The following is a discussion of the historical results of operations and financial condition of Cinedigm Digital Cinema Corp. (the "Company") and factors affecting the Company's financial resources. This discussion should be read in conjunction with the condensed consolidated financial statements, including the notes thereto, set forth herein under Item 1 "Financial Statements" and the Form 10-K for the year ended March 31, 2009.

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, many of which are beyond our control. Our actual results could differ materially and adversely from those anticipated in such forward-looking statements as a result of certain factors, including those set forth in our Annual Report on Form 10-K for the year ended March 31, 2009. 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 the Company's control that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Additional information regarding risks to the Company can be found below (see Part II Item 1A under Risk Factors).

In this report, "Cinedigm," "we," "us," "our" refers to Cinedigm Digital Cinema Corp. f/k/a Access Integrated Technologies, Inc. and the "Company" refers to Cinedigm and its subsidiaries unless the context otherwise requires.

OVERVIEW

Cinedigm Digital Cinema Corp. was incorporated in Delaware on March 31, 2000 ("Cinedigm", and collectively with its subsidiaries, the "Company"). On September 30, 2009 the Company's stockholders approved a change in the Company's name from Access Integrated Technologies, Inc., to Cinedigm Digital Cinema Corp. and such change was effected October 5, 2009. The Company provides technology solutions, financial services and advice, software services, electronic delivery and content distribution services to owners and distributors of digital content to movie theatres and other venues. During the quarter ended September 30, 2009, the Company modified how its

decision makers review and allocate resources to operating segments, which resulted in revised reportable segments, but did not impact our consolidated financial position, results of operations or cash flows. We realigned our focus to five primary businesses: first digital cinema deployment ("Phase I Deployment"), second digital cinema deployment ("Phase II Deployment"), services ("Services"), media content and entertainment ("Content & Entertainment") and other ("Other"). The Company's Phase I Deployment and Phase II Deployment segments are the financing vehicles and administrators for the Company's digital cinema equipment (the "Systems") installed in movie theatres nationwide. The Company's Services segment provides technology solutions, software services, electronic content delivery services via satellite and hard drive to the motion picture industry, primarily to facilitate the conversion from analog (film) to digital cinema and has positioned the Company at what it believes to be the forefront of rapidly developing industry relating to the delivery and management of digital cinema and other content to theatres and other remote venues worldwide. The Company's Content & Entertainment segment provides content distribution services to theatrical exhibitors and in-theatre advertising. The Company's Other segment provides motion picture exhibition to the general public, information technology consulting and managed network monitoring services and hosting services and network access for other web hosting services ("Access Digital Server Assets"). Overall, the Company's goal is to aid in the transformation of movie theatres to entertainment centers by providing a platform of hardware, software and content choices.

The Phase I Deployment segment of our business is comprised of Christie/AIX, Inc. ("Phase 1 DC"). The Phase II Deployment segment is comprised of Access Digital Cinema Phase 2 Corp. ("Phase 2 DC"). The Services segment of our business is comprised of FiberSat Global Services, Inc. d/b/a AccessIT Satellite and Support Services, ("Satellite"), Access Digital Media, Inc. ("AccessDM" and, together with Satellite, "DMS"), Hollywood Software, Inc. d/b/a AccessIT Software ("Software"), and PLX Acquisition Corp. The Content & Entertainment segment of our business is comprised of UniqueScreen Media, Inc. ("USM") and Vistachiara Productions, Inc. f/k/a The Bigger Picture, currently d/b/a Cinedigm Content and Entertainment Group ("CEG"). Our Other segment consists of the operations of Core Technology Services, Inc. ("Managed Services"), ADM Cinema Corporation ("ADM Cinema") d/b/a the Pavilion Theatre (the "Pavilion Theatre") and our Access Digital Server Assets. In the past our Other segment included the operations of our internet data centers ("IDCs"). However, since May 2007, our three IDCs have been operated by FiberMedia, consisting of unrelated third parties, and substantially all of the revenues and expenses were being realized by FiberMedia and not the Company and since May 1, 2008, 100% of the revenues and expenses are being realized by FiberMedia. In June 2009, one of the IDC leases expired, leaving two IDC leases with the Company as lessee.

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

[[Image Removed]]

We have incurred net losses of $6.3 million and $1.1 million in the three months ended September 30, 2008 and 2009, respectively, and $10.6 million and $8.2 million in the six months ended September 30, 2008 and 2009,

respectively, and we have an accumulated deficit of $146.5 million as of September 30, 2009. We also have significant contractual obligations related to our recourse and non-recourse debt for the remainder of fiscal year 2010 and beyond. We expect to continue generating net losses for the foreseeable future. Based on our cash position at September 30, 2009, and expected cash flows from operations, we believe that we have the ability to meet our obligations through September 30, 2010. We are seeking to raise additional capital to refinance certain outstanding debt, to meet equipment requirements related to the Phase 2 DC second digital cinema deployment (the "Phase II Deployment") and for working capital as necessary. Although we recently entered into certain agreements related to the Phase II Deployment, there is no assurance that financing of additional Systems for the Phase II Deployment will be completed as contemplated or under terms acceptable to us or our existing stockholders. We expect any Phase II debt will be non-recourse to the parent company, as is the case with our existing debt at Phase 1 DC. Failure to generate additional revenues, raise additional capital or manage discretionary spending could have a material adverse effect on our ability to continue as a going concern. The accompanying condensed consolidated financial statements do not reflect any adjustments which may result from our inability to continue as a going concern.

Results of Operations for the Three Months Ended September 30, 2008 and 2009

Revenues

                               For the Three Months Ended September 30,
($ in thousands)               2008                 2009             Change
Phase I Deployment        $       12,713       $       11,406             (10 )%
Phase II Deployment                    -                  450               -
Services                           2,269                1,735             (24 )%
Content & Entertainment            4,368                3,947             (10 )%
Other                              2,499                2,343              (6 )%
                          $       21,849       $       19,881              (9 )%

Revenues decreased $2.0 million or 9%. The decrease in revenues in the Phase I Deployment segment was due to a 10% decrease in Phase 1 DC's VPF revenues, attributable to a contractual 16% reduction in VPF rates starting in November 2008, offset by an increase in quarterly screen turnover. The increase in revenues in the Phase II Deployment segment was due to Phase 2 DC VPF revenues which were not generated during the three months ended September 30, 2008, as no Phase 2 DC's Systems were installed and ready for content until December 2008. The decrease in revenues in the Services segment was primarily due to (i) a 26% decrease in DMS revenues, attributable to flat revenues from digital feature and trailer deliveries as DMS maintained its movie studio customers but experienced limited growth in the number of digital delivery sites and a 52% decrease in non-theatrical satellite services revenues due to general economic factors; and (ii) a 22% decrease in Software revenues due to delayed Phase 2 deployments, limiting expected license and maintenance fees. We expect Phase 2 DC service fees, DMS revenues and software license fees to increase as additional Systems are deployed under both the recent $100 million non-recourse credit facility committed to by GECC's Media, Communications & Entertainment business ("GE Capital") and Société Générale Corporate & Investment Banking ("Soc Gen") as well as through the exhibitor-buyer model launched in late September 2009 initially with two exhibitors.

In the Content & Entertainment segment, revenues decreased 10% due to a 24% decline in in-theatre advertising revenues, attributable to the elimination of various under-performing customer contracts, as well as the current weak economic environment, offset by a 4% increase in national advertising revenues generated by the partnership with Screenvision and non-cash barter revenues of $0.5 million, which represents the fair value of advertising provided to alternative content providers of CEG. CEG's distribution revenues relating to digitally-equipped locations decreased 51% for alternative content and content sponsorship revenues as CEG planned a limited number of events and independent films during the three months ended September 30, 2009. The CEG distribution slate is expected to be more significant in the second half of our 2010 fiscal year commencing in October 2009 with the release of Opa! and the December 11, 2009 release of Dave Matthews Band in 3-D. The primary driver of CEG revenues is the number of programs CEG is distributing, together with the nationwide (and anticipated worldwide) conversion of theatres to digital capabilities, a trend the Company expects to continue. In addition to the distribution of independent motion pictures, the Company also expects that with its implementation of the CineLiveSM product into movie theatres, CEG's revenues will increase from the distribution of live 2D and 3D content such as concerts and sporting events.

We expect consolidated revenues to increase during the remainder of our fiscal year relative to the previous fiscal year due to increased amounts of financing that are generally available to fund digital deployments, and the growing number of 3-D movies to be released by the motion picture studios. In particular, the Company recently signed 457 screens with two exhibitors who are purchasing the equipment directly and have hired the Company to manage the asset base in exchange for an upfront activation fee and on-going share of VPF revenues. In addition, the Company expects to sign definitive documentation for a $100 million non-recourse, senior credit facility with GE Capital and Soc Gen prior to year end and commence deployments under this facility in the fourth quarter of fiscal 2010. As the number of industry wide digital screens increases generally, the Company expects to earn additional delivery fees in its DMS business unit as well as distribution fees in CEG and software fees from our TCC software. We are dependent on the availability of suitable financing for any large scale Phase II Deployment. To date such sources of financing are still being pursued.

Direct Operating Expenses

                              For the Three Months Ended September 30,
($ in thousands)              2008                2009             Change
Phase I Deployment        $         241       $         262               9 %
Phase II Deployment                   -                  61               -
Services                          1,512               1,349             (11 )%
Content & Entertainment           2,874               2,553             (11 )%
Other                             2,105               1,841             (13 )%
                          $       6,732       $       6,066             (10 )%

Direct operating expenses decreased $0.7 million or 10%. The increase in direct operating costs in the Phase I Deployment segment was primarily due to a 27% increase in property taxes on Systems. The increase in direct operating costs in the Phase II Deployment segment was due to Phase 2 DC costs which were not generated during the three months ended September 30, 2008. The decrease in the Content & Entertainment segment was primarily related to a 28% decrease in minimum guaranteed obligations under theatre advertising agreements with exhibitors for displaying cinema advertising, reduced operational staffing levels at USM and reduced advertising and marketing costs in CEG related to the fewer number of programs CEG distributed during the quarter offset by non-cash content acquisition expenses of $0.5 million for CEG related to the fair value of barter advertising provided by USM. We expect direct operating expenses to decrease as compared to prior periods and remain constant at the current level.

Selling, General and Administrative Expenses

                              For the Three Months Ended September 30,
($ in thousands)              2008                2009             Change
Phase I Deployment        $         313       $         117             (63 )%
Phase II Deployment                   -                 244               -
Services                            376                 463              23 %
Content & Entertainment           1,641               1,228             (25 )%
Other                               201                 223              11 %
Corporate                         1,656               1,798               9 %
                          $       4,187       $       4,073              (3 )%

Selling, general and administrative expenses decreased approximately $0.1 million or 3%. The decrease was primarily caused by reduced payroll related expenses in the Phase I Deployment segment due to the completion of our Phase I Deployment as those costs are now being allocated to the Phase II Deployment segment. The decrease was also related to reduced staffing levels in the Content & Entertainment segment offset by increased professional fees within Corporate due to one-time investor relations expenses and compensation consulting fees and scheduled quarterly directors' fees. Following the completion of our Phase I Deployment, overall headcount reductions have now stabilized. As of September 30, 2008 and 2009, we had 252 and 244 employees, of which 40 and 47, were part-time employees and 39 and 43, were salespersons, respectively. We expect selling, general and administrative expenses to decrease as compared to prior periods and remain relatively constant at the current level.

Stock-based compensation

Stock-based compensation expense increased approximately $0.2 million or 120%. The increase was primarily related to the expenses associated with the stock option awards granted during the three months ended September 30, 2009, which were issued in exchange for the termination of the AccessDM options. Such grants vested upon issuance and resulted in an additional $0.3 million of stock-based compensation expense for the quarter.

Depreciation and Amortization Expense on Property and Equipment

                              For the Three Months Ended September 30,
($ in thousands)              2008                2009             Change
Phase I Deployment        $       7,137       $       7,139               -
Phase II Deployment                   -                 290               -
Services                            447                 470               5 %
Content & Entertainment             267                 217             (19 )%
Other                               265                 198             (25 )%
Corporate                            17                   9             (47 )%
                          $       8,133       $       8,323               2 %

Depreciation and amortization expense remained consistent with last year. Other than the Phase II Deployment and Services segments, the decreases reflect reduced expense on assets which are fully depreciated or amortized at September 30, 2009. The increase in the Phase II Deployment segment represents depreciation on the Phase 2 DC Systems which were not in service during the three months ended September 30, 2008. We expect the depreciation and amortization expense in the Phase II Deployment segment to increase as new Phase 2 DC Systems are installed.

Interest expense

                              For the Three Months Ended September 30,
($ in thousands)              2008                2009             Change
Phase I Deployment        $       4,315       $       5,456              26 %
Phase II Deployment                   -                 227               -
Services                              4                  25             525 %
Content & Entertainment               4                   3             (25 )%
Other                               260                 259               -
Corporate                         2,407               2,821              17 %
                          $       6,990       $       8,791              26 %

Interest expense increased $1.8 million or 26%. Total interest expense included $6.2 million and $7.7 million of interest paid and accrued for the three months ended September 30, 2008 and 2009, respectively. The increase in interest paid and accrued within the Phase I Deployment segment relates to the increased interest rate on the GE Credit Facility related to the fourth amendment and in part to the Interest Rate Swap (see change in fair value of interest rate swap discussed below) and increased interest within the Phase II Deployment segment related to the credit facility with KBC Bank NV ("KBC") to fund the purchase of Systems (the "KBC Related Facility") from Barco, Inc. ("Barco").

Non-cash interest expense was $0.7 million and $1.1 million for the three months ended September 30, 2008 and 2009, respectively. The increase was due to the accretion of the note payable discount associated with the note issued in August 2009 (the "2009 Note"). Non-cash interest related to the interest payments on the 2007 Senior Notes has ceased as the 2007 Senior Notes were cancelled in August 2009. Accretion of the note payable discount associated with the 2009 Note will continue over the term of the 2009 Note.

As a result of the completion of our Phase I Deployment and the continued payments of principal related to the GE Credit Facility, partially offset by limited borrowings related to the Phase II Deployment, we expect our interest

expense to stabilize and remain relatively constant at the current level, as reduced interest from the 2007 Senior Notes will be replaced by increased interest on the 2009 Note.

Extinguishment of debt

The gain on the extinguishment of debt was $10.7 million for the three months ended September 30, 2009, related to the satisfaction of the principal and any accrued and unpaid interest on the 2007 Senior Notes for an aggregate purchase price of $42.5 million which resulted in a gain of $12.5 million of remaining principal along with $0.6 million in unpaid accrued interest offset by unamortized debt issuance costs of $2.4 million.

Change in fair value of interest rate swap

The change in fair value of the interest rate swap was $0.6 million for the three months ended September 30, 2009. This represents Phase 1 DC's unrealized gain from the change in the fair value of the Interest Rate Swap executed in April 2008 related to the GE Credit Facility.

Change in fair value of warrants

The change in fair value of warrants issued to Sageview Capital LP ("Sageview"), related to the 2009 Note, was a loss of $3.6 million for the three months ended September 30, 2009. Until the shares underlying these warrants are registered with the SEC, the Company will continue to adjust the warrant liability each quarter to the then fair value.

Results of Operations for the Six Months Ended September 30, 2008 and 2009

Revenues

                                For the Six Months Ended September 30,
($ in thousands)               2008                 2009             Change
Phase I Deployment        $       24,614       $       22,027            (11 )%
Phase II Deployment                    -                  694              -
Services                           4,215                3,815            (10 )%
Content & Entertainment            8,463                7,210            (15 )%
Other                              5,127                4,801             (6 )%
                          $       42,419       $       38,547             (9 )%

Revenues decreased $3.9 million or 9%. The decrease in revenues in the Phase I Deployment segment was primarily due to an 11% decrease in Phase 1 DC's VPF revenues, attributable to a contractual 16% reduction in VPF rates starting in November 2008, offset by an increase in quarterly screen turnover. The increase in revenues in the Phase II Deployment segment was due to Phase 2 DC VPF revenues which were not generated during the six months ended September 30, 2008, as no Phase 2 DC's Systems were installed and ready for content until December 2008. The decrease in revenues in the Services segment was primarily due to (i) a 14% decrease in DMS revenues, attributable to flat revenues from digital feature and trailer deliveries as DMS maintained its movie studio customers but experienced limited growth in the number of digital delivery sites and a 26% decrease in non-theatrical satellite services revenues due to general economic factors; and (ii) a 10% decrease in Software revenues due to delayed Phase 2 deployments, limiting expected license and maintenance fees. We expect Phase 2 DC service fees, DMS revenues and software license fees to increase as additional Systems are deployed under both the recent $100 million non-recourse credit facility committed to by GE Capital and Soc Gen as well as through the exhibitor-buyer model launched in late September 2009 initially with two exhibitors.

In the Content & Entertainment segment, revenues decreased 15% due to a 25% decline in in-theatre advertising revenues, attributable to the elimination of various under-performing customer contracts, as well as the current weak macro-economic environment, offset by 21% increase in national advertising revenues generated by the partnership with Screenvision and non-cash barter revenues of $0.5 million, which represents the fair value of advertising provided to alternative content providers of CEG. CEG's distribution revenues relating to digitally-equipped locations decreased 53% for alternative content and content sponsorship revenues as CEG planned a limited number of events and independent films during the six months ended September 30, 2009. The CEG distribution slate will expand to be more significant in the second half of our 2010 fiscal year commencing in October 2009 with the

release of Opa! and the December 11, 2009 release of Dave Matthews Band in 3-D The primary driver of CEG revenues is the number of programs CEG is distributing, together with the nationwide (and anticipated worldwide) conversion of theatres to digital capabilities, a trend the Company expects to continue. In addition to the distribution of independent motion pictures, the Company also expects that with its implementation of the CineLiveSM product into movie theatres, CEG's revenues will increase from the distribution of live 2D and 3D content such as concerts and sporting events.

We expect consolidated revenues to increase during the remainder of our fiscal year relative to the previous fiscal year due to increased amounts of financing that are generally available to fund digital deployments, and the growing number of 3-D movies to be released by the motion picture studios. In particular, the Company recently signed 457 screens with two exhibitors who are purchasing the equipment directly and have hired the Company to manage the asset base in exchange for an upfront activation fee and on-going share of VPF revenues. In addition, the Company expects to sign definitive documentation for a $100 million non-recourse, senior credit facility with GE Capital and Soc Gen prior to year end and commence deployments under this facility in the fourth quarter of fiscal 2010. As the number of industry wide digital screens increases generally, the Company expects to earn additional delivery fees in its DMS business unit as well as distribution fees in CEG and software fees from our TCC software. We are dependent on the availability of suitable financing for any large scale Phase II Deployment. To date such sources of financing are still being pursued.

Direct Operating Expenses

                                For the Six Months Ended September 30,
($ in thousands)               2008                 2009             Change
Phase I Deployment        $          421       $          443              5 %
Phase II Deployment                    -                   85              -
Services                           2,563                2,523             (2 )%
Content & Entertainment            5,401                4,709            (13 )%
Other                              4,144                3,768             (9 )%
                          $       12,529       $       11,528             (8 )%

Direct operating expenses decreased $1.0 million or 8%. The increase in direct operating costs in the Phase I Deployment segment was primarily due to a 5% increase in Phase 1 DC's costs, attributable to a 38% increase in property taxes on Systems. The increase in direct operating costs in the Phase II Deployment segment was due to Phase 2 DC costs which were not generated during the six months ended September 30, 2008. The decrease in the Content & Entertainment . . .