE Acquisition negatively impacted our sales in the current fiscal year. Our CEG business continued to be impacted by changes in consumer behavior, particularly declining in-store purchasing of packaged entertainment products and reduced retail shelf space allotted thereto.

Direct Operating Expenses



	For the Fiscal Year Ended March 31,
($ in thousands)	2015		2014		$ Change			% Change
Phase I Deployment	$	970	$	766	$	204		27	%
Phase II Deployment	485		610		(125		)	(20	)%
Services	58		380		(322		)	(85	)%
Content & Entertainment	28,596		27,164		1,432			5	%
	$	30,109	$	28,920	$	1,189		4	%

Direct operating expenses were comparable to the prior year period; although the fiscal year ended March 31, 2015 includes a full year of direct operating expense from the GVE Acquisition, compared to five months in the prior fiscal year. In the fiscal year ended March 31, 2015, we recognized charges of approximately $2.8 million to accelerate expensing of certain advances based

upon revised estimates of projected revenue for certain products. In addition, we had higher than anticipated expenses related to our transition to a new physical goods replication, distribution and fulfillment partner in connection with the GVE Acquisition. These increases were offset by reduced upfront theatrical releasing, marketing and acquisitions costs of $2.6 million as CEG released four movies during the current fiscal year compared to 14 releases in the prior fiscal year.

Selling, General and Administrative Expenses



	For the Fiscal Year Ended March 31,
($ in thousands)	2015		2014		$ Change			% Change
Phase I Deployment	$	464	$	328	$	136		41	%
Phase II Deployment	130		279		(149		)	(53	)%
Services	744		765		(21		)	(3	)%
Content & Entertainment	18,736		14,448		4,288			30	%
Corporate	12,328		10,513		1,815			17	%
	$	32,402	$	26,333	$	6,069		23	%

Selling, general and administrative expenses increased compared to the prior year, primarily reflecting the full year contribution of the GVE Acquisition in the Content & Entertainment segment, which contributed five months to such operating expenses in the prior year period. Expenses incurred in connection with expanding our OTT business also contributed to the increase compared to the prior year period. Professional fees in our Corporate operations increased $1.7 million, related to the Gaiam litigation, incremental costs related to Sarbanes-Oxley compliance and a financial systems conversion.

Restructuring, Transition and Acquisitions Expenses, Net

Restructuring, transition and acquisitions expense, net were $2.6 million for the fiscal year ended March 31, 2015, which reflect the continued integration of GVE and an ongoing alignment of resources Content & Entertainment business. In the March 31, 2014 fiscal year, we recorded restructuring, transition and acquisitions expenses, net of $1.5 million, primarily related professional fees, workforce reduction and integration related to our GVE Acquisition, which was offset by a $3.4 million reduction in contingent liabilities recorded in connection with our acquisition of New Video Group.

Goodwill Impairment

In the fourth quarter of the year ended March 31, 2015, we recorded a goodwill impairment charge of $6.0 million. Goodwill impairment was primarily a result of reduced expectations of future cash flows to be generated by our CEG reporting unit, reflecting the continuing decline in consumer demand for packaged goods in favor of films in downloadable form. As a result, we have shifted our operating focus to devote more resources to our OTT channel business, which we expect to build upon significantly in fiscal years ending March 31, 2016 through 2018. Launching OTT channels requires that we make significant up-front investments to build the infrastructure, acquire content and develop partnerships, in exchange for anticipated revenue streams, which we also took into account in our discounted cash flow analysis. Beyond 2018, however, we expect that increased cash flows from our OTT channel business will more than offset decreases in cash flows from the sale of packaged goods. In addition, we applied a higher discount rate to expected future cash flows, reflecting a higher implied cost of debt financing.

Depreciation and Amortization Expense on Property and Equipment



	For the Fiscal Year Ended March 31,
($ in thousands)	2015		2014		$ Change			% Change
Phase I Deployment	$	28,550	$	28,549	$	1		—	%
Phase II Deployment	7,523		7,523		—			—	%
Services	177		214		(37		)	(17	)%
Content & Entertainment	219		210		9			4	%
Corporate	1,050		793		257			32	%
	$	37,519	$	37,289	$	230		1	%

Depreciation and amortization expense was consistent with the prior fiscal year, as we have not added substantially to our property and equipment balances. Depreciation and amortization expense increased at Corporate for certain leasehold improvements made to our California offices and equipment acquired under capital lease arrangements.

Amortization of intangible assets

Amortization of intangible assets increased to $5.9 million for the fiscal year ended March 31, 2015 compared to $3.5 million in the prior fiscal year, reflecting a full year of amortization expense related to the finite-lives intangible assets recognized in connection with the GVE Acquisition, the valuation of which were finalized during the three months ended March 31, 2014.

Interest expense



	For the Fiscal Year Ended March 31,
($ in thousands)	2015		2014		$ Change			% Change
Phase I Deployment	$	13,585	$	15,051	$	(1,466	)	(10	)%
Phase II Deployment	1,610		1,976		(366		)	(19	)%
Corporate	4,704		2,728		1,976			72	%
	$	19,899	$	19,755	$	144		1	%

We made principal payments of $58.4 million on our long-term debt arrangements and had borrowings under our revolving credit facility of $18.2 million in the year ended March 31, 2015.

Interest expense reported by our Phase I and Phase II Deployment segments decreased as a result of reduced debt balances compared to the prior period. The 2013 Term Loans, which are repaid from free cash flow, were charged at a rate of LIBOR, plus 275 basis points with a 1.0% LIBOR floor in the fiscal year ended March 31, 2015, compared to the prior credit agreement rate of LIBOR, plus 350 basis points with a 1.75% LIBOR floor in the prior year. Interest expense related to the KBC Facilities decreased due to a reduction of outstanding principal. The Prospect Loan bears interest rate of 13.5%, which includes a rate of LIBOR, plus 9.0% with a 2.0% LIBOR floor, payable in cash, and a rate of 2.5% paid-in-kind, which is added to the principal balance of the loan. We expect interest expense related to the KBC Facilities to continue to decrease due to the pay-down of such balances.

Interest expense at Corporate increased during the fiscal year ended March 31, 2015, primarily as a result of higher borrowings under our revolving credit facility. In addition, the interest rate on the Cinedigm Term Loans and Cinedigm Revolving Loans increased from a base rate plus 3.0% or the Eurodollar rate plus 4.0%, to a base rate of 5.0% or the Eurodollar rate plus 6.0%. Base rate, per annum, is equal to the highest of (a) the rate quoted by the Wall Street Journal as the “base rate on corporate loans by at least 75% of the nation’s largest banks,” (b) 0.50% plus the federal funds rate, and (c) the Eurodollar rate plus 1.0%. The 2013 Notes bear interest at 9.0%.

Non-cash interest expense was approximately $0.7 million and $0.6 million for the fiscal year ended March 31, 2015 and 2014, respectively.

Change in fair value of interest rate derivatives

The change in fair value of the interest rate derivatives, which we use to minimize our exposure to changes in interest rates, was a loss of approximately $0.4 million and a gain of $0.7 million for the fiscal year ended March 31, 2015 and 2014, respectively.

Discontinued operations

We recognized a loss related to discontinued operations of $3.2 million for the fiscal year ended March 31, 2015, which represents the operating results of Software and a $3.3 million loss that was recorded in connection with the sale of Software. During the fiscal year ended March 31, 2014, we recorded a loss from discontinued operations of $11.9 million, reflecting the operating results of Software, which included an $8.5 million charge for the impairment of goodwill and intangible assets, due to a change in the fair value of its business.

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 (including the results of the Phase I and Phase II Deployment segments) was $47.9 million for the fiscal year ended March 31, 2015, compared to $55.7 million for the fiscal year ended March 31, 2014. Adjusted EBITDA from our non-

deployment businesses was $1.2 million for the fiscal year ended March 31, 2015, compared to $9.5 million for the fiscal year ended March 31, 2014. Lower than expected revenues, which were a result of delayed sales and termination of certain unprofitable customer contracts, and higher than expected returns resulting from our transition to a new replication, distribution and fulfillment partner, contributed to the decrease in the current period. In addition, we experienced changes in consumer and customer behavior, particularly the trend of fewer in-store purchases of physical entertainment products, and a declining amount shelf space reserved for such products. The reconciliation of Adjusted EBITDA for year ended March 31, 2015, also takes into consideration $6.0 million for goodwill impairment and $1.7 million of legal and other compliance related expenses, primarily related to our ongoing litigation with Gaiam, expenses related to enhanced reporting requirements under Sarbanes-Oxley and a financial systems conversion.

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 its stockholders, as a valuable financial metric.

We present Adjusted EBITDA because we believe that Adjusted EBITDA is a useful supplement to net 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 loss from continuing operations and Adjusted EBITDA has been provided in the financial results. Adjusted EBITDA should not be considered as an alternative to income from operations or net loss from continuing 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 consolidated financial statements prepared in accordance with GAAP.

Following is the reconciliation of our consolidated Adjusted EBITDA to consolidated GAAP net loss from continuing operations:



	For the Fiscal Year Ended March 31,
($ in thousands)	2015			2014
Net loss from continuing operations before benefit from income taxes	$	(28,976	)	$	(13,960	)
Add Back:
Depreciation and amortization of property and equipment	37,519			37,289
Amortization of intangible assets	5,864			3,473
Interest expense	19,899			19,755
Interest income	(101		)	(98		)
Loss on investment in non-consolidated entity	—			1,812
Other income, net	(105		)	(444		)
Change in fair value of interest rate derivatives	441			(679		)
Stock-based compensation and expenses	2,151			2,282
Goodwill impairment	6,000			—
Restructuring, transition and acquisitions expenses	2,638			5,023
Professional fees pertaining to litigation and compliance	1,668			—
Allocated costs attributable to discontinued operations	—			1,214
Loss attributable to noncontrolling interest	861			—
Adjusted EBITDA	$	47,859		$	55,667

Adjustments related to the Phase I and Phase II Deployments:
Depreciation and amortization of property and equipment	$	(36,073	)	$	(36,072	)
Amortization of intangible assets	(46		)	(52		)
Income from operations	(10,506		)	(10,092		)
Intersegment services fees earned	—			16
Adjusted EBITDA from non-deployment businesses	$	1,234		$	9,467

Results of Continuing Operations for the Fiscal Years Ended March 31, 2014 and 2013

Revenues



	For the Fiscal Year Ended March 31,
($ in thousands)	2014		2013		$ Change			% Change
Phase I Deployment	$	36,309	$	39,646	$	(3,337	)	(8	)%
Phase II Deployment	12,146		12,464		(318		)	(3	)%
Services	12,558		12,932		(374		)	(3	)%
Content & Entertainment	43,315		16,050		27,265			170	%
	$	104,328	$	81,092	$	23,236		29	%

Revenues increased $23.2 million or 29% during the fiscal year ended March 31, 2014 resulting from the organic growth in revenues in Content & Entertainment as well as the GVE Acquisition, partially offset by decreases in Deployment and Services revenues. Phase 1 and Phase 2 Deployment revenues declined by $3.7 million for the fiscal year ended March 31, 2014 as VPFs were reduced due to (i) a reduced releasing calendar in the current fiscal year as compared to the prior fiscal year period as 118 wide titles were released as compared to 135 wide titles in the previous fiscal year; and (ii) constrained booking patterns on many tent-pole and wide studio releases as a crowded release calendar at the peak summer and holiday seasons limited screen space; and (iii) several under-performing blockbuster releases receiving smaller releases than historically common.

In the Services segment, a $0.4 million, or 3%, decrease in revenues was primarily due to (i) the expected reduction in service revenues as the termination of the North American deployment program resulted in $1.3 million of activation fee revenue recognized

during the current fiscal year as compared to $3.5 million of activation fees in the prior fiscal year; (ii) reduced VPFs of $4.0 million translating into an approximately $0.4 million reduction in service fees; and (iii) delays in remaining deployments by several international exhibitors to the next fiscal year. These decreases were partially offset by an increase in service fees of $1.2 million due to our international deployment. During the fiscal year ended March 31, 2014, 925 Phase 2 DC Exhibitor-Buyer Structure Systems were installed and 8,904 installed Phase 2 Systems were generating service fees at March 31, 2014 as compared to 7,980 Phase 2 Systems at March 31, 2013. We also service an additional 3,724 screens in its Phase I deployment subsidiary. We expect modest growth in Services as we (i) continue with international servicing and software installations in Australia, New Zealand and Europe during the fiscal year ending March 31, 2015 from our 88 international screen backlog; and (ii) secure additional international servicing customers.

The CEG business expanded by $27.3 million, or 170%, year over year, of which $21.3 million is directly attributed to revenues of GVE earned from October 21, 2013 through the end of our fiscal year. Organic growth was driven by expansion in distribution fees earned from (i) recent acquisitions of physical and digital distribution rights of home entertainment titles; (ii) expanded fee revenue and monetization of our library of close to 50,000 movies and television episodes; and (iii) revenues from theatrical releases that have reached the home entertainment window.

Direct Operating Expenses



	For the Fiscal Year Ended March 31,
($ in thousands)	2014		2013		$ Change			% Change
Phase I Deployment	$	766	$	459	$	307		67	%
Phase II Deployment	610		687		(77		)	(11	)%
Services	380		821		(441		)	(54	)%
Content & Entertainment	27,164		6,548		20,616			315	%
	$	28,920	$	8,515	$	20,405		240	%

Direct operating expenses increased by 240% as a result of (i) $10.2 million attributed to the GVE Acquisition during the fiscal year; (ii) increased direct expenses for the expanded CEG home entertainment releasing slate as certain selling, general and administrative expenses were shifted to direct costs due to our outsourced DVD replication and manufacturing partnership with Universal Pictures; and (iii) significant growth in upfront theatrical releasing, marketing and acquisitions costs as CEG released fourteen movies during the current fiscal year versus a single small release in the prior fiscal year.

CEG released fourteen theatrical movies during the current fiscal year which totaled over $8.4 million of upfront releasing costs. In accordance with GAAP, Cinedigm must recognize its upfront content acquisition and marketing expenses at the time of a theatrical release of a movie. This timing difference creates a “J-Curve” and will continue in future periods as we increase our distribution activities. We will also experience an increase in direct operating expenses corresponding with additional revenue growth.

The decrease in the Services segment was primarily related to expense reductions in digital cinema services as the domestic installation period ended.

Selling, General and Administrative Expenses



	For the Fiscal Year Ended March 31,
($ in thousands)	2014		2013		$ Change			% Change
Phase I Deployment	$	328	$	92	$	236		257	%
Phase II Deployment	279		139		140			101	%
Services	765		797		(32		)	(4	)%
Content & Entertainment	14,448		8,308		6,140			74	%
Corporate	10,513		11,469		(956		)	(8	)%
	$	26,333	$	20,805	$	5,528		27	%

Selling, general and administrative expenses grew by 27% during the period as strong expense controls and synergies from the GVE Acquisition were relative to the 29% increase in revenues. The Content & Entertainment segment increased 74% as a result of the GVE Acquisition, which added $5.2 million of expense, and the expansion of our theatrical releasing and marketing teams which we added in the summer and fall of 2012 as well as increased staffing to support the rapid growth in our home entertainment

acquisition and distribution volume. The decrease within Corporate reflects ongoing prudent expense management and synergies from the GVE Acquisition

Restructuring, Transition and Acquisitions Expenses, Net

Restructuring, transition and acquisitions expenses, net were $1.5 million and $0.9 million for the fiscal years ended March 31, 2014 and 2013, respectively, and include the following:

•

During the fiscal year ended March 31, 2014, we completed a strategic assessment of our resource requirements within our Content & Entertainment reporting segment which, based upon the GVE Acquisition, resulted in a restructuring expense of $1.5 million as a result of workforce reduction and severance and employee-related expenses. Transition expenses of $0.5 million are principally attributed to the integration of GVE. Restructuring expenses were approximately $0.3 million during the fiscal year ended March 31, 2013;

•

Merger and acquisition expenses included in corporate of $3.0 million for the fiscal year ended March 31, 2014 consisted primarily of professional fees and internal expenses directly related to the GVE Acquisition of $2.5 million and $0.5 million, respectively. Merger and acquisition expenses included in corporate for the fiscal year ended March 31, 2013 of $1.3 million include professional fees incurred which pertained to the purchase of New Video which was consummated in April 2012; and


•	A reduction of a contingent liability of $3.4 million and $0.8 million related to the acquisition of New Video for the fiscal years ended March 31, 2014 and 2013, respectively.

Depreciation and Amortization Expense on Property and Equipment



	For the Fiscal Year Ended March 31,
($ in thousands)	2014		2013		$ Change		% Change
Phase I Deployment	$	28,549	$	28,549	$	—	—	%
Phase II Deployment	7,523		7,371		152		2	%
Services	214		9		205		2,278	%
Content & Entertainment	210		72		138		192	%
Corporate	793		358		435		122	%
	$	37,289	$	36,359	$	930	3	%

Depreciation and amortization expense increased $0.9 million or 3%. The increase in the Phase II Deployment segment represents depreciation on the increased number of Phase 2 DC Systems which were not in service during the fiscal year ended March 31, 2013. We expect the depreciation and amortization expense in the Phase II Deployment segment to remain at similar levels as the Phase 2 deployment period has ended and we do not expect to add international Systems that require inclusion on our balance sheet.

Amortization of intangible assets

Amortization of intangible assets increased to $3.5 million for the fiscal year ended March 31, 2014 from $1.5 million, which is attributed to the finite-lives intangible assets added from the GVE Acquisition.

Interest expense



	For the Fiscal Year Ended March 31,
($ in thousands)	2014		2013		$ Change			% Change
Phase I Deployment	$	15,051	$	9,016	$	6,035		67	%
Phase II Deployment	1,976		2,351		(375		)	(16	)%
Corporate	2,728		16,947		(14,219		)	(84	)%
	$	19,755	$	28,314	$	(8,559	)	(30	)%

Interest expense decreased $8.6 million or 30% due to the interest savings driven by the February 2013 refinancing and the continued repayment of non-recourse and recourse term loan debt as we reduced principal outstanding by $42.0 million during the fiscal year ended March 31, 2014. The 67% increase in interest paid and accrued within the non-recourse Phase I Deployment segment is the result of shifting our corporate debt to non-recourse as part of the February 2013 refinancing. The non-recourse

Phase I deployment debt was refinanced, expanded and combined with the proceeds of the non-recourse Prospect Loan to repay the recourse 2010 Note in our Corporate segment. The 2013 Term Loans are at a rate of LIBOR, plus 275 basis points with a 1.0% LIBOR floor, versus the prior credit agreement rate of LIBOR, plus 350 basis points with a 1.75% LIBOR floor. Interest decreased within the Phase II Deployment segment related to the KBC Facilities due to the reduction of outstanding principal. Phase 2 DC’s non-recourse interest expense is expected to continue to decrease as it did during the fiscal year as we continue to repay the KBC Facilities from free cash flow and the benefit from the resulting reduced debt balance. The decrease in interest paid and accrued within Corporate is related to the recourse note, which was paid off in February 2013. The Prospect Loan carries an interest rate of 13.5%, including a cash rate of LIBOR, plus 9.0% with a 2.0% LIBOR floor, and a PIK rate of 2.5%. Interest on the prior recourse note was 8% PIK Interest and 7% per annum paid in cash. Corporate interest expense during the fiscal year ended March 31, 2014 includes recourse debt from the Cinedigm Term Loans and Cinedigm Revolving Loans and the 2013 Notes. Each of the Cinedigm Term Loans and the Cinedigm Revolving Loans bear interest at the base rate plus 3.0% or the Eurodollar rate plus 4.0%. Base rate, per annum, is equal to the highest of (a) the rate quoted by the Wall Street Journal as the “base rate on corporate loans by at least 75% of the nation’s largest banks,” (b) 0.50% plus the federal funds rate, and (c) the Eurodollar rate plus 1.0%. The 2013 Notes bear interest at 9.0%.

Non-cash interest expense was approximately $0.6 million and $2.1 million for the fiscal year ended March 31, 2014 and 2013, respectively.

Change in fair value of interest rate derivatives

The change in fair value of the interest rate derivatives were gains of approximately $0.7 million and $1.2 million for the fiscal year ended March 31, 2014 and 2013, respectively. The interest swap associated with the 2013 Term Loans matured in June 2013.

Benefit from income taxes

A net benefit from income taxes of $5.0 million was recorded primarily from the acquisition of New Video during the fiscal year ended March 31, 2013. A net deferred tax liability of $5.0 million was recorded upon the New Video Acquisition for the excess of the financial statement basis over the tax basis of the acquired assets and liabilities. As New Video will be included in our consolidated federal and state tax returns, deferred tax liabilities assumed in the New Video Acquisition are able to offset the reversal of our preexisting deferred tax assets. Accordingly, our valuation allowance has been reduced by $5.0 million and recorded as a deferred tax benefit in the accompanying consolidated statements of operations for the fiscal year ended March 31, 2013. We will continue to assess our ability to realize the deferred tax assets at each interim and annual balance sheet date based upon actual and forecasted operating results.

Loss from discontinued operations

Loss from discontinued operations, which principally represents the results of Software, was $11.9 million and $0.9 million for the fiscal years ended March 31, 2014 and 2013, respectively. During the fiscal year ended March 31, 2014, goodwill and intangible assets were impaired by approximately $8.5 million, due to the change in fair value of the Software business.

Adjusted EBITDA

Adjusted EBITDA (including the results of the Phase I and Phase II Deployment segments) was $55.7 million for the fiscal year ended March 31, 2014, a decrease of 1% in comparison to $56.4 million for the fiscal year ended March 31, 2013. The approximately $4.0 million reduction in VPFs and service fees during the fiscal year ending March 31, 2014, which are outside of our influence and which all directly reduce Adjusted EBITDA offset the growth in CEG EBITDA deriving from the GVE Acquisition and organic growth. Adjusted EBITDA from non-deployment businesses was $9.5 million during the fiscal year ended March 31, 2014, increasing 59% from $5.9 million for the fiscal year ended March 31, 2014.

Following is the reconciliation of our consolidated Adjusted EBITDA to consolidated GAAP net loss from continuing operations:



	For the Fiscal Year Ended March 31,
($ in thousands)	2014			2013
Net loss from continuing operations before income taxes	$	(13,960	)	$	(25,149	)
Add Back:
Depreciation and amortization of property and equipment	37,289			36,359
Amortization of intangible assets	3,473			1,538
Interest expense	19,755			28,314
Interest income	(98		)	(48		)
Debt prepayment fees	—			3,725
Loss on extinguishment of notes payable	—			7,905
Loss (income) on investment in non-consolidated entity	1,812			(322		)
Other income, net	(444		)	(654		)
Change in fair value of interest rate derivatives	(679		)	(1,231		)
Stock-based compensation and expenses	2,282			2,044
Non-recurring transaction expenses	5,023			1,907
Allocated costs attributable to discontinued operations	1,214			1,980
Adjusted EBITDA	$	55,667		$	56,368

Adjustments related to the Phase I and Phase II Deployments:
Depreciation and amortization of property and equipment	$	(36,072	)	$	(35,920	)
Amortization of intangible assets	(52		)	(53		)
Income from operations	(10,092		)	(14,483		)
Intersegment services fees earned	16			24
Adjusted EBITDA from non-deployment businesses	$	9,467		$	5,936

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued new accounting guidance on revenue recognition. The new standard provides for a single five-step model to be applied to all revenue contracts with customers as well as requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. The guidance will be effective during our fiscal year ending March 31,

2018. In May of 2015, the FASB issued an exposure draft to extend the effective date of this standard by one year. We are currently evaluating the impact of the adoption of this accounting standard update on our consolidated financial statements.

In June 2014, the FASB issued an accounting standards update, which provides additional guidance on how to account for share-based payments where the terms of an award may provide that the performance target could be achieved after an employee completes the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite period is treated as a performance condition. The guidance will be effective during our fiscal year ending March 31, 2017. We are currently evaluating the impact of the adoption of this accounting standard update on our consolidated financial statements, and may be applied (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In August 2014, the FASB amended accounting guidance pertaining to going concern considerations by company management. The amendments in this update state that in connection with preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued, when applicable). The guidance will be effective during our fiscal year ending March 31, 2018. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In February 2015, the FASB issued an accounting standards update that amended accounting guidance on consolidation. The amendments affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The update will be effective during tour fiscal year ending March 31, 2017. We are currently evaluating the impact of the adoption of this accounting standard update on our consolidated financial statements.

In April 2015, the FASB issued an accounting standards update, which requires debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability. This update will be effective during our fiscal year ending March 31, 2017. We are currently evaluating the impact of this accounting standard update on our Consolidated Balance Sheet.

Liquidity and Capital Resources

We have incurred net losses each year since we commenced our operations. Since our inception, we have financed our operations substantially through the private placement of shares of our common and preferred stock, the issuance of promissory notes, our initial public offering and subsequent private and public offerings, notes payable and common stock used to fund various acquisitions.

Our business is primarily driven by the growth in global demand for entertainment content in all forms and, in particular, the shifting consumer demand for content in digital forms within home and mobile devices as well as the maturing digital cinema marketplace. Our primary revenue drivers are expected to be the increasing number of digitally equipped devices/screens and the demand for entertainment content in theatrical, home and mobile ancillary markets. According to the Motion Picture Association of America, during 2014 there were approximately 43,000 domestic (United States and Canada) movie theatre screens and approximately 142,000 screens worldwide, of which approximately 42,000 of the domestic screens were equipped with digital cinema technology, and 12,628 of those screens contained our Systems. Historically, the number of digitally equipped screens in the marketplace has been a significant determinant of our potential revenue. Going forward, the expansion of our content business into the ancillary distribution markets, as well into the acquisition and distribution of new movie releases, expands our market opportunities, and is expected to be the primary driver of our revenue as the rapidly evolving digital and entertainment landscape creates a significant new opportunity for growth.

Beginning in December 2008, Phase 2 B/AIX, our indirect wholly owned subsidiary, began entering into credit facilities with KBC to fund the purchase of Systems to be installed in movie theatres as part of our Phase II Deployment. As of March 31, 2015, the outstanding principal balance of the KBC Facilities was $27.0 million.

In February 2013, we refinanced our existing non-recourse senior 2010 Term Loan and recourse 2010 Note with a $125.0 million senior non-recourse credit facility led by Société Générale and a $70.0 million non-recourse credit facility provided by Prospect Capital Corporation. These two new non-recourse credit facilities are supported by the cash flows of the Phase 1 deployment and our digital cinema servicing business. As of March 31, 2015, the outstanding principal balance of these non-recourse credit facilities was $129.7 million.

In October 2013, we entered into the Cinedigm Credit Agreement pursuant to which we borrowed term loans of $25.0 million and revolving loans of up to $30.0 million, of which $24.3 million of the revolving loans were drawn upon as of March 31, 2015. The Cinedigm Credit Agreement, which further enhances our working capital needs and ability to further invest in entertainment content, will be supported by the cash flows of our media library, acquired in connection with the GVE Acquisition. Additionally, we entered into an agreement providing $5.0 million of financing. As of March 31, 2015, the outstanding principal balance of these recourse credit facilities was $47.5 million.

In April 2015, we issued $64.0 million aggregate principal amount of 5.5% convertible senior notes (the "Convertible Notes"), due April 15, 2035, unless earlier repurchased, redeemed or converted. The net proceeds from the note offering were approximately $60.9 million, after deducting the initial purchaser's discount and estimated offering expenses payable. In connection with the closing of the offering, we used approximately $18.6 million of the net proceeds to repay borrowings under and terminate the term loan under the Cinedigm Credit Agreement. In addition, we used $11.4 million of the net proceeds to enter into a forward stock purchase transaction to acquire approximately 11.8 million shares of our Class A common stock for settlement on or about the fifth year anniversary of the issuance date of the Convertible Notes and approximately $2.6 million to repurchase approximately 2.7 million shares of our Class A common stock from certain purchasers of the Convertible Notes in privately negotiated transactions. We expect to use the remainder of the net proceeds for working capital and general corporate purposes, including development of our OTT channels and applications and possible acquisitions.

As of March 31, 2015, we had negative working capital, defined as current assets less current liabilities, of $30.9 million and cash and cash equivalents and restricted cash totaling $25.8 million.

Our changes in cash flows were as follows:



	For the Fiscal Years Ended March 31,
($ in thousands)	2015			2014			2013
Net cash provided by operating activities	$	9,211		$	39,594		$	29,369
Net cash provided by (used in) investing activities	1,197			(52,009		)	(4,250		)
Net cash (used in) provided by financing activities	(41,624		)	49,182			(29,514		)
Net (decrease) increase in cash and cash equivalents	$	(31,216	)	$	36,767		$	(4,395	)

Net cash provided by operating activities is primarily driven by income or loss from operations, excluding non-cash expenses such as depreciation, amortization, bad debt provisions and stock-based compensation, offset by changes in working capital. We expect cash received from VPFs to remain consistent with the current fiscal year and support non-recourse debt pay-down. Changes in accounts receivable from our studio customers and others largely impact cash flows from operating activities and vary based on the seasonality of movie release schedules by the major studios. Cash flows associated with our CEG business are highly dependent upon the success and timing of its theatrical and home entertainment releases. Operating cash flows from CEG are typically higher during our fiscal third and fourth quarters, resulting from revenues earned during the holiday season, and lower in the following 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 twelve months. To manage working capital fluctuations, we have a revolving line of credit that allows for borrowings of up to $30.0 million. Timing and volume of our trade accounts payable can also be a significant factor impacting cash flows from operations. Certain non-cash expense fluctuations, primarily resulting from the change in the fair value of interest rate derivative arrangements, can also impact the timing and amount of cash flows from operations. We expect operating activities to continue to be a positive source of cash.

Regularly recurring cash flows from investing activities consist primarily of purchases of property and equipment which amounted to $1.6 million, $1.4 million and $6.5 million in the fiscal years ended March 31, 2015, 2014 and 2013, respectively. We also had significant cash flows relating to the acquisition and disposition of businesses in each of the three fiscal years ended March 31, 2015. In the year ended March 31, 2015, we completed the sale of our Software business, for which we were paid $3.0 million in cash. In addition, we received capital contributions of $0.7 million related to the noncontrolling interest in CONtv. For the fiscal years ended March 31, 2014 and 2013, cash used in investing activities reflects our acquisitions of GVE and New Video, Inc., respectively, for which we paid $48.5 million and $3.1 million in cash, respectively.

For the fiscal year ended March 31, 2015, cash flows used in financing activities primarily reflects repayments of notes payable and capital lease obligations, offset by net borrowings under our revolving credit facility. We generated cash from financing

activities for the fiscal year ended March 31, 2014, which reflects proceeds from borrowings under the Cinedigm Credit Facility in October 2013 and issuances of Class A Common Stock in July 2013, October 2013 and March 2014, offset by repayments of notes payable.

As discussed above, in April 2015, we raised an aggregate amount of $64.0 million of cash through a private offering of 5.5% Senior Convertible Notes, due April 2035. We used $18.2 million of the proceeds from the offering to pay the remaining outstanding principal balance of the term loan under the Cinedigm Credit Agreement.

We have contractual obligations that include long-term debt consisting of notes payable, credit facilities, non-cancelable long-term capital lease obligations for the Pavilion Theatre, capital leases for information technology equipment and other various computer related equipment, non-cancelable operating leases consisting of real estate leases, and minimum guaranteed obligations under theatre advertising agreements with exhibitors for displaying cinema advertising. The capital lease obligation of the Pavilion Theatre is paid by an unrelated third party, although Cinedigm remains the primary lessee and would be obligated to pay if the unrelated third party were to default on its rental payment obligations.

The following table summarizes our significant contractual obligations as of March 31, 2015:



	Payments Due
Contractual Obligations ($ in thousands)	Total		2016		2017 & 2018		2019 & 2020		Thereafter
Long-term recourse debt ⁽¹⁾	$	47,486	$	42,486	$	—	$	5,000	$	—
Long-term non-recourse debt ⁽²⁾	168,658		32,973		53,147		3,411		79,127
Capital lease obligations ⁽³⁾	5,495		640		1,350		1,280		2,225
Debt-related obligations, principal	$	221,639	$	76,099	$	54,497	$	9,691	$	81,352

Interest on recourse debt ⁽¹⁾	$	1,706	$	554	$	900	$	252	$	—
Interest on non-recourse debt ⁽²⁾	54,493		10,631		18,313		16,844		8,705
Interest on capital leases ⁽³⁾	3,713		798		1,392		1,024		499
Total interest	$	59,912	$	11,983	$	20,605	$	18,120	$	9,204
Total debt-related obligations	$	281,551	$	88,082	$	75,102	$	27,811	$	90,556

Total non-recourse debt including interest	$	223,151	$	43,604	$	71,460	$	20,255	$	87,832
Operating lease obligations	$	7,321	$	1,663	$	2,457	$	2,609	$	592


(1)	Recourse debt includes the Cinedigm Credit Agreement and the 2013 Notes, of which $18.2 million was repaid in April of 2015.

(2)

Non-recourse debt is generally defined as debt whereby the lenders’ sole recourse, with respect to defaults, is limited to the value of the asset that is collateral for the debt. The 2013 Term Loans are not guaranteed by us or our other subsidiaries, other than Phase 1 DC and CDF I, the Prospect Loan is not guaranteed by us or our other subsidiaries, other than Phase 1 DC and DC Holdings and the KBC Facilities are not guaranteed by us or our other subsidiaries, other than Phase 2 DC.

(3)

Represents the capital lease and capital lease interest for the Pavilion Theatre and capital leases on information technology equipment. We have remained the primary obligor on the Pavilion capital lease, and therefore, the capital lease obligation and related assets under the capital lease remain on our consolidated financial statements as of March 31, 2015. However, we have entered into a sub-lease agreement with the unrelated third party purchaser which pays the capital lease and as such, has no continuing involvement in the operation of the Pavilion Theatre. This capital lease was previously included in discontinued operations.

We may continue to generate net losses for the foreseeable future primarily due to depreciation and amortization, interest on the 2013 Term Loans, Prospect Loan and Cinedigm Credit Agreement, marketing and promotional activities and content acquisition and marketing costs. Certain of these costs, including costs of content acquisition, marketing and promotional activities, could be reduced if necessary. The restrictions imposed by the 2013 Term Loans and Prospect Loan may limit our ability to obtain financing, make it more difficult to satisfy our debt obligations or require us to dedicate a substantial portion of our cash flow to payments on our existing debt obligations. The Prospect Loan requires certain screen turn performance from Phase 1 DC and Phase 2 DC. While such restrictions may reduce the availability of our cash flow to fund working capital, capital expenditures and other corporate requirements, we do not have similar restrictions imposed upon our CEG businesses. We may seek to raise additional capital for strategic acquisitions or working capital as necessary. Failure to generate additional revenues, raise additional capital or manage discretionary spending could have an adverse effect on our financial position, results of operations or liquidity.

Seasonality

Revenues from our Phase I Deployment and Phase II Deployment segments derived from the collection of VPFs from motion picture studios are seasonal, coinciding with the timing of releases of movies by the motion picture studios. Generally, motion picture studios release the most marketable movies during the summer and the winter holiday season. The unexpected emergence of a hit movie during other periods can alter the traditional trend. The timing of movie releases can have a significant effect on our results of operations, and the results of one quarter are not necessarily indicative of results for the next quarter or any other quarter. While CEG benefits from the winter holiday season, we believe the seasonality of motion picture exhibition, however, is becoming less pronounced as the motion picture studios are releasing movies somewhat more evenly throughout the year.

Off-balance sheet arrangements

We are not a party to any off-balance sheet arrangements, other than operating leases in the ordinary course of business, which are disclosed above in the table of our significant contractual obligations, and CDF2 Holdings. In addition, as discussed further in Note 2 - Basis of Presentation and Consolidation to the Consolidated Financial Statements included in Item 8 of this Report on Form 10-K, 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.

Impact of Inflation

The impact of inflation on our operations has not been significant to date. However, there can be no assurance that a high rate of inflation in the future would not have an adverse impact on our operating results.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CINEDIGM CORP.

INDEX TO FINANCIAL STATEMENTS



Reports of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets at March 31, 2015 and 2014	F-3
Consolidated Statements of Operations for the fiscal years ended March 31, 2015, 2014 and 2013	F-5
Consolidated Statements of Comprehensive Loss for the fiscal years ended March 31, 2015, 2014 and 2013	F-6
Consolidated Statements of (Deficit) Equity for the fiscal years ended March 31, 2015, 2014 and 2013	F-7
Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2015, 2014 and 2013	F-10
Notes to Consolidated Financial Statements	F-11

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Cinedigm Corp.

We have audited the accompanying consolidated balance sheets of Cinedigm Corp. and subsidiaries (the “Company”) as of March 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive loss, (deficit) equity, and cash flows for each of the years in the three-year period ended March 31, 2015. The financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cinedigm Corp. and subsidiaries as of March 31, 2015 and 2014, and the consolidated results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2015 in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Cinedigm Corp. and subsidiaries’ internal control over financial reporting as of March 31, 2015, based on criteria established in the 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated June 30, 2015 expressed an unqualified opinion thereon.

/s/ EisnerAmper LLP

New York, New York

June 30, 2015

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Cinedigm Corp.

We have audited Cinedigm Corp. and subsidiaries (the “Company”) internal control over financial reporting as of March 31, 2015, based on criteria established in the 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Cinedigm Corp. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of March 31, 2015, based on criteria established in the 2013 Internal Control - Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Cinedigm Corp. and subsidiaries as of March 31, 2015 and 2014 and the related consolidated statements of operations, comprehensive loss, stockholders’ (deficit) equity, and cash flows for each of the years in the three-year period ended March 31, 2015, and our report dated June 30, 2015 expressed an unqualified opinion thereon.

/s/ EisnerAmper LLP

New York, New York

June 30, 2015

F-2

CINEDIGM CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)



	March 31,
	2015		2014
ASSETS
Current assets
Cash and cash equivalents	$	18,999	$	50,215
Accounts receivable, net	59,591		56,863
Inventory	3,210		3,164
Unbilled revenue	5,065		5,144
Prepaid and other current assets	19,950		19,949
Note receivable, current portion	128		112
Assets of discontinued operations, net of current liabilities	—		278
Total current assets	106,943		135,725
Restricted cash	6,751		6,751
Security deposits	156		269
Property and equipment, net	98,561		134,936
Intangible assets, net	31,784		37,639
Goodwill	26,701		25,494
Debt issuance costs, net	7,586		9,279
Accounts receivable, long-term	1,208		1,397
Note receivable, net of current portion	15		99
Assets of discontinued operations, net of current portion	—		5,660
Total assets	$	279,705	$	357,249

See accompanying notes to Consolidated Financial Statements

F-3

CINEDIGM CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)

(continued)



	March 31,
	2015			2014
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities
Accounts payable and accrued expenses	$	77,147		$	83,855
Current portion of notes payable, non-recourse	32,973			33,825
Current portion of notes payable	24,294			19,219
Current portion of capital leases	640			614
Current portion of deferred revenue	2,760			3,214
Total current liabilities	137,814			140,727
Notes payable, non-recourse, net of current portion	124,325			164,779
Notes payable, net of current portion	21,750			23,525
Capital leases, net of current portion	4,855			5,472
Deferred revenue, net of current portion	10,098			12,519
Total liabilities	298,842			347,022
Commitments and contingencies (see Note 8)
Stockholders’ (Deficit) Equity
Preferred stock, 15,000,000 shares authorized; Series A 10% - $0.001 par value per share; 20 shares authorized; 7 shares issued and outstanding at March 31, 2015 and 2014, respectively. Liquidation preference of $3,648	3,559			3,559
Class A common stock, $0.001 par value per share; 210,000,000 and 118,759,000 shares authorized; 77,178,494 and 77,127,054 shares issued and 77,075,614 and 76,520,532 shares outstanding at March 31, 2015 and 2014, respectively	77			76
Class B common stock, $0.001 par value per share; 1,241,000 shares authorized; 1,241,000 shares issued and 0 outstanding at March 31, 2015 and 2014, respectively	—			—
Additional paid-in capital	277,984			275,519
Treasury stock, at cost; 51,440 Class A shares	(172		)	(172		)
Accumulated deficit	(300,350		)	(268,686		)
Accumulated other comprehensive loss	(57		)	(69		)
Total stockholders’ (deficit) equity of Cinedigm Corp.	(18,959		)	10,227
Deficit attributable to noncontrolling interest	(178		)	—
Total (deficit) equity	(19,137		)	10,227
Total liabilities and (deficit) equity	$	279,705		$	357,249

See accompanying notes to Consolidated Financial Statements

F-4

CINEDIGM CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for share and per share data)



	For the Fiscal Year Ended March 31,
	2015			2014			2013
Revenues	$	105,484		$	104,328		$	81,092
Costs and expenses:
Direct operating (exclusive of depreciation and amortization shown below)	30,109			28,920			8,515
Selling, general and administrative	32,402			26,333			20,805
(Benefit) provision for doubtful accounts	(206		)	394			478
Restructuring, transition and acquisitions expenses, net	2,638			1,533			857
Goodwill impairment	6,000			—			—
Depreciation and amortization of property and equipment	37,519			37,289			36,359
Amortization of intangible assets	5,864			3,473			1,538
Total operating expenses	114,326			97,942			68,552
(Loss) income from operations	(8,842		)	6,386			12,540
Interest income	101			98			48
Interest expense	(19,899		)	(19,755		)	(28,314		)
Debt prepayment fees	—			—			(3,725		)
Loss on extinguishment of notes payable	—			—			(7,905		)
(Loss) income on investment in non-consolidated entity	—			(1,812		)	322
Other income, net	105