SEGMENT INFORMATION

The Company is comprised of four reportable segments: Phase I Deployment, Phase II Deployment, Services and Content & Entertainment. The segments were determined based on the products and services provided by each segment and how management reviews and makes decisions regarding segment operations. Performance of the segments is evaluated on the segment’s income (loss) from continuing operations before interest, taxes, depreciation and amortization.

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



Operations of:	Products and services provided:
Phase 1 DC	Financing vehicles and administrators for the Company’s 3,724 Systems installed nationwide in Phase 1 DC’s deployment to theatrical exhibitors. The Company retains 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.
Phase 2 DC	Financing vehicles and administrators for the Company’s 8,697 Systems installed in the second digital cinema deployment, through Phase 2 DC. The Company retains 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.

The Services segment consists of the following:



Operations of:	Products and services provided:
Services	Provides monitoring, billing, collection, verification and other management services to the Company’s Phase I Deployment, Phase II Deployment, Holdings, as well as to exhibitors who purchase their own equipment. Collects and disburses VPFs from motion picture studios and distributors and ACFs from alternative content providers, movie exhibitors and theatrical exhibitors.
Software	Develops and licenses software to the theatrical distribution and exhibition industries as well as other content owners, provides ASP services, and provides software enhancements and consulting services.

The Content & Entertainment segment consists of the following:



Operations of:	Products and services provided:
CEG	As a leading distributor of independent digital content, CEG collaborates with producers and the exhibition community to market, source, curate and distribute independent content to targeted and profitable audiences in theatres and homes, and via mobile and emerging platforms.

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



	As of September 30, 2013
	Phase I		Phase II		Services		Content & Entertainment		Corporate		Consolidated
Total intangible assets, net	$	321	$	3	$	34	$	11,648	$	—	$	12,006
Total goodwill	$	—	$	—	$	4,197	$	8,542	$	—	$	12,739
Total assets	$	122,808	$	72,703	$	21,295	$	41,425	$	5,796	$	264,027

Notes payable, non-recourse	$	177,359	$	39,975	$	—	$	—	$	—	$	217,334
Capital leases	—		—		—		81		4,455		4,536
Total debt	$	177,359	$	39,975	$	—	$	81	$	4,455	$	221,870



	As of March 31, 2013
	Phase I		Phase II		Services		Content & Entertainment		Corporate		Consolidated
Total intangible assets, net	$	344	$	6	$	49	$	12,449	$	—	$	12,848
Total goodwill	$	—	$	—	$	4,197	$	8,542	$	—	$	12,739
Total assets	$	137,880	$	79,139	$	21,864	$	39,158	$	6,017	$	284,058

Notes payable, non-recourse	$	192,609	$	45,300	$	—	$	—	$	—	$	237,909
Capital leases	—		—		—		—		4,518		4,518
Total debt	$	192,609	$	45,300	$	—	$	—	$	4,518	$	242,427



	Statements of Operations
	For the Three Months Ended September 30, 2013
	(Unaudited)
	Phase I		Phase II		Services			Content & Entertainment			Corporate			Consolidated
Revenues from external customers	$	9,374	$	3,161	$	4,114		$	3,718					$	20,367
Intersegment revenues (1)	—		—		71			21			—			92
Total segment revenues	9,374		3,161		4,185			3,739			—			20,459
Less: Intersegment revenues	—		—		(71		)	(21		)	—			(92		)
Total consolidated revenues	$	9,374	$	3,161	$	4,114		$	3,718		$	—		$	20,367
Direct operating (exclusive of depreciation and amortization shown below) (2)	202		141		788			4,339			—			5,470
Selling, general and administrative	96		40		1,177			2,772			987			5,072
Plus: Allocation of Corporate overhead	—		—		1,008			692			(1,700		)	—
Research and development	—		—		19			—			—			19
Provision for doubtful accounts	102		16		14			—			—			132
Depreciation and amortization of property and equipment	7,138		1,880		199			7			151			9,375
Amortization of intangible assets	12		1		8			395			1			417
Total operating expenses	7,550		2,078		3,213			8,205			(561		)	20,485
Income (loss) from operations	$	1,824	$	1,083	$	901		$	(4,487	)	$	561		$	(118	)

(1) Intersegment revenues principally represent personnel expenses.

(2) Included in direct operating of the Services segment is $422 for the amortization of capitalized software development costs.

The following employee and director stock-based compensation expense related to the Company’s stock-based awards is included in the above amounts as follows:



	Phase I		Phase II		Services		Content & Entertainment		Corporate		Consolidated
Direct operating	$	—	$	—	$	15	$	1	$	—	$	16
Selling, general and administrative	—		—		19		19		467		505
Research and development	—		—		19		—		—		19
Total stock-based compensation	$	—	$	—	$	53	$	20	$	467	$	540



	Statements of Operations
	For the Three Months Ended September 30, 2012
	(Unaudited)
	Phase I		Phase II		Services			Content & Entertainment			Corporate			Consolidated
Revenues from external customers	$	10,087	$	3,164	$	5,755		$	3,603		$	—		$	22,609
Intersegment revenues (1)	—		—		247			11			—			258
Total segment revenues	10,087		3,164		6,002			3,614			—			22,867
Less: Intersegment revenues	—		—		(247		)	(11		)	—			(258		)
Total consolidated revenues	$	10,087	$	3,164	$	5,755		$	3,603		$	—		$	22,609
Direct operating (exclusive of depreciation and amortization shown below) (2)	94		158		1,280			1,396			—			2,928
Selling, general and administrative	56		26		906			2,192			3,126			6,306
Plus: Allocation of Corporate overhead	—		—		1,221			900			(2,121		)	—
Research and development	—		—		36			—			—			36
Provision for doubtful accounts	53		15		10			—			—			78
Restructuring expenses	—				—			340			—			340
Depreciation and amortization of property and equipment	7,137		1,828		35			5			115			9,120
Amortization of intangible assets	12		1		6			203			1			223
Total operating expenses	7,352		2,028		3,494			5,036			1,121			19,031
Income (loss) from operations	$	2,735	$	1,136	$	2,261		$	(1,433	)	$	(1,121	)	$	3,578

(1) Intersegment revenues principally represent personnel expenses.

(2) Included in direct operating of the Services segment is $396 for the amortization of capitalized software development costs.

The following employee stock-based compensation expense related to the Company’s stock-based awards is included in the above amounts as follows:



	Phase I		Phase II		Services		Content & Entertainment		Corporate		Consolidated
Direct operating	$	—	$	—	$	19	$	7	$	—	$	26
Selling, general and administrative	—		—		17		21		428		466
Research and development	—		—		36		—		—		36
Total stock-based compensation	$	—	$	—	$	72	$	28	$	428	$	528



	Statements of Operations
	For the Six Months Ended September 30, 2013
	(Unaudited)
	Phase I		Phase II		Services			Content & Entertainment			Corporate			Consolidated
Revenues from external customers	$	18,293	$	6,115	$	8,592		$	6,992		$	—		$	39,992
Intersegment revenues (1)	—		—		141			32			—			173
Total segment revenues	18,293		6,115		8,733			7,024			—			40,165
Less: Intersegment revenues	—		—		(141		)	(32		)	—			(173		)
Total consolidated revenues	$	18,293	$	6,115	$	8,592		$	6,992		$	—		$	39,992
Direct operating (exclusive of depreciation and amortization shown below) (2)	357		283		1,597			7,724			—			9,961
Selling, general and administrative	159		127		2,313			5,527			4,069			12,195
Plus: Allocation of Corporate overhead	—		—		2,041			1,425			(3,466		)	—
Research and development	—		—		47			—			—			47
Provision for doubtful accounts	145		30		19			—			—			194
Depreciation and amortization of property and equipment	14,275		3,761		301			10			303			18,650
Amortization of intangible assets	23		3		15			800			1			842
Total operating expenses	14,959		4,204		6,333			15,486			907			41,889
Income (loss) from operations	$	3,334	$	1,911	$	2,259		$	(8,494	)	$	(907	)	$	(1,897	)

(1) Intersegment revenues principally represent personnel expenses.

(2) Included in direct operating of the Services segment is $736 for the amortization of capitalized software development costs.

The following employee and director stock-based compensation expense related to the Company’s stock-based awards is included in the above amounts as follows:



	Phase I		Phase II		Services		Content & Entertainment		Corporate		Consolidated
Direct operating	$	—	$	—	$	31	$	3	$	—	$	34
Selling, general and administrative	—		—		40		42		1,120		1,202
Research and development	—		—		41		—		—		41
Total stock-based compensation	$	—	$	—	$	112	$	45	$	1,120	$	1,277



	Statements of Operations
	For the Six Months Ended September 30, 2012
	(Unaudited)
	Phase I		Phase II		Services			Content & Entertainment			Corporate			Consolidated
Revenues from external customers	$	20,003	$	6,323	$	10,819		$	6,368		$	—		$	43,513
Intersegment revenues (1)	—		—		488			18			—			506
Total segment revenues	20,003		6,323		11,307			6,386			—			44,019
Less: Intersegment revenues	—		—		(488		)	(18		)	—			(506		)
Total consolidated revenues	$	20,003	$	6,323	$	10,819		$	6,368		$	—		$	43,513
Direct operating (exclusive of depreciation and amortization shown below) (2)	209		324		2,396			2,434			—			5,363
Selling, general and administrative	73		51		1,796			3,887			6,392			12,199
Plus: Allocation of Corporate overhead	—		—		2,484			1,824			(4,308		)	—
Research and development	—		—		74			—			—			74
Provision for doubtful accounts	105		31		18			—			—			154
Restructuring expenses	—		—		—			340						340
Merger and acquisition expenses	—				—			—			1,267			1,267
Depreciation and amortization of property and equipment	14,275		3,629		77			10			226			18,217
Amortization of intangible assets	23		3		13			341			1			381
Total operating expenses	14,685		4,038		6,858			8,836			3,578			37,995
Income (loss) from operations	$	5,318	$	2,285	$	3,961		$	(2,468	)	$	(3,578	)	$	5,518

(1) Intersegment revenues principally represent personnel expenses.

(2) Included in direct operating of the Services segment is $527 for the amortization of capitalized software development costs.

The following employee stock-based compensation expense related to the Company’s stock-based awards is included in the above amounts as follows:



	Phase I		Phase II		Services		Content & Entertainment		Corporate		Consolidated
Direct operating	$	—	$	—	$	37	$	11	$	—	$	48
Selling, general and administrative	—		—		32		38		1,128		1,198
Research and development	—		—		73		—		—		73
Total stock-based compensation	$	—	$	—	$	142	$	49	$	1,128	$	1,319