UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
DC 20549





FORM
10-K/A


(Amendment
No. 2)





(Mark
One)


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





For
the fiscal year ended: March 31, 2008





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: 000-51910Access
      Integrated Technologies, Inc.
              (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.)





55
      Madison Avenue, Suite 300, Morristown, New Jersey
            07960(Address
      of principal executive offices)
            (Zip
      Code)





(973)
290-0080


(Registrant’s
telephone number, including area code)





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


CLASS
A COMMON STOCK, PAR VALUE $0.001 PER SHARE





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









Large
      accelerated filer   ̈
            Accelerated
      filer  x
            Non-accelerated
      filer   ̈
              (Do
      not check if a smaller reporting company)
            Smaller
      reporting company   ̈Indicate
      by check mark whether the registrant is a shell company (as defined in
      Rule 12b-2 of the Act).
            Yes
       ̈ 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 $2.11 per share, the closing
price of such common equity on the Nasdaq Global Market, as of June 6, 2008, was
approximately $49,186,427.  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 September 9, 26,797,817 shares of Class A Common Stock, $0.001 par
value, and 733,811 shares of Class B Common Stock, $0.001 par value, were
outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE


Certain
information required by Items 10, 11, 12, 13 and 14 of Form 10-K is incorporated
by reference into Part III hereof from the registrant’s Proxy Statement for the
2008 Annual Meeting of Stockholders held on September 4, 2008.














EXPLANATORY
NOTE





This
Amendment No. 2 on Form 10-K/A (the “Amendment”) to the Annual Report on Form
10-K for the year ended March 31, 2008 of Access Integrated Technologies, Inc.,
as amended by Amendment No. 1 on Form 10-K/A filed on June 26, 2008 (the “Form
10-K”), is being filed solely to (i)
include information that had been inadvertently omitted in Note 10 to the
Consolidated Financial Statements and (ii) amend the Exhibit Index to (x)
include Exhibit 24.2, Substitution of Power of Attorney, and (y) include
references to Exhibits 2.5, 2.16, 4.3, 4.32, 10.45, 10.46, 10.47, 10.49, 10.50,
10.52.1, 10.52.2 and 10.53 that portions of such exhibits are subject to
confidential treatment.  No other changes to the Form
10-K are included in this Amendment.














ACCESS
INTEGRATED TECHNOLOGIES, INC.


TABLE
OF CONTENTS











PageITEM
      8.
            Financial
      Statements and Supplementary Data
            1ITEM
      15.
            Exhibits,
      Financial Statement Schedules
            2SIGNATURES
            3

















ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA








ACCESS
INTEGRATED TECHNOLOGIES, INC.


INDEX
TO FINANCIAL STATEMENTS








Report
      of Independent Registered Public Accounting Firm
            F-1Consolidated
      Balance Sheets at March 31, 2007 and 2008
            F-3Consolidated
      Statements of Operations for the fiscal years ended March 31, 2006, 2007
      and 2008
            F-4Consolidated
      Statements of Cash Flows for the fiscal years ended March 31, 2006, 2007
      and 2008
            F-5Consolidated
      Statements of Stockholders’ Equity for the fiscal years ended March 31,
      2006, 2007 and 2008
            F-7Notes
      to Consolidated Financial Statements
            F-10

















REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the
Board of Directors and Stockholders


Access
Integrated Technologies, Inc.




We have
audited the accompanying consolidated balance sheets of Access Integrated
Technologies, Inc. and subsidiaries (the "Company") as of March 31, 2007 and
2008, and the related consolidated statements of operations, cash flows and
stockholders' equity for each of the years in the three-year period ended March
31, 2008.  These 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 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 enumerated above present fairly, in all
material respects, the consolidated financial position of Access Integrated
Technologies, Inc. and subsidiaries as of March 31, 2007 and 2008, and the
consolidated results of their operations and their consolidated cash flows for
each of the years in the three-year period ended March 31, 2008 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), Access Integrated Technologies, Inc.’s
assessment of internal control over financial reporting as of March 31, 2008,
based on criteria established in Internal Control – Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”), and our report dated June 13, 2008 expressed an unqualified opinion
thereon.








/s/
Eisner LLP


Florham
Park, New Jersey


June 13,
2008





F-1





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the
Board of Directors and Stockholders


Access
Integrated Technologies, Inc.




We have
audited Access Integrated Technologies, Inc. and subsidiaries’ (the "Company")
internal control over financial reporting as of March 31, 2008, based on
criteria established in 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 control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in the
accompanying Management’s 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 of internal control over financial
reporting 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 (1)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the company;
(2) 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 (3) 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, Access Integrated Technologies, Inc. and subsidiaries maintained, in
all material respects, effective internal control over financial reporting as of
March 31, 2008, based on criteria established in 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 Access
Integrated Technologies, Inc. and Subsidiaries as of March 31, 2007 and 2008,
and the related consolidated statements of operations, cash flows and
stockholders' equity for each of the years in the three-year period ended March
31, 2008, and our report dated June 13, 2008 expressed an unqualified opinion
thereon.








/s/
Eisner LLP


Florham
Park, New Jersey


June 13,
2008





F-2





ACCESS
INTEGRATED TECHNOLOGIES, INC.


CONSOLIDATED
BALANCE SHEETS


(In
thousands, except for share data)





March
      31,2007
            
            
            2008ASSETSCurrent
      assetsCash
      and cash equivalents
            
            $
            29,376
            
            
            $
            29,655Accounts
      receivable, net
            
            
            18,504
            
            
            
            21,494Unbilled
      revenue, current portion
            
            
            2,324
            
            
            
            6,393Deferred
      costs, current portion
            
            
            2,318
            
            
            
            3,859Prepaid
      expenses
            
            
            970
            
            
            
            889Other
      current assets
            
            
            23
            
            
            
            427Note
      receivable, current portion
            
            
            101
            
            
            
            158Total
      current assets
            
            
            53,616
            
            
            
            62,875Deposits
      on property and equipment
            
            
            8,513
            
            
            
            —Property
      and equipment, net
            
            
            197,452
            
            
            
            269,031Intangible
      assets, net
            
            
            19,432
            
            
            
            13,592Capitalized
      software costs, net
            
            
            2,840
            
            
            
            2,777Goodwill
            
            
            13,249
            
            
            
            14,549Accounts
      receivable, net of current portion
            
            
            248
            
            
            
            299Deferred
      costs, net of current portion
            
            
            3,304
            
            
            
            6,595Note
      receivable, net of current portion
            
            
            1,227
            
            
            
            1,220Unbilled
      revenue, net of current portion
            
            
            1,221
            
            
            
            2,075Security
      deposits
            
            
            445
            
            
            
            408Restricted
      cash
            
            
            180
            
            
            
            255Total
      assets
            
            $
            301,727
            
            
            $
            373,676LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilitiesAccounts
      payable and accrued expenses
            
            $
            28,931
            
            
            $
            25,213Current
      portion of notes payable
            
            
            2,480
            
            
            
            16,998Current
      portion of deferred revenue
            
            
            8,871
            
            
            
            6,204Current
      portion of customer security deposits
            
            
            129
            
            
            
            333Current
      portion of capital leases
            
            
            75
            
            
            
            89Total
      current liabilities
            
            
            40,486
            
            
            
            48,837Notes
      payable, net of current portion
            
            
            164,196
            
            
            
            250,689Capital
      leases, net of current portion
            
            
            5,903
            
            
            
            5,814Deferred
      revenue, net of current portion
            
            
            283
            
            
            
            283Customer
      security deposits, net of current portion
            
            
            54
            
            
            
            46Total
      liabilities
            
            
            210,922
            
            
            
            305,669Commitments
      and contingencies (Note 8)Stockholders’
      EquityClass
      A common stock, $0.001 par value per share; 40,000,000
      shares
              authorized;
      23,988,607 and 26,143,612 shares issued and 23,937,167
      and
              26,092,172
      shares outstanding at March 31, 2007 and March 31,
              2008,
      respectively
            
            
            24
            
            
            
            26Class
      B common stock, $0.001 par value per share; 15,000,000
      shares
              authorized;
      763,811 and 733,811 shares issued and outstanding, at
              March
      31, 2007 and March 31, 2008, respectively
            
            
            1
            
            
            
            1Additional
      paid-in capital
            
            
            155,957
            
            
            
            168,844Treasury
      stock, at cost; 51,440 shares
            
            
            (172
            )
            
            
            (172
            )Accumulated
      deficit
            
            
            (65,005
            )
            
            
            (100,692
            )Total
      stockholders’ equity
            
            
            90,805
            
            
            
            68,007Total
      liabilities and stockholders’ equity
            
            $
            301,727
            
            
            $
            373,676







See
accompanying notes to Consolidated Financial Statements





F-3





ACCESS
INTEGRATED TECHNOLOGIES, INC.


CONSOLIDATED
STATEMENTS OF OPERATIONS


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








For
      the fiscal years ended March 31,2006
            
            
            2007
            
            2008Revenues
            $
            16,795
            
            
            $
            47,110
            
            
            $
            80,984Costs
      and expenses:Direct
      operating (exclusive of depreciation and amortization
              shown
      below)
            
            11,550
            
            
            
            22,214
            
            
            
            26,569Selling,
      general and administrative
            
            8,887
            
            
            
            18,565
            
            
            
            23,170Provision
      for doubtful accounts
            
            186
            
            
            
            848
            
            
            
            1,396Research
      and development
            
            300
            
            
            
            330
            
            
            
            162Stock-based
      compensation
            
            —
            
            
            
            2,920
            
            
            
            453Loss
      on disposition of assets
            
            —
            
            
            
            2,561
            
            
            
            —Impairment
      of intangible asset
            
            —
            
            
            
            —
            
            
            
            1,588Depreciation
      of property and equipment
            
            3,693
            
            
            
            14,699
            
            
            
            29,285Amortization
      of intangible assets
            
            1,308
            
            
            
            2,773
            
            
            
            4,290Total
      operating expenses
            
            25,924
            
            
            
            64,910
            
            
            
            86,913Loss
      from operations before other income (expense)
            
            (9,129
            )
            
            
            (17,800
            )
            
            
            (5,929
            )Interest
      income
            
            316
            
            
            
            1,425
            
            
            
            1,406Interest
      expense
            
            (3,644
            )
            
            
            (9,176
            )
            
            
            (29,327
            )Debt
      conversion expense
            
            (6,269
            )
            
            
            —
            
            
            
            —Debt
      refinancing expense
            
            —
            
            
            
            —
            
            
            
            (1,122
            )Other
      income (expense), net
            
            1,603
            
            
            
            (448
            )
            
            
            (715
            )Net
      loss
            $
            (17,123
            )
            
            $
            (25,999
            )
            
            $
            (35,687
            )Net
      loss per common share:Basic
      and diluted
            $
            (1.22
            )
            
            $
            (1.10
            )
            
            $
            (1.40
            )Weighted
      average number of common shares outstanding:Basic
      and diluted
            
            14,086,001
            
            
            
            23,729,763
            
            
            
            25,576,787










See
accompanying notes to Consolidated Financial Statements





F-4





ACCESS
INTEGRATED TECHNOLOGIES, INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(In
thousands)





For
      the fiscal years ended March 31,2006
            
            
            2007
            
            2008Cash
      flows from operating activitiesNet
      loss
            $
            (17,123
            )
            
            $
            (25,999
            )
            
            $
            (35,687
            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Loss
      on disposal of assets
            
            —
            
            
            
            6
            
            
            
            172Loss
      on disposition of assets
            
            —
            
            
            
            2,561
            
            
            
            —Loss
      on impairment of intangible asset
            
            —
            
            
            
            —
            
            
            
            1,588Depreciation  of
      property and equipment and
              amortization  of
      intangible assets
            
            5,001
            
            
            
            17,472
            
            
            
            33,575Amortization
      of software development costs
            
            547
            
            
            
            840
            
            
            
            590Debt
      issuance costs included in interest expense
            
            730
            
            
            
            646
            
            
            
            1,211Provision
      for doubtful accounts
            
            186
            
            
            
            848
            
            
            
            1,396Stock-based
      compensation
            
            —
            
            
            
            2,920
            
            
            
            453Non-cash
      interest expense
            
            1,407
            
            
            
            1,903
            
            
            
            7,043Debt
      refinancing expense
            
            —
            
            
            
            —
            
            
            
            1,122Gain
      on available-for-sale securities
            
            —
            
            
            
            (393
            )
            
            
            (148
            )Net
      fair value change of Class A common stock warrants
            
            (1,660
            )
            
            
            —
            
            
            
            —Debt
      conversion expense
            
            6,269
            
            
            
            —
            
            
            
            —Changes
      in operating assets and liabilities:Accounts
      receivable
            
            (832
            )
            
            
            (9,451
            )
            
            
            (4,437
            )Prepaids
      and other current assets
            
            (111
            )
            
            
            (289
            )
            
            
            (323
            )Unbilled
      revenue
            
            (915
            )
            
            
            (3,602
            )
            
            
            (4,923
            )Other
      assets
            
            (449
            )
            
            
            (119
            )
            
            
            472Accounts
      payable and accrued expenses
            
            1,662
            
            
            
            (5,989
            )
            
            
            (76
            )Deferred
      revenues
            
            (145
            )
            
            
            (411
            )
            
            
            (2,668
            )Other
      liabilities
            
            (55
            )
            
            
            (133
            )
            
            
            197Net
      cash used in operating activities
            
            (5,488
            )
            
            
            (19,190
            )
            
            
            (443
            )Cash
      flows from investing activitiesPurchases
      of property and equipment
            
            (17,392
            )
            
            
            (118,602
            )
            
            
            (76,177
            )Deposits
      paid for property and equipment
            
            (8,673
            )
            
            
            (36,887
            )
            
            
            (20,052
            )Purchases
      of intangible assets
            
            (21
            )
            
            
            (3
            )
            
            
            —Additions
      to capitalized software costs
            
            (606
            )
            
            
            (1,015
            )
            
            
            (528
            )Payment
      of additional purchase price related Managed
Services
            
            —
            
            
            
            (14
            )
            
            
            —Acquisition
      of PLX Systems
            
            —
            
            
            
            (1,640
            )
            
            
            —Acquisition
      of UniqueScreen Media
            
            —
            
            
            
            (1,172
            )
            
            
            (121
            )Acquisition
      of The Bigger Picture
            
            —
            
            
            
            (337
            )
            
            
            (15
            )Acquisition
      of Access Digital Server Assets
            
            —
            
            
            
            —
            
            
            
            (35
            )Purchase
      of available-for-sale securities
            
            (24,000
            )
            
            
            (9,000
            )
            
            
            (6,000
            )Maturities
      and sales of available-for-sale securities
            
            —
            
            
            
            33,393
            
            
            
            6,148Restricted
      short-term investment
            
            (180
            )
            
            
            —
            
            
            
            (75
            )Net
      cash used in investing activities
            
            (50,872
            )
            
            
            (135,277
            )
            
            
            (96,855
            )Cash
      flows from financing activitiesRepayment
      of notes payable
            
            (1,697
            )
            
            
            (5,397
            )
            
            
            (17,372
            )Proceeds
      from notes payable
            
            —
            
            
            
            727
            
            
            
            14,600Repayment
      of credit facilities
            
            —
            
            
            
            (2,943
            )
            
            
            —Proceeds
      from credit facilities
            
            —
            
            
            
            138,077
            
            
            
            66,660Proceeds
      from One Year Senior Notes
            
            —
            
            
            
            22,000
            
            
            
            —Proceeds
      from 2007 Senior Notes
            
            —
            
            
            
            —
            
            
            
            36,891Payments
      of debt issuance costs
            
            —
            
            
            
            (5,054
            )
            
            
            (3,114
            )Principal
      payments on capital leases
            
            (424
            )
            
            
            (96
            )
            
            
            (76
            )




F-5




Costs
      associated with prior year issuance of Class A common
      stock
            
            —
            
            
            (251
            )
            
            
            (47
            )Net
      proceeds from issuance of Class A common stock
            
            90,343
            
            
            139
            
            
            
            35Net
      cash provided by financing activities
            
            88,222
            
            
            147,202
            
            
            
            97,577Net
      increase (decrease) in cash and cash equivalents
            
            31,862
            
            
            (7,265
            )
            
            
            279Cash
      and cash equivalents at beginning of period
            
            4,779
            
            
            36,641
            
            
            
            29,376Cash
      and cash equivalents at end of period
            $
            36,641
            
            $
            29,376
            
            
            $
            29,655





See
accompanying notes to Consolidated Financial Statements





F-6




ACCESS
      INTEGRATED TECHNOLOGIES, INC.
                CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY
                (In thousands, except share
      data)


Class
      A
              Common
      Stock
            
            Class
      B
              Common
      Stock
            Treasury
              Stock
            
            Additional
              Pain-In
              Capital
            Accumulated
              Deficit
            Total
              Stockholders’
              EquityShares
            
            Amount
            
            Shares
            
            Amount
            Shares
            
            AmountBalances
      as of March 31, 2005 as previously reported
            9,433,328
            
            
            $9
            
            965,811
            
            $1
            (51,440
            )
            $(172
            )
            $32,696
            $(21,487
            )
            $11,047Cumulative
      effect of restatement
            
            
            
            
            
            
            
            
            
            
            
            
            
            (396
            )
            (396
            )Balances
      as of March 31, 2005 as restated
            9,433,328
            
            
            $9
            
            965,811
            
            $1
            (51,440
            )
            $(172
            )
            $32,696
            $(21,883
            )
            $10,651Issuance
      of common stock in connection with exercise of warrants and stock
      options
            395,305
            
            
            —
            
            —
            
            —
            —
            
            —
            
            1,801
            —
            
            1,801Issuance
      of common stock in connection with the July 2005 Private
      Placement
            1,909,115
            
            
            2
            
            —
            
            —
            —
            
            —
            
            16,719
            —
            
            16,721Issuance
      of common stock in connection with the January 2006
      Offering
            1,500,000
            
            
            2
            
            —
            
            —
            —
            
            —
            
            14,495
            —
            
            14,497Issuance
      of common stock in connection with the March 2006 Offering and the March
      2006 Second Offering
            5,894,999
            
            
            6
            
            —
            
            —
            —
            
            —
            
            54,753
            —
            
            54,759Issuance
      of common stock in lieu of redeeming the Boeing
    Shares
            53,534
            
            
            —
            
            —
            
            —
            —
            
            —
            
            250
            —
            
            250Issuance
      of common stock in payment of interest on Convertible
      Debentures
            17,758
            
            
            —
            
            —
            
            —
            —
            
            —
            
            146
            —
            
            146Issuance
      of common stock in connection with the conversion of the Convertible
      Debentures
            2,507,657
            
            
            3
            
            —
            
            —
            —
            
            —
            
            11,040
            —
            
            11,043Issuance
      of common stock in connection with the conversion of the 6% Convertible
      Notes
            307,871
            
            
            —
            
            —
            
            —
            —
            
            —
            
            1,699
            —
            
            1,699Conversion
      of Class B shares to Class A
            40,000
            
            
            —
            
            (40,000
            )
            —
            —
            
            —
            
            —
            —
            
            —Transfer
      to equity of liability relating to warrants upon registration
      effectiveness
            —
            
            
            —
            
            —
            
            —
            —
            
            —
            
            3,330
            —
            
            3,330Net
      loss as restated
            —
            
            
            —
            
            —
            
            —
            —
            
            —
            
            —
            (17,123
            )
            (17,123
            )Balances
      as of March 31, 2006
            22,059,567
            
            
            $22
            
            925,811
            
            $1
            (51,440
            )
            $(172
            )
            $136,929
            $(39,006
            )
            $97,774








See
accompanying notes to Consolidated Financial Statements








F-7





ACCESS
      INTEGRATED TECHNOLOGIES, INC.
                CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY
                (In thousands, except share
      data)


Class
      A
              Common
      Stock
            
            
            
            Class
      B
              Common
      Stock
            
            
            
            Treasury
              Stock
            
            
            Additional
              Pain-In
              Capital
            
            
            
            Accumulated
              Deficit
            
            
            
            Total
              Stockholders’
              EquityShares
            
            Amount
            
            
            
            Shares
            
            Amount
            
            
            
            Shares
            
            AmountBalances
      as of March 31, 2006
            
            22,059,567
            
            
            $22
            
            
            
            925,811
            
            
            $1
            
            
            
            
            (51,440
            )
            
            $(172
            )
            
            
            
            $136,929
            
            
            
            
            $(39,006
            )
            
            
            
            $97,774Issuance
      of common stock in connection with  exercise of warrants and
      stock options
            
            15,750
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            138
            
            
            
            
            —
            
            
            
            
            138Issuance
      of common stock in connection with the  purchase of the Access
      Digital Server Assets
            
            23,445
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            308
            
            
            
            
            —
            
            
            
            
            308Issuance
      of common stock in connection with the  acquisition of
      ACS
            
            974,184
            
            
            1
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            9,999
            
            
            
            
            —
            
            
            
            
            10,000Issuance
      of common stock in connection with the  acquisition of The
      Bigger Picture
            
            460,000
            
            
            1
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            3,923
            
            
            
            
            —
            
            
            
            
            3,924Issuance
      of common stock in payment of  interest on One Year Senior
      Notes
            
            260,267
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            1,811
            
            
            
            
            —
            
            
            
            
            1,811Issuance
      of common stock in connection with the additional purchase price of
      Managed Services
            
            3,394
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            30
            
            
            
            
            —
            
            
            
            
            30Issuance
      of common stock as payment for the reduction of principal due under the HS
      Notes
            
            30,000
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            150
            
            
            
            
            —
            
            
            
            
            150Costs
      associated with prior year issuance of  common
      stock
            
            —
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            (251
            )
            
            
            
            —
            
            
            
            
            (251
            )Conversion
      of Class B shares to Class A
            
            162,000
            
            
            —
            
            
            
            (162,000
            )
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            
            
            —
            
            
            
            
            —Stock
      compensation expense
            
            —
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            2,920
            
            
            
            
            —
            
            
            
            
            2,920Net
      loss
            
            —
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            
            
            (25,999
            )
            
            
            
            (25,999
            )Balances
      as of March 31, 2007
            
            23,988,607
            
            
            $24
            
            
            
            763,811
            
            
            $1
            
            
            
            
            (51,440
            )
            
            $(172
            )
            
            
            
            $155,957
            
            
            
            
            $(65,005
            )
            
            
            
            $90,805







See
accompanying notes to Consolidated Financial Statements














F-8






ACCESS
      INTEGRATED TECHNOLOGIES, INC.
                CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY
                (In thousands, except share
      data)


Class
      A
              Common
      Stock
            
            
            
            Class
      B
              Common
      Stock
            
            
            
            Treasury
              Stock
            
            
            Additional
              Pain-In
              Capital
            
            
            Accumulated
              Deficit
            
            
            
            Total
              Stockholders’
              EquityShares
            
            Amount
            
            
            
            Shares
            
            Amount
            
            
            
            Shares
            
            AmountBalances
      as of March 31, 2007
            
            23,988,607
            
            
            $24
            
            
            
            763,811
            
            
            $1
            
            
            
            
            (51,440
            )
            
            $(172
            )
            
            
            
            $155,957
            
            
            
            $(65,005
            )
            
            
            
            $90,805Issuance
      of common stock in connection with  exercise of warrants and
      stock options
            
            6,500
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            32
            
            
            
            —
            
            
            
            
            32Issuance
      of common stock in connection with the  additional purchase
      price of ACS
            
            145,861
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            1,000
            
            
            
            —
            
            
            
            
            1,000Issuance
      of common stock in payment of  interest on the One Year Senior
      Notes
            
            357,737
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            2,452
            
            
            
            —
            
            
            
            
            2,452Issuance
      of common stock in payment of  interest on  the 2007
      Senior Notes
            
            1,609,516
            
            
            2
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            7,948
            
            
            
            —
            
            
            
            
            7,950Additional
      Interest on the 2007 Senior Notes to be issued in common
      stock
            
            —
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            1,020
            
            
            
            —
            
            
            
            
            1,020Issuance
      of common stock in connection with the additional purchase price of
      Managed Services
            
            5,391
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            29
            
            
            
            —
            
            
            
            
            29Costs
      associated with issuance of  common stock
            
            —
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            (47
            )
            
            
            —
            
            
            
            
            (47
            )Conversion
      of Class B shares to Class A
            
            30,000
            
            
            —
            
            
            
            (30,000
            )
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            
            —
            
            
            
            
            —Stock
      compensation expense
            
            —
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            453
            
            
            
            —
            
            
            
            
            453Net
      loss
            
            —
            
            
            —
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            —
            
            
            
            
            —
            
            
            
            (35,687
            )
            
            
            
            (35,687
            )Balances
      as of March 31, 2008
            
            26,143,612
            
            
            $26
            
            
            
            733,811
            
            
            $1
            
            
            
            
            (51,440
            )
            
            $(172
            )
            
            
            
            $168,844
            
            
            
            $(100,692
            )
            
            
            
            $68,007














See
accompanying notes to Consolidated Financial Statements





F-9








ACCESS
INTEGRATED TECHNOLOGIES, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended March 31, 2006, 2007 and 2008


($ in
thousands, except for per share data)








1.
            NATURE
      OF OPERATIONS





Access
Integrated Technologies, Inc. (“AccessIT” or the “Company”) was incorporated in
Delaware on March 31, 2000.  The Company provides fully managed
storage, electronic delivery and software services and technology solutions for
owners and distributors of digital content to movie theatres and other
venues.  In the past, the Company generated revenues from two primary
businesses, media services (“Media Services”) and internet data center (“IDC” or
“data center”) services (“Data Center Services”), a business the Company no
longer operated after May 1, 2007. Beginning April 1, 2007, the Company made
changes to its organizational structure which impacted the Company’s reportable
segments, but did not impact the Company’s consolidated financial position,
results of operations or cash flows. The Company realigned its focus to three
primary businesses, media services (“Media Services”), media content and
entertainment (“Content & Entertainment”) and other (“Other”). The Company’s
Media Services business provides software, services and technology solutions to
the motion picture and television industries, primarily to facilitate the
transition from analog (film) to digital cinema and has positioned the Company
at what the Company believes to be the forefront of an emerging industry
opportunity relating to the delivery and management of digital cinema and other
content to entertainment and other remote venues worldwide.  The
Company’s Content & Entertainment business provides motion picture
exhibition to the general public and cinema advertising and film distribution
services to movie exhibitors.  The Company’s Other business is
attributable to the Data Center Services.





2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES





BASIS
OF PRESENTATION AND CONSOLIDATION





For the
fiscal years ended March 31, 2006, 2007 and 2008, the Company incurred net
losses of $17,123, $25,999 and $35,687, respectively, and cash used in operating
activities of $5,488, $19,190 and $443, respectively. In addition, the Company
has an accumulated deficit of $100,692 as of March 31, 2008. At March 31, 2008,
the Company also has contractual obligations (including interest and excluding
non-cash interest) of $47,854 for the fiscal year 2009. Management expects that
the Company will continue to generate losses for the foreseeable future. Certain
of these costs could be reduced if working capital decreased. Based on the
Company’s cash position at March 31, 2008, and expected cash flows from
operations, management believes that the Company has the ability to meet its
obligations through June 30, 2009. The Company may attempt to raise additional
capital from various sources for equipment requirements related to the Company’s
Phase II Deployment or for working capital as necessary. There is no assurance
that such financing will be completed as contemplated or under terms acceptable
to the Company or its existing shareholders. Failure to generate additional
revenues, raise additional capital or manage discretionary spending could have a
material adverse effect on the Company’s ability to continue as a going concern
and to achieve its intended business objectives. The accompanying consolidated
financial statements do not reflect any adjustments which may result from the
outcome of such uncertainties.





The
Company’s consolidated financial statements include the accounts of AccessIT,
Access Digital Media, Inc. (“AccessDM”), Hollywood Software, Inc. d/b/a AccessIT
Software (“AccessIT SW”), Core Technology Services, Inc. (“Managed Services”),
FiberSat Global Services, Inc. d/b/a AccessIT Satellite and Support Services,
(“AccessIT Satellite”), ADM Cinema Corporation (“ADM Cinema”) d/b/a the Pavilion
Theatre (the “Pavilion Theatre”), Christie/AIX, Inc. d/b/a AccessIT Digital
Cinema (“AccessIT DC”), PLX Acquisition Corp., UniqueScreen Media, Inc. d/b/a
AccessIT Advertising and Creative Services (“ACS”),  Vistachiara
Productions, Inc. d/b/a The Bigger Picture (“The Bigger Picture”) and Access
Digital Cinema Phase 2 Corp. (“Phase 2 Corporation”). AccessDM and AccessIT
Satellite will together be known as the Digital Media Services Division (“DMS”).
All intercompany transactions and balances have been eliminated.





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America (“GAAP”) requires management
to make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. The Company’s most
significant estimates related to software revenue recognition, capitalization of
software development costs, amortization and impairment testing of intangible
assets and depreciation of fixed assets. On an on-going basis, the Company
evaluates its estimates, including those related to the carrying values of its
fixed assets and intangible assets, the valuation of deferred tax assets, and
the valuation of assets acquired and liabilities assumed in purchase business
combinations. The Company bases its estimates on historical experience and on
various other assumptions that the Company believes to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the





F-10





carrying
values of assets and liabilities that are not readily apparent from other
sources. Actual results could differ from these estimates under different
assumptions or conditions.





Certain
reclassifications of prior period data have been made to conform to the current
presentation.





CASH
AND CASH EQUIVALENTS





The
Company considers all highly liquid investments with an original maturity of
three months or less to be “cash equivalents.” The carrying amount of the
Company’s cash equivalents approximates fair value due to the short maturities
of these investments and consists primarily of money market funds and other
overnight investments. The Company maintains cash deposits with major banks,
which from time to time may exceed federally insured limits. The Company
periodically assesses the financial condition of the institutions and believes
that the risk of any loss is minimal.





INVESTMENT
SECURITIES





During
the fiscal years ended March 31, 2007 and 2008, the Company held investment
securities which were principally auction rate perpetual preferred
securities.  However, as of each year end date, the Company was not
invested in these securities.  The Company classified all investment
securities as available-for-sale. Securities accounted for as available-for-sale
were required to be reported at fair value with unrealized gains and losses, net
of taxes, excluded from net income and shown separately as a component of
accumulated other comprehensive income within stockholders’ equity. The
securities that the Company had classified as available-for-sale generally
traded at par and as a result typically did not have any realized or unrealized
gains or losses.





DEPOSITS
ON PROPERTY AND EQUIPMENT





Deposits
on property and equipment represent amounts paid when digital cinema projection
systems (the “Systems”) are ordered from Christie Digital Systems USA, Inc.
(“Christie”) in connection with AccessIT DC’s Phase I Deployment (see Note 8).
During AccessIT DC’s Phase I Deployment, such amounts were classified as
long-term assets due to the nature of the assets underlying these deposits,
although such deposits were to be offset against invoices from Christie when the
associated invoices were paid.  As of March 31, 2008, the Company had
$3,802 of unapplied deposits which are combined with accounts payable and
accrued expenses, as AccessIT DC’s Phase I Deployment was finalized, and the
related projection systems had been delivered and installed.





PROPERTY
AND EQUIPMENT





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





Computer
      equipment
            3-5
      yearsDigital
      cinema projection systems
            10
      yearsOther
      projection system equipment
            5
      yearsMachinery
      and equipment
            3-10
      yearsFurniture
      and fixtures
            3-6
      yearsVehicles
            5
      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.  Upon the sale or other disposition of any property and
equipment, the cost and related accumulated depreciation are removed from the
accounts and the gain or loss is included in the statement of
operations.





FAIR
VALUE OF FINANCIAL INSTRUMENTS





The
carrying amounts of the Company’s financial instruments, which include cash and
cash equivalents, investment securities, accounts receivable, accounts payable,
accrued expenses and other obligations, approximate their fair value due to the
short-term maturities of the related instruments.





F-11





Concentrations
of Credit Risk





The
Company’s customer base is primarily composed of businesses throughout the
United States.  The Company routinely assesses the financial strength
of its customers and the status of its accounts receivable and, based upon
factors surrounding the credit risk, establishes an allowance, if required, for
uncollectible accounts and, as a result, believes that its accounts receivable
credit risk exposure beyond such allowance is limited.  Based on
borrowing rates currently available to the Company for loans with similar terms,
the carrying value of notes payable and capital lease obligations approximates
fair value.





IMPAIRMENT
OF LONG-LIVED ASSETS





The
Company reviews the recoverability of its long-lived assets on a periodic basis
in order to identify business conditions, which may indicate a possible
impairment. The assessment for potential impairment is based primarily on the
Company’s ability to recover the carrying value of its long-lived assets from
expected future undiscounted cash flows. If the total of expected future
undiscounted cash flows is less than the total carrying value of the assets, a
loss is recognized for the difference between the fair value (computed based
upon the expected future discounted cash flows) and the carrying value of the
assets.





BUSINESS
COMBINATIONS AND INTANGIBLE ASSETS





The
Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 141,
“Business Combinations” (“SFAS No. 141”) and SFAS No. 142, “Goodwill and other
Intangible Assets” (“SFAS No. 142”). SFAS No. 141 requires all business
combinations to be accounted for using the purchase method of accounting and
that certain intangible assets acquired in a business combination must be
recognized as assets separate from goodwill. SFAS No. 142 addresses the
recognition and measurement of goodwill and other intangible assets subsequent
to their acquisition. SFAS No. 142 also addresses the initial recognition and
measurement of intangible assets acquired outside of a business combination,
whether acquired individually or with a group of other assets. This statement
provides that intangible assets with indefinite lives and goodwill will not be
amortized but will be tested at least annually for impairment. If impairment is
indicated, then the asset will be written down to its fair value, typically
based upon its future expected discounted cash flows. As of March 31, 2008, the
Company’s finite-lived intangible assets consisted of customer relationships and
agreements, theatre relationships, covenants not to compete, trade names and
trademarks and Federal Communications Commission licenses (for satellite
transmission services), which are estimated to have useful lives ranging from
two to ten years.  In June 2007, the unamortized balance of the liquor
license (for the Pavilion Theatre) was charged to other expense.  In
connection with The Bigger Picture Acquisition (see Note 3), $2,071 of the
purchase price was allocated to a certain customer contract.  During
the fiscal year ended March 31, 2008, the customer decided not to continue its
contract with The Bigger Picture.  As a result, the unamortized
balance of $1,588 was charged to expense and recorded as impairment of
intangible asset in the consolidated financial statements.  At March
31, 2008, the Company concluded that there was no impairment of any other
intangible assets.





In
addition, the Company recorded goodwill in connection with the acquisitions of
AccessIT SW, Managed Services, AccessIT Satellite, the Pavilion Theatre, PLX,
ACS and The Bigger Picture.  Goodwill related to the acquisition of
the Pavilion Theatre was reduced in September 2005 in connection with the early
retirement of the outstanding note payable (see Note 6).  In September
2006, the amount of goodwill related to the Pavilion Theatre was reduced by $107
for the remaining unpaid amount related to the holdback of funds at the time of
purchase.  At March 31, 2008, the Company concluded that there was no
impairment of goodwill.





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





F-12








Media
      Services
            
            
            Content
      & Enter-tainment
            
            
            Other
            
            
            Corp.
            
            
            TotalBalance
      as of March 31, 2006
            
            $
            3,875
            
            
            $
            3,830
            
            
            $
            —
            
            
            $
            —
            
            
            $
            7,705Additional
      purchase price related to
              Managed
      Services
            
            
            212
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            212PLX
      Acquisition
            
            
            442
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            442ACS
      Acquisition
            
            
            —
            
            
            
            3,280
            
            
            
            —
            
            
            
            —
            
            
            
            3,280Bigger
      Picture Acquisition
            
            
            —
            
            
            
            1,717
            
            
            
            —
            
            
            
            —
            
            
            
            1,717Reduction
      due to the holdback of funds related to the Pavilion
      Theatre
            
            
            —
            
            
            
            (107
            )
            
            
            —
            
            
            
            —
            
            
            
            (107
            )Balance
      as of March 31, 2007
            
            $
            4,529
            
            
            $
            8,720
            
            
            $
            —
            
            
            $
            —
            
            
            $
            13,249Additional
      purchase price related to the AccessIT Digital Server
      Assets
            
            
            —
            
            
            
            —
            
            
            
            164
            
            
            
            —
            
            
            
            164Additional
      costs associated with the ACS Acquisition
            
            
            —
            
            
            
            121
            
            
            
            —
            
            
            
            —
            
            
            
            121Additional
      purchase price related to the ACS Acquisition
            
            
            —
            
            
            
            1,000
            
            
            
            —
            
            
            
            —
            
            
            
            1,000Additional
      costs associated with the Bigger Picture Acquisition
            
            
            —
            
            
            
            15
            
            
            
            —
            
            
            
            —
            
            
            
            15Balance
      as of March 31, 2008
            
            $
            4,529
            
            
            $
            9,856
            
            
            $
            164
            
            
            $
            —
            
            
            $
            14,549








CAPITALIZED
SOFTWARE DEVELOPMENT COSTS





Internal
Use Software





The
Company accounts for these software development costs under Statement of
Position (“SOP”) 98-1, “Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use” (“SOP
98-1”).  SOP 98-1 states that there are three distinct stages to the
software development process for internal use software.  The first
stage, the preliminary project stage, includes the conceptual formulation,
design and testing of alternatives.  The second stage, or the program
instruction phase, includes the development of the detailed functional
specifications, coding and testing.  The final stage, the
implementation stage, includes the activities associated with placing a software
project into service.  All activities included within the preliminary
project stage would be considered research and development and expensed as
incurred.  During the program instruction phase, all costs incurred
until the software is substantially complete and ready for use, including all
necessary testing, are capitalized and amortized on a straight-line basis over
estimated lives ranging from three to five years.  The Company has not
sold, leased or licensed software developed for internal use to the Company’s
customers and the Company has no intention of doing so in the
future.





Software
to be Sold, Licensed or Otherwise Marketed





The
Company accounts for these software development costs under SFAS No. 86,
“Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise
Marketed” (“SFAS No. 86”).  SFAS No. 86 states that software
development costs that are incurred subsequent to establishing technological
feasibility are capitalized until the product is available for general release.
Amounts capitalized as software development costs are amortized using the
greater of revenues during the period compared to the total estimated revenues
to be earned or on a straight-line basis over estimated lives ranging from three
to five years. The Company reviews capitalized software costs for impairment on
a periodic basis. To the extent that the carrying amount exceeds the estimated
net realizable value of the capitalized software cost, an impairment charge is
recorded. No impairment charge was recorded for the fiscal years ended March 31,
2006, 2007 and 2008, respectively.  Amortization of capitalized
software development costs, included in direct operating costs, for the fiscal
years ended March 31, 2006, 2007 and 2008 amounted to $547, $840 and $590,
respectively.  Revenues relating to customized software development
contracts are recognized on a percentage-of-completion method of accounting
using the cost to date to the total estimated cost approach.  For the
fiscal years ended March 31, 2006, 2007 and 2008, unbilled receivables under
such customized software development contracts aggregated $1,492, $1,405 and
$1,187, respectively.





F-13





REVENUE
RECOGNITION





Media
Services





The
Company’s Media Services revenues are generated as follows:





Revenues
      consist of:
            
            Accounted
      for in accordance with:Software
      licensing, including customer licenses and application service provider
      (“ASP Service”) agreements.
            
            Statement
      of Position (“SOP”) 97-2,
              “Software
      Revenue Recognition”Software
      maintenance contracts, and professional consulting services, which
      includes systems implementation, training, custom software development
      services and other professional services, delivery revenues via satellite
      and hard drive, data encryption and preparation fee revenues, satellite
      network monitoring and maintenance fees, movie theatre admission and
      concession revenues, virtual print fees (“VPFs”) and alternative content
      fees (“ACFs”).
            
            Staff
      Accounting Bulletin (“SAB”) No. 104
              “Revenue
      Recognition in Financial Statements” (“SAB No. 104”).Cinema
      advertising service revenues and distribution fee
revenues.
            
            SOP
      00-2, “Accounting by Producers or
              Distributors
      of Films” (“SOP 00-2”)








Software
licensing revenue is recognized when the following criteria are met: (a)
persuasive evidence of an arrangement exists, (b) delivery has occurred and no
significant obligations remain, (c) the fee is fixed or determinable and (d)
collection is determined to be probable. Significant upfront fees are received
in addition to periodic amounts upon achievement of contractual events for
licensing of the Company’s products. Such amounts are deferred until the revenue
recognition criteria have been met, which typically occurs upon delivery and
acceptance.





Revenues
relating to customized software development contracts are recognized on a
percentage-of-completion method of accounting.





Deferred
revenue is recorded in cases where:  (1) a portion or the entire
contract amount cannot be recognized as revenue, due to non-delivery or
acceptance of licensed software or custom programming, (2) incomplete
implementation of ASP Service arrangements, or (3) unexpired pro-rata periods of
maintenance, minimum ASP Service fees or website subscription fees. As license
fees, maintenance fees, minimum ASP Service fees and website subscription fees
are often paid in advance, a portion of this revenue is deferred until the
contract ends. Such amounts are classified as deferred revenue and are
recognized as revenue in accordance with the Company’s revenue recognition
policies described above.





Cinema
advertising service revenue, and the associated direct selling, production and
support cost, is recognized on a straight-line basis over the period the related
advertising is displayed in-theatre, pursuant to the specific terms of each
advertising contract. The Company has the right to receive or bill the entire
amount of the advertising contract upon execution, and therefore such amount is
recorded as a receivable at the time of execution, and all related advertising
revenue and all direct costs actually incurred are deferred until such time as
the advertising is displayed in-theatre.





The right
to sell and display such advertising, or other in-theatre programs, products and
services, is based upon advertising contracts with exhibitors which stipulate
payment terms to such exhibitors for this right. Payment terms generally consist
of either fixed annual payments or annual minimum guarantee payments, plus a
revenue share of the excess of a percentage of advertising revenue over the
minimum guarantee, if any.  The Company recognizes the cost of fixed
and minimum guarantee payments on a straight-line basis over each advertising
contract year, and the revenue share cost, if any, as such obligations arise in
accordance with the terms of the advertising contract.





Distribution
fee revenue is recognized for the theatrical distribution of third party feature
films and alternative content at the time of exhibition based on the Company’s
participation in box office receipts.  The Company 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 films’ or alternative content’s theatrical release
date.








F-14





Data
Center Services





The
Company’s Data Center Services revenues were generated as follows:





Revenues
      consist of:
            
            Accounted
      for in accordance with:License
      fees for data center space, hosting and network access fees, electric,
      cross connect fees and riser access charges,  non-recurring
      installation and consulting fees, network monitoring and maintenance
      fees.
            
            SAB
      No. 104





Since May
1, 2007, the Company’s IDCs have been operated by FiberMedia pursuant to a
master collocation agreement.  Although the Company is still the
lessee of the IDCs, substantially all of the revenues and expenses are being
realized by FiberMedia and not the Company.





DIRECT
OPERATING COSTS





Direct
operating costs consists of facility operating costs such as rent, utilities,
real estate taxes, repairs and maintenance, insurance and other related
expenses, direct personnel costs, film rent expense, amortization of capitalized
software development costs, exhibitors payments for displaying cinema
advertising and other deferred expenses, such as advertising production, post
production and technical support related to developing and displaying
advertising. These other deferred expenses are capitalized and amortized on a
straight-line basis over the same period as the related cinema advertising
revenues are recognized.





STOCK-BASED
COMPENSATION





The
Company has two stock-based employee compensation plans, which are described
more fully in Note 7. Effective April 1, 2006, the Company adopted SFAS No. 123
(revised 2004), “Share-Based Payment” (“SFAS 123(R)”), which is a revision of
SFAS No. 123, Accounting for Stock-Based Compensation. Under SFAS 123(R),
the Company is required to measure the cost of employee services received in
exchange for an award of equity instruments based on the grant-date fair value
of the award (with limited exceptions) and recognize such cost in the statement
of operations over the period during which an employee is required to provide
service in exchange for the award (usually the vesting period). Pro forma
disclosure is no longer an alternative.





Effective
March 8, 2006, the compensation committee of the Company’s Board of Directors
(the “Board”) approved the acceleration of the vesting of all unvested stock
options awarded under the Company’s stock incentive plans. The primary purpose
of the acceleration was to eliminate the impact of $3,098 of future stock-based
compensation expense, of which $1,410 is related to stock options held by the
Company’s executive officers and members of the Board, that would have been
recognized over the next three years as the stock options vested as a result of
adopting SFAS No. 123(R).  The Company will not be required to
recognize future compensation expense for the accelerated stock options under
SFAS No. 123(R) unless further modifications are made to the stock
options, which are not anticipated.





The
Company adopted SFAS 123(R) using the “modified prospective” method in which
stock-based compensation cost is recognized beginning with the April 1, 2006
adoption date (a) based on the requirements of SFAS 123(R) for all
share-based payments granted after April 1, 2006 and (b) based on the
requirements of SFAS No. 123 for all awards granted to employees prior to April
1, 2006 that remain unvested on the adoption date. There were no unvested stock
options as of March 31, 2006, as the compensation committee of the Board
approved the acceleration of the vesting of all unvested stock options awarded
under the Company’s stock incentive plans as of March 31, 2006. At the Company’s
2006 Annual Meeting of Stockholders held on September 14, 2006, the expansion of
the Company’s stock incentive plan was approved by the shareholders. For the
fiscal year ended March 31, 2007, stock-based compensation expense of $2,920 was
recorded, of which $2,779 related to the 436,747 stock options awarded in excess
of options eligible to be granted under the Company’s stock incentive plan prior
to its expansion and $141 relates to stock options granted on or after April 1,
2006. For the fiscal year ended March 31, 2008, stock-based compensation expense
of $453 was recorded.   The Company has estimated that the
stock-based compensation expense, using a Black-Scholes option valuation model,
related to such stock options currently outstanding at March 31, 2008, will be
approximately $700 for the fiscal year 2009 (see Note 7 for further discussion
of stock options).





Previously,
the Company accounted for its stock-based employee compensation plans in
accordance with the provisions of Accounting Principles Board (“APB”) Opinion
No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), and related
interpretations. As such, stock-based compensation expense was recorded on the
date of grant only if the current fair value of the underlying stock exceeds the
exercise price. The Company followed the disclosure standards of SFAS No. 148
“Accounting for Stock-Based Compensation - Transition and Disclosures”, which
amended SFAS No. 123, “Accounting for Stock-Based





F-15





Compensation”
(“SFAS 123”), which required the Company to provide pro forma net loss and net
loss per share disclosures for stock option grants made in 1995 and future years
as if the fair-value based method of accounting for stock options as defined in
SFAS 123 had been applied.





The
following table illustrates the effect on net loss and net loss per share if the
Company had applied the fair-value recognition provisions of SFAS No. 123 to
stock-based compensation for the year ended March 31, 2006:





Net
      loss as reported
            
            $
            (17,123
            )Add:
      Stock-based compensation expense included in net
loss
            
            
            —Less:
      Stock-based compensation expense determined under fair-value based
      method
            
            
            (4,866
            )Pro
      forma net loss
            
            $
            (21,989
            )Basic
      and diluted net loss per share:As
      reported
            
            $
            (1.22
            )Pro
      forma
            
            $
            (1.56
            )





The
Company estimated the fair value of stock options at the date of each grant
using a Black-Scholes option valuation model with the following
assumptions:





For
      the fiscal years ended March 31,2006
            
            
            2007
            
            
            2008Weighted-average
      risk-free interest rate
            
            
            4.2
            %
            
            
            4.7
            %
            
            
            3.2
            %Dividend
      yield
            
            
            —
            
            
            
            —
            
            
            
            —Expected
      life (years)
            
            
            10
            
            
            
            10
            
            
            
            5Weighted-average
      expected volatility
            
            
            88.4
            %
            
            
            56.3
            %
            
            
            55.1
            %











NET
LOSS PER SHARE AVAILABLE TO COMMON STOCKHOLDERS





Computations
of basic and diluted net loss per share of the Company’s Common Stock have been
made in accordance with SFAS No. 128, “Earnings Per Share”.  Basic and
diluted net losses per share have been calculated as follows:





Basic
      and diluted net loss per share =
            Net
      lossWeighted
      average number of common shares
              outstanding
      during the period





Shares
issued and reacquired during the period are weighted for the portion of the
period that they were outstanding.





The
Company has incurred net losses for the fiscal years ended March 31, 2006, 2007
and 2008 and, therefore, the impact of dilutive potential common shares from
outstanding stock options, warrants (prior to the application of the treasury
stock method), and convertible notes (on an as-converted basis) were excluded
from the computation as it would be anti-dilutive.  Potentially
dilutive shares excluded from the computations aggregated 2,712,993, 2,827,743
and 3,406,654 for the fiscal years ended March 31, 2006, 2007 and 2008,
respectively.





RECENT
      ACCOUNTING PRONOUNCEMENTS





In June
2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in
income taxes recognized in an enterprise’s financial statements in accordance
with SFAS No. 109, “Accounting for Income Taxes.”  FIN 48 prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of an income tax position taken or expected to be
taken in a tax return. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure, and transition. FIN 48 is effective for fiscal years beginning after
December 15, 2006. The Company adopted FIN 48 on April 1, 2007 and had no effect
on the consolidated financial statements.





In
September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements” (“SFAS
157”). SFAS 157 defines fair value, establishes a framework for measuring fair
value in GAAP, and expands disclosures about fair value measurements. SFAS 157
applies to derivatives and other financial instruments measured at fair value
under SFAS No. 133 “Accounting for Derivative





F-16





Instruments
and Hedging Activities” (“SFAS 133”) at initial recognition and in all
subsequent periods. Therefore, SFAS 157 nullifies the guidance in
footnote 3 of the Emerging Issues Task Force (“EITF”)
Issue No. 02-3, “Issues Involved in Accounting for Derivative
Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and
Risk Management Activities” (“EITF 02-3”). SFAS 157 also amends SFAS 133 to
remove the similar guidance to that in EITF 02-3, which was added by SFAS
155. SFAS 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. Earlier application is encouraged, provided that the reporting entity has
not yet issued financial statements for that fiscal year, including financial
statements for an interim period within that fiscal year. Any transition
adjustment, measured as the difference between the carrying amounts and the fair
values of those financial instruments at the date SFAS 157 is initially applied,
should be recognized as a cumulative-effect adjustment to the opening balance of
retained earnings (or other appropriate components of equity or net assets
in the statement of financial position) for the fiscal year in which SFAS 157 is
initially applied. The Company plans to adopt SFAS 157 on April 1, 2008, and
does not believe it will be affected by its adoption.





In
September 2006, the FASB issued SFAS No. 158 “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements
No. 87, 88, 106, and 132(R)” (“SFAS 158”). SFAS 158 requires the recognition of
the overfunded or underfunded status of a defined benefit postretirement plan
(other than a multiemployer plan) as an asset or liability in the reporting
entity’s statement of financial position and to recognize changes in that funded
status in the year in which the changes occur through comprehensive income of a
business entity or changes in unrestricted net assets of a not-for-profit
organization. SFAS 158 also requires the reporting entity to measure the funded
status of a plan as of the date of its year-end statement of financial position,
with limited exceptions. A reporting entity with publicly traded equity
securities is required to recognize the funded status of a defined benefit
postretirement plan and to provide the required disclosures as of the end of the
fiscal year ending after December 15, 2006. The Company adopted SFAS 158 on
April 1, 2007 and was not affected by its adoption.





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities—including an amendment of FASB
Statement No. 115” (“SFAS 159”). SFAS 159 permits entities to elect to measure
many financial instruments and certain other items at fair value. The objective
is to improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. SFAS 159 is expected to expand the use of fair value measurement,
which is consistent with the FASB’s long-term measurement objectives for
accounting for financial instruments. SFAS 159 is effective for fiscal years
beginning after November 15, 2007 and early adoption is permitted provided the
entity also elects to apply the provisions of SFAS 157. The Company plans to
adopt SFAS 159 on April 1, 2008, and does not believe it will be affected by its
adoption.





In December 2007, the FASB
issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS
141(R)”).  SFAS 141(R) will change the accounting for business
combinations.  Under SFAS No. 141(R), an acquiring entity will be
required to recognize all the assets acquired and liabilities assumed in a
transaction at the acquisition-date fair value with limited
exceptions.  SFAS No. 141(R) will change the accounting treatment
and disclosure for certain specific items in a business combination. SFAS
No. 141(R) applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008.  SFAS 141(R) will impact
the Company in the event of any future acquisition after the date of
adoption.





In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements—an amendment of Accounting Research Bulletin
No. 51” (“SFAS 160”). SFAS 160establishes new
accounting and reporting standards for the non-controlling interest in a
subsidiary and for the deconsolidation of a subsidiary.  SFAS
No. 160 is effective for fiscal years beginning on or after
December 15, 2008.The Company does not believe that SFAS
160 will have a material impact on its consolidated financial
statements.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities—an amendment of FASB Statement No. 133” (“SFAS 161”).
SFAS 161changes the
disclosure requirements for derivative instruments and hedging activities.
Entities are required to provide enhanced disclosures about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under FASB Statement No. 133 and its related
interpretations, and (c) how derivative instruments and related hedged items
affect an entity’s financial position, financial performance, and cash flows.
SFAS 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged.  SFAS 161 encourages, but does not require, comparative
disclosures for earlier periods at initial adoption.The Company
does not believe that SFAS 161 will have a material impact on its consolidated
financial statements.





F-17





In April
2008, the FASB issued FASB Staff Position No. FAS 142-3,”Determination of the
Useful Life of Intangible Assets” (“FSP FAS 142-3”).  FSP FAS 142-3
applies to all recognized intangible assets and its guidance is restricted to
estimating the useful life of recognized intangible assets. FSP FAS 142-3 is
effective for the first fiscal period beginning after December 15, 2008 and must
be applied prospectively to intangible assets acquired after the effective date.
We will be required to adopt FSP FAS 142-3 to intangible assets acquired
beginning with the first quarter of fiscal 2010.





3.
            ACQUISITIONS





On
January 1, 2006, the Company purchased the domain name, website, customer list
and the IP address space of Ezzi.net and certain data center-related computer
equipment of R & S International, Inc. (together the “Access Digital Server
Assets”).  The Access Digital Server Assets were acquired to
complement the Company’s existing Data Center Services business and are
primarily used for hosting services and providing network access for other web
hosting services.  The purchase price of $448 included a cash payment
of $140 and 23,445 shares of unregistered Class A Common Stock issued in April
2006 valued at $308.  In addition in the fiscal year ended March 31,
2008, the Company paid an additional purchase price of $164, which consisted of
a cash payment of $35 and 30,000 shares of Class A Common Stock valued at $129,
which were issued in April 2008.





In June
2006, the Company, through its indirect wholly-owned subsidiary, PLX Acquisition
Corp., purchased substantially all of the assets of PLX Systems Inc. (“PLX”).
The results of PLX’s operations have been included in the consolidated financial
statements since June 1, 2006. PLX provides technology, expertise and core
competencies in intellectual property (“IP”) rights and royalty management,
expanding the Company’s ability to bring alternative forms of content, such as
non-traditional feature films, to movie-goers in addition to supporting IP
license contract management, royalty processing, revenue reporting and
billing.





The total
purchase price of $1,640, including estimated transaction costs, allocated to
the net assets acquired based upon the results of an appraisal of fair value,
was as follows:





Accounts
      receivable
            
            $
            73Prepaid
      expenses and other current assets
            
            
            27Property
      and equipment
            
            
            45Intangible
      assets
            
            
            209Capitalized
      software costs
            
            
            984Goodwill
            
            
            442Total
      assets acquired
            
            
            1,780Deferred
      revenues
            
            
            140Total
      liabilities assumed
            
            
            140Net
      assets acquired
            
            $
            1,640





The
finite-lived intangible assets of $209, are estimated to have useful lives
ranging from three to five years, and have a weighted-average amortization
period of 3.24 years.





In July
2006, the Company acquired 100% of the issued and outstanding stock of ACS (the
“ACS Acquisition”) for a combination of an aggregate of 974,184 shares of the
Company’s Class A Common Stock, $1,000 in cash, and promissory notes issued by
the Company in favor of the stockholders of ACS (the “ACS Stockholders”) in the
principal amount of $5,204 (see Note 6). The results of ACS’s operations have
been included in the consolidated financial statements since August 1, 2006. The
Company also agreed to pay to the ACS Stockholders additional purchase price, up
to a maximum of $1,000 in cash or the equivalent of the Company’s Class A Common
Stock, at the Company’s sole discretion. In April 2007 and July 2007, such
digital cinema deployment milestones were met, and the Company issued 67,906 and
77,955 shares of the Company’s Class A Common Stock, respectively, with a value
of $1,000 to the ACS Stockholders as additional purchase price (see Note
7).  The Company also assumed $5,914 of ACS’s debt, of which $5,598
relates to ACS’s revolving credit facility (see Note 6).





The total
purchase price of approximately $16,400, including estimated transaction costs,
allocated to the net assets acquired based upon the results of an appraisal of
fair value, was as follows:






F-18




Accounts
      receivable
            
            $
            7,304Prepaid
      expenses and other assets
            
            
            970Property
      and equipment
            
            
            2,849Customer
      relationships
            
            
            9,020Theatre
      relationships
            
            
            6,500Other
      intangible assets
            
            
            1,000Goodwill
            
            
            3,280Deferred
      Costs
            
            
            71Note
      receivable
            
            
            100Total
      assets acquired
            
            
            31,094Accounts
      payable and accrued expenses
            
            
            1,300Deferred
      revenues
            
            
            7,498Notes
      payable
            
            
            5,914Capital
      leases
            
            
            7Total
      liabilities assumed
            
            
            14,719Net
      assets acquired
            
            $
            16,375





The
finite-lived intangible assets of $16,520, are estimated to have useful lives
ranging from two to ten years, and have a weighted-average amortization period
of 6.57 years.





In
December 2006, ACS’s revolving credit facility, assumed in the ACS Acquisition,
was converted into a term loan (see Note 6)  In August 2007, the
outstanding principal balance of $6,390 for the Excel Term Note was repaid in
full with a portion of the proceeds from the August 2007 Private Placement (see
Note 6).





In
January 2007, the Company purchased substantially all of the assets and assumed
certain liabilities of BP/KTF, LLC, a subsidiary of privately-held Sabella Dern
Entertainment (“BP/KTF”) for 460,000 shares of the Company’s Class A Common
Stock. The results of Bigger Picture’s operations have been included in the
consolidated financial statements since February 1, 2007. The Company also
agreed to pay BP/KTF additional purchase price in cash or the equivalent of the
Company’s Class A Common Stock, at the Company’s sole discretion, if certain
conditions are met.





The total
purchase price of approximately $4,300, including estimated transaction costs,
allocated to the net assets acquired based upon the results of an appraisal of
fair value, was as follows:





Unbilled
      revenue
            
            $
            1,394Property
      and equipment
            
            
            16Customer
      relationships and contracts
            
            
            3,058Other
      intangible assets
            
            
            360Goodwill
            
            
            1,717Total
      assets acquired
            
            
            6,545Accounts
      payable and accrued expenses
            
            
            1,134Deferred
      revenues
            
            
            1,150Total
      liabilities assumed
            
            
            2,284Net
      assets acquired
            
            $
            4,261





Of the
$3,058 of customer relationships and contracts, $2,071 was allocated to a
certain customer contract.  During the fiscal year ended March 31,
2008, the customer decided not to continue its contract with The Bigger
Picture.  As a result, the unamortized balance of $1,588 was charged
to expense and recorded as impairment of intangible asset in the consolidated
financial statements and is included in the Content & Entertainment
segment.  The remaining finite-lived intangible assets of $1,347 are
estimated to have useful lives of five years.





The
following pro forma information shows the results of operations for the fiscal
years ended March 31, 2006 and 2007, as though the above acquisitions had
occurred at the beginning of each respective fiscal year.  The pro
forma information reflects adjustments for (i) depreciation and amortization of
acquired tangible and intangible assets from the acquisitions, (ii) interest
expense for promissory notes issued by the Company in favor of the ACS
Stockholders in the principal amount of $5,204 (see Note 6), and (iii) the full
year impact of the issuance of 974,184 shares for the ACS Acquisition and
460,000 shares for the Bigger Picture Acquisition.  The pro forma
financial information below is presented for illustrative purposes only and is
not necessarily





F-19





indicative
of the operating results that would have been achieved had the acquisitions been
completed as of the dates indicated above or the results that may be obtained in
the future.





For
      the Fiscal Years ended March 31,2006
            
            
            2007(unaudited)
            
            
            (unaudited)Revenues
            
            $
            35,581
            
            
            $
            55,578Net
      loss
            
            $
            (19,294
            )
            
            $
            (28,892
            )Basic
      and diluted net loss per share
            
            $
            (1.24
            )
            
            $
            (1.18
            )








4.
            CONSOLIDATED
      BALANCE SHEET COMPONENTS





CASH
AND CASH EQUIVALENTS





Cash and
cash equivalents consisted of the following:





As
      of March 31,2007
            
            
            2008Bank
      balances
            
            $
            23,446
            
            
            $
            23,161Money
      market funds
            
            
            5,930
            
            
            
            6,494Total
      cash and cash equivalents
            
            $
            29,376
            
            
            $
            29,655











As of
March 31, 2007 and 2008, cost approximated fair value of cash and cash
equivalents.





RESTRICTED
CASH





The
Company had $180 and $255 of restricted cash as of March 31, 2007 and 2008,
respectively, in the form of a bank certificate of deposit underlying an
outstanding bank standby letter of credit for an office space lease for AccessIT
SW.





ACCOUNTS
RECEIVABLE





Accounts
receivable, net consisted of the following:





As
      of March 31,2007
            
            
            2008Trade
      receivables
            
            $
            19,836
            
            
            $
            23,800Allowance
      for doubtful accounts
            
            
            (1,332
            )
            
            
            (2,306
            )Total
      accounts receivable, net
            
            $
            18,504
            
            
            $
            21,494





The
Company determines its allowance by considering a number of factors, including
the length of time such receivables are past due, the Company’s previous loss
history, and the customer’s current ability to pay its obligation to the
Company.  The Company writes off receivables when all collection efforts
have been exhausted.





PROPERTY
AND EQUIPMENT, NET





Property
and equipment, net was comprised of the following:






F-20




As
      of March 31,2007
            
            
            2008Land
            
            $
            1,500
            
            
            $
            1,500Building
      and improvements
            
            
            4,600
            
            
            
            4,600Leasehold
      improvements
            
            
            1,482
            
            
            
            1,748Computer
      equipment and software
            
            
            6,288
            
            
            
            7,050Digital
      cinema projection systems
            
            
            188,577
            
            
            
            285,060Other
      projection system equipment
            
            
            3,699
            
            
            
            4,021Machinery
      and equipment
            
            
            9,181
            
            
            
            9,882Furniture
      and fixtures
            
            
            662
            
            
            
            734Vehicles
            
            
            125
            
            
            
            125216,114
            
            
            
            314,720Less
      - accumulated depreciation
            
            
            (18,662
            )
            
            
            (45,689
            )Total
      property and equipment, net
            
            $
            197,452
            
            
            $
            269,031





Land and
building and improvements represent the Company’s capital lease for the Pavilion
Theatre.  Leasehold improvements consist primarily of costs incurred
at the Pavilion Theatre and for the new offices of AccessIT
SW.  Computer equipment and software consists primarily of software
used in the Company’s Managed Storage Services business, the Cinefence License,
the Access Digital Server Assets and from the AccessIT SW, Managed Services and
Boeing Digital Asset Acquisitions.  Digital cinema projection systems
consist entirely of equipment purchased in connection with AccessIT DC’s Phase I
Deployment.  Other projection system equipment consists entirely of
equipment purchased in connection with the ACS Acquisition.  Machinery
and equipment consists primarily of costs incurred for satellite equipment
purchased in connection with AccessIT DC’s Phase I Deployment and equipment from
the FiberSat Acquisition.  For the fiscal years ended March 31, 2006,
2007 and 2008, depreciation expense amounted to $3,693, $14,699 and $29,285,
respectively.  The amortization of the Company’s capital lease for the
Pavilion Theatre, and included in depreciation expense, amounted to $359 for
each of the fiscal years ended March 31, 2006, 2007 and 2008.





At March
31, 2007, all the assets related to the Company’s IDCs were written-off and
included in the loss on disposition of assets, and consisted of the
following:





Leasehold
      improvements
            
            $
            4,185Computer
      equipment and software
            
            
            326Machinery
      and equipment
            
            
            697Furniture
      and fixtures
            
            
            1785,386Less
      - accumulated depreciation
            
            
            (3,120
            )Total
      property and equipment, net
            
            $
            2,266








INTANGIBLE
ASSETS, NET





Intangible
assets, net consisted of the following:





As
      of March 31,2007
            
            
            2008Trademarks
            
            $
            81
            
            
            $
            81Corporate
      trade names
            
            
            889
            
            
            
            889Customer
      relationships and contracts
            
            
            13,729
            
            
            
            11,348Theatre
      relationships
            
            
            6,500
            
            
            
            6,575Covenants
      not to compete
            
            
            2,649
            
            
            
            2,50923,848
            
            
            
            21,402Less
      - accumulated amortization
            
            
            (4,416
            )
            
            
            (7,810
            )Total
      intangible assets, net
            
            $
            19,432
            
            
            $
            13,592





For the
fiscal years ended March 31, 2006, 2007 and 2008, amortization expense amounted
to $1,308, $2,773 and $4,290, respectively.





F-21





Amortization
expense on intangible assets is estimated as follows:





For
      the fiscal years ending March 31,2009
            
            $
            3,4122010
            
            $
            2,9312011
            
            $
            2,8422012
            
            $
            1,5312013
            
            $
            674





CAPITALIZED
SOFTWARE COSTS, NET





Capitalized
software costs, net consisted of the following:





As
      of March 31,2007
            
            
            2008Capitalized
      software
            
            $
            4,715
            
            
            $
            5,242Less
      - accumulated amortization
            
            
            (1,875
            )
            
            
            (2,465
            )Total
      capitalized software costs, net
            
            $
            2,840
            
            
            $
            2,777





For the
years ended March 31, 2006, 2007 and 2008, amortization of software costs, which
is included in direct operating costs, amounted to $547, $840 and $590,
respectively.





ACCOUNTS
PAYABLE AND ACCRUED EXPENSES





Accounts
payable and accrued expenses consisted of the following:





As
      of March 31,2007
            
            
            2008Accounts
      payable
            
            $
            20,493
            
            
            $
            18,182Accrued
      compensation and benefits
            
            
            1,096
            
            
            
            1,075Accrued
      taxes payable
            
            
            553
            
            
            
            591Interest
      payable
            
            
            1,191
            
            
            
            2,671Accrued
      other expenses
            
            
            5,598
            
            
            
            2,694Total
      accounts payable and accrued expenses
            
            $
            28,931
            
            
            $
            25,213





For the
years ended March 31, 2007 and 2008, amounts ordered from Christie for digital
cinema projection systems in connection with AccessIT DC’s Phase I Deployment
and included in accounts payable amounted to $19,677 and $19,734,
respectively.  In addition, included in accrued other expenses were
$233 and $0, respectively, for installation costs from Christie.  At
March 31, 2008, accounts payable has been reduced by $3,802 related to unapplied
deposits paid to Christie for digital cinema projection systems that will be
applied on subsequent payments to Christie.





For the
years ended March 31, 2007 and 2008, the Company has also included $1,023 and
$26, respectively, in accrued other expenses, representing the estimated fiscal
2008 IDC operating losses expected as a result of the agreement with
FiberMedia.





5.
            NOTES
      RECEIVABLE





Notes
receivable consisted of the following:





As
      of March 31, 2007
            
            
            As
      of March 31, 2008Note
      Receivable (as defined below)
            
            Current
      Portion
            
            
            Long
      Term Portion
            
            
            Current
      Portion
            
            
            Long
      Term PortionExhibitor
      Note
            
            $
            47
            
            
            $
            141
            
            
            $
            50
            
            
            $
            91Exhibitor
      Install Notes
            
            
            54
            
            
            
            986
            
            
            
            95
            
            
            
            1,002TIS
      Note
            
            
            —
            
            
            
            100
            
            
            
            —
            
            
            
            100Other
            
            
            —
            
            
            
            —
            
            
            
            13
            
            
            
            27$
            101
            
            
            $
            1,227
            
            
            $
            158
            
            
            $
            1,220








F-22





In March
2006, in connection with AccessIT DC’s Phase I Deployment, the Company issued to
a certain motion picture exhibitor a 7.5% note receivable for $231 (the
“Exhibitor Note”), in return for the Company’s payment for certain financed
digital projectors.  The Exhibitor Note requires monthly principal and
interest payments through September 2010.  As of March 31, 2008, the
outstanding balance of the Exhibitor Note was $141.





In
connection with AccessIT DC’s Phase I Deployment (see Note 8), the Company
agreed to provide financing to certain motion picture exhibitors upon the
billing to the motion picture exhibitors by Christie for the installation costs
associated with the placement of Systems in movie theatres.  In April
2006, certain motion picture exhibitors agreed to issue to the Company two 8%
notes receivable for an aggregate of $1,287 (the “Exhibitor Install Notes”).
Under the Exhibitor Install Notes, the motion picture exhibitors are required to
make monthly interest only payments through October 2007 and quarterly principal
and interest payments thereafter through August 2009 and August 2017,
respectively.  As of March 31, 2008, the outstanding balance of the
Exhibitor Install Notes was $1,097.





Prior to
the ACS Acquisition (see Note 3), Theatre Information Systems, Ltd. (“TIS”), a
developer of proprietary software, issued to ACS a 4.5% note receivable for $100
(the “TIS Note”) to fund final modifications to certain proprietary software and
the development and distribution of related marketing materials. Interest
accrues monthly on the outstanding principal amount. The TIS Note and all the
accrued interest is due in one lump-sum payment in April 2009. Provided that the
TIS Note has not been previously repaid, the entire unpaid principal balance and
any accrued but unpaid interest may, at ACS’s option, be converted into a 10%
limited partnership interest in TIS.  As of March 31, 2008, the
outstanding balance of the TIS Note was $100.





The
aggregate principal repayments to the Company on notes receivable are scheduled
to be as follows:





For
      the fiscal years ending March 31,2009
            
            $
            1582010
            
            
            2612011
            
            
            1432012
            
            
            1002013
            
            
            108Thereafter
            
            
            608$
            1,378








6.
            DEBT
      AND CREDIT FACILITIES





Notes
payable consisted of the following:





As
      of March 31, 2007
            
            
            As
      of March 31, 2008Note
      Payable (as defined below)
            
            Current
      Portion
            
            
            Long
      Term Portion
            
            
            Current
      Portion
            
            
            Long
      Term PortionHS
      Notes
            
            $
            828
            
            
            $
            367
            
            
            $
            540
            
            
            $
            —Boeing
      Note
            
            
            450
            
            
            
            402
            
            
            
            450
            
            
            
            —First
      ACS Note
            
            
            382
            
            
            
            634
            
            
            
            414
            
            
            
            221SilverScreen
      Note
            
            
            100
            
            
            
            144
            
            
            
            113
            
            
            
            20One
      Year Senior Notes
            
            
            —
            
            
            
            22,000
            
            
            
            —
            
            
            
            —Excel
      Term Note
            
            
            720
            
            
            
            6,030
            
            
            
            —
            
            
            
            —Vendor
      Note B
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            9,6002007
      Senior Notes
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            55,000Other
            
            
            —
            
            
            
            —
            
            
            
            50
            
            
            
            —GE
      Credit Facility
            
            
            —
            
            
            
            134,619
            
            
            
            15,431
            
            
            
            185,848$
            2,480
            
            
            $
            164,196
            
            
            $
            16,998
            
            
            $
            250,689





In
November 2003, the Company issued two 5-year, 8% notes payable aggregating
$3,000 (the “HS Notes”) to the founders of AccessIT SW as part of the purchase
price for AccessIT SW.  During the fiscal years ended March 31, 2007
and 2008, the Company repaid principal of $595 and $655 on the HS
Notes.  On March 31, 2007, one of the holders of the HS Notes agreed
to reduce their note by $150 for 30,000 shares of unregistered Class A Common
Stock and forego $150 of principal payments at the end of their note
term.  As of March 31, 2008, the outstanding principal balance of the
HS Notes was $540.





F-23





In March
2004, in connection with the Boeing Digital Asset Acquisition, the Company
issued a 4-year, non-interest bearing note payable with a face amount of $1,800
(the “Boeing Note”). The estimated fair value of the Boeing Note was determined
to be $1,367 on the closing date.  Interest is being imputed, at a
rate of 12%, over the term of the Boeing Note, and is being charged to non-cash
interest expense. During the fiscal years ended March 31, 2007 and 2008,
principal repayments of $450 and $450, respectively, were made. During the
fiscal years ended March 31, 2006, 2007 and 2008, non-cash interest expense
resulting from the Boeing Note was $130, $91 and $48,
respectively.  As of March 31, 2008, the outstanding balance of the
Boeing Note, including imputed interest, was $450.





In July
2006, in connection with the ACS Acquisition (see Note 3), the Company issued an
8% note payable in the principal amount of $1,204 (the “First ACS Note”) and an
8% note payable in the principal amount of $4,000 (the “Second ACS Note”), both
in favor of the stockholders of ACS. The First ACS Note is payable in twelve
equal quarterly installments commencing on October 1, 2006 until July 1, 2009.
The Second ACS Note was payable on November 30, 2006, or earlier if certain
conditions were met, and was paid by the Company in October 2006. The First ACS
Note may be prepaid in whole or from time to time in part without penalty
provided that the Company pays all accrued and unpaid interest. As of March 31,
2008, the outstanding principal balance of the First ACS Note was
$635.





Prior to
the ACS Acquisition (see Note 3), ACS had purchased substantially all the assets
of SilverScreen Advertising Incorporated (“SilverScreen”) and issued a 3-year,
4% note payable in the principal amount of $333 (the “SilverScreen Note”) as
part of the purchase price for SilverScreen. The SilverScreen Note is payable in
equal monthly installments until May 2009.  As of March 31, 2008, the
outstanding principal balance of the SilverScreen Note was $133.





In
October 2006, the Company entered into a securities purchase agreement (the
“Purchase Agreement”) with the purchasers party thereto (the “Purchasers”)
pursuant to which the Company issued 8.5% Senior Notes (the “One Year Senior
Notes”) in the aggregate principal amount of $22,000 (the “October 2006 Private
Placement”). The term of the One Year Senior Notes is one year and may be
extended for up to two 90-day periods at the discretion of the Company if
certain market conditions are met. Interest on the One Year Senior Notes will be
paid on a quarterly basis in cash or, at the Company’s option and subject to
certain conditions, in shares of its Class A Common Stock (“Interest Shares”).
In addition, each quarter, the Company will issue shares of Class A Common Stock
to the Purchasers as payment of interest owed under the One Year Senior Notes
based on a formula (“Additional Interest”). The Company also entered into a
Registration Rights Agreement with the Purchasers pursuant to which the Company
agreed to register the resale of any shares of its Class A Common Stock issued
pursuant to the One Year Senior Notes at any time and from time to time.
Pursuant to the One Year Senior Notes, the Company issued 46,750 shares of Class
A Common Stock as Additional Interest in payment of the first quarterly interest
on the One Year Senior Notes, due December 31, 2006. The Company elected to pay
the quarterly interest due December 31, 2006 in shares of its Class A Common
Stock and issued 53,029 Interest Shares. The Company filed a registration
statement on Form S-3 on January 26, 2007, which was declared effective by the
SEC on February 15, 2007.  Subsequent Additional Interest payments
will be made quarterly in arrears at the end of each quarterly period beginning
March 31, 2007. Pursuant to the One Year Senior Notes, the Company issued 81,768
shares of Class A Common Stock as Additional Interest in payment of the
quarterly interest on the One Year Senior Notes, due March 31, 2007. The Company
elected to pay the quarterly interest due March 31, 2007 in shares of its Class
A Common Stock and issued 78,720 Interest Shares. The Company filed a
registration statement on Form S-3 on April 27, 2007, which was declared
effective by the SEC on May 18, 2007.  The Company may prepay the One
Year Senior Notes in whole or in part, without penalty, subject to paying the
Additional Interest. The net proceeds of approximately $20,965 from the October
2006 Private Placement is expected to be used for the expansion of the Company’s
digital cinema rollout plans to markets outside of the United States, and any
one or more of the following: (i) the payment of certain existing outstanding
indebtedness of the Company due within twelve months of the issuance of the One
Year Senior Notes, (ii) working capital and (iii) other general corporate
purposes, including acquisitions. The Purchase Agreement also requires the One
Year Senior Notes to be guaranteed by each of the Company’s existing and,
subject to certain exceptions, future subsidiaries (the “Guarantors”), other
than AccessIT DC and ACS and their respective subsidiaries. Accordingly, each of
the Guarantors entered into a subsidiary guaranty (the “Subsidiary Guaranty”)
with the Purchasers pursuant to which it guaranteed the obligations of the
Company under the One Year Senior Notes.





In
February 2007, the Company and the Purchasers of the One Year Senior Notes
agreed to amend the One Year Senior Notes to: (i) remove the market conditions
that would otherwise restrict the Company from extending the term of the One
Year Senior Notes for up to two 90-day periods, (ii) provide for an increase in
the amount of permitted indebtedness the Company  may  incur,
to  up to  $5,000, (iii) provide for additional interest to be paid in
either cash or stock, at the Company’s option, if the average price of the
Company’s stock falls below $7.00 during the 30 days before any quarterly
interest due date , and (iv) provide an approximate 1% increase in the
value of the Additional Interest Shares payable to the Purchasers
annually.  In August 2007, the One Year Senior Notes were repaid in
full with a portion of the proceeds from the refinancing which closed in August
2007, which is discussed further below.  In August 2007, the Company
recorded debt refinancing expense of $1,122, of which $436 related to
unamortized debt issuance costs and $686 for shares of Class A Common Stock
issued to certain holders of the One





F-24





Year
Senior Notes (see Note 6) as an inducement for them to enter into a securities
purchase agreement with the Company in August 2007.





In May
2007, the Company received $5,000 of vendor financing (the “Vendor Note A”) for
equipment used in AccessIT DC’s Phase I Deployment.  The Vendor Note A
bore interest at 15% and was permitted to be prepaid without penalty. A
mandatory principal amount of $617 plus all accrued and unpaid interest was paid
in December 2007.  The Vendor Note A and all accrued interest was to
become due and payable in July 2008. If the Vendor Note A was repaid in
full by March 31, 2008, the interest rate would become 8%, retroactive to the
beginning of the note term.  In February 2008, the outstanding
principal balance of the Vendor Note A of $4,383 was repaid in
full.





In August
2007, AccessIT DC obtained $9,600 of vendor financing (the “Vendor Note B”) for
equipment used in AccessIT DC’s Phase I Deployment. The Vendor Note B bears
interest at 11% and may be prepaid without penalty.  Interest is due
semi-annually commencing February 2008.  The balance of the Vendor
Note B, together with all unpaid interest is due on the maturity date of August
1, 2016.  As of March 31, 2008, the outstanding balance of the Vendor
Note B was $9,600.





In August
2007, the Company entered into a securities purchase agreement (the “Purchase
Agreement”) with the purchasers party thereto (the “Purchasers”) pursuant to
which the Company issued 10% Senior Notes (the “2007 Senior Notes”) in the
aggregate principal amount of $55,000 (the “August 2007 Private Placement”). The
term of the 2007 Senior Notes is three years which may be extended for one 6
month period at the discretion of the Company if certain conditions are
met.  Interest on the 2007 Senior Notes will be paid on a quarterly
basis in cash or, at the Company’s option and subject to certain conditions, in
shares of its Class A Common Stock (“Interest Shares”). In addition, each
quarter, the Company will issue shares of Class A Common Stock to the Purchasers
as payment of additional interest owed under the 2007 Senior Notes based on a
formula (“Additional Interest”).  The Company may prepay the 2007
Senior Notes in whole or in part following the first anniversary of issuance of
the 2007 Senior Notes, subject to a penalty of 2% of the principal if the 2007
Senior Notes are prepaid prior to the two year anniversary of the issuance and a
penalty of 1% of the principal if the 2007 Senior Notes are prepaid thereafter,
and subject to paying the number of shares as Additional Interest that would be
due through the end of the term of the 2007 Senior Notes.  The net
proceeds of approximately $53,200 from the August 2007 Private Placement are
expected to be used for expansion of digital cinema rollout plans, to pay off
the existing obligations under the $22,000 of One Year Senior Notes, to pay off
certain other outstanding debt obligations, for investment in digital projection
systems and for working capital and other general corporate purposes. The
Purchase Agreement also requires the 2007 Senior Notes to be guaranteed by each
of the Company’s existing and, subject to certain exceptions, future
subsidiaries (the “Guarantors”), other than AccessIT DC and its respective
subsidiaries. Accordingly, each of the Guarantors entered into a subsidiary
guaranty (the “Subsidiary Guaranty”) with the Purchasers pursuant to which it
guaranteed the obligations of the Company under the 2007 Senior
Notes.  The Company also entered into a Registration Rights Agreement
with the Purchasers pursuant to which the Company agreed to register the resale
of any shares of its Class A Common Stock issued pursuant to the 2007 Senior
Notes at any time and from time to time.  As of December 31, 2007, all
shares issued to the holders of the 2007 Senior Notes have been registered for
resale (see Note 7).  Under the  2007 Senior Notes the
Company agreed (i) to limit its and its subsidiaries' indebtedness to an
aggregate of $315,000 and (ii) not to, and not to cause its subsidiaries (except
for AccessIT DC and its subsidiaries) to, incur indebtedness, with certain
exceptions, including an exception for $10,000; provided that no more than
$5,000 of such indebtedness is incurred by AccessDM or AccessIT Satellite or any
of their respective subsidiaries except as incurred by AccessDM pursuant to a
guaranty entered into in accordance with the GE Credit Facility (see
below).  At the present time, the Company and its subsidiaries, other
than AccessIT DC and its subsidiaries, are prohibited from paying dividends
under the terms of the 2007 Senior Notes.  Additionally, the Company
and its subsidiaries may incur additional indebtedness in connection with the
deployment of Systems beyond the Company’s initial rollout of up to 4,000
Systems, if certain conditions are met.  As of March 31, 2008, the
outstanding principal balance of the 2007 Senior Notes was $55,000.





CREDIT
FACILITIES





In July
2006, in connection with the ACS Acquisition (see Note 3), the Company assumed
$5,598 of debt relating to ACS’s $7,500 revolving credit facility with Excel
Bank (the “Excel Credit Facility”). The Excel Credit Facility bore interest at a
rate between 2.75% to 3.5% over the current one-month London Interbank Offered
Rate (LIBOR), depending on ACS’s leverage ratio. A quarterly unused line fee was
due equal to 0.25% of the excess of $7,500 over the average outstanding balance
of the Excel Credit Facility during the quarter. Under the Excel Credit
Facility, ACS would pay interest only through December 31, 2008. The balance of
the principal amount, together with all unpaid interest on such borrowings and
any fees incurred by ACS pursuant to the Excel Credit Facility are due on the
maturity date of December 31, 2008. Pursuant to the Excel Credit Facility, ACS’s
bank deposits in excess of a minimum balance were swept from time to time by
Excel Bank toward the repayment of the Excel Credit Facility.  The
Excel Credit Facility was repaid in full, as discussed below.





In
December 2006, in connection with the conversion of the Excel Credit Facility,
ACS issued a 5-year, 8% term note payable to Excel Bank with a face amount of
$6,750 (the “Excel Term Note”). Proceeds from the Excel Term Note were used to
repay the





F-25





Excel
Credit Facility, to purchase advertising projection systems and for working
capital. Interest is due monthly commencing January 1, 2007 and principal shall
be paid in quarterly installments commencing April 1, 2007. The balance of the
Excel Term Note, together with all unpaid interest are due on the maturity date
of January 1, 2012. ACS may prepay at any time and time from time, all or any
portion of the Excel Term Note, without penalty or premium. The Excel Term Note
is not guaranteed by the Company or its other subsidiaries, other than
ACS.  Since April 1, 2007, the Company paid quarterly installments
which repaid principal of $360 on the Excel Term Note.  In August
2007, the outstanding principal balance of $6,390 for the Excel Term Note was
repaid in full with a portion of the proceeds from the August 2007 Private
Placement, which is discussed further above.





In August
2006, AccessIT DC entered into an agreement with General Electric Capital
Corporation (“GECC”) pursuant to which GECC and certain other lenders agreed to
provide to AccessIT DC a $217,000 Senior Secured Multi Draw Term Loan (the “GE
Credit Facility”). Proceeds from the GE Credit Facility will be used for the
purchase and installation of up to 70% of the aggregate purchase price,
including all costs, fees or other expenses associated with the purchase
acquisition, receipt, delivery, construction and installation of Systems in
connection with AccessIT DC’s Phase I Deployment (see Note 8) and to pay
transaction fees and expenses related to the GE Credit Facility, and for certain
other specified purposes. The remaining cost of the Systems is to be funded from
other sources of capital including contributed equity. Each of the borrowings by
AccessIT DC bears interest, at the option of AccessIT DC and subject to certain
conditions, based on the bank prime loan rate in the United States or the
Eurodollar rate, plus a margin ranging from 2.75% to 4.50%, depending on, among
other things, the type of rate chosen, the amount of equity contributed into
AccessIT DC and the total debt of AccessIT DC. Under the GE Credit Facility,
AccessIT DC must pay interest only through July 31, 2008. Beginning August 31,
2008, in addition to the interest payments, AccessIT DC must repay approximately
71.5% of the principal amount of the borrowings over a five-year period with a
balloon payment for the balance of the principal amount, together with all
unpaid interest on such borrowings and any fees incurred by AccessIT DC pursuant
to the GE Credit Facility on the maturity date of August 1, 2013. In addition,
AccessIT DC may prepay borrowings under the GE Credit Facility in whole or in
part, after July 31, 2007 and before August 1, 2010, subject to paying certain
prepayment penalties ranging from 3% to 1%, depending on when the prepayment is
made. The GE Credit Facility is required to be guaranteed by each of AccessIT
DC’s existing and future direct and indirect domestic subsidiaries (the
“Guarantors”) and secured by a first priority perfected security interest on all
of the collective assets of AccessIT DC and the Guarantors, including real
estate owned or leased, and all capital stock or other equity interests in
AccessIT DC and its subsidiaries, subject to specified exceptions. The GE Credit
Facility is not guaranteed by the Company or its other subsidiaries, other than
AccessIT DC. As of March 31, 2008, $201,279 was borrowed under the GE Credit
Facility at a weighted average interest rate of 8.58%.





In August
2006, the GE Credit Facility was amended to allow borrowings by AccessIT DC to
be in aggregate amounts not in exact multiples of $1,000.





Under the
GE Credit Facility, as amended, AccessIT DC is required to maintain compliance
with certain financial covenants. Material covenants include a leverage ratio,
and an interest coverage ratio.  In September 2007, AccessIT DC
entered into the third amendment with respect to the GE Credit Facility to (1)
lower the interest reserve from 12 months to 9 months; (2) modify the definition
of total equity ratio to count as capital contributions (x) up to $23,300 of
permitted subordinated indebtedness and (y) up to $4,000 of previously paid and
approved expenses that were incurred during the deployment of digital systems;
(3) change the leverage ratio covenant; (4) add a new consolidated senior
leverage ratio covenant; and (5) change the consolidated fixed charge
coverage ratio covenant.





Pursuant
to the GE Credit Facility, AccessIT DC will be required to enter into some form,
or combination, of interest rate swap agreements, cap agreements, collar
agreements and insurance (“Interest Rate Contracts”) and thereafter maintain
Interest Rate Contracts on terms and with counter-parties reasonably
satisfactory to GECC until August 2013 for an amount equal to at least 50% of
the aggregate principal amount outstanding at August 2008.  These
Interest Rate Contracts will be in order to provide protection against
fluctuation of interest rates.  In April 2008, AccessIT DC completed
an Interest Rate Swap also known as a "synthetic fixed rate financing", under
which AccessIT DC would hedge its exposure to increases in interest rate under
the GE Credit Facility. GE Corporate Financial Services arranged the
transaction, which will take effect commencing August 1, 2008 in accordance with
the terms of the GE Credit Facility.





At March
31, 2008, the Company was in compliance with all of its debt
covenants.





The
aggregate principal repayments on the Company’s notes payable are scheduled to
be as follows:






F-26




For
      the fiscal years ending March 31,2009
            
            $
            16,9982010
            
            
            25,0652011
            
            
            82,6762012
            
            
            30,6952013
            
            
            33,714Thereafter
            
            
            78,539$
            267,687





7.
            STOCKHOLDERS’
      EQUITY





CAPITAL
STOCK





In March
2004, in connection with the acquisition of certain assets from the Boeing
Company (the “Boeing Digital Asset Acquisition”), the Company issued 53,534
unregistered shares of Class A Common Stock (the “Boeing Shares”) to the Boeing
Company (“Boeing”), as part of the purchase price. At any time during the ninety
day period beginning March 29, 2005 to June 29, 2005, Boeing had the option to
sell the Boeing Shares to the Company in exchange for $250 in cash, which the
Company classified under commitments and contingencies. The ninety day period
expired on June 29, 2005, and Boeing did not require the Company to repurchase
the Boeing Shares.  Accordingly, the amount of $250 was credited to
additional paid-in capital.





In August
2004, the Company’s Board authorized the repurchase of up to 100,000 shares of
Class A Common Stock, which may be purchased at prevailing prices from
time-to-time in the open market depending on market conditions and other
factors.  As of March 31, 2007, the Company has repurchased 51,440
shares of Class A Common Stock for an aggregate purchase price of $172,
including fees, which have been recorded as treasury stock.





In July
2005, the Company entered into a purchase agreement with certain institutional
and other accredited investors in a private placement (the “July 2005 Private
Placement”) to issue and sell 1,909,115 unregistered shares of Class A Common
Stock at a sale price of $9.50 per share and warrants to the investors for gross
proceeds of $18,137.  The Company agreed to register the resale of the
shares of Class A Common Stock issued with the SEC.  The Company filed
a Form S-3 on August 18, 2005, which was declared effective by the SEC onAugust 31,
2005.





In August
2005, in connection with the Conversion Agreement (see Note 6), all Convertible
Debentures Warrants were exercised for $2,487 and the Company issued 560,196
shares of Class A Common Stock.  The Company also issued 71,359 New
Shares to the investors, and another 8,780 Placement Agent
Shares.  The Company was required to register the resale of the shares
of the Class A Common Stock underlying the Convertible Debentures Warrants with
the SEC.   The Company filed a Form S-3 on March 11, 2005, which
was declared effective by the SEC on March 21, 2005.  The Company was
also required to register the New Shares and the Placement Agent Shares on Form
S-3 with the SEC.  The Company filed a Form S-3 on November 16, 2005,
which was declared effective by the SEC on December 2, 2005.





In
September 2005, in connection with the Exchange Offer completed in March 2004
(see Note 6), the AMEX 30-day average closing price of the Company’s Class A
Common Stock exceeded $12.00, and therefore, the Company converted all of the 6%
Convertible Notes into 307,871 shares of Class A Common Stock, of which 248,282
shares of Class A Common Stock were issued to certain officers and directors of
the Company. The Company registered the resale of 59,589 of these shares of
Class A Common Stock on Form S-3 with the SEC.  The Company filed a
Form S-3 on November 16, 2005, which was declared effective by the SEC on
December 2, 2005.





In
December 2005, the Company filed a shelf registration statement on Form S-3 with
the SEC (the “Shelf”), which was declared effective on January 13, 2006. The
Shelf provided that the Company may offer and sell in one or more offerings up
to $75,000 of any combination of the following securities: Class A Common Stock,
preferred stock in one or more series and warrants to purchase Common Stock or
preferred stock.





In
January 2006, in connection with the Shelf, the Company entered into: (1) a
placement agency agreement to issue and sell up to 1,145,000 registered shares
of Class A Common Stock at a price to the public of $10.70 per share to certain
institutional and other accredited investors, and (2) a purchase agreement with
an underwriter for 355,000 registered shares of Class A Common Stock at a price
to the public of $10.70 per share (together the “January 2006 Offering”) for
gross aggregate proceeds of $16,050.  The offering and sale of the
1,500,000 shares was completed on January 25, 2006.  The securities
were offered by the Company, pursuant to the Shelf.





F-27





In March
2006, in connection with the Shelf, the Company entered into a purchase
agreement with two underwriters for 5,126,086 registered shares of Class A
Common Stock at a price to the public of $10.00 per share (the “March 2006
Offering”) for gross proceeds of $51,261, which was completed on March 17,
2006.  The Company granted the underwriters a 30-day option to
purchase up to an additional 768,913 shares of Class A Common Stock at a price
to the public of $10.00 per share (the “March 2006 Second Offering”) to cover
over-allotments, which was exercised by the underwriters on March 21, 2006 for
gross proceeds of $7,689 and was completed on March 24,
2006.    The securities were offered by the Company,
pursuant to the Shelf.





As a
result of the January 2006 Offering, the March 2006 Offering and the March 2006
Second Offering, substantially all of the Shelf amount of $75.0 million has been
utilized.  The de minimus remainder has been withdrawn.





In April
2006, the Company issued 23,445 shares of unregistered Class A Common Stock to R
& S International, Inc., in connection with the purchase of the domain name,
website, customer list and the IP address space for Ezzi.net and certain data
center-related computer equipment of R & S International, Inc. The Company
agreed to register the resale of these shares with the SEC. The Company filed a
Form S-3/A on September 15, 2006, which was declared effective by the SEC on
September 19, 2006.





In July
2006, in connection with the ACS Acquisition (see Note 3), the Company issued
974,184 shares of unregistered Class A Common Stock (the “ACS Shares”) as part
of the purchase price. Under the stock purchase agreement entered into by the
Company in connection with the ACS Acquisition, the Company was required to
register the resale of the ACS Shares with the SEC. The Company filed a Form S-3
on August 30, 2006, which was declared effective by the SEC on September 19,
2006.





In
October 2006 and December 2006, the Company issued 46,750 and 53,029 shares of
Class A Common Stock as Additional Interest and Interest Shares, respectively,
in connection with the October 2006 Private Placement (see Note 6). The Company
agreed to register the resale of the shares of the Class A Common Stock
underlying these shares with the SEC. The Company filed a registration statement
on Form S-3 on January 26, 2007, which was declared effective by the SEC on
February 15, 2007.





In
January 2007, in connection with the BP Acquisition (see Note 3), the Company
issued 460,000 shares of unregistered Class A Common Stock (the “BP Shares”) as
payment of the purchase price. The Company entered into a Registration Rights
Agreement with BP, pursuant to which the Company agreed to register the resale
of all of the Class A Common Stock issued in connection with the BP Acquisition.
The Company filed a Form S-3/A on February 13, 2007, which was declared
effective by the SEC on February 15, 2007.





In
February 2007, in connection with the Managed Services Acquisition in January
2004, the Company issued 3,394 shares of unregistered Class A Common Stock as
additional purchase price based on the subsequent performance of the business
acquired.





In March
2007, the Company issued 81,768 and 78,720 shares of Class A Common Stock as
Additional Interest and Interest Shares, respectively, in connection with the
October 2006 Private Placement (see Note 6). The Company agreed to register the
resale of the shares of the Class A Common Stock underlying these shares with
the SEC. The Company filed a registration statement on Form S-3 on April 27,
2007, which was declared effective by the SEC on May 18, 2007.





In March
2007, the Company agreed to issue 30,000 shares of unregistered Class A Common
Stock to one of the holders of the HS Notes (see Note 6) for their agreement to
reduce the remaining principal on their note by $150.  The Company
agreed to register the resale of these shares of Class A Common Stock with the
SEC. The Company filed a registration statement on Form S-3 on July 27, 2007,
which was declared effective by the SEC on August 9, 2007.





In April
2007, in connection with the acquisition of ACS and the achievement of certain
digital cinema deployment milestones, the Company issued 67,906 shares of the
Company’s Class A Common Stock, with a value of $512, to the ACS Stockholders as
additional purchase price.  The Company agreed to register the resale
of these shares of Class A Common Stock with the SEC. The Company filed a
registration statement on Form S-3 on April 27, 2007, which was declared
effective by the SEC on May 18, 2007.





In June
2007, the Company issued 74,947 and 72,104 shares of Class A Common Stock as
Additional Interest and Interest Shares, respectively, pursuant to the One Year
Senior Notes (see Note 6). The Company agreed to register the resale of these
shares of Class A Common Stock with the SEC. The Company filed a registration
statement on Form S-3 on July 27, 2007, which was declared effective by the SEC
on August 9, 2007.





In July
2007, in connection with the acquisition of ACS and the achievement of certain
digital cinema deployment milestones, the Company issued an additional 77,955
shares of the Company’s Class A Common Stock, with a value of $488, to the ACS
Stockholders as additional purchase price.  The Company agreed to
register the resale of these shares of Class A Common Stock





F-28





with the
SEC. The Company filed a registration statement on Form S-3 on July 27, 2007,
which was declared effective by the SEC on August 9, 2007.





In August
2007, the Company issued 105,715 shares of Class A Common Stock as Interest
Shares pursuant to the One Year Senior Notes (see Note 6) for interest due up
through the date refinanced.  The Company issued an additional 104,971
shares of Class A Common Stock as an inducement for certain holders of the One
Year Senior Notes to invest in the August 2007 Private Placement and $686 was
recorded as debt refinancing expense for the value of such
shares.  The Company agreed to register the resale of all 210,686
shares of Class A Common Stock with the SEC. The Company filed a registration
statement on Form S-3 on September 26, 2007, which was declared effective by the
SEC on November 2, 2007.





Pursuant
to the 2007 Senior Notes, in August 2007 the Company issued 715,000 shares of
Class A Common Stock (the “Advance Additional Interest Shares”) covering the
first 12 months of Additional Interest (see Note 6).  The Company
registered the resale of these shares of Class A Common Stock and also
registered an additional 1,249,875 shares of Class A Common Stock for future
Interest Shares and Additional Interest.  The Company filed a
registration statement on Form S-3 on September 26, 2007, which was declared
effective by the SEC on November 2, 2007.  The Company is recording
the value of the Advance Additional Interest Shares of $4,676 to interest
expense over the 36 month term of the 2007 Senior Notes.  For the year
ended March 31, 2008, the Company recorded $935 of interest expense in
connection with the Advance Additional Interest Shares.





Commencing
with the quarter ended December 31, 2008 and through the maturity of the 2007
Senior Notes in the quarter ended September 30, 2010, the Company is obligated
to issue a minimum of 132,000 shares of Class A Common Stock per quarter as
Additional Interest (the “Minimum Additional Interest Shares”).  The
Company has estimated the value of the Minimum Additional Interest Shares to be
$5,244 million and is recording that amount over the 36 month term of the 2007
Senior Notes.  For the year ended March 31, 2008, the Company recorded
$1,020 million to interest expense in connection with the Minimum Additional
Interest Shares.





In
December 2007 and March 2008, the Company issued 345,944 and 548,572 shares of
Class A Common Stock, respectively, as Interest Shares pursuant to the 2007
Senior Notes (see Note 6), which were part of the 1,249,875 shares previously
registered on the registration statement on Form S-3 filed on September 26,
2007, which was declared effective by the SEC on November 2, 2007.





ACCESSIT
STOCK OPTION PLAN





Stock
Options





AccessIT’s
stock option plan (“the Plan”) currently provides for the issuance of up to
2,200,000 options to purchase shares of Class A Common Stock to employees,
outside directors and consultants.  On June 9, 2005, the Company’s
Board approved the expansion of the Plan from 850,000 to 1,100,000 options,
which was approved by the shareholders at the Company’s 2005 Annual Meeting held
on September 15, 2005.  On July 6, 2006, the Board approved the
expansion of the Plan from 1,100,000 to 2,200,000 options, which was approved by
the shareholders at the Company’s 2006 Annual Meeting held on September 14,
2006.  On May 9, 2008, the Board approved an amendment to the Plan,
which was not required to be approved by the shareholders, to allow for the
grant of restricted stock units in addition to the other equity-based awards
available under the Plan.





Awards
under the Plan may be in any of the following forms (or a combination thereof)
(i) stock option awards; (ii) stock appreciation rights; (iii) stock or
restricted stock or restricted stock units; or (iv) performance
awards.  The Plan provides for the granting of incentive stock options
(“ISOs”) with exercise prices not less than the fair market value of the
Company’s Class A Common Stock on the date of grant. ISOs granted to
shareholders of more than 10% of the total combined voting power of the Company
must have exercise prices of at least 110% of the fair market value of the
Company’s Class A Common Stock on the date of grant. ISOs and non-statutory
stock options granted under the Plan are subject to vesting provisions, and
exercise is subject to the continuous service of the participant. The exercise
prices and vesting periods (if any) for non-statutory options are set at the
discretion of the Company’s Board. Upon a change of control of the Company, all
stock options (incentive and non-statutory) that have not previously vested will
vest immediately and become fully exercisable. In connection with the grants of
stock options under the Plan, the Company and the participants have executed
stock option agreements setting forth the terms of the grants.





During
the fiscal year ended March 31, 2008, under the Plan, the Company granted
644,197 stock options to its employees and 50,000 stock options to five
non-employee members of the Company’s Board, all at an exercise price ranging
from $3.19 to $9.04 per share.





F-29





The
following table summarizes the activity of the Plan related to shares issuable
pursuant to outstanding options:





Shares
      Under Option
            
            
            Weighted
      Average Exercise Price Per ShareBalance
      at March 31, 2006
            1,100,000
            
            
            $
            6.61Granted
            517,747
            (1)
            
            
            10.68Exercised
            (5,750
            )
            
            
            4.98Cancelled
            (15,500
            )
            
            
            10.46Balance
      at March 31, 2007
            1,596,497
            
            
            $
            7.90Granted
            694,197
            (2)
            
            
            4.18Exercised
            (6,500
            )
            
            
            5.32Cancelled
            (207,625
            )
            
            
            7.71Balance
      at March 31, 2008
            2,076,569
            (3)
            
            $
            6.68





(1)
            The
      issuance of 436,747 stock options was subject to shareholder approval,
      which was obtained at the Company’s 2006 Annual Meeting of Stockholders
      held on September 14, 2006.


(2)
            The
      issuance of an additional 320,003 stock options is subject to shareholder
      approval at the Company’s 2008 Annual Meeting of Stockholders to be held
      on or about September 4, 2008.


(3)
            As
      of March 31, 2008, there are no shares available for issuance under the
      Plan, due to the number of options and restricted stock currently
      outstanding along with historical option exercises.  An
      expansion of the number of shares issuable under the Plan will be proposed
      at the Company’s 2008 Annual Meeting of Stockholders to be held on or
      about September 4, 2008.





An
analysis of all options outstanding under the Plan as of March 31, 2008 is
presented below:





Range
      of Prices
            
            Options
      Outstanding
            
            Weighted
              Average
              Remaining
              Life
      in Years
            
            Weighted
              Average
              Exercise
              Price
            
            Options
              Exercisable
            
            Weighted
              Average
              Exercise
              Price
      of
              Options
              Exercisable
            
            
            Aggregate
      Intrinsic Value$2.50
      - $4.99
            
            
            637,997
            
            
            8.85
            
            $
            3.31
            
            
            195,500
            
            $
            3.40
            
            $
            120,520$5.00
      - $6.99
            
            
            530,500
            
            
            7.15
            
            
            5.32
            
            
            334,500
            
            
            5.32
            
            
            —$7.00
      - $9.99
            
            
            347,572
            
            
            6.84
            
            
            8.00
            
            
            246,122
            
            
            7.83
            
            
            —$10.00
      - $13.52
            
            
            560,500
            
            
            7.58
            
            
            11.00
            
            
            539,395
            
            
            10.98
            
            
            —2,076,569
            
            
            7.74
            
            $
            6.68
            
            
            1,315,517
            
            $
            7.82
            
            $
            120,520








As of
March 31, 2008, unamortized stock-based compensation relating to options
outstanding totaled $1,641, which will be expensed as follows:








For
      the fiscal years ending March 31,
            
            Stock-based
      Compensation Expense
            
            
            Weighted
      Average Fair Value Per Share2009
            
            $
            709
            
            
            $
            2.762010
            
            
            572
            
            
            
            2.402011
            
            
            360
            
            
            
            1.792012
            
            
            —
            
            
            
            —2013
            
            
            —
            
            
            
            —Thereafter
            
            
            —
            
            
            
            —$
            1,641
            
            
            $
            2.36








The
outstanding options at March 31, 2008 will expire as follows:





F-30








For
      the fiscal years ending March 31,
            Number
      of Shares
            
            Weighted
      Average Exercise Price Per Share
            
            Exercise
      Price2009
            —
            
            $
            —
            
            —2010
            —
            
            
            —
            
            —2011
            80,372
            
            
            9.00
            
            $7.50
      - $12.502012
            46,000
            
            
            5.00
            
            $5.002013
            76,000
            
            
            4.01
            
            $2.50
      - $7.50Thereafter
            1,874,197
            
            
            6.73
            
            $3.19
      - $13.522,076,569
            
            $
            6.68
            
            $2.50
      - $13.52











Restricted
Stock Awards





At the
Company’s 2007 Annual Meeting of Stockholders held on September 18, 2007,
shareholders approved an amendment to the Plan to allow various equity-based
awards to be granted pursuant to the Plan.  During the fiscal year
ended March 31, 2008, under the Plan, the Company granted 103,047 shares of
restricted stock to selected employees which will vest equally over a three year
period, all at a market price ranging from $2.51 to $5.56 per
share.





The
following table summarizes the activity of the Plan related to restricted
stock:





Restricted
      Stock
            
            
            Weighted
      Average Market Price Per ShareBalance
      at March 31, 2006
            —
            
            
            $
            —Granted
            —
            
            
            
            —Forfeitures
            —
            
            
            
            —Balance
      at March 31, 2007
            —
            
            
            $
            —Granted
            103,047
            
            
            
            3.79Forfeitures
            (433
            )
            
            
            5.56Balance
      at March 31, 2008
            102,614
            
            
            $
            3.78





As of
March 31, 2008, unamortized stock-based compensation relating to restricted
stock outstanding totaled $339, which will be expensed as follows:








For
      the fiscal years ending March 31,
            
            Stock-based
      Compensation Expense
            
            
            Weighted
      Average Market Price Per Share2009
            
            $
            129
            
            
            $
            3.782010
            
            
            129
            
            
            
            3.782011
            
            
            81
            
            
            
            3.432012
            
            
            —
            
            
            
            —2013
            
            
            —
            
            
            
            —Thereafter
            
            
            —
            
            
            
            —$
            339
            
            
            $
            3.69





ACCESSDM
STOCK OPTION PLAN





In May
2003, AccessDM adopted the 2003 Stock Option Plan (the “AccessDM Plan”) under
which ISOs and nonstatutory stock options may be granted to employees, outside
directors, and consultants. The purpose of the AccessDM Plan is to enable
AccessDM to attract, retain and motivate employees, directors, advisors and
consultants. AccessDM reserved a total of 2,000,000 shares of AccessDM’s common
stock for issuance upon the exercise of stock options granted in accordance with
the AccessDM Plan. Options granted under the AccessDM Plan expire ten years
following the date of grant (five years for shareholders who own greater than
10% of the outstanding stock) and are subject to limitations on transfer.
Options granted under the AccessDM Plan vest generally over three-year periods.
The AccessDM Plan is administered by AccessDM’s Board.





F-31








The
AccessDM Plan provides for the granting of ISOs with exercise prices not less
than the fair market value of AccessDM’s common stock on the date of grant. ISOs
granted to shareholders of more than 10% of the total combined voting power of
AccessDM must have exercise prices of at least 110% of the fair market value of
AccessDM common stock on the date of grant. ISOs and non-statutory stock options
granted under the AccessDM Plan are subject to vesting provisions, and exercise
is subject to the continuous service of the participants. The exercise prices
and vesting periods (if any) for non-statutory options are set at the discretion
of AccessDM’s Board. Upon a change of control of AccessDM, all stock options
(incentive and non-statutory) that have not previously vested will vest
immediately and become fully exercisable. In connection with the grants of stock
options under the AccessDM Plan, AccessDM and the participants have executed
stock option agreements setting forth the terms of the grants.





As of
March 31, 2008, the AccessDM Plan currently provides for the issuance of up to
2,000,000 options to purchase shares of AccessDM common stock to
employees.  During the fiscal year ended March 31, 2008, AccessDM did
not issue any options to purchase shares of AccessDM common stock.





Shares
      Under Option
            
            
            
            Weighted
      Average Exercise Price Per ShareBalance
      at March 31, 2006
            
            
            1,055,000
            
            (2
            )
            
            $
            0.95
            
            (1
            )Granted
            
            
            —
            
            
            
            
            
            —Exercised
            
            
            —
            
            
            
            
            
            —Cancelled
            
            
            —
            
            
            
            
            
            —Balance
      at March 31, 2007
            
            
            1,055,000
            
            (2
            )
            
            $
            0.95
            
            (1
            )Granted
            
            
            —
            
            
            
            
            
            —Exercised
            
            
            —
            
            
            
            
            
            —Cancelled
            
            
            —
            
            
            
            
            
            —Balance
      at March 31, 2008
            
            
            1,055,000
            
            (2
            )
            
            $
            0.95
            
            (1
            )








(1)
            Since
      there is no public trading market for AccessDM’s common stock, the fair
      market value of AccessDM’s common stock on the date of grant was
      determined by an appraisal of such
options.


(2)
            As
      of March 31, 2008, there were 19,213,758 shares of AccessDM’s common stock
      issued and outstanding.





An
analysis of all options outstanding under the AccessDM Plan as of March 31, 2008
is presented below:





Range
      of Prices
            
            Options
      Outstanding
            
            Weighted
              Average
              Remaining
              Life
      in Years
            
            
            Weighted
              Average
              Exercise
              Price
            
            Options
              Exercisable
            
            
            Weighted
              Average
              Exercise
              Price
      of
              Options
              Exercisable$0.20
      - $0.25
            
            1,005,000
            
            5.30
            
            $
            0.21
            
            1,005,000
            
            $
            0.21$15.88
            
            50,000
            
            7.22
            
            
            15.88
            
            50,000
            
            
            15.881,055,000
            
            5.39
            
            $
            0.95
            
            1,055,000
            
            $
            0.95











WARRANTS





Warrants
outstanding consisted of the following:





As
      of March 31,Outstanding
      Warrant (as defined below)
            
            
            2007
            
            
            
            2008Underwriter
      Warrants
            
            
            3,775
            
            
            
            —July
      2005 Private Placement Warrants
            
            
            467,275
            
            
            
            467,275New
      Warrants (see Note 6)
            
            
            760,196
            
            
            
            760,1961,231,246
            
            
            
            1,227,471








F-32





In
November 2003, in connection with the Company’s initial public offering, the
Company issued to the underwriter, warrants to purchase up to 120,000 shares of
Class A Common Stock at an exercise price of $6.25 per share (the “Underwriter
Warrants”). The Underwriter Warrants were immediately exercisable and expired on
November 7, 2007. The exercise price was subject to adjustment in certain
circumstances, and in 2004 the exercise price was adjusted to $6.03 per
share.  During the fiscal year ended March 31, 2006, 49,085
Underwriter Warrants were exercised for an aggregate of $296 and the Company
issued 49,085 shares of Class A Common Stock.  In addition, 67,140
Underwriter Warrants were exercised on a cashless basis, which resulted in the
issuance of 33,278 shares of Class A Common Stock.  As of March 31,
2008, there were no Underwriter Warrants outstanding.





In July
2005, in connection with the July 2005 Private Placement, the Company issued
warrants to purchase 477,275 shares of Class A Common Stock at an exercise price
of $11.00 per share (the “July 2005 Private Placement Warrants”). The July 2005
Private Placement Warrants are exercisable beginning on February 18, 2006 for a
period of five years thereafter. The July 2005 Private Placement Warrants are
callable by the Company, provided that the closing price of the Company’s Class
A Common Stock is $22.00 per share, 200% of the applicable exercise price, for
twenty consecutive trading days. The Company agreed to register the resale of
the shares of the Class A Common Stock underlying the July 2005 Private
Placement Warrants with the SEC.  The Company filed a Form S-3 on
August 18, 2005, which was declared effective by the SEC on August 31, 2005.
During the fiscal year ended March 31, 2007, 10,000 of the July 2005 Private
Placement Warrants were exercised for $110 in cash, and the Company issued
10,000 shares of Class A Common Stock. As of March 31, 2008, 467,275 July 2005
Private Placements Warrants remained outstanding.





In
accordance with EITF 00-19, “Accounting for Derivative Financial Instruments
Indexed To, and Potentially Settled In, a Company’s Own Stock” (“EITF 00-19”),
and the terms of the July 2005 Private Placement Warrants, the fair value of the
July 2005 Private Placement Warrants were initially accounted for as a
liability, with an offsetting reduction to the carrying value of the Common
Stock. Such liability was reclassified to equity as of the August 31, 2005
effective date of the Form S-3.





The fair
value of the July 2005 Private Placement Warrants was estimated to be $800 on
the closing date of the transaction, using the Black-Scholes option-pricing
model with the following assumptions: no dividends, risk-free interest rate of
3.84%, the contractual life of 5-years and volatility of 55%. In September 2005,
the fair value of the July 2005 Private Placement Warrants was re-measured and
estimated to be $1,050 and the increase in the fair value of $250 was recorded
as other expense.





In August
2005, in connection with the Conversion Agreement (see Note 6), all Convertible
Debentures Warrants were exercised for $2,487 and the Company issued 560,196
shares of Class A Common Stock and the Company issued to the investors the New
Warrants to purchase 760,196 shares of Class A Common Stock at an exercise price
of $11.39 per share. The Company was required to register the resale of the
shares of the Class A Common Stock underlying the Convertible Debentures
Warrants with the SEC.  The Company filed a Form S-3 on March 11,
2005, which was declared effective by the SEC on March 21, 2005.  The
New Warrants were immediately exercisable upon issuance and for a period of five
years thereafter. The Company was required to register the resale of the shares
of Class A Common Stock underlying the New Warrants with the SEC. The Company
filed a Form S-3 on November 16, 2005, which was declared effective by the SEC
on December 2, 2005.  As of March 31, 2008, 760,196 New Warrants
remained outstanding.





In
accordance with EITF 00-19, and the terms of the New Warrants, the fair value of
the New Warrants was initially accounted for as a liability, with an offsetting
reduction to the carrying value of the Common Stock.   Such
liability was reclassified to equity as of the December 2, 2005 effective date
of the Form S-3.The fair value of the New Warrants was estimated to be $4,990 on
the closing date of the transaction, using the Black-Scholes option-pricing
model with the following assumptions: no dividends, risk-free interest rate of
4.01%, a contractual life of 5-years and volatility of 56%. At September 30,
2005, the fair value of the New Warrants was re-measured and estimated to be
$3,490. The decrease in the fair value of $1,500 was recorded as other
income.   At December 2, 2005, the fair value of the New Warrants
was re-measured and estimated to be $3,080 and the decrease in the fair value of
$410 was recorded as other income.





8.
            COMMITMENTS
      AND CONTINGENCIES





Pursuant
to a digital cinema framework agreement and related supply agreement, as
amended, entered into with Christie through the Company’s indirect wholly-owned
subsidiary, AccessIT DC, in June 2005, AccessIT DC may order up to 4,000 Systems
from Christie (the “Phase I Deployment”).





In
connection with AccessIT DC’s Phase I Deployment, the Company entered into
digital cinema deployment agreements with seven motion picture studios and a
digital cinema agreement with one alternative content provider for the
distribution of digital movie releases and alternate content to motion picture
exhibitors equipped with Systems, and providing for payment of VPFs and ACFs to
AccessIT DC.  AccessIT DC also entered into master license agreements
with sixteen motion picture exhibitors for the





F-33





placement
of Systems in movie theatres (including screens at AccessIT’s Pavilion
Theatre).  In December 2007, AccessIT DC completed its Phase I
Deployment with 3,723 Systems installed.





As of
March 31, 2008, the Company has paid approximately $278,500 towards Systems
ordered and installation costs incurred in connection with AccessIT DC’s Phase I
Deployment.AccessIT DC has agreed to
provide financing to certain motion picture exhibitors upon the billing to the
motion picture exhibitors by Christie for the installation costs associated with
the placement of the Systems in movie theatres (see Note 5).  The
motion picture exhibitors were required to make monthly interest only payments
through October 2007 and are required to make quarterly principal and interest
payments thereafter.





In
December 2007, AccessIT DC’s Phase I Deployment was completed and as of March
31, 2008, there were no significant Phase I purchase obligations not included in
the Company’s consolidated financial statements.





LEASES





The
Company has acquired property and equipment under a non-cancelable long-term
capital lease obligation that expires in July 2022. As of March 31, 2008, the
Company had an outstanding capital lease obligation of $5,903. The Company’s
capital lease obligation is at the following location and in the following
principal amount:


Location
            
            
            
            Purpose
      of capital lease
            
            
            
            Outstanding
              Capital
              Lease
              ObligationThe
      Pavilion Theatre
            
            
            
            For
      building, land and improvements
            
            
            
            $
            5,903





As of
March 31, 2008, minimum future capital lease payments (including interest)
totaled $16,396, are due as follows:





For
      the fiscal years ending March 31,2009
            
            $
            1,1282010
            
            
            1,1282011
            
            
            1,1282012
            
            
            1,1282013
            
            
            1,132Thereafter
            
            
            10,75216,396Less:
      interest
            
            
            (10,493
            )Outstanding
      capital lease obligation
            
            $
            5,903





Assets
recorded under capitalized lease agreements included in property and equipment
consists of the following:





As
      of March 31,2007
            
            
            2008Land
            
            $
            1,500
            
            
            $
            1,500Building
            
            
            4,600
            
            
            
            4,600Computer
      equipment
            
            
            22
            
            
            
            —Machinery
      and equipment
            
            
            380
            
            
            
            —6,502
            
            
            
            6,100Less:
      accumulated depreciation
            
            
            (1,180
            )
            
            
            (1,136
            )Net
      assets under capital lease
            
            $
            5,322
            
            
            $
            4,964





Depreciation
expense on assets under capitalized lease agreements was $439, $383 and $359 for
the fiscal years ended March 31, 2006, 2007 and 2008, respectively.




F-34





The
Company’s businesses operate from leased properties under non-cancelable
operating lease agreements (see Item 2. Properties).  As of March 31,
2008, obligations under non-cancelable operating leases totaled $11,217,
including $8,474 for the IDCs currently being operated by FiberMedia, are due as
follows:




For
      the fiscal years ending March 31,2009
            
            $
            3,3432010
            
            
            2,5282011
            
            
            1,6062012
            
            
            1,0352013
            
            
            712Thereafter
            
            
            1,993$
            11,217








Total
rent expense was $2,615, $2,970 and $3,174 for the fiscal years ended March 31,
2006, 2007 and 2008, respectively.





9.
            SUPPLEMENTAL
      CASH FLOW DISCLOSURE





For
      the fiscal years ended March 31,2006
            
            
            2007
            
            
            2008Interest
      paid
            
            $
            1,461
            
            
            $
            5,475
            
            
            $
            19,339Reduction
      of goodwill and other assets relating to the early cancellation of the
      Pavilion Note
            
            $
            1,232
            
            
            $
            —
            
            
            $
            —Issuance
      of Class A Common Stock for conversion of 6% Convertible
      Notes
            
            $
            1,699
            
            
            $
            —
            
            
            $
            —Issuance
      of Class A Common Stock for conversion of Convertible
      Debentures
            
            $
            7,600
            
            
            $
            —
            
            
            $
            —Issuance
      of Class A Common Stock in lieu of redeeming the Boeing
      Shares
            
            $
            250
            
            
            $
            —
            
            
            $
            —Transfer
      to equity of liability relating to warrants upon registration statement
      effectiveness
            
            $
            4,130
            
            
            $
            —
            
            
            $
            —Equipment
      in accounts payable and accrued expenses purchased from
      Christie
            
            $
            7,924
            
            
            $
            19,677
            
            
            $
            19,734Note
      receivable in accounts payable and accrued expenses for installation costs
      from Christie
            
            $
            934
            
            
            $
            —
            
            
            $
            —Reduction
      of goodwill related to the Pavilion Theatre
            
            $
            —
            
            
            $
            107
            
            
            $
            —Deposits
      applied to equipment purchased from Christie
            
            $
            —
            
            
            $
            37,047
            
            
            $
            24,763Issuance
      of Class A Common Stock for purchase of Access Digital Server
      Assets
            
            $
            —
            
            
            $
            308
            
            
            $
            —Liabilities
      assumed in the PLX Acquisition
            
            $
            —
            
            
            $
            140
            
            
            $
            —Issuance
      of Class A Common Stock for the ACS Acquisition
            
            $
            —
            
            
            $
            10,000
            
            
            $
            —Liabilities
      assumed in the ACS Acquisition
            
            $
            —
            
            
            $
            14,719
            
            
            $
            —Issuance
      of debt for the ACS Acquisition
            
            $
            —
            
            
            $
            5,204
            
            
            $
            —Refinance
      of Excel Credit Facility
            
            $
            —
            
            
            $
            6,114
            
            
            $
            —Issuance
      of Class A Common Stock for the Bigger Picture
      Acquisition
            
            $
            —
            
            
            $
            3,924
            
            
            $
            —Liabilities
      assumed in the Bigger Picture Acquisition
            
            $
            —
            
            
            $
            2,284
            
            
            $
            —Issuance
      of Class A Common Stock as additional purchase price for Managed
      Services
            
            $
            —
            
            
            $
            30
            
            
            $
            —Additional
      purchase price in accounts payable and accrued expenses for Managed
      Services
            
            $
            —
            
            
            $
            168
            
            
            $
            —Reduction
      of HS Note for the issuance of Class A Common Stock
            
            $
            —
            
            
            $
            150
            
            
            $
            —Issuance
      of Class A Common Stock as additional
              purchase
      price for ACS
            
            $
            —
            
            
            $
            —
            
            
            $
            1,000Issuance
      of Class A Common Stock as additional
              purchase
      price for Managed Services
            
            $
            —
            
            
            $
            —
            
            
            $
            29Note
      payable issued for customer contract
            
            $
            —
            
            
            $
            —
            
            
            $
            75Repayment
      of One Year Senior Notes
            
            $
            —
            
            
            $
            —
            
            
            $
            18,000Legal
      fees from the holders of the 2007 Senior Notes
              included
      in debt issuance costs
            
            $
            —
            
            
            $
            —
            
            
            $
            109Additional
      purchase price in accounts payable and accrued expenses for Access Digital
      Server Assets
            
            $
            —
            
            
            $
            —
            
            
            $
            129








F-35





10.     SEGMENT
INFORMATION





Segment
information has been prepared in accordance with SFAS No. 131, “Disclosures
about Segments of an Enterprise and Related Information.” As discussed in Note
1, beginning April 1, 2007, the Company made changes to its organizational
structure that impacted the Company’s reportable segments. The Media Services
segment was reorganized. The Company has realigned its focus and its business is
now comprised of three primary reportable segments: Media Services, Content
& Entertainment and Other. The segments were determined based on the
products and services provided by each segment. Accounting policies of the
segments are the same as those described in Note 2. Performance of the segments
is evaluated on operating income before interest, taxes, depreciation and
amortization.  Future changes to this organization structure may
result in changes to the reportable segments disclosed.





The Media
Services segment consists of the following:





Operations
      of:
            
            Products
      and services provided:AccessIT DC
      and its subsidiary, Phase 2 Corporation
            ·
            Financing
      vehicles and administrators for the Company’s 3,723 digital cinema
      projection systems (the “Systems”) installed nationwide in
      AccessIT DC’s Phase I Deployment and our second digital cinema
      deployment (the “Phase II Deployment”) to motion picture
      exhibitors·
            Collect
      virtual print fees (“VPFs”) from motion picture studios and distributors
      and alternative content fees (“ACFs”)  from alternative content
      providersAccessIT
      SW
            ·
            Develops
      and licenses software to the theatrical distribution and exhibition
      industries as well as intellectual property rights and royalty
      management·
            Provides
      services as an Application Service Provider·
            Provides
      software enhancements and consulting servicesDMS
            ·
            Stores
      and distributes digital content to movie theatres and other venues having
      digital projection equipment and provides satellite-based broadband video,
      data and Internet transmission, encryption management services, key
      management, video network origination and management
    services·
            Provides
      a virtual booking center to outsource the booking and scheduling of
      satellite and fiber networks·
            Provides
      forensic watermark detection services for motion picture studios and
      forensic recovery services for content ownersManaged
      Services
            ·
            Provides
      information technology consulting services and managed network monitoring
      services through its global network command
  center





The
Content & Entertainment segment consists of the following:





Operations
      of:
            
            Products
      and services provided:Pavilion
      Theatre
            ·
            A
      nine-screen digital movie theatre and showcase to demonstrate the
      Company’s integrated digital cinema solutionsACS
            ·
            Provides
      cinema advertising services and entertainmentThe
      Bigger Picture
            ·
            Acquires,
      distributes and provides the marketing for programs of alternative content
      to theatrical exhibitors








F-36





The Other
segment consists of the following:





Operations
      of:
            
            Products
      and services provided:Data
      Centers
            ·
            Provides
      services through its three IDCs (see below)Access
      Digital Server Assets
            ·
            Provides
      hosting services and provides network access for other web hosting
      services





Since May
1, 2007, the Company’s IDCs have been operated by FiberMedia pursuant to a
master collocation agreement.  Although the Company is still the
lessee of the IDCs, substantially all of the revenues and expenses are being
realized by FiberMedia and not the Company.





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





As
      of March 31, 2007Media
      Services
            
            
            Content
      & Entertainment
            
            
            Other
            
            
            Corporate
            
            
            ConsolidatedTotal
      intangible assets, net
            
            $
            1,443
            
            
            $
            17,984
            
            
            $
            —
            
            
            $
            5
            
            
            $
            19,432Total
      goodwill
            
            $
            4,529
            
            
            $
            8,720
            
            
            $
            —
            
            
            $
            —
            
            
            $
            13,249Total
      assets
            
            $
            243,186
            
            
            $
            48,707
            
            
            $
            1,239
            
            
            $
            8,595
            
            
            $
            301,727





As
      of March 31, 2008Media
      Services
            
            
            Content
      & Entertainment
            
            
            Other
            
            
            Corporate
            
            
            ConsolidatedTotal
      intangible assets, net
            
            $
            666
            
            
            $
            12,924
            
            
            $
            —
            
            
            $
            2
            
            
            $
            13,592Total
      goodwill
            
            $
            4,529
            
            
            $
            9,856
            
            
            $
            164
            
            
            $
            —
            
            
            $
            14,549Total
      assets
            
            $
            315,588
            
            
            $
            39,755
            
            
            $
            1,136
            
            
            $
            17,197
            
            
            $
            373,676





Capital
      Expenditures
            
            Media
      Services
            
            
            Content
      & Entertainment
            
            
            Other
            
            
            Corporate
            
            
            ConsolidatedFor
      the fiscal year ended March 31, 2006
            
            $
            15,961
            
            
            $
            863
            
            
            $
            505
            
            
            $
            63
            
            
            $
            $17,392For
      the fiscal year ended March 31, 2007
            
            $
            115,934
            
            
            $
            1,578
            
            
            $
            1,027
            
            
            $
            63
            
            
            $
            $118,602For
      the fiscal year ended March 31, 2008
            
            $
            75,491
            
            
            $
            642
            
            
            $
            13
            
            
            $
            31
            
            
            $
            $76,177






F-37




For
      the Fiscal Year Ended March 31, 2006Media
      Services
            
            
            Content
      & Entertainment
            
            
            Other
            
            
            Corporate
            
            
            ConsolidatedRevenues
      from external customers
            
            $
            6,519
            
            
            $
            4,944
            
            
            $
            5,332
            
            
            $
            —
            
            
            $
            16,795Intersegment
      revenues
            
            
            209
            
            
            
            —
            
            
            
            149
            
            
            
            —
            
            
            
            358Total
      segment revenues
            
            
            6,728
            
            
            
            4,944
            
            
            
            5,481
            
            
            
            —
            
            
            
            17,153Less
      :Intersegment revenues
            
            
            (209
            )
            
            
            —
            
            
            
            (149
            )
            
            
            —
            
            
            
            (358
            )Total
      consolidated revenues
            
            $
            6,519
            
            
            $
            4,944
            
            
            $
            5,332
            
            
            $
            —
            
            
            $
            16,795Direct
      operating (exclusive of depreciation and amortization shown
      below)
            
            
            4,118
            
            
            
            3,762
            
            
            
            3,670
            
            
            
            —
            
            
            
            11,550Selling,
      general and administrative
            
            
            3,690
            
            
            
            204
            
            
            
            50
            
            
            
            4,943
            
            
            
            8,887Provision
      for doubtful accounts
            
            
            18
            
            
            
            —
            
            
            
            168
            
            
            
            —
            
            
            
            186Research
      and development
            
            
            300
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            300Stock-based
      compensation
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Loss
      on disposition of assets
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Impairment
      of intangible asset
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Depreciation
      of property and equipment
            
            
            2,469
            
            
            
            463
            
            
            
            700
            
            
            
            61
            
            
            
            3,693Amortization
      of intangible assets
            
            
            734
            
            
            
            5
            
            
            
            555
            
            
            
            14
            
            
            
            1,308Total
      operating expenses
            
            
            11,329
            
            
            
            4,434
            
            
            
            5,143
            
            
            
            5,018
            
            
            
            25,924(Loss)
      income from operations
            
            $
            (4,810
            )
            
            $
            510
            
            
            $
            189
            
            
            $
            (5,018
            )
            
            $
            (9,129
            )





For
      the Fiscal Year Ended March 31, 2007Media
      Services
            
            
            Content
      & Entertainment
            
            
            Other
            
            
            Corporate
            
            
            ConsolidatedRevenues
      from external customers
            
            $
            23,023
            
            
            $
            20,105
            
            
            $
            3,982
            
            
            $
            —
            
            
            $
            47,110Intersegment
      revenues
            
            
            1,120
            
            
            
            —
            
            
            
            266
            
            
            
            —
            
            
            
            1,386Total
      segment revenues
            
            
            24,143
            
            
            
            20,105
            
            
            
            4,248
            
            
            
            —
            
            
            
            48,496Less
      :Intersegment revenues
            
            
            (1,120
            )
            
            
            —
            
            
            
            (266
            )
            
            
            —
            
            
            
            (1,386
            )Total
      consolidated revenues
            
            $
            23,023
            
            
            $
            20,105
            
            
            $
            3,982
            
            
            $
            —
            
            
            $
            47,110Direct
      operating (exclusive of depreciation and amortization shown
      below)
            
            
            8,018
            
            
            
            10,043
            
            
            
            4,153
            
            
            
            —
            
            
            
            22,214Selling,
      general and administrative
            
            
            5,738
            
            
            
            6,030
            
            
            
            534
            
            
            
            6,263
            
            
            
            18,565Provision
      for doubtful accounts
            
            
            234
            
            
            
            564
            
            
            
            50
            
            
            
            —
            
            
            
            848Research
      and development
            
            
            330
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            330Stock-based
      compensation
            
            
            127
            
            
            
            10
            
            
            
            33
            
            
            
            2,750
            
            
            
            2,920Loss
      on disposition of assets
            
            
            —
            
            
            
            —
            
            
            
            2,561
            
            
            
            —
            
            
            
            2,561Impairment
      of intangible asset
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Depreciation
      of property and equipment
            
            
            12,524
            
            
            
            1,168
            
            
            
            938
            
            
            
            69
            
            
            
            14,699Amortization
      of intangible assets
            
            
            752
            
            
            
            1,998
            
            
            
            —
            
            
            
            23
            
            
            
            2,773Total
      operating expenses
            
            
            27,723
            
            
            
            19,813
            
            
            
            8,269
            
            
            
            9,105
            
            
            
            64,910(Loss)
      income from operations
            
            $
            (4,700
            )
            
            $
            292
            
            
            $
            (4,287
            )
            
            $
            (9,105
            )
            
            $
            (17,800
            )






F-38




For
      the Fiscal Year Ended March 31, 2008Media
      Services
            
            
            Content
      & Entertainment
            
            
            Other
            
            
            Corporate
            
            
            ConsolidatedRevenues
      from external customers
            
            $
            53,917
            
            
            $
            25,767
            
            
            $
            1,300
            
            
            $
            —
            
            
            $
            80,984Intersegment
      revenues
            
            
            734
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            734Total
      segment revenues
            
            
            54,651
            
            
            
            25,767
            
            
            
            1,300
            
            
            
            —
            
            
            
            81,718Less
      :Intersegment revenues
            
            
            (734
            )
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (734
            )Total
      consolidated revenues
            
            $
            53,917
            
            
            $
            25,767
            
            
            $
            1,300
            
            
            $
            —
            
            
            $
            80,984Direct
      operating (exclusive of depreciation and amortization shown
      below)
            
            
            8,938
            
            
            
            16,749
            
            
            
            882
            
            
            
            —
            
            
            
            26,569Selling,
      general and administrative
            
            
            6,137
            
            
            
            9,377
            
            
            
            215
            
            
            
            7,441
            
            
            
            23,170Provision
      for doubtful accounts
            
            
            586
            
            
            
            810
            
            
            
            —
            
            
            
            —
            
            
            
            1,396Research
      and development
            
            
            162
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            162Stock-based
      compensation
            
            
            266
            
            
            
            65
            
            
            
            —
            
            
            
            122
            
            
            
            453Loss
      on disposition of assets
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Impairment
      of intangible asset
            
            
            —
            
            
            
            1,588
            
            
            
            —
            
            
            
            —
            
            
            
            1,588Depreciation
      of property and equipment
            
            
            27,046
            
            
            
            1,748
            
            
            
            423
            
            
            
            68
            
            
            
            29,285Amortization
      of intangible assets
            
            
            777
            
            
            
            3,509
            
            
            
            —
            
            
            
            4
            
            
            
            4,290Total
      operating expenses
            
            
            43,912
            
            
            
            33,846
            
            
            
            1,520
            
            
            
            7,635
            
            
            
            86,913(Loss)
      income from operations
            
            $
            10,005
            
            
            $
            (8,079
            )
            
            $
            (220
            )
            
            $
            (7,635
            )
            
            $
            (5,929
            )





11.
            RELATED
      PARTY TRANSACTIONS





A
non-employee officer of AccessIT DC is also an officer of Christie, from whom
AccessIT DC purchases the Systems for AccessIT DC’s Phase I
Deployment.  Payments for such Systems to Christie for the fiscal
years ended March 31, 2006, 2007 and 2008 totaled $21,057, $143,839 and
$113,598, respectively.  This individual was not compensated by
AccessIT DC and since May 2007, the individual was no longer an officer of
AccessIT DC.





In
connection with the Bigger Picture Acquisition, The Bigger Picture entered into
a services agreement with SD Entertainment, Inc. (“SDE”) to provide certain
services and other resources.  An employee officer of The Bigger
Picture is also an officer of SDE.  Payments for such services to SDE
for the fiscal year ended March 31, 2008 totaled $260.





12.
            INCOME
      TAXES





The
Company did not record any current or deferred income tax benefit from income
taxes in the fiscal years ended March 31, 2007 and 2008.





Net
deferred tax liabilities consisted of the following:




F-39





As
      of March 31,2007
            
            
            2008Deferred
      tax assets:Net
      operating loss carryforwards
            
            $
            25,603
            
            
            $
            40,989Stock
      based compensation
            
            
            1,015
            
            
            
            1,094Revenue
      deferral
            
            
            936
            
            
            
            700Other
            
            
            2,242
            
            
            
            1,103Total
      deferred tax assets before valuation allowance
            
            
            29,796
            
            
            
            43,886Less:
      Valuation allowance
            
            
            (17,099
            )
            
            
            (29,361
            )Total
      deferred tax assets after valuation allowance
            
            $
            12,697
            
            
            $
            14,525Deferred
      tax liabilities:Depreciation
      and amortization
            
            $
            (6,252
            )
            
            $
            (9,341
            )Intangibles
            
            
            (6,410
            )
            
            
            (5,167
            )Other
            
            
            (35
            )
            
            
            (17
            )Total
      deferred tax liabilities
            
            
            (12,697
            )
            
            
            (14,525
            )Net
      deferred tax liabilities
            
            $
            —
            
            
            $
            —





The
Company has provided a valuation allowance equal to its net deferred tax assets
for the fiscal years ended March 31, 2007 and 2008.  The Company is
required to recognize all or a portion of its deferred tax assets if it believes
that it is more likely than not, given the weight of all available evidence,
that all or a portion of its deferred tax assets will be
realized.  Management assesses the realizability of the deferred tax
assets at each interim and annual balance sheet date based on actual and
forecasted operating results.  The Company assessed both its positive
and negative evidence to determine the proper amount of its required valuation
allowance.  Factors considered include the Company's current taxable
income and projections of future taxable income.  Management increased
the valuation allowance by $6,914 and $12,262 during the fiscal years ended
March 31, 2007 and 2008, respectively.  The increase of the valuation
allowance of $6,914 for the year ended March 31, 2007 is net of a decrease to
the valuation allowance of $1,964.  The decrease to the valuation
allowance of $1,964 resulted from net taxable temporary differences acquired
from ACS, including future intangible asset amortization.  Management
will continue to assess the realizability of the deferred tax assets at each
interim and annual balance sheet date based on actual and forecasted operating
results.





At March
31, 2008, the Company had Federal and state net operating loss carryforwards of
approximately $102,000 available to reduce future taxable income.  The
federal net operating loss carryforwards will begin to expire in
2020.  The Company also has a charitable contribution carryforward of
approximately $325 thousand at March 31, 2008, available to offset future
federal and state taxable income, but limited to 10% of such income. Under the
provisions of the Internal Revenue Code, certain substantial changes in the
Company's ownership may result in a limitation on the amount of net operating
losses that may be utilized in future years.  Depending on a variety
of factors, this limitation, if applicable, could cause a portion or all of
these net operating losses to expire before utilization.





The
differences between the United States statutory federal tax rate and the
Company’s effective tax rate are as follows:





As
      of March 31,2007
            
            
            2008Provision
      at the U.S. statutory federal tax rate
            
            
            34.0
            %
            
            
            34.0
            %State
      income taxes, net of federal benefit
            
            
            6.8
            
            
            
            6.7Change
      in valuation allowance
            
            
            (38.4
            )
            
            
            (34.4
            )Disallowed
      interest
            
            
            (2.5
            )
            
            
            (6.7
            )Non-deductible
      equity compensation
            
            
            (1.2
            )
            
            
            (0.4
            )Other
            
            
            1.3
            
            
            
            0.8Income
      tax (provision) benefit
            
            
            0.0
            %
            
            
            0.0
            %





Effective
April 1, 2007, the Company adopted Financial Accounting Standards Board (FASB)
Interpretation No. 48 (FIN No. 48), "Accounting for Uncertainty in Income
Taxes," which clarifies the accounting and disclosure for uncertainty in income
taxes. The adoption of this interpretation did not have any impact on the
Company’s financial statements, as the Company did not have any unrecognized tax
benefits as of April 1, 2007 or during the year ended March 31,
2008.





The
Company files income tax returns in the U.S. federal jurisdiction and various
states. For federal income tax purposes, the Company’s fiscal 2005 through 2008
tax years remain open for examination by the tax authorities under the normal
three year





F-40





statute
of limitations.  For state tax purposes, the Company’s fiscal 2004
through 2008 tax years generally remain open for examination by most of the tax
authorities under a four year statute of limitations.





13.
            QUARTERLY
      FINANCIAL DATA (Unaudited) ($ in thousands, except per share
      data)





For
      the Quarter EndedFiscal
      year 2007
            
            6/30/2006
            
            
            9/30/2006
            
            
            12/31/2006
            
            
            3/31/2007Revenues
            
            $
            5,576
            
            
            $
            9,965
            
            
            $
            14,224
            
            
            $
            17,345Gross
      Margin
            
            $
            2,154
            
            
            $
            4,771
            
            
            $
            7,641
            
            
            $
            10,330Net
      Loss
            
            $
            (2,602
            )
            
            $
            (6,096
            )
            
            $
            (6,239
            )
            
            $
            (11,062
            )Basic
      and diluted net loss per share
            
            $
            (0.11
            )
            
            $
            (0.26
            )
            
            $
            (0.26
            )
            
            $
            (0.46
            )Shares
      used in computing basic and diluted net loss per
    share
            
            
            22,960,108
            
            
            
            23,613,396
            
            
            
            23,932,736
            
            
            
            24,362,925








For
      the Quarter EndedFiscal
      year 2008
            
            6/30/2007
            
            
            9/30/2007
            
            
            12/31/2007
            
            
            3/31/2008Revenues
            
            $
            18,146
            
            
            $
            19,466
            
            
            $
            21,480
            
            
            $
            21,892Gross
      Margin
            
            $
            11,940
            
            
            $
            12,482
            
            
            $
            14,872
            
            
            $
            15,121Net
      Loss
            
            $
            (6,843
            )
            
            $
            (9,257
            )
            
            $
            (8,352
            )
            
            $
            (11,235
            )Basic
      and diluted net loss per share
            
            $
            (0.28
            )
            
            $
            (0.36
            )
            
            $
            (0.32
            )
            
            $
            (0.43
            )Shares
      used in computing basic and diluted net loss per
    share
            
            
            24,758,441
            
            
            
            25,338,550
            
            
            
            25,931,467
            
            
            
            26,277,411





14.
            VALUATION
      AND QUALIFYING ACCOUNTS





Balance
      at Beginning of Period
            
            
            Additions
      to Bad Debt Expense
            
            
            Other
      Additions (1)
            
            
            Deductions
      (2)
            
            
            Balance
      at End of PeriodFor
      the Fiscal Year Ended March 31, 2008:Reserve
      for doubtful accounts
            
            $
            1,332
            
            
            $
            1,396
            
            
            $
            —
            
            
            $
            422
            
            
            $
            2,306For
      the Fiscal Year Ended March 31, 2007:Reserve
      for doubtful accounts
            
            $
            104
            
            
            $
            848
            
            
            $
            522
            
            
            $
            142
            
            
            $
            1,332For
      the Fiscal Year Ended March 31, 2006:Reserve
      for doubtful accounts
            
            $
            131
            
            
            $
            186
            
            
            $
            —
            
            
            $
            213
            
            
            $
            104





(1)          Primarily
represents allowance for doubtful accounts related to the PLX
Acquisition.


(2)          Represents
write-offs of specific accounts receivable.





15.
            SUBSEQUENT
      EVENTS





In April
2008, AccessIT DC entered into an Interest Rate Swap also known as a "synthetic
fixed rate financing" for 90% of the amounts outstanding under the GE Credit
Facility at a fixed rate of 7.3%, to hedge AccessIT DC’s exposure to increases
in interest rate under the GE Credit Facility. GE Corporate Financial Services
arranged the transaction, which will take effect commencing August 1, 2008 as
required by the GE Credit Facility.





In April
2008, in connection with the acquisition of Managed Services in January 2004,
the Company issued 15,219 shares of unregistered Class A Common Stock as
additional purchase price based on the subsequent performance of the business
acquired.





In April
2008, in connection with the acquisition of the Access Digital Server Assets,
the Company issued 30,000 shares of unregistered Class A Common Stock as
additional purchase price based on the subsequent performance.





In May
2008, the Company filed a registration statement on Form S-3 to register an
additional 500,000 shares of Class A Common Stock for future interest payments
on the 2007 Senior Notes.





In May
2008, AccessDM entered into a credit facility with NEC Financial Services, LLC
(the “NEC Facility”) to fund the purchase and installation of equipment to
enable the exhibition of 3-D live events in movie theatres as part of the
Company’s CineLiveSMproduct offering.  The NEC Facility provides for maximum borrowings
of up to $2,000, repayments over a 47 month period, and interest at an annual
rate of 8.25%.





F-41








Subsequent
to March 31, 2008, under the Plan (see Note 7), the Company granted 5,500 stock
options to employees at an exercise price ranging from $3.87 to $5.49 per share.
In addition, the Company granted 620,250 restricted stock units (“RSUs”) to
employees and 103,450 RSUs to five non-employee members of the Company’s
Board.  Each RSU represents a contingent right to receive one share of
Class A Common Stock, based on a three year vesting period, however, the Company
has the discretion to settle in shares of Class A Common Stock or cash or a
combination thereof.








F-42








ITEM
      15.
            EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES





(a)(1)
Financial Statements


See
Index to Financial Statements on page 1 herein.


(a)(2)
Financial Statement Schedules


None.





(a)(3)
Exhibits


The
exhibits are listed in the Exhibit Index beginning on page 5
herein.











2





SIGNATURES





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





ACCESS
INTEGRATED TECHNOLOGIES, INC.





Date:
            September 11,
      2008
            
            By:
            /s/
      A. Dale MayoA.
      Dale Mayo
              President
      and Chief Executive Officer and Chairman of the Board of
      Directors
              (Principal
      Executive Officer)Date:
            September 11,
      2008
            
            By:
            /s/
      Brian D. PflugBrian
      D. Pflug
              Senior
      Vice President – Accounting & Finance
              (Principal
      Financial & Accounting Officer)





Pursuant to the requirements of the
Securities Exchange Act of 1934, this Amendment to the report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated .





SIGNATURE(S)
            
            TITLE(S)
            DATE/s/
      A. Dale Mayo
            
            President,
      Chief Executive Officer
            September 11,
      2008A.
      Dale Mayo
            
            and
      Chairman of the Board of Directors
              (Principal
      Executive Officer)*
            
            Senior
      Vice President - Facilities
            September 11,
      2008Kevin
      J. Farrell
            
            and
      Director/s/
      Gary S. Loffredo
            
            Senior
      Vice President - General Counsel,
            September 11,
      2008Gary
      S. Loffredo
            
            Secretary
      and Director/s/
      Brian D. Pflug
            
            Senior
      Vice President - Accounting and Finance
            September 11,
      2008Brian
      D. Pflug
            
            (Principal
      Financial & Accounting Officer)*
            
            Director
            September 11,
      2008Wayne
      L. Clevenger*
            
            Director
            September 11,
      2008Gerald
      C. Crotty*
            
            Director
            September 11,
      2008Robert
      Davidoff*
            
            Director
            September 11,
      2008Matthew
      W. Finlay*
            
            Director
            September 11,
      2008Robert
      E. Mulholland






*By:
              /s/
      Gary S. LoffredoGary
      S. Loffredo, Attorney-in-Fact


3





EXHIBIT
INDEX





ExhibitNumber
            
            Description of Document1.1
            --
            Form
      of Underwriting Agreement between the Company and the underwriter to the
      Company’s November 10, 2003 Public Offering. (1)2.1
            --
            Stock
      Purchase Agreement, dated July 17, 2003, between the Company and Hollywood
      Software, Inc. and its stockholders. (2)2.2
            --
            [Intentionally
      omitted]2.3
            --
            Amendment
      No. 1 to Stock Purchase Agreement, dated as of November 3, 2003, between
      and among the Company, Hollywood Software, Inc., the selling stockholders
      and Joseph Gunnar & Co., LLC. (1)2.4
            --
            Stock
      Purchase Agreement, dated as of December 22, 2003, among the Company, Core
      Technologies, Inc. and Erik B. Levitt. (4)2.5
            --
            Securities
      Purchase Agreement, dated August 24, 2007, by and among the Company and
      certain purchasers.  (25)

                (confidential
      treatment granted under Rule 24b-2 as to certain portions which are
      omitted and filed separately with the SEC )2.6
            --
            [Intentionally
      omitted]2.7
            --
            [Intentionally
      omitted]2.8
            --
            [Intentionally
      omitted]2.9
            --
            Asset
      Purchase Agreement, dated as of October 19, 2004, among the Company,
      FiberSat Global Services, Inc., FiberSat Global Services LLC, Richard
      Wolfe, Ravi Patel, McKebben Communications, Globecomm Systems, Inc.,
      Timothy Novoselski, Scott Smith and Farina. (8)2.10
            --
            Asset
      Purchase Agreement, dated as of December 23, 2004, among ADM Cinema
      Corporation, Pritchard Square Cinema, LLC and Norman Adie.
      (10)2.11
            --
            [Intentionally
      omitted]2.12
            --
            Securities
      Purchase Agreement, dated as of February 9, 2005, among the Company and
      certain investors. (9)2.13
            --
            Securities
      Purchase Agreement, dated as of July 19, 2005, among the Company and
      certain purchasers. (13)2.14
            --
            Letter
      Agreement, dated August 29, 2005, among the Company and certain
      purchasers. (19)2.15
            --
            Securities
      Purchase Agreement, dated October 5, 2006, by and among the Company and
      certain purchasers. (20)2.16
            --
            Stock
      Purchase and Sale Agreement, dated as of July 6, 2006, by and among Access
      Integrated Technolgoies, Inc., UniqueScreen Media, Inc., the holders of
      all of the capital stock of UniqueScreen Media, Inc. listed on the
      signature pages thereto and Granite Equity Limited Partnership, as the
      Stockholder Representative. (22) (confidential
      treatment granted under Rule 24b-2 as to certain portions which are
      omitted and filed separately with the SEC)2.17
            --
            First
      Amendment to the Stock Purchase and Sale Agreement, dated as of July 6,
      2006, by and among Access Integrated Technolgoies, Inc., UniqueScreen
      Media, Inc., the holders of all of the capital stock of UniqueScreen
      Media, Inc. listed on the signature pages thereto and Granite Equity
      Limited Partnership, as the Stockholder Representative.
    (22)2.18
            --
            Asset
      Purchase Agreement, dated as of January 7, 2007, by and between Access
      Integrated Technologies, Inc., Vistachiara Productions, Inc., BP/KTF, LLC
      and each member of BP/KTF, LLC. (24)3.1
            --
            Fourth
      Amended and Restated Certificate of Incorporation of the Company.
      (4)3.2
            --
            Bylaws
      of the Company. (2)4.1
            --
            Form
      of Warrant Agreement (with Warrant Certificates) between the Company and
      the lead underwriter. (1)4.2
            --
            Specimen
      certificate representing Class A common stock.
  (1)





4








4.3
            --
            Form
      of Note to be issued  to purchaser pursuant to the Securities
      Purchase Agreement, dated August 24, 2007, by and among the Company and
      certain purchasers.  (25) (confidential
      treatment granted under Rule 24b-2 as to certain portions which are
      omitted and filed separately with the SEC)4.4
            --
            Registration
      Rights Agreement, dated August 24, 2007 by and among the Company and
      certain purchasers.  (25)4.5
            --
            Form
      of note to be issued by the Company to the selling stockholders of
      Hollywood Software, Inc. (2)4.6
            --
            Subsidiary
      Guaranty in favor of the holders of certain notes, dated August 24, 20007,
      by Access Digital Media, Inc., Core Technology Services, Inc., Hollywood
      Software, Inc., Fibersat Global Services Inc., PLX Acquisition Corp. And
      Vistachiara Productions, Inc. (25)4.7
            --
            Redemption
      Agreement, dated August 24, 2007, by and among the Company and certain of
      the holders of the Company’s One Year Notes. (25)4.8
            --
            [Intentionally
      omitted]4.9
            --
            Pledge
      and Security Agreement, dated as of November 3, 2003, between the Company
      and the selling stockholders of Hollywood Software, Inc.
    (1)4.10
            --
            [Intentionally
      omitted]4.11
            --
            Promissory
      note dated March 29, 2004 issued by the Company to The Boeing Company.
      (5)4.12
            --
            [Intentionally
      omitted]4.13
            --
            [Intentionally
      omitted]4.14
            --
            [Intentionally
      omitted]4.15
            --
            [Intentionally
      omitted]4.16
            --
            [Intentionally
      omitted]4.17
            --
            Registration
      Rights Agreement, dated as of June 2004, among the Company and certain
      investors. (6)4.18
            --
            Promissory
      Note, dated November 14, 2003, issued by the Company to David Gajda.
      (7)4.18.1
            --
            Promissory
      Note, dated May 16, 2007 issued by the Company to David Gajda replacing
      the Promissory Note dated November 14, 2003 issued by the Company to David
      Gajda. (24)4.18.2
            --
            Letter
      Agreement dated May 16, 2007 between the Company and David Gajda.
      (24)4.19
            --
            Promissory
      Note, dated November 14, 2003, issued by the Company to Robert
      Jackovich.(7)4.20
            --
            [Intentionally
      omitted]4.21
            --
            Form
      of Subsidiary Guarantee to be entered  into by certain
      subsidiaries of the Company pursuant to the Securities Purchase Agreement,
      dated as of February 9, 2005 among the Company and the several investors
      party thereto. (9)4.22
            --
            [Intentionally
      omitted]4.23
            --
            [Intentionally
      omitted]4.24
            --
            Form
      of Registration Rights Agreement, among the registrant and certain
      investors pursuant to the Securities Purchase Agreement, dated as of
      February 9, 2005 among the Company and the several investors party
      thereto. (9)4.25
            --
            Form
      of Warrant, dated July 19, 2005, issued to purchasers pursuant to
      Securities Purchase Agreement, dated as of July 19, 2005, among the
      Company and certain purchasers. (13)4.26
            --
            Registration
      Rights Agreement, dated as of July 19, 2005 among the Company and certain
      purchasers. (13)4.27
            --
            Form
      of Warrant issued to purchasers pursuant to a letter agreement.
      (15)4.28
            --
            Registration
      Rights Agreement, dated as of November 16, 2005, among the Company and
      certain purchasers. (15)4.29
            --
            Form
      of Note to be issued to purchasers pursuant to the Securities Purchase
      Agreement, dated October 5, 2006, by and among the Company and certain
      purchasers. (20)





5








4.30
            --
            Amendment
      No. 1, dated February 9, 2007, to the Notes issued to purchasers pursuant
      to the Securities Purchase Agreement, dated October 5, 2006, by and
      certain purchasers. (23)4.30
            --
            Registration
      Rights Agreement, dated October 5, 2006, by and among the Company and
      certain purchasers. (20)4.31
            --
            Form
      of Promissory Note, dated as of July 31, 2006, executed by Access
      Integrated Technologies, Inc. in favor of Granite Equity Limited
      Partnership in the principal amount of $1,204,402.34.
  (22)4.32
            --
            Form
      of Promissory Note, dated as of July 31, 2006, executed by Access
      Integrated Technologies, Inc. in favor of Granite Equity Limited
      Partnership in the principal amount of $4,000,000.00. (22) (confidential
      treatment granted under Rule 24b-2 as to certain portions which are
      omitted and filed separately with the SEC)4.33
            --
            Form
      of Note, to be executed by Christie/AIX, Inc. in connection with that
      certain Credit Agreement, dated as of August 1, 2006, among Christie/AIX,
      Inc., the Lenders party thereto and General Electric Capital Corporation,
      as administrative agent and collateral agent for the Lenders.
      (22)4.34
            --
            Registration
      Rights Agreement, dated as of July 31, by and among Access Integrated
      Technologies, Inc. and the stockholders signatory thereto.
      (22)4.35
            --
            Pledge
      Agreement, dated as of August 1, 2006, between Access Digital Media, Inc.
      and General Electric Capital Corporation, as administrative agent and
      collateral agent for the Lenders. (22)4.36
            --
            Guaranty
      and Security Agreement, dated as of August 1, 2006, among Christie/AIX,
      Inc. and each Grantor from time to time party thereto and General Electric
      Capital Corporation, as Administrative Agent and Collateral Agent.
      (22)4.37
            --
            Form
      of Revolving Note, dated as of December 29, 2005, executed by UniqueScreen
      Media, Inc. and Excel Bank Minnesota. (22)4.38
            --
            Security
      Agreement, dated as of December 29, 2005, by and between UniqueScreen
      Media, Inc. and Excel Bank Minnesota. (22)4.39
            --
            Registration
      Rights Agreement, dated as of January 29, 2007, by and among Access
      Integrated Technologies, Inc., Vistachiara Productions, Inc., BP/KTF, LLC
      and each member of BP/KTF, LLC. (24)10.1
            --
            Amended
      and Restated Employment Agreement, dated as of December 15, 2005, between
      the Company and A. Dale Mayo. (16)10.1.1
            --
            Amended
      and Restated Employment Agreement, dated March 31, 2008, between the
      Company and A. Dale Mayo.  (28)10.2
            --
            Employment
      Agreement, dated as of April 10, 2000, between the Company and Kevin
      Farrell. (2)10.3
            --
            Form
      of Employment Agreements between Hollywood Software, Inc. and David
      Gajda/Robert Jackovich. (2)10.4
            --
            Second
      Amended and Restated 2000 Equity Incentive Plan of the Company.
      (26)10.4.1
            --
            Amendment
      dated May 9, 2008 to the Second Amended and Restated 2000 Equity Incentive
      Plan of the Company. (30)10.4.2
            --
            Form
      of Notice of Restricted Stock Award (26)10.4.3
            --
            Form
      of Non-Qualified Stock Option Agreement (28)10.4.4
            --
            Form
      of Restricted Stock Unit Agreement (employees) (30)10.4.5
            --
            Form
      of Stock Option Agreement. (11)10.4.6
            --
            Form
      of Restricted Stock Unit Agreement (directors) (30)10.5
            --
            [Intentionally
      omitted]10.6
            --
            [Intentionally
      omitted]10.7
            --
            [Intentionally
      omitted]10.8
            --
            [Intentionally
      omitted]10.9
            --
            [Intentionally
      omitted]10.10
            --
            [Intentionally
      omitted]





6








10.11
            --
            Services
      Distribution Agreement, dated July 17, 2001, between the Company and
      Managed Storage International, Inc. (2)10.12
            --
            License
      Agreement between the Company and AT&T Corp., dated July 31, 2001.
      (2)10.13
            --
            Master
      Agreement for Colocation Space between the Company (by assignment from Cob
      Solutions Global Services, Inc.) and KMC Telecom VI LLC dated April 11,
      2002. (2)10.14
            --
            [Intentionally
      omitted]10.15
            --
            Lease
      Agreement, dated as of May 23, 2000, between the Company (formerly
      Fibertech & Wireless, Inc.) and 55 Madison Associates, LLC.
      (2)10.16
            --
            Agreement
      of Lease, dated as of July 18, 2000, between the Company and 1-10 Industry
      Associates, LLC. (2)10.17
            --
            Lease
      Agreement, dated as of August 28, 2000, between the Company (formerly
      Fibertech & Wireless, Inc.) and RFG Co. Ltd. (2)10.18
            --
            Letter
      Amendment to the Lease Agreement, dated August 28, 2000, between the
      Company (formerly Fibertech & Wireless, Inc.) and RFG Co. Ltd.
      (2)10.19
            --
            First
      Amendment to the Lease, dated August 28, 2000 between the Company
      (formerly Fibertech & Wireless, Inc.) and RFG Co. Ltd. dated October
      27, 2000. (2)10.20
            --
            Agreement
      of Lease, dated as of January 18, 2000, between the Company (by assignment
      from BridgePoint International (Canada), Inc.) and 75 Broad, LLC.
      (2)10.21
            --
            Additional
      Space and Lease Modification to the Agreement of Lease, dated as of
      January 18, 2000, between the Company (by assignment from BridgePoint
      International (Canada), Inc.) and 75 Broad, LLC dated May 16, 2000.
      (2)10.22
            --
            Second
      Additional Space and Lease Modification to the Agreement of Lease, dated
      as of January 18, 2000, between the Company (by assignment from
      BridgePoint International (Canada), Inc.) and 75 Broad, LLC dated August
      15, 2000. (2)10.23
            --
            Lease
      Agreement, dated as of January 17, 2001, as amended, between the Company
      (by assignment from R. E. Stafford, Inc. d/b/a ColoSolutions) and Union
      National Plaza I, Inc. (2)10.24
            --
            Lease
      Agreement, dated as of February 6, 2001, between the Company (by
      assignment from R. E. Stafford, Inc. d/b/a ColoSolutions) and Granite --
      Wall Street Limited Partnership (successor in interest to Duffy Wall
      Street L.L.C.). (2)10.25
            --
            Indenture
      Agreement, dated as of May 22, 2001, between the Company (by assignment
      from R. E. Stafford, Inc. d/b/a ColoSolutions) and Research Boulevard
      Partnership. (2)10.26
            --
            Lease
      Agreement, dated as of January 22, 2001, between the Company (by
      assignment from ColoSolutions L.L.C.) and 340 Associates, L.L.C.
      (2)10.27
            --
            Lease
      Agreement, dated as of September 29, 2002, between the Company (by
      assignment from R. E. Stafford, Inc. d/b/a ColoSolutions) and Jerry J.
      Howard and Eddy D. Howard. (2)10.28
            --
            Office
      Lease, dated as of February 22, 2001, between the Company (by assignment
      from R. E. Stafford, Inc. d/b/a ColoSolutions) and One Liberty Place, L.C.
      (2)10.29
            --
            Commercial
      Property Lease between Hollywood Software, Inc. and Hollywood Media
      Center, LLC, dated January 1, 2000. (2)10.30
            --
            Lease,
      dated as of February 1, 1999, between Hollywood Software, Inc. and Spieker
      Properties, L. P. (2)10.30.1
            --
            First
      Amendment to Lease, dated as of February 1, 1999, between Hollywood
      Software, Inc. and Spieker Properties, L.P. dated May 10, 2000.
      (2)10.30.2
            --
            Second
      Amendment to Lease, dated as of February 1, 1999, between Hollywood
      Software, Inc. and Spieker Properties, L.P. dated February 16, 2001.
      (2)10.30.3
            --
            Third
      Amendment to Lease, dated as of February 1, 1999, between Hollywood
      Software, Inc. and EOP-BREA Park Centre, L.P. (successor in interest to
      Spieker Properties, L.P.), dated June 27, 2002. (2)10.31
            --
            [Intentionally
      omitted]





7








10.32
            --
            [Intentionally
      omitted]10.33
            --
            [Intentionally
      omitted]10.34
            --
            [Intentionally
      omitted]10.35
            --
            [Intentionally
      omitted]10.36
            --
            Universal
      Transport Exchange License and Option Agreement, dated August 13, 2003, by
      and between the Company and Universal Access, Inc. (3)10.37
            --
            Employment
      Agreement, dated as of January 9, 2004, between the Company and Erik B.
      Levitt. (4)10.38
            --
            Confidentiality,
      Inventions and Noncompete Agreement, dated as of January 9, 2004, between
      the Company and Erik B. Levitt. (4)10.39
            --
            Employment
      Agreement, dated as of November 21, 2003, between the Company and Russell
      Wintner.  (7)10.40
            --
            Lease
      Agreement, dated as of August 9, 2002, by and between OLP Brooklyn
      Pavilion LLC and Pritchard Square Cinema LLC. (19)10.40.1
            --
            First
      Amendment to Contract of Sale and Lease Agreement, dated as of August 9,
      2002, by and among Pritchard Square LLC, OLP Brooklyn Pavilion LLC and
      Pritchard Square Cinema, LLC. (19)10.40.2
            --
            Second
      Amendment to Contract of Sale and Lease Agreement, dated as of April 2,
      2003, by and among Pritchard Square LLC, OLP Brooklyn Pavilion LLC and
      Pritchard Square Cinema, LLC. (19)10.40.3
            --
            Third
      Amendment to Contract of Sale and Lease Agreement, dated as of November 1,
      2003, by and among Pritchard Square LLC, OLP Brooklyn Pavilion LLC and
      Pritchard Square Cinema, LLC. (19)10.40.4
            --
            Fourth
      Amendment to Lease Agreement, dated as of February 11, 2005, between ADM
      Cinema Corporation and OLP Brooklyn Pavilion
      LLC.  (12)10.41
            --
            2002
      ISDA Master Agreement between HSBC Bank USA, National Association and
      Christie/AIX, Inc., dated as of April 2, 2008. (29)10.42
            --
            Schedule
      to the ISDA Master Agreement between HSBC Bank USA, National Association
      and Christie/AIX, Inc., dated as of April 2, 2008. (29)10.43
            --
            Swap
      Transaction Confirmation from HSBC Bank USA, National Association to
      Christie/AIX, Inc., dated as of April 2, 2008. (29)10.44
            --
            [Intentionally
      omitted]10.45
            --
            Amended
      and Restated Digital Cinema Framework Agreement, dated as of September 30,
      2005, by and among Access Digital Media, Inc., Christie/AIX, Inc. and
      Christie Digital Systems USA, Inc. (14) (confidential
      treatment granted under Rule 24b-2 as to certain portions which are
      omitted and filed separately with the SEC)10.46
            --
            Digital
      Cinema Deployment Agreement, dated September 14, 2005, by and among Buena
      Vista Pictures Distribution, Christie/AIX, Inc. and Christie Digital
      Systems USA, Inc. (14) (confidential
      treatment granted under Rule 24b-2 as to certain portions which are
      omitted and filed separately with the SEC)10.47
            --
            Digital
      Cinema Deployment Agreement, dated October 12, 2005, by and between
      Twentieth Century Fox Film Corporation and Christie/AIX, Inc. (14) (confidential
      treatment granted under Rule 24b-2 as to certain portions which are
      omitted and filed separately with the SEC)10.48
            --
            Placement
      Agency Agreement, dated as of January 17, 2006, by and between the Company
      and Craig-Hallum Capital Group LLC. (17)10.49
            --
            Digital
      Cinema Deployment Agreement, dated as of October 25, 2005, by and between
      Universal City Studios, LLP and Christie/AIX, Inc. (18) (confidential
      treatment granted under Rule 24b-2 as to certain portions which are
      omitted and filed separately with the SEC)10.50
            --
            Master
      License Agreement, dated as of December 16, 2005, by and between
      Christie/AIX, Inc. and Carmike Cinemas, Inc. (18)

                (confidential
      treatment granted under Rule 24b-2 as to certain portions which are
      omitted and filed separately with the SEC)10.51
            --
            Subsidiary
      Guaranty in favor of the holders of certain notes, dated October 5, 2006,
      by Access Digital Media, Inc., Core Technology Services, Inc., Hollywood
      Software, Inc., FiberSat Global Services Inc. and PLX Acquisition Corp.
      (20)10.51.1
            --
            Subsidiary
      Guaranty Supplement, dated as of January, 2007, made by Vistachiara
      Productions, Inc., in favor of and for the benefit of certain purchasers.
      (24)10.52
            --
            Amended
      and Restated Digital System Supply Agreement, dated September 30, 2005, by
      and between Christie Digital Systems USA, Inc. and Christie/AIX, Inc.
      (21)





8








10.52.1
            --
            Letter
      Agreement amending the Amended and Restated Digital System Supply
      Agreement, dated as of February 21, 2006, by and between Christie Digital
      Systems USA, Inc. and Christie/AIX, Inc. (21) (confidential
      treatment granted under Rule 24b-2 as to certain portions which are
      omitted and filed separately with the SEC)10.52.2
            --
            Letter
      Agreement amending the Amended and Restated Digital System Supply
      Agreement, entered into on November 2, 2006, by and between Christie
      Digital Systems USA, Inc. and Christie/AIX, Inc. (21) (confidential
      treatment granted under Rule 24b-2 as to certain portions which are
      omitted and filed separately with the SEC)10.53
            --
            Credit
      Agreement, dated as of August 1, 2006, among Christie/AIX, Inc., the
      Lenders party thereto and General Electric Capital Corporation, as
      administrative agent and collateral agent for the Lenders. (22) (confidential
      treatment granted under Rule 24b-2 as to certain portions which are
      omitted and filed separately with the SEC)10.53.1
            --
            First
      Amendment, effective as of August 30, 2006, with respect to that certain
      Credit Agreement, dated as of August 1, 2006, among Christie/AIX, Inc.,
      the Lenders party thereto and General Electric Capital Corporation, as
      administrative agent and collateral agent for the Lenders.
      (22)10.53.2
            --
            Second
      Amendment, dated December, 2006, with respect to that certain Credit
      Agreement, dated as of August 1, 2006, among Christie/AIX, Inc., the
      Lenders party thereto and General Electric Capital Corporation, as
      administrative agent and collateral agent  for the Lenders.
      (24)10.53.3
            --
            Third
      Amendment, dated September 28, 2007, with respect to that certain
      definitive Credit Agreement, dated as of August 1, 2006 (as amended,
      supplemented or otherwise modified prior to entry into the Third
      Amendment), with General Electric Capital Corporation, as administrative
      agent and collateral agent for the
  Lenders.  (27)10.54
            --
            Credit
      Agreement, dated as of December 29, 2005, by and between UniqueScreen
      Media, Inc. and Excel Bank Minnesota, as amended on March 10, 2006 and
      July 25, 2006. (22)21.1
            --
            List
      of Subsidiaries (previously filed).23.1
            --
            Consent
      of Eisner LLP.*24.1
            --
            Powers
      of Attorney (previously filed).24.2
            --
            Substitution
      of Power of Attorney, dated June 26, 2008.*31.1
            --
            Officer’s
      Certificate Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
            --
            Officer’s
      Certificate Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
            --
            Certification
      Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002.*32.2
            --
            Certification
      Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
      the Sarbanes-Oxley Act of
2002.*





* Filed
herewith.




Documents
Incorporated Herein by Reference:




(1)
Previously filed with the Securities and Exchange Commission on November 4, 2003
as an exhibit to the Company’s Amendment No. 3 to Registration Statement on Form
SB-2 (File No. 333-107711).




(2)
Previously filed with the Securities and Exchange Commission on August 6, 2003
as an exhibit to the Company’s Registration Statement on Form SB-2 (File No.
333-107711).




(3)
Previously filed with the Securities and Exchange Commission on September 22,
2003 as an exhibit to the Company’s Amendment No. 1 to Registration Statement on
Form SB-2 (File No. 333-107711).




(4)
Previously filed with the Securities and Exchange Commission on February 17,
2004 as an exhibit to the Company’s Form 10-QSB for the quarter ended December
31, 2003 (File No. 001-31810).




(5)
Previously filed with the Securities and Exchange Commission on April 2, 2004 as
an exhibit to the Company’s Form 8-K (File No. 001-31810).







9





(6)
Previously filed with the Securities and Exchange Commission on June 2, 2004 as
an exhibit to the Company’s Form 8-K (File No. 001-31810).




(7)
Previously filed with the Securities and Exchange Commission on June 25, 2004 as
an exhibit to the Company’s Form 10-KSB for the fiscal year ended March 31, 2004
(File No. 001-31810).




(8)
Previously filed with the Securities and Exchange Commission on November 8, 2004
as an exhibit to the Company’s Form 8-K (File No. 001-31810).




(9)
Previously filed with the Securities and Exchange Commission on February 10,
2005 as an exhibit to the Company’s Form 8-K (File No. 001-31810).




(10)
Previously filed with the Securities and Exchange Commission on February 14,
2005 as an exhibit to the Company’s Form 10-QSB for the quarter ended December
31, 2004 (File No. 001-31810).




(11)
Previously filed with the Securities and Exchange Commission on April 25, 2005
as an exhibit to the Company’s Registration Statement on Form S-8 (File No.
333-124290).




(12)
Previously filed with the Securities and Exchanged Commission on April 29, 2005
as an exhibit to the Company’s Form 8-K (File No. 001-31810).




(13)
Previously filed with the Securities and Exchange Commission on July 22, 2005 as
an exhibit to the Company’s Form 8-K (File No. 001-31810).




(14)
Previously filed with the Securities and Exchange Commission on November 14,
2005 as an exhibit to the Company’s Form 10-QSB for the quarter ended September
30, 2005 (File No. 001-31810).




(15)
Previously filed with the Securities and Exchange Commission on November 16,
2005 as an exhibit to the Company’s Registration Statement on Form S-3 (File No.
333-129747).




(16)
Previously filed with the Securities and Exchange Commission on December 21,
2005, as an exhibit to the Company’s Form 8-K (File No. 001-31810).




(17)
Previously filed with the Securities and Exchange Commission on January 19, 2006
as an exhibit to the Company’s 8-K (File No. 001-31810).




(18)
Previously filed with the Securities and Exchange Commission on February 13,
2006 as an exhibit to the Company’s Form 10-QSB (File No.
001-31810).




(19)
Previously filed with the Securities and Exchange Commission on June 29, 2006 as
an exhibit to the Company’s Form 10-KSB for the fiscal year ended March 31, 2006
(File No. 001-31810).




(20)  Previously
filed with the Securities and Exchange Commission on October 6, 2006 as an
exhibit to the Company’s Form 8-K (File No. 000-51910).




(21)
Previously filed with the Securities and Exchange Commission on November 8, 2006
as an exhibit to the Company’s Form 8-K (File No. 000-51910).




(22)  Previously
filed with the Securities and Exchange Commission on November 14, 2006 as an
exhibit to the Company’s Form 10-QSB for the fiscal quarter ended September 30,
2006 (File No. 000-51910).




(23)
Previously filed with the Securities and Exchange Commission on May 16, 2007 as
an exhibit to Amendment No. 1 to the Company’s Registration Statement on Form
S-3 (Reg. No. 333-14241).




(24)
Previously filed with the Securities and Exchange Commission on June 29, 2007 as
an exhibit to the Company’s Form 10-KSB (File No. 000-51910).




(25)
Previously filed with the Securities and Exchange Commission on August 29, 2007
as an exhibit to the Company’s Form 8-K (File No. 000-51910).




10




(26)
Previously filed with the Securities and Exchange Commission on September 24,
2007 as an exhibit to the Company’s Form 8-K (File No. 000-51910).




(27)
Previously filed with the Securities and Exchange Commission on October 16, 2007
as an exhibit to the Company’s Form 8-K (File No. 000-51910).




(28)
Previously filed with the Securities and Exchange Commission on March 31, 2008
as an exhibit to the Company’s Form 8-K (File No. 000-51910).




(29)
Previously filed with the Securities and Exchange Commission on April 8, 2008 as
an exhibit to the Company’s Form 8-K (File No. 000-51910).




(30)
Previously filed with the Securities and Exchange Commission on May 14, 2008 as
an exhibit to the Company’s Form 8-K (File No. 000-51910).





11