Amcomri Entertainment : Management Discussion & Analysis – Q1 2023

AMCOMRI ENTERTAINMENT INC.

(formerly Appreciated Media Holdings Inc.)

MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2023, AND 2022

This management’s discussion and analysis (“MD&A”) presents an analysis of the financial position of Amcomri Entertainment Inc. (the “Company” or “Amcomri”) for the three months ended March 31, 2023, and 2022. The following information should be read in conjunction with the Company’s consolidated financial statements and related notes for the three months ended March 31, 2023, and 2022 and audited consolidated financial statements for three months ended March 31, 2023, including the notes contained therein (collectively the “financial statements”). The financial statements are presented in Canadian currency and were prepared in accordance with accounting policies consistent with International Financial Reporting Standards (“IFRS”) appropriate in the circumstances.

Additional information related to the Company is available on its website at www.amcomrientertainmentinc.com.Other information related to the Company, including the Company’s most recent Annual Information Form (“AIF”) and financial statements referred to herein are available on the Canadian Securities Administrator’s website at www.sedar.com.

DATE OF REPORT

This MD&A is dated May 15, 2023.

EXPLANATORY NOTE

This MD&A for the three months ended March 31, 2023, and 2022, has been prepared to assist readers in understanding the financial performance of the Company.

FORWARD LOOKING STATEMENTS

The information set forth in this MD&A contains statements concerning future results, future performance, intentions, objectives, plans and expectations that are, or may be deemed to be, forward-looking statements. These statements concerning possible or assumed future results of operations of the Company are preceded by, followed by or include the words ‘believes’, ‘expects’, ‘anticipates’, ‘estimates’, ‘intends’, ‘plans’, ‘forecasts’, ‘projects’ or similar expressions or statements that certain events or conditions “may” or “will” occur. Although the Company’s management believes that the assumptions made and the expectations represented by such statement or information are reasonable, there can be no assurance that forward-looking statements or information referenced herein will prove to be accurate. Forward- looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. These forward-looking statements are based on current expectations that involve numerous risks and uncertainties, including, but not limited to, those identified in the “Risks Factors” section. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and any of the assumptions could prove inaccurate. These factors should be considered carefully, and readers should not place undue reliance on forward-looking statements. The forward-looking statements contained herein are given as of the date of this MD&A. Unless required by securities legislation, the Company has no intention and undertakes no obligation to update or revise any forward-looking statements, whether written or oral, that may be made by or on the Company’s behalf.

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CAUTION REGARDING NON-IFRS MEASURES

In addition to the results reported in accordance with IFRS, this MD&A makes reference to certain measures that are not recognized under IFRS and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be comparable to similar measures presented by other companies. The Company uses non-IFRS measures, including “EBITDA,” “adjusted EBITDA” as additional information to complement IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Management believes that these measures provide useful information in that they may exclude amounts that are not indicative of the Company’s core operating results and ongoing operations and provide a more consistent basis for comparison between periods. For further details, please refer to the Non-IFRS Financial Measures section later in this document.

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CORPORATE PROFILE

The Company was acquired on January 7, 2022, by the shareholders of Trinity Pictures Distribution Limited (“Trinity”) by way of a reverse takeover (the “RTO”) and is now listed on the NEO Stock Exchange (the “NEO”) under the symbol “AMEN”, on OTC Markets Exchange under the symbol “AMNNF” and on the Frankfurt Exchange under the symbol “25YO.”

Operating in the multi-billion-dollar film and television market, Amcomri is a global independent producer, distributor, library owner and finance provider of movies, television series, and documentaries. With decades of experience across all key media platforms, the Company is rapidly becoming the go-to team for independent producers seeking the broadest possible audience for their productions. Amcomri is comprised of several subsidiaries including: 101 Films Limited (“101 Films”), 101 Films International Limited (“101 International”), Hollywood Classics International Limited (“HCI”), Appreciated Media Global Limited, Amcomri Productions Limited and Abacus Media Rights Limited (“Abacus”).

Revenue by Activity

The company operates in three distinct areas namely, Film Distribution, Film Production & Representation and Television Distribution & Co-production. Revenue by activity for the three months ended March 31, 2023 is set out below:

A geographical analysis of the Company’s sales activities for three months ended March 31, 2023 is as follows: –

Details of the Reverse Takeover

On August 9, 2021, the Company entered into an arrangement agreement with Trinity and the shareholders of Trinity which outlined the terms and conditions pursuant to which the Company and Trinity would complete a transaction which would result in a RTO of the Company by the shareholders of Trinity (the “Arrangement”).

On January 7, 2022, the Company completed the Arrangement. Pursuant to the Arrangement, the Company effected a consolidation of all of its outstanding common shares on a 25:1 basis (the “Consolidation”) and acquired all of the ordinary shares in the capital of Trinity (the “Trinity Shares”) in exchange for 66,666,667 post-Consolidation common shares of the Company issued at a deemed price per post-Consolidation share of $0.75.

The Company also settled debt with Amcomri Limited Partnership and Oranmore Limited, both controlled by Paul McGowan (together, the “Creditors”), a significant shareholder of Trinity. The Creditors exchanged $1,486,034 of debt for 1,981,379 post-Consolidation common shares at a deemed price of $0.75 per post-Consolidation share.

In connection with the Arrangement, the Company changed its name to “Amcomri Entertainment Inc.”, delisted its common shares from the TSX Venture Exchange (“TSXV”) and listed its common shares on the NEO, a senior exchange based in Toronto, Canada.

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STRATEGY

As a full service and diversified film and television business, our mission is to be the home of independent storytelling. We are breaking down the barriers for independent filmmakers and taking their stories global.

Our commitment and transparent approach to the market ensures our partner network of streaming platforms and television channels is second to none. As a result, we offer scale and aggregation to nearly 200 television and film producers around the world.

Amcomri plans to grow by:

• leveraging our high-margin, low overhead business model, partnerships with key platforms and channels (including Amazon Prime, AMC, CBC, and Netflix), and proven success in content acquisition;
• building our content portfolio through further library growth and new content acquisition and investment;
• expanding global distribution channels, with specific focus on North America;
• increasing our in-house production and co-production capabilities; and
• completing opportunistic acquisitions.

OVERALL PERFORMANCE

Quarter Highlights

• Revenue for the quarter of $5,118,176, an increase of 22.9% compared to the first quarter of 2022;
• EBITDA was a profit of $2,449,817 for the first quarter, an increase of 101% compared to the first quarter of 2022;
• Net income for the quarter of $1,589,246 an increase of 329% compared to the first quarter of 2022;
• Basic and diluted earnings per share of $0.02 for the three months ended March 31, 2023;
• Generated $1,546,634 in cash from operating activities for the three months ended March 31, 2023 (2022 – ($498,561)), with cash at the end of the quarter of $1,554,376 (2022 – $1,406,901).
• Released Left Behind 2 (Rise of the Antichrist) in North American theatres on 26 January 2023 with Box Office revenues of $4.8m in a limited four-day release. Physical and Digital distribution windows opened in North America on 26 March 2023.
• Strong performance in the quarter from 101 Films (Movie Distribution).Revenues in Abacus (television and documentary division) experienced a slower than expected start to the year however this is due to two major 2023 releases being pushed to mid-2023.
• Delays experienced in 101 International’s (Movie Production) slate started to ease with seven titles delayed in 2022 now available for sale at the major film markets.

SELECTED QUARTERLY INFORMATION

The following financial data, which has been prepared in accordance with IFRS, is derived from the unaudited condensed interim consolidated financial statements for the quarters noted below. Earnings per share has been restated for periods prior to the RTO based upon a retroactive application of the RTO share exchange ratio.

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