FINANCIAL POSITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited interim Condensed
Consolidated Financial Statements and related notes included elsewhere in this
Quarterly Report on Form 10-Q ("Quarterly Report") and with our audited
Consolidated Financial Statements included in our Annual Report on Form 10-K for
the year ended December 31, 2021 as filed with the Securities and Exchange
Commission ("SEC").

The following discussion and analysis contains forward-looking statements that
involve risks and uncertainties. Our actual results may materially differ from
those discussed in such forward-looking statements. Factors that could cause or
contribute to these differences include, but are not limited to, those
identified below and those discussed in "Risk Factors" under Part 1, Item 1A of
our Annual Report on Form 10-K for the year ended December 31, 2021.

Insight

Redbox is an established brand and leading provider in the home entertainment
market in the United States. The Company is focused on providing its customers
with the best value in entertainment and the most choice in how they consume it,
through physical media and/or digital services. Redbox is undergoing a
significant business expansion and digital transformation. The Company has
transitioned from a pure-play DVD rental company to a multi- faceted
entertainment company that provides tremendous value and choice by offering DVD
rentals as well as multiple digital products across a variety of content windows
including transactional (TVOD), ad-supported (AVOD/FLTV) and being a distributor
of feature films with a growing library of original content. Redbox currently
conducts its business through two operating segments: (1) Legacy Business and
(2) Digital Business.

For its Legacy Business, the Company operates a nationwide network of
approximately 38,000 self-service kiosks where consumers can rent or purchase
new-release DVDs and Blu-ray DiscsTM ("movies"). The Company also generates
service revenue by providing installation, merchandising and break-fix services
to other kiosk businesses. Finally, the Company acquires, and distributes movies
exclusively through its film distribution label, Redbox Entertainment, LLC,
acquiring rights to talent-led films that are distributed across Redbox
platforms as well as through third party digital services. For its Digital
Business, the Company provides both transactional and ad-supported digital
streaming services, which include 1) Redbox On Demand, a transactional service
providing digital rental or purchase of new release and catalog movies and TV
content, 2) Redbox Free On Demand (AVOD), an ad- supported service providing
free movies and TV shows on demand, and 3) Redbox Free Live TV (FLTV), a free,
ad-supported television service giving access to over 145 linear channels. The
Company also sells third-party display advertising via its mobile app, website,
and e-mails, as well as display and digital video advertising at the kiosk.

Due to risks and uncertainties related to the ongoing adverse effects of the
COVID-19 pandemic on the Company's operating results, together with the
Company's recurring operating losses, accumulated deficit and negative working
capital, there is substantial doubt as to our ability to continue as a going
concern. See "Business Update, Going Concern and Strategic Alternatives."

Redbox Legacy Business

Redbox's mission has always been to make it ridiculously cheap and easy for
customers to get the home entertainment they want. Redbox provides exceptional
customer value with new release movie disc rentals priced at approximately $2.00
a night, about one-third of the cost of a digital rental, which are typically
$5.99 or more on digital retail platforms. Customers have the flexibility to
rent a movie from one location and return their rental to any kiosk. Kiosks are
located primarily in retail centers that experience heavy foot traffic,
including grocery stores, mass retailers, drug stores, dollar retailers, and
convenience stores. With approximately 32,000 locations and more than 150 retail
partners, consumers have convenient access to kiosks as part of their routine
shopping experiences. Revenue is generated primarily through the fees charged to
rent or purchase a movie at the kiosk. In turn, Redbox pays retailers a
percentage of the revenue generated at the Redbox kiosks installed at their
locations. The Company obtains content through revenue sharing agreements and
license agreements with major studios as well as through direct purchases from
independent distributors and other suppliers.

Redbox has built a unique asset in its loyalty and rewards program, Redbox
Perks, which currently boasts approximately 40 million members. Customers earn
points for their rentals or purchases and can use those points for free rentals
in the future. This tiered loyalty program gives the Company the ability to
reward its most loyal and valuable customers while providing a currency for
incenting increased transaction frequency and other behaviors, such as
downloading the Redbox app or trying new products and services. Redbox Perks is
a vehicle to provide greater value to customers and is central to its marketing
and customer strategy. The

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program is a differentiator in the market and competitive advantage for Redbox.
Redbox's customers are value-conscious, love movies and entertainment, and tend
to be late-adopters of new technology. Given the scale of the existing customer
base, the Company has built a sizable marketing program that includes
approximately 45 million e-mail subscribers, approximately 5 million SMS
subscribers, approximately 45 million mobile app downloads, and nearly 400
million weekly impressions at retail.

To drive further engagement with our customers, Redbox established Redbox
Entertainment, LLC as a movie distribution label. Through this label, the
Company acquires North American rights and distributes feature films through
Redbox kiosks, Redbox On Demand, third party digital transactional platforms and
other streaming services. Redbox Entertainment acquires rights to finished films
and also commits to slate financing deals for films to be produced, giving the
Company input on creative direction. The Company generates gross profit from
these films through promotional initiatives on its own platform and by selling
downstream window rights to subscription streaming services. Moreover, because
the Company acquires long term exclusive rights to these films, Redbox is
building a content library which can be used on its Free On Demand (AVOD) and
Free Live TV (FLTV) services or further licensed to other streaming platforms in
future windows.

In addition, Redbox Entertainment benefits from the Company's robust rental data
that has been accumulated over the years, giving the Company proprietary
insights into what titles and talent will perform well on its platforms. The
Company has released a number of films since 2019 under the Redbox Entertainment
label. The Company has already announced a slate deal with Basil Iwanyk, the
producer of the blockbuster John Wick franchise, committing to 12
action/thriller films over the next several years.

Finally, Redbox has a service business, which employs a team of best-in-class
field workers nationwide to manage kiosk installation, merchandising and
break-fix services. In addition to maintaining Redbox's kiosk network, the
Company's service team also supports other kiosk businesses. The Company has
service agreements with multiple companies that have national and regional kiosk
networks and since June of 2020, Redbox has been the primary vendor for Amazon
to service their expanding Amazon Hub Locker locations. The service business
helps mitigate the costs of the field operations for the Legacy DVD business
while generating incremental margin dollars.

Redbox digital business

Redbox is rapidly expanding its digital product offering, leveraging its
customer and marketing scale to transform the brand. The Company is building a
digital ecosystem that consumers can use as a one stop shop for their
entertainment needs by engaging with a variety of digital video services within
the Redbox app in an integrated, easy-to use format. This simplifies the
customer experience, drives multi-product adoption, and minimizes customer
churn. These services span multiple business models including transactional,
ad-supported, and anticipated in the future, subscription. The Company's digital
products are available to stream across web browsers, mobile devices, and almost
every major consumer device, including Roku, Apple TV, Samsung, LG, AndroidTV,
VIZIO, Xbox and PlayStation.

In December 2017, the Company launched Redbox On Demand, a digital transactional
video-on-demand service (TVOD), allowing customers to rent or buy new release
and catalog digital movies and television episodes, with new release prices
typically ranging from $5.99 to $24.99 and catalog movies from $1.99 to $3.99,
not including any discounts. Since 2020, customers have also been able to
digitally rent movies that are still in theaters, which is known as Premium
Video-On-Demand (PVOD). Customers pay a transactional fee to rent or buy content
while earning Redbox Perks loyalty points every time they transact. Redbox On
Demand has seen rapid growth and adoption with nearly 4 million customers since
launch. That growth has been fueled primarily though leveraging the Company's
own marketing channels including e-mail and SMS and offering rewards points and
other promotional activity to drive digital customer acquisition.

In February 2020, the Company launched Redbox Free Live TV (FLTV), an
ad-supported digital linear television service, as a complement to the existing
transactional On Demand service. With over 145 linear channels and growing,
including five Redbox branded and programmed channels, Free Live TV gives
customers the opportunity to channel surf and find content that interests them.
A variety of these Redbox- branded channels, are currently syndicated to the
Roku Channel, LG Channels and Vizio Watchfree services, which drives greater
viewership and revenue. The Company has plans to continue syndicating Redbox
programmed channels to additional 3rd party services.

Redbox launched an ad-supported Free On Demand (AVOD) service in December 2020.
AVOD gives consumers complete control over when and what they watch, and
combined with Redbox's growing AVOD library, which has more than 10,000 movies
and TV episodes, consumers have a broad amount of content to choose from. The
ad-supported services (FLTV and AVOD) have seen strong growth in engagement as
new channels and titles are added and awareness of the offering grows.

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Finally, Redbox operates a media advertising business which monetizes more than
100 million monthly display and digital video ad-impressions across its mobile
app, web, e-mail and kiosk network. The Company drives advertising revenue
through a mix of programmatic advertising and direct sales. Direct ad sales for
the media above as well as video advertising for Free On Demand and FLTV are
driven by both internal sales team and strategic sales partnerships with
Screenvision and the Palomino Media Group.

Growth strategy

Redbox’s transformation into a multi-faceted entertainment company creates multiple areas for future growth. The company’s expansion into AVOD and our planned eventual expansion into SVOD channels allows Redbox to participate in a very large and rapidly growing market. The Company is convinced that it can create long-term value by focusing on:

Growing multi-product customers. Redbox intends to grow multi-product customers
through increasing customer acquisition marketing and spend across streaming
device partners, marketing at the kiosk, and other external paid media. To date,
the Company has relied primarily on e-mail and SMS channels to drive customer
acquisition. Thus, over time, with increased spend and attention via these
additional channels, and with more content and services offered, the Company
expects to drive greater customer growth. Redbox intends to also drive greater
multi-product customer adoption through improved CRM, greater personalization
and targeted use of promotions to create more personalized customer funnels to
encourage users to trial and adopt other digital services within the Redbox app.

Accelerating AVOD adoption. Redbox projects growth for the Company's
ad-supported service through measured investment to expand the Free Live TV and
Free On Demand content offerings. Through increased content volume and improved
content quality, the Company expects to drive higher engagement and more hours
watched per customer. Further, this improved content is expected to drive an
increase in customers, accelerating the business while maintaining a reasonable
customer acquisition cost.

Ramping Content Acquisition. Redbox Entertainment drives additional revenue in
two ways. First, it provides more content for Redbox kiosks, On Demand and the
ad-supported offerings; secondly, it generates revenue from distribution and
licensing to other streaming platforms. The Company expects to ramp the number
of Redbox Entertainment branded releases to 36 a year over time. The number of
releases will naturally ramp as committed titles complete production and are
delivered and the pipeline continues to grow.

Launching SVOD channels platform. As part of its long-term growth strategy, the
Company's intended launch of Redbox's SVOD channels service will become another
meaningful revenue stream. Redbox would act as the merchant of record,
collecting 100% of the subscription revenue before paying the SVOD channel
owner's revenue share. By providing access to multiple SVOD channel options,
customers could easily subscribe to one or more SVOD services all within the
Redbox app, and Redbox could merchandise the third party SVOD content and
service via the approximately 45 million Redbox app downloads on mobile devices,
streaming media players, game consoles, and connected televisions.

Impact of COVID-19 and Emerging Industry Trends

In March 2020, the World Health Organization recognized the novel strain of
coronavirus, COVID-19, as a pandemic. Public and private sector policies and
initiatives to reduce the transmission of COVID-19 varied significantly across
the United States. Throughout 2021, a significant percentage of the U.S.
population was subject to meaningful restrictions on activities, which included
limitations on the operation of non-essential businesses including retail
operations, requirements that individuals remain in or close to their homes,
school closures, theater closures, limitations on large gatherings, travel
restrictions and other policies to promote or enforce physical distancing. These
restrictions not only impacted how the Company's customers used its products and
services but also affected content production, release and distribution. As a
result of these restrictions, many consumers subscribed to additional streaming
services to satisfy their content needs as the number of new release movies,
released theatrically and through home entertainment, decreased by more than 50%
in both 2020 and 2021 compared with 2019, which had 140 theatrical titles.
During 2020 and 2021, the Company experienced a decline in physical movie
rentals, due in part to a significant decline in new movie releases and theater
closures along with governmental and retail store restrictions. The Company's On
Demand transactional offering is also dependent on new releases, albeit at a
lesser level than the physical business as the On Demand platform has a larger
catalog offering. Beginning in the second half of 2020, the growth potential of
Redbox On Demand was negatively impacted by fewer new releases and changes in
release strategy by studios throughout the pandemic.

Starting late in 2021 and into the first quarter of 2022, the U.S. population
experienced a wave of illness brought on by a variant of COVID-19, widely
referred to as the Omicron variant. During the peak holiday rental season as
content started to release at Redbox, the variant began to spread amongst the
population, again impacting customer rental behavior. The disruptions from

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Omicron, including further delays to productions and film releases by studios, has further resulted in periods of no new releases and has led studios to explore and pursue alternative release strategies for their films, including direct to services streaming, day and date outputs and PVOD outputs.

As a result of temporary theater closures during the COVID-19 pandemic, studios
and content producers either delayed the release of movies into future periods
or experimented with alternative release strategies which altered the typical
release strategy for new movies. One alternative release method, was to sell
movies directly to subscription services for exclusive release on their
respective platforms. As a result, these titles were not available through a
traditional transactional On Demand window, thus leading to fewer new release
titles available to the Company. However, as studios continue to evolve their
window release strategies, more and more studios are retaining their home
entertainment distribution rights despite the initial sale of a title to a
streaming service. This allows Redbox to make the movie available for rental
through the kiosk and possibly On Demand at a later date. The Company expects
studios to sell titles directly to streaming services from time to time, but it
may be less likely going forward with the reopening of theatrical exhibitors and
the opportunity to achieve higher returns for both studios and artists. The
Company is further mitigating the impact of titles sold exclusively to
subscription services by building out a library of content via its Redbox
Entertainment label. Redbox Entertainment titles are available physically and
digitally on Redbox platforms and are monetized across other platforms.

The second alternative release strategy that emerged, known as a day-and-date
release, is a simultaneous release on a studio's own digital platform as well as
a theatrical release to provide optionality to those customers who are not ready
to return to the theater. This shared window strategy can negatively impact the
physical rental performance of a title as most of these titles release at a
later date at the kiosk and transactionally on Redbox On Demand in a subsequent
window. Studios who have previously released titles on streaming services on the
same date as in theatres in 2021 have announced plans to return to theatrical
windows of 45 to 90 days, before these titles go to home entertainment; however,
studios continue to experiment with timing of releases on their owned and
operated platforms which may continue to negatively impact Redbox's ability to
monetize future titles.

The third alternative release is known as premium video on demand or "PVOD"
which creates an early transactional window for an at-home digital theatrical
release at a higher price point, typically $19.99. The PVOD releases provided
consumers a way to watch new releases at home while theaters remain shuttered.
Redbox On Demand participates in and benefits from PVOD releases as it provides
an early window option to Redbox customers at higher price points.

The Company expects studios to return to a more normal release slate as COVID-19
restrictions continue to ease due to the relationship with theatrical exhibitors
and the draw of higher margin potential. Nevertheless, a number of titles
continue to shift back further in 2022 and into 2023. In the first quarter of
2022, Redbox experienced intermittent periods of no new releases causing
inconsistency in titles available at Redbox kiosks and on the Redbox On Demand
platform, impacting rental performance. The Company expects new release content
to build back up throughout 2022 as the pandemic subsides. This expectation is
based on known titles delayed from 2020 and 2021, which are planned for release
in 2022 and 2023.

The Company will continue to build out its digital offerings on both linear and
on demand ad-supported to provide more options for customers to consume content
at varying price points including free with ads. The Company believes that the
complement of digital services creates greater utility to its customers and
makes the offering more competitive relative to more focused streamers, while
also reducing the reliance on content in a single content window.

Business update, business continuity and strategic alternatives

Historically, rentals have been correlated with the number and quality of new
theatrical titles released in a quarter. During 2021 and for the first three
months of 2022, Redbox's business was negatively impacted by the effects of the
ongoing COVID-19 pandemic, which resulted in fewer than expected theatrical
releases. In addition, the significant increase in impacts from the Omicron
variant caused further disruption to the business. As such, Redbox rentals have
not recovered to the extent expected and, notwithstanding the year-over-year
increase in new theatrical releases, were lower than pre-COVID-19 levels. As
part of an effort to expand its business and transform into a multi-faceted
entertainment company, during the fourth quarter of 2021 and into the first
three months of 2022, Redbox increased its marketing and on-demand expenditures.
Costs also increased as Redbox purchased more content, which were not offset by
an increase in revenues.

Redbox has been exploring a number of potential strategic alternatives with
respect to the Company's corporate or capital structure and seeking financing to
fund operations and one-time restructuring costs. In March 2022, the Company's
Board of Directors established a Strategic Review Committee to, among other
things, consider and oversee strategic alternatives or transactions that may be
available to the Company with respect to its corporate or capital structure.
Redbox is also executing on a previously announced

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series of restructuring actions and initiatives to improve its efficiency and
reduce its cost structure, including, but not limited to, (i) optimizing its
kiosk network and (ii) executing a workforce reduction across its supply chain
and corporate teams. However, the risks and uncertainties related to the ongoing
adverse effects of the COVID-19 pandemic on the Company's operating results,
together with the Company's recurring operating losses, accumulated deficit and
negative working capital, raise substantial doubt about our ability to continue
as a going concern.

The accompanying consolidated financial statements and notes have been prepared
assuming the Company will continue as a going concern. For the three months
ended March 31, 2022, the Company generated negative cash flows from operations
of $14.8 million, had an accumulated deficit of $334.4 million and negative
working capital of $79.8 million. The Company evaluated the impact of the
additional financing and restructuring actions and initiatives further described
below on its ability to continue as a going concern.

On March 29, 2022, the Company completed a reduction in force of 150 employees.
One-time restructuring charges of $3.8 million were incurred, the substantial
amount of which related to severance. The Company estimates that the workforce
reduction will decrease its annual operating costs by approximately $13.1
million.

On April 15, 2022 certain subsidiaries of the Company entered into the
Incremental Assumption and Amendment Agreement No. 6, amending its Credit
Agreement (the "Sixth Amendment"), pursuant to which the Sixth Amendment
Incremental Revolving Lenders (as defined in the Credit Agreement) will make
available to certain subsidiaries of the Company Sixth Amendment Incremental
Revolving Commitments (as defined in the Credit Agreement) in an aggregate
amount equal to $50.0 million subject to certain conditions, the proceeds of
which will be used to make payments in accordance with the Budget Plan (as
defined in the Credit Agreement) and pay certain fees and expenses. From April
15, 2022 until the Signing Deadline Date, borrowings under the Sixth Amendment
Incremental Revolving Facility (as defined in the Credit Agreement) were limited
to no more than $15.0 million in the aggregate. During April 2022, the Company
borrowed the available $15.0 million under its Sixth Amendment Incremental
Revolving Facility. Pursuant to the Sixth Amendment, additional borrowings of
$35.0 million under its Sixth Amendment Incremental Facility would become
available if, by no later than May 10, 2022 (the "Signing Deadline Date"), the
Company entered into a valid and binding definitive purchase agreement for the
sale of all or substantially all of the assets, or all of the equity interests
of the Company (the "Company Sale"), and which purchase agreement either (i)
provided for the payment in full (principal and interest) of the Senior
Facilities other than the Term B-2 Loans or (ii) otherwise was in form and
substance reasonably acceptable to the Administrative Agent. Pursuant to the
Credit Agreement, the Company Sale shall be consummated no later than October
31, 2022. The details of the Sixth Amendment are discussed in further detail in
Note 6: Debt in Redbox's Notes to Condensed Consolidated Financial Statements
included elsewhere in this Form 10-Q.

As a further condition to the Sixth Amendment, the Company issued to HPS
Investment Partners, LLC (administrative agent and collateral agent to the
Credit Agreement) and certain affiliates (as defined in the Credit Agreement)
warrants with an exercise price of $0.0001 per share (the "HPS Warrants") to
purchase 11,416,700 shares of Class A common stock of the Company ("Common
Stock") in the event certain milestones were not met under the Amended Credit
Agreement. Upon signing of the CSSE merger agreement, the HPS Warrants became
void and all rights of the warrant holders thereunder to exercise the HPS
Warrants ceased. Our unaudited condensed consolidated financial statements do
not include any adjustments related to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities that
might be necessary should we be unable to continue as a going concern.

In connection with the Sixth Amendment, on April 15, 2022, the Company entered
into a Voting and Support Agreement with AP VIII Aspen Holdings, L.P. ("Aspen"),
Seaport Global SPAC, LLC and Redwood Holdco, LP ("Redwood"), (collectively the
"Stockholders"), whereby the Stockholders agreed to vote their shares of the
Company (i) in favor of any strategic transaction approved and recommended by
the Company's Board of Directors (the "Board"), or any committee to which the
Board delegates authority, subject to certain terms and conditions (each, a
"Transaction"), (ii) in opposition to any transaction involving the Company that
has not been approved and recommend by the Board, and (iii) in favor of any
directors that are proposed or nominated to the Board by the Company at any
annual meeting of the Company.

The Company further agreed, pursuant to the Voting and Support Agreement, to (i)
permanently reduce a portion of its revolving commitment under its Union
Revolving Credit Facility in an amount equal to $10.6 million (and the Company
made such reduction) and (ii) among other agreements, refrain from borrowing
under the Union Revolving Credit Facility without the consent of Aspen and
Redwood Holdco, LP (other than with respect to certain scheduled borrowings and
borrowings to cover interest, fees and expenses).

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In connection with the execution of the Sixth Amendment, the Company agreed to
implement certain changes to the composition and size of its Board of Directors,
as further described in the Company's Current Report on Form 8-K filed with the
SEC on April 19, 2022. The Strategic Review Committee of the Board was also
dissolved in connection with these changes.

In connection with the Company's entry into the Voting and Support Agreement,
Redwood permanently waived the "Early Termination Payment" by the Company (or an
affiliate) to Redwood that could have resulted from a provision in that certain
Tax Receivable Agreement dated as of October 22, 2021 ("TRA"), which would have
been triggered upon the change to the Board's composition.

Additionally, under the Voting and Support Agreement, the Company and Redwood
agreed, in connection with the consummation of a Transaction, to (a) terminate
the TRA upon the consummation of a Transaction and (b) waive all claims under
the TRA with such waiver being effective upon the consummation of such
Transaction.

On May 10, 2022, the Company entered into a merger agreement with Chicken Soup
for the Soul Entertainment, Inc. ("CSE"), pursuant to which, the Company will
become a wholly owned subsidiary of CSSE. As a result, additional borrowings
under the Sixth Amendment Incremental Revolving Facility became available upon
the Company's entry into the merger agreement with CSSE provided, that the CSSE
merger agreement contains an interim covenant that restricts outstanding
borrowings by the Company under the Sixth Amendment Incremental Revolving
Facility to a maximum of $45.0 million. See Note 17: Subsequent Events in
Redbox's Notes to Condensed Consolidated Financial Statements included elsewhere
in this Form 10-Q for additional information regarding the CSSE merger.

For a more in-depth discussion of the Sixth Amendment, see Note 6: Debt in Redbox’s Notes to the Summary Consolidated Financial Statements included elsewhere in this Form 10-Q.

If the Company is unable to implement one or more of the contemplated strategic
alternatives, or if the CSSE merger agreement is terminated (and is not replaced
by another Acceptable Purchase Agreement), or consummation of the CSSE merger
does not occur on or before October 31, 2022 (or such later date as HPS may
agree) an event of default will occur under the Credit Agreement, and the
Company could continue to experience adverse pressures on its relationships with
counterparties who are critical to its business, its ability to access the
capital markets, its ability to execute on its operational and strategic goals
and its business, prospects, results of operations and liquidity generally.
There can be no assurance as to when or whether the implementation of one or
more of the Company's strategic initiatives will be successful, or as to the
effects the failure to take action may have on the Company's business, its
ability to achieve its operational and strategic goals or its ability to finance
its business or refinance its indebtedness. A failure to address these matters,
will have a material adverse effect on the Company's business, prospects,
results of operations, liquidity and financial condition, and its ability to
service or refinance its corporate debt as it becomes due.

Selected financial data and key indicators

The selected consolidated financial data below should be read in conjunction
with the following MD&A and the condensed consolidated financial statements and
notes thereto appearing elsewhere in this Form 10-Q. All references to rentals
and net rental revenue presented within MD&A include physical and On Demand
rentals and revenue, unless otherwise noted, respectively.

Management uses these non-GAAP financial measures internally for strategic
decision-making, forecasting future results, and evaluating current performance.
Management believes that the non-GAAP financial measures (i.e., Adjusted EBITDA)
provide a more consistent comparison of its operating results and trends for the
periods presented. These non-GAAP financial measures are used in addition to and
in conjunction with results presented in accordance with GAAP and reflect an
additional way of viewing aspects of its operations that, when viewed with its
GAAP results, provides a more complete understanding of factors and trends
affecting its business. These non-GAAP measures should be considered as a
supplement to, and not as a substitute for, or superior to, the

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corresponding measures calculated in accordance with GAAP. Refer to "Use of
Non-GAAP Measures" below for discussion of this measure and related
reconciliation.

Key Financial Measures                                  March 31,
Dollars in thousands                                2022          2021
Total net revenue                                $   63,227    $   76,730
Product cost                                     $   27,290    $   28,248
Gross margin                                     $   35,937    $   48,482
Gross margin %                                         56.8 %        63.2 %
Adjusted EBITDA                                  $ (13,538)    $    1,302
Adjusted EBITDA as a % of net revenue                (21.4) %         1.7 %
Loss before income taxes                         $ (40,848)    $ (36,474)
Net loss                                         $ (40,874)    $ (27,195)
Retail footprint
Ending number of kiosks                              37,791        39,257
Ending number of locations                           32,160        33,068
Physical Theatrical Titles Released in Period            22             7


Seasonality

Absent the effects of the COVID-19 pandemic in 2020, 2021 and into 2022, the
Company has generally experienced seasonality in its rentals and revenue.
Historically, greater demand over the holiday season typically results in higher
rentals November through January. April has usually been a low rental month due,
in part, to retail release timing in connection with the Academy Awards that
historically has provided stronger content and resulted in higher rentals in
March. September and October have been low rental months due, in part, to the
beginning of the school year and the introduction of the new fall television
season. Significant recurring events, such as the Olympics, also have a negative
impact on rentals as they compete with customer viewing interest for movie
content and affect retail release timing, which aims to avoid such events. The
effects of the COVID-19 pandemic in 2020 and 2021 have continued to disrupt the
Company's typical seasonal patterns into 2022.

Components of operating results

Revenue

The Company generates revenue primarily through fees charged to rent or purchase
a movie both physically and digitally. Revenue is presented net of promotional
offerings provided to its consumers and any subsequent refunds. Revenue also
consists of fees the Company earns in its service business for servicing and
merchandising other kiosk businesses, digital advertising through its media
network business, as well as licensing fees it generates from selling downstream
rights to subscription streaming services through its Redbox Entertainment
label.

Product cost

Product Cost primarily represents the amortization of the Company's physical
content library and digital revenue sharing or licensing costs. Amortization of
the content library is calculated using rental decay curves based on historical
performance of movies over their useful lives. Given the steepness of the rental
decay curve, amortization on most of the content library is recorded on an
accelerated basis with substantially all of the amortization expense recognized
within the first year after a title's release.

The physical content library costs mainly include (1) the costs paid to studios
and other vendors to acquire content including revenue share as applicable, (2)
costs incurred to label, sort, and ship content to the Company's kiosks for
merchandising, (3) costs incurred to destroy content after use if required under
contractual arrangements with studios and (4) indirect taxes, if applicable. For
content the Company expects to sell, it determines an estimated salvage value.
Content salvage values are estimated based on the historical sales activity. The
cost of each title is capitalized and amortized to its estimated salvage value.
The rental decay curves and salvage value of the Company's content library are
periodically reviewed and evaluated.

For movies acquired through the Company's Redbox Entertainment label, costs
include (1) the costs to acquire content, (2) manufacturing costs and (3) supply
chain costs. These costs are capitalized as they are incurred and amortized in
proportion to the current year's revenue as a percentage of management's
estimate of total ultimate revenue, not to exceed the life of the acquired
rights. Ultimate revenue estimates are periodically reviewed and adjustments, if
any, will result in changes to amortization rates.

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The digital content costs mainly include (1) the costs paid to studios and other
vendors to acquire or offer digital content, including revenue share or
licensing fees, for our ad-supported offerings, and (2) the revenue share costs
paid to studios for transactional titles.

Direct operation

Direct Operating expense accounts primarily for (1) commissions the Company pays
to its retailers, (2) credit card fees, (3) operations support to both
merchandise and service its kiosks, and (4) consumer electronic device
royalties, licensing and digital rights management fees and content delivery
network fees for delivery of On Demand content.

Marketing

Marketing expenses represent the cost of online and offline marketing and public
relations efforts in national and regional advertising. The Company's marketing
efforts consist of various media programs, such as e-mail, text, mobile
applications, social media, the Company's loyalty program and digital
advertising. However, the Company also leverages the visibility provided by its
expansive network of approximately 38,000 kiosks and partnership programs with
retailers and consumer goods manufacturers to attract and retain new customers.

Stock-based compensation expense

Stock-based compensation expense represents compensation costs related to Redbox’s stock plan and Redwood Holdco’s management incentive plan.

General and administrative

General and administrative expenses consist primarily of executive management,
business development, finance, management information systems, human resources,
legal, facilities, risk management and administrative support for operations.

Depreciation and amortization

Depreciation and other expenses consist of depreciation charges on the Company's
installed kiosks as well as on computer equipment, leasehold improvements, and
capitalizable costs for automobile leases and internally developed software
related primarily to its customer-facing products.

Amortization expenses are related to the amortization of intangible assets. For
further information on amortization, see Note 4: Goodwill and Other Intangible
Assets in Redbox's Notes to Condensed Consolidated Financial Statements included
elsewhere in this Form 10-Q.

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Results of operations for the three months ended March 31, 2022 and 2021

                                                   March 31,              2022 vs 2021 YTD
Dollars in thousands                           2022          2021           $            %
Net revenue                                 $   63,227    $   76,730    $ (13,503)     (17.6) %
Product cost                                    27,290        28,248           958        3.4 %
Gross margin                                $   35,937    $   48,482    $ (12,545)     (25.9) %
Gross margin %                                    56.8 %        63.2 %                  (6.4) %
Operating expenses:
Direct operating                                30,005        33,024         3,019        9.1 %
Marketing                                        4,022         3,284         (738)     (22.5) %
Stock-based compensation expense                 1,808           566      
(1,242)       n.m.
General and administrative                      23,203        13,309       (9,894)     (74.3) %
Depreciation and amortization                   25,090        27,526         2,436        8.8 %
Operating (loss) income                       (48,191)      (29,227)      (18,964)     (64.9) %
Interest and other income (expense),
net:
Interest and other income (expense), net         7,343       (7,247)        14,590       n.m.
Total interest and other income
(expense), net                                   7,343       (7,247)        14,590       n.m.
Loss before income taxes                      (40,848)      (36,474)       (4,374)     (12.0) %
Income tax expense (benefit)                        26       (9,279)       (9,305)    (100.3) %
Net loss                                    $ (40,874)    $ (27,195)    $ (13,679)     (50.3) %
Adjusted EBITDA(1)                          $ (13,538)    $    1,302    $ (14,840)       n.m.
Ending number of kiosks                         37,791        39,257       (1,466)      (3.7) %
Physical Theatrical Titles Released in
Period                                              22             7            15       n.m.


n.m. not meaningful

(1) See “Use of Non-GAAP Measures” below for a discussion of this measure and

related reconciliation.

Three months completed March 31, 2022 compared to the three months ended March 31, 2021

Net Revenue. Net revenue was $63.2 million, a decrease of $13.5 million or
17.6%, compared to net revenues of $76.7 million for the three months ended
March 31, 2021. Beginning in March 2020, physical movie rentals were negatively
impacted by the COVID-19 global pandemic due to a significant decline in new
movie releases available to consumers resulting from broad-based movie theater
closures and a material slowdown in new productions. The impacts of 2020
continued into 2021 and the first three months of 2022 as studios continued to
either delay the release of new movies into future periods or experimented with
alternative release strategies, including selling movies directly to streaming
services, which resulted in fewer titles being released at the kiosk. The first
quarter of 2022 was further impacted by the Omicron variant, which continued to
disrupt customer rental behavior.

The total number of theatrical and Direct-to-Video (DTV) titles released during
the three months ended March 31, 2022 were essentially flat with 58 in the first
quarter of 2022, down one title from 59 in the first quarter of 2021. Of these
totals, theatrical releases were 22 compared to 7 in the same prior year period.
Physical units purchased in the quarter were 29.9% lower due to the quality of
content released compared to the same quarter in the prior year, and as a result
physical rentals declined 36.9%. In addition, the weakness in theatrical
releases negatively impacted the performance of the digital transactional
business. New and consistent content available for consumers was still well
below 2019 (pre-COVID) levels which adversely impacted consumer rental patterns.
As a result of temporary theater closures during the COVID-19 pandemic, studios
and content producers either delayed the release of movies into future periods
or experimented with alternative release strategies, including direct sales to
streaming services, day-and-date releases, and PVOD releases, all of which
altered the typical window cadence. The Company expects studios to return to a
more normal release slate with new release content building throughout 2022 as
the pandemic subsides, however, titles may continue to shift as the year
progresses. The decrease in physical rentals in the Legacy Business was
partially offset by a 3.8% increase in rental revenue per physical revenue.
Partially offsetting the decline in revenue was strong growth in the Company's
Digital business, specifically its media network business and ad-supported
services (AVOD and FLTV), along with continued strong growth in the Company's
kiosk servicing business.

Product cost. The cost of the product was $27.3 milliona decrease of $1.0 million i.e. 3.4%, compared to $28.3 million for the same period in 2021 due to variable cost savings, partially offset by increased costs for ad-supported content (AVOD).

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Gross margin. The gross margin was $35.9 milliona decrease of $12.5 million i.e. 25.9%, compared to a gross margin of $48.5 million for the three months ended
March 31, 2021 primarily due to lower net income as noted above.

Gross margin as a percentage of net revenue decreased to 56.8% for the three
months ended March 31, 2022 as compared to 63.2% for the same period in 2021,
reflecting increased upfront costs for certain theatrical titles coupled with
lower net revenue.

Direct Operating Expenses. Direct Operating expenses were $30.0 million, a
decrease of $3.0 million or 9.1%, compared to the same period in 2021 due to
lower variable expenses including credit cards fees and retailer revenue share
expenses.

Marketing Expenses. Marketing expenses increased by 22.5% to $4.0 million for
the three months ended March 31, 2022 as compared to $3.3 million for the same
period in 2021 reflecting increased investments in the Company's Digital
Business.

Stock-Based Compensation Expense. Stock-based compensation expense was $1.8
million for the three months ended March 31, 2022 compared to $0.6 million for
the same period in 2021, primarily due to the equity award granted in connection
with the Redbox Equity Plan.

General and Administrative Expenses. General and administrative expenses were
$23.2 million, an increase of $9.9 million or 74.3%, compared to $13.3 million
for the same period in 2021. The $9.9 million increase reflects $3.8 million in
severance and related costs in connection with the reduction in force, $3.1
million in legal and advisory expenses incurred as the Company explores
strategic alternatives, as well as public company costs, which did not occur in
the prior year period, including $1.4 million in directors' and officers'
liability insurance along with increases in accounting advisory and audit fees.

Depreciation and Amortization. Depreciation and amortization decreased by 8.8%
to $25.1 million for the three months ended March 31, 2022 as compared to $27.5
million for the same period in 2021 due to certain kiosks reaching the end of
their depreciable useful lives along with reduced capital expenditure spend.

Operating Loss. Operating loss for the three months ended March 31, 2022 was
$48.2 million compared to an operating loss of $29.2 million for the same period
in 2021. The decrease is primarily driven by the net revenue decrease as
described above along with increased general and administrative and marketing
expenses.

Net Loss. Net loss was $40.9 million for the three months ended March 31, 2022,
as compared to a net loss of $27.2 million for the same period in 2020. The
decline is due to the decrease in operating income as discussed above and a
lower income tax benefit, partially offset by a $13.8 million pretax gain from
the change in fair value on the Company's warrant liabilities.

Adjusted EBITDA. Adjusted EBITDA was ($13.5) million, a decrease of $14.8
million, compared to Adjusted EBITDA of $1.3 million for the same period in
2021. The decline is due to decreases in net revenue in the Company's Legacy
Business along with increased general and administrative and marketing costs as
a public company and from investing in our Digital Business, partially offset by
strong growth in the Company's Digital Business along with a decrease in product
and direct operating costs due to variable direct cost savings.

Segment Discussion

Legacy Business

Results

                                         Three Months Ended           March 31,
                                             March 31,               2022 vs 2021
Dollars in thousands                      2022         2021          $           %
Net revenue                            $   48,767    $ 67,637    $ (18,870)    (27.9) %
Adjusted EBITDA                          (15,553)         334      (15,887)       n.m
Adjusted EBITDA margin                     (31.9) %       0.5 %                   n.m
Physical Theatrical Titles Released            22           7            15

nm

Physical Rentals (in thousands)            11,195      17,754       (6,559)    (36.9) %
Net revenue per physical rental        $     3.29    $   3.17    $     0.12
      3.8 %


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Net Revenue. Net revenue was $48.8 million, a decrease of $18.9 million or
27.9%, compared to net revenue of $67.6 million for the three months ended March
31, 2021. Physical movie rentals continue to be negatively impacted by the
COVID-19 global pandemic due to a material decline in new movie releases
available to consumers compared to pre-COVID levels. Redbox is currently in the
process of building content available at the kiosk and new content available for
consumers adversely impacting consumer rental patterns. Studios either delayed
the release of new movies into future periods or experimented with alternative
release strategies, including selling movies directly to streaming services,
which resulted in fewer titles being released at the kiosk.

The total number of theatrical and Direct-to-Video (DTV) titles released during
the three months ended March 31, 2022 were essentially flat with 58 in the first
quarter of 2022, down one title from 59 in the first quarter of 2021. Of these
totals, theatrical releases were 22 compared to 7 in the same prior year period.
Physical units purchased in the quarter were 29.9% lower due to the quality of
content released compared to the same quarter in the prior year, and as a result
physical rentals declined 36.9%. Further, during the quarter, the Company
experienced persistent periods of time with no new releases driving
inconsistency in customer rental patterns. The Company expects studios to return
to a more normal release slate with new release content building throughout 2022
as the pandemic subsides. The decrease in physical rentals in the Legacy
Business was partially offset by a 3.8% increase in rental revenue per physical
revenue. Legacy segment revenue also benefited from strong growth in the
Company's kiosk servicing business.

As COVID-19 restrictions ease, the Company expects studios to continue to sell
titles directly to streaming services from time to time, but may be less likely
going forward with the reopening of theatrical exhibitors and the opportunity to
achieve higher returns for both studios and artists. The Company expects new
release content to build back throughout 2022 if the pandemic subsides; however,
title release dates will continue to shift and change as the year progresses and
the Company does not have control over title release timing. The Company is
offsetting some of the impact from titles sold exclusively to subscription
services by building out a library of content via its Redbox Entertainment
label. Redbox Entertainment titles are available physically and digitally on
Redbox platforms and will also be monetized across other platforms.

Adjusted EBITDA. Adjusted EBITDA was ($15.6) million, a decrease of $15.9
million, compared to Adjusted EBITDA of $0.3 million for the three months ended
March 31, 2021. The decrease in Adjusted EBITDA is primarily driven by the
decrease in net revenue discussed above along with increased general and
administrative expenses, partially offset by a decrease in product costs and
direct operating costs. The Company's Legacy Business includes corporate general
and administrative expenses, which includes technology and public company costs,
along with corporate overhead expenses related to our Digital Business.

Digital Business

Results

                            Three Months Ended         March 31,
                                March 31,             2022 vs 2021
Dollars in thousands         2022         2021         $        %
Net revenue               $    14,460    $ 9,093    $ 5,367     59.0 %
Adjusted EBITDA                 2,015        968      1,047    108.2 %
Adjusted EBITDA margin           13.9 %     10.6 %           330 pts

Net Revenue. Net revenue was $14.5 million, an increase of $5.4 million or
59.0%, compared to $9.1 million for the same period in the prior year,
reflecting strong growth in the Company's media network business and
ad-supported services (AVOD and FLTV). Redbox transactional On Demand revenue
was down slightly for the period compared to the prior year reflecting a decline
in transactions, due to fewer high quality tent-pole releases in the quarter as
well as studios releasing titles theatrically and on their owned platforms
simultaneously. The lower transactions were partially offset by increased
revenue per transaction.

Adjusted EBITDA. Adjusted EBITDA was $2.0 million, an increase of $1.0 million,
compared to $1.0 million during 2021 reflecting increased revenue, partially
offset by increased marketing costs. The Digital Business includes expenses
directly attributable to this business.

Use of Non-GAAP Measures

The Company defines EBITDA as net income before net interest expense, income
taxes, depreciation and amortization. Adjusted EBITDA adjusts EBITDA by
excluding the results of business optimization costs, one-time non-recurring
costs, new business start-up costs, restructuring related costs and stock-based
compensation expense. Neither EBITDA nor Adjusted EBITDA are presented in
accordance with GAAP.

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The Company uses EBITDA and Adjusted EBITDA for operational and financial
decision-making and believes these measures are useful in eliminating certain
items to focus on what it deems to be indicators of operating performance.
EBITDA and Adjusted EBITDA are also used by many of the Company's investors,
securities analysts, and other interested parties in evaluating operational and
financial performance as well as debt service capabilities. The Company believes
that the presentation of EBITDA and Adjusted EBITDA provides useful information
to investors by allowing an understanding of key measures that the Company uses
internally for operational decision-making, budgeting, and assessing
performance.

EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be
considered as a substitute for net income, cash flows from operating activities,
or other income or cash flow statement data. These measures have limitations as
analytical tools, and should not be considered in isolation or as substitutes
for analysis of the Company's results as reported under GAAP. Investors should
review the Company's financial statements and publicly filed reports in their
entirety and not rely on any single financial measure.

Because non-GAAP financial measures are not standardized, EBITDA and Adjusted
EBITDA, as defined by Redbox, may not be comparable to similarly titled measures
reported by other companies. It therefore may not be possible to compare the
Company's use of these non-GAAP financial measures with those used by other
companies.

Adjusted EBITDA is calculated as follows:

                                               Three Months Ended
                                                   March 31,
Dollars in thousands                           2022          2021
Net loss                                    $ (40,874)    $ (27,195)
Depreciation and amortization                   25,090        27,526
Interest and other (income) expense, net       (7,343)         7,247
Income tax expense (benefit)                        26       (9,279)
EBITDA                                        (23,101)       (1,701)
Adjustments to EBITDA:
Business optimization(a)                             -           550
One-time non-recurring(b)                        3,743           364
New business start-up costs(c)                       -           171
Restructuring related(d)                         4,012         1,352
Stock-based compensation expense                 1,808           566
Adjusted EBITDA                             $ (13,538)    $    1,302


(a) Business optimization costs include employee retention costs,

as well as consulting fees for certain projects.

Includes costs related to project costs and initiatives, as well as bank charges,

legal and other fees related to the Company’s (b) debt financing activities. In the three months ended March 31, 2022the company

incurred $3.1 million in one-time legal and advisory fees while the Company

explores strategic alternatives.

(c) Includes the costs of supporting the Company’s On Demand and AVOD offerings, as well as

with costs related to the Company’s media service and network activities.

(d) Restructuring costs include items such as severance

and the costs incurred related to the removal of the kiosks.

Cash and capital resources

The Company's primary sources of liquidity are from cash on hand, cash flow
generated from operations, and amounts available under its Revolving Credit
Facility. Redbox has been exploring a number of potential strategic alternatives
with respect to the Company's corporate or capital structure and seeking
financing to fund operations and one-time restructuring costs. The Company is
executing on a series of previously announced restructuring actions and
initiatives to improve its efficiency and reduce its cost structure, including,
but not limited to, (i) optimizing its kiosk network and (ii) executing a
workforce reduction across its supply chain and corporate teams. However, the
risks and uncertainties related to the ongoing adverse effects of the COVID-19
pandemic on the Company's operating results, together with the Company's
recurring operating losses, accumulated deficit and negative working capital,
raise substantial doubt about our ability to continue as a going concern. There
can be no assurance as to when or whether the implementation of one or more of
the Company's strategic initiatives will be successful, or as to the effects the
failure to take action

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could have on the Company’s activities, its ability to achieve its operational and strategic objectives or its ability to finance its activities or refinance its debt.

The Company has taken and continues to take steps to reduce expenses and manage working capital to preserve available cash. These actions include, but are not limited to:

? manage working hours spent in the field and maintenance operations according to

inventory levels and demand;

? extend payment terms with suppliers;

? delay hiring for non-critical roles;

? delaying the schedule of annual salary increases;

? reduce long-term incentive compensation; and

? limit capital expenditure.


As of March 31, 2022, the Company's cash, cash equivalents and restricted cash
decreased $4.8 million to $13.7 million from the December 31, 2021 balance of
$18.5 million. As of March 31, 2022, amounts outstanding under the Company's
Term Loan Facility and revolving credit facilities were $310.0 million and $36.4
million, respectively. As of March 31, 2022 there was no remaining availability
under the Company's Senior Revolving Credit Facility. As described more fully
below, on April 15, 2022, the Company entered into a Sixth Amendment to its
Credit Agreement. For additional information see Note 6: Debt in Redbox's Notes
to Condensed Consolidated Financial Statements included elsewhere in this Form
10-Q.

Senior Facilities

Redbox Automated Retail, LLC ("RAR") is party to a credit agreement (as amended,
the "Credit Agreement"). The Credit Agreement was first entered into on October
20, 2017, and has subsequently been amended by an Incremental Assumption and
Amendment Agreement (the "Amendment") dated September 7, 2018, a second
amendment (the "Second Amendment") dated September 30, 2020, a third amendment
(the "Third Amendment") dated December 28, 2020, a fourth amendment (the "Fourth
Amendment") dated January 29, 2021, a fifth amendment (the "Fifth Amendment")
dated May 16, 2021, and a consent to the Fifth Amendment dated October 11, 2021,
and a sixth amendment (the "Sixth Amendment"), dated as of April 15, 2022. As of
March 31, 2022, RAR's Senior Facilities will mature on April 20, 2024, and
subsequent to the Amendment, Second Amendment, Third Amendment, Fourth
Amendment, Fifth Amendment, consent thereto and Sixth Amendment consisted of:

? a senior B term loan facility (the “B term loan”), in an initial aggregate

principal amount of $425.0 million;

? a senior B-1 term loan facility (the “B-1 Term Loan”), in an original

aggregate principal amount of $85.8 million;

? a senior B-2 term loan facility (the “B-2 Term Loan”), in an original

aggregate principal amount of $25.0 million;

a senior revolving credit facility, in an aggregate principal amount of up to

? for $30.0 million (provided that commitments under this revolving facility

were terminated under the Sixth Amendment and such amounts, if

repaid, cannot be re-borrowed); and

? an additional senior revolving credit facility, in aggregate principal

amount up to $50.0 million.


The Term Loan B was made available to RAR immediately upon closing of the Credit
Agreement and was used in part to retire all $280.0 million of the Company's
existing debt and to settle closing costs associated with the new Term Loan B
totaling $19.5 million of which $4.6 million was paid to Apollo Global
Securities, LLC, an affiliate of Apollo, for services provided in connection
with the financing. The balance of the Term Loan B proceeds were used towards a
dividend, occurring on the same day, with total dividend of $160.0 million to
equity holders of RAR. Additionally, at the execution of the new Credit
Agreement, RAR wrote-off unamortized deferred financing costs of $21.7 million
related to the extinguishment of the entire debt under the prior credit
agreement.

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On September 7, 2018, RAR entered into an Incremental Assumption and Amendment
Agreement (the "Amendment") to the Credit Agreement. The Amendment provided for,
among other things, (i) an incremental Term B-1 Loan ("Term Loan B-1") in an
original aggregate principal amount of $85.8 million and (ii) the payment of one
or more restricted payments to shareholders of RAR in an aggregate amount not to
exceed $115.0 million. The proceeds received from the Amendment along with cash
flow from the business were used towards a dividend distribution to equity
holders of RAR totaling $115.0 million that was paid within five business days
of September 7, 2018, and to pay fees and expenses in connection with the
Amendment totaling $3.7 million. The additional loan under Term Loan B-1 had
terms identical to the original Term Loan B, except to account for the
incremental principal amount within the quarterly amortization payment schedule
and to reset call protection on the Term Loan B-1.

On September 30, 2020RAR has entered into the Second Amendment to its Credit Agreement (the “Second Amendment”) to, among other things, increase the total net leverage clause over the remaining term of the Credit Agreement and revise the quarterly amortization payment schedule .

On December 28, 2020, RAR entered into a third amendment to its Credit Agreement
(the "Third Amendment"). The amendment deferred the December 2020 amortization
payment to March 2021.

As of December 31, 2020, RAR's Senior Facilities matured on October 20, 2022,
and subsequent to the Amendment, Second Amendment and Third Amendment consisted
of:

? a senior B term loan facility, in an initial aggregate principal amount of

$425.0 million;

? a B-1 senior term loan facility, in an initial aggregate principal amount

of $85.8 million; and

? a senior revolving credit facility, in an aggregate principal amount of up to

for $30.0 million.

In addition, under the Fourth Amendment, RAR incurred an incremental first lien
term loan B-2 facility (the "Term Loan B-2") in an aggregate principal amount of
$25.0 million which was provided by New Outerwall, Inc. The loan was
subsequently assigned to Aspen Parent, Inc., an affiliate of Apollo and
therefore a related party of the Company.

Pursuant to the Fourth Amendment, interest is payable on the Senior Facilities
entirely in cash or, for a specified period, could be paid by increasing the
principal amount of the Senior Facilities (PIK Interest), or through a
combination of cash and PIK interest, subject to certain liquidity thresholds.
Borrowings under the Senior Facilities bear interest at a rate at RAR's option,
either (a) a London Interbank Offer Rate ("LIBOR") determined by reference to
the costs of funds for Eurodollar deposits for the interest period relevant to
such borrowing, adjusted for certain additional costs, subject to a 1.00% floor
in the case of term loans or (b) a base rate determined by reference to the
highest of (i) the federal funds rate plus 0.50% per annum, (ii) the prime rate
quoted by The Wall Street Journal (or another national publication selected by
the administrative agent) and (iii) the one-month adjusted LIBOR plus 1.00% per
annum, in each case plus an applicable margin. The applicable margin for
borrowings under the Senior Facilities is 7.25% with respect to Eurocurrency
Borrowings (increasing to 8.25% if PIK Interest is paid) and 6.25% with respect
to ABR Borrowings (increasing to 7.25% if PIK Interest is paid).

In addition to paying interest on outstanding principal under the Senior
Facilities, RAR is required to pay a commitment fee at a rate equal to 0.50% per
annum to the lenders in respect of the unutilized commitments thereunder. RAR is
also required to pay customary agency fees.

In connection with the Business Combination, on May 16, 2021, RAR entered into
another amendment to its Credit Agreement (the "Fifth Amendment"). The Fifth
Amendment, which became effective upon consummation of the Business Combination,
provided consent to the planned Business Combination and among other things,
extended the Senior Facilities maturity date to October 2023 and subordinated
the Term Loan B-2 to the Term Loan B and the Term Loan B-1. In addition, among
other things, concurrently with the consummation of the Business Combination,
(i) $15.0 million of cash proceeds from the Business Combination were used to
pay down outstanding borrowings under the Revolving Credit Facility and (ii)
$35.0 million of cash proceeds from the Business Combination were used to pay
down outstanding borrowings under the Term Loan B and the Term Loan B-1.

On October 11, 2021, RAR entered into a consent to the Fifth Amendment to make
certain additional changes to the Credit Agreement, which became effective upon
consummation of the Business Combination, including extending the maturity date
of the Senior Facilities to April 20, 2024 and extending the PIK interest option
until December 31, 2022 (subject to a minimum pro forma liquidity).

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On April 15, 2022, RAR entered into a sixth amendment to its Credit Agreement
(the "Sixth Amendment") (capitalized terms used herein are defined in the
Amended Credit Agreement).  Pursuant to the Sixth Amendment, an additional $50.0
million in financing under the Credit Agreement will be made available to the
Company subject to certain conditions, the proceeds of which will be used to
make payments in accordance with the Budget Plan and pay certain fees and
expenses. At entry into the Sixth Amendment, borrowings were limited to no more
than $15.0 million in the aggregate.  During April 2022, the Company borrowed
the available $15.0 million under its Revolving Credit Facility.  Pursuant to
the Sixth Amendment, additional borrowings would become available if, by no
later than May 10, 2022 (the "Signing Deadline Date"), the Company entered into
a valid and binding definitive purchase agreement for the sale of all or
substantially all of the assets, or all of the equity interests of the Company
(the "Company Sale"), and which purchase agreement either (i) provided for the
payment in full (principal and interest) of the Senior Facilities other than the
Term B-2 Loans or (ii) otherwise was in form and substance reasonably acceptable
to the Administrative Agent.  Pursuant to the Merger Agreement, the Company Sale
shall be consummated not later than October 31, 2022.  The details of the Sixth
Amendment are discussed in Note 6: Debt in Redbox's Notes to Condensed
Consolidated Financial Statements included elsewhere in this Form 10-Q.

On May 10, 2022, the Company entered into a merger agreement with Chicken Soup
for the Soul Entertainment, Inc. ("CSSE"), pursuant to which, the Company will
become a wholly owned subsidiary of CSSE. As a result, additional borrowings
under the Sixth Amendment Incremental Revolving Facility became available upon
the Company's entry into the merger agreement with CSSE. See Note 17: Subsequent
Events in Redbox's Notes to Condensed Consolidated Financial Statements included
elsewhere in this Form 10-Q for additional information regarding the CSSE
merger.

From March 31, 2022 and December 31, 2021the borrowing interest rate for the Senior Loans was 9.25%, respectively.

Minimum principal amortization payments required under the senior facilities from March 31, 2022are the following:

                        Repayment
Dollars in thousands      Amount
2022                    $   38,394
2023                             -
2024                       271,562
Total                   $  309,956

In addition, the Senior Facilities require RAR to prepay outstanding term loans, subject to certain exceptions, with:

a certain percentage provided for in the Credit Agreement governing the Senior

? RAR annual excess cash facilities, as defined in the Senior

Facilities;

a certain percentage of the net cash proceeds of certain non-ordinary courses

? sales of assets, other disposals of property or certain claims, in each

cases subject to certain exceptions and reinvestment rights; and

? the net cash proceeds of any issue or formation of debt, other than

proceeds of debt authorized under the senior facilities.


RAR may voluntarily repay outstanding loans that are funded solely by internally
generated cash from business operations under the Senior Facilities at any time,
without prepayment premium or penalty, except customary "breakage" costs with
respect to LIBOR rate loans.

All obligations under the Senior Facilities are unconditionally guaranteed by
each of RAR's existing and future direct and indirect material, wholly- owned
domestic subsidiaries, subject to certain exceptions, and the direct parent of
RAR. The obligations are secured by a pledge of substantially all of RAR's
assets and those of each guarantor, including capital stock of the subsidiary
guarantors and 65% of the capital stock of the first-tier foreign subsidiaries
that are not subsidiary guarantors, in each case subject to certain exceptions,
and its capital stock owned by RAR's direct parent. Such security interests
consist of a first-priority lien with respect to the collateral.  For additional
information regarding the Senior Facilities, see Note 6:  Debt in Redbox's Notes
to Condensed Consolidated Financial Statements included elsewhere in this Form
10-Q.

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Union revolving credit facility

On December 29, 2020, Redbox Entertainment, LLC entered into a four-year, $20.0
million revolving credit facility with Union Bank (the "Union Revolving Credit
Facility"). The facility is used exclusively to pay for minimum guarantees,
license fees and related distribution expenses for original content obtained
under the Company's Redbox Entertainment label. Borrowings outstanding under the
Union Revolving Credit Facility as of March 31, 2022 and December 31, 2021 were
$4.1 million and $4.6 million, respectively.

Borrowings under the Union Revolving Credit Facility bear interest at either the
alternate base rate or LIBOR (based on an interest period selected by the
Company of one month, three months or six months) in each case plus a margin.
The alternate base rate loans bear interest at a per annum rate equal to the
greatest of (i) the base rate in effect on such day, (ii) the federal funds
effective rate in effect on such day plus 1/2 of 1.0%, and (iii) daily one month
LIBOR plus 1.0%. The revolving credit facility borrowings that are LIBOR loans
bear interest at a per annum rate equal to the applicable LIBOR plus a margin of
0.50%. The borrowing interest rate for the Union Revolving Credit Facility was
4.25% as of March 31, 2022 and December 31, 2021, respectively.

On April 15, 2022, the Company agreed, pursuant to the Voting and Support
Agreement (as more fully described in Note 1: Basis of Presentation in Redbox's
Notes to Condensed Consolidated Financial Statements), to (i) permanently reduce
a portion of its revolving commitment under its Union Revolving Credit Facility
in an amount equal to $10.6 million (and the Company made such reduction) and
(ii) among other agreements, refrain from borrowing under the Union Revolving
Credit Facility without the consent of Aspen and Redwood Holdco, LP (other than
with respect to certain scheduled borrowings and borrowings to cover interest,
fees and expenses).

In addition to paying interest on the principal outstanding under Union’s revolving credit facility, Redbox Entertainment, LLC is required to pay a commitment fee at a rate equal to 0.50% per annum to the lenders in respect of unused commitments thereunder.

All obligations under Union’s revolving credit facility are guaranteed by all of the company’s direct and indirect wholly owned subsidiaries. Redbox Entertainment, LLC entity.

As of the period ended March 31, 2022, the Company was in compliance with all
applicable loan covenants.

Historical Cash Flows

                                                                Three Months Ended
                                                                    March 31,
Dollars in thousands                                             2022         2021
Net cash used in operating activities                         $ (14,823)   $ (14,110)
Net cash used in investing activities                            (2,832)   

(3,518)

Net cash provided by financing activities                         12,835   

25,843

Total change in cash, cash equivalents and restricted cash ($4,820) $8,215


Operating Activities

Net cash used in operating activities during the three months ended March 31, 2022 been $14.8 million compared to the net cash used in operating activities of
$14.1 million for the three months ended March 31, 2021. the $0.7 million
the decrease in cash flow from operations is mainly explained by the following items:

? $13.7 million decline in net income;

? $20.1 million increase in net cash inflows related to changes in working capital

mainly due to an increase in trade payables; and

$7.1 million decrease in net non-cash income and expenses included in net income

? primarily reflecting the pre-tax non-cash gain on the change in fair value on

   the warrant liabilities.


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Investing Activities

Investing activities reflect a $2.8 million net use of cash during the three
months ended March 31, 2022 compared to a $3.5 million net use of cash during
the three months ended March 31, 2021. The decrease is due to less capital
expenditures in 2022 compared to 2021, primarily on the Company's kiosk
infrastructure.

Fundraising activities

Net cash provided by financing activities was $12.8 million during the three
months ended March 31, 2022 compared to net cash provided by financing
activities of $25.8 million for the three months ended March 31, 2021. The $13.0
million decrease reflects less borrowings on the Company's Senior Facilities.

Contractual payment obligations

The following is a summary of contractual obligations and other commitments as
of March 31, 2022. Also see Note 3: Leases in Redbox's Notes to Condensed
Consolidated Financial Statements included elsewhere in this Form 10-Q for
expected future payments relating to the Company's operating and finance lease
liabilities.

                                                                                            2026 &
Dollars in thousands                        2022         2023          2024        2025     Beyond       Total
Long-term debt(1)                         $  38,394    $       -    $  271,562    $    -    $     -    $  309,956
Contractual interest on long-term
debt(1)                                      21,627       25,840         7,932         -          -        55,399
Revolving credit facilities(1)                3,145            -        33,223         -          -        36,368
Minimum estimated movie content
commitments(2)                               40,709        8,865             -         -          -        49,574
Asset retirement obligations(3)                   -            -           
 -         -      9,501         9,501
Other(4)                                        505           67             -         -          -           572
Total(5)                                  $ 104,380    $  34,772    $  312,717    $    -    $ 9,501    $  461,370

(1) See Note 6: Debt in the Redbox Notes to the condensed consolidated financial statements

Statements included elsewhere in this Form 10-Q.

(2) See note 13: Commitments and contingencies in Redbox’s notes to Condensed

    Consolidated Financial Statements included elsewhere in this Form 10-Q.


    Asset retirement obligations represent estimated amounts the Company is

obligated to pay to return the space occupied by a kiosk to its original state (3) upon removal of a kiosk and are shown to occur in 2025 and

beyond, because the moment of the removal of the kiosks cannot be reasonably determined. the

    amount is included as a component of Other long term liabilities on the
    Condensed Consolidated Balance Sheets.

The balance mainly represents firm commitments for spare parts for kiosk maintenance/repairs/upgrades (4) and information related expenses

Technology.

Income tax liabilities for uncertain tax positions have been excluded as the (5) Company is unable to make a reasonably reliable estimate of the amount and

period of related future payments. From December 31, 2021the company had

$2.2 million unrecognized gross tax benefits for uncertain tax positions.

Off-balance sheet arrangements

Other than certain contractual arrangements listed above, the Company does not
have any off-balance sheet arrangements that have or are reasonably likely to
have a material current or future effect on its financial condition, changes in
financial condition, revenue or expenses, results of operations, liquidity,
capital expenditures or capital resources. For additional information see Note
13: Commitments and Contingencies in Redbox's Notes to Condensed Consolidated
Financial Statements included elsewhere in this Form 10-Q.

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Contents

Significant Accounting Policies and Estimates

The Company's Consolidated Financial Statements are prepared in accordance with
accounting principles generally accepted in the United States of America and
include amounts based on management's prudent judgments and estimates. Actual
results may differ from these estimates. Management believes that any reasonable
deviation from those judgments and estimates would not have a material impact on
the Company's consolidated financial position or results of operations. To the
extent that the estimates used differ from actual results, however, adjustments
to the Condensed Consolidated Statements of Operations and corresponding
Condensed Consolidated Balance Sheets accounts would be necessary. These
adjustments would be made in future periods. Some of the more significant
estimates include goodwill, long-lived assets impairment, content library, and
income taxes. For a further discussion of our significant accounting policies,
refer to the Company's 2021 Annual Report on Form 10-K.

Recent accounting pronouncements

Accounting guidelines adopted:

In February 2016, the FASB issued ASU 2016-02, Leases ("Topic 842" or "ASC 842")
related to leases to increase transparency and comparability among organizations
by requiring the recognition of right-of-use ("ROU") assets and lease
liabilities on the balance sheet. Most prominent among the changes in the
standard is the recognition of ROU assets and lease liabilities by lessees for
those leases classified as operating leases. Under the standard, disclosures are
required to meet the objective of enabling users of financial statements to
assess the amount, timing, and uncertainty of cash flows arising from leases.

The Company adopted ASC 842 as of January 1, 2022, using the modified
retrospective approach. The modified retrospective approach provides a method
for recording existing leases at adoption and not restated comparative periods;
rather the effect of the change is recorded at the beginning of the year of
adoption. The Company will elect the package of practical expedients permitted
under the transition guidance within the new standard, which allows us to
carryforward historical lease classification. In addition, we are electing the
hindsight practical expedient to determine the reasonably certain lease term for
existing leases. Lastly, we elect the short-term lease recognition exemption for
our leases. This means for short-term leases, we will not recognize ROU assets
and lease liabilities, and this includes not recognizing ROU asset or lease
liabilities for existing short-term leases of those assets in transition. In
preparation for adoption of the standard, we have implemented internal controls
to enable the preparation of financial information.

The Company recorded ROU assets of $9.1 million and lease liabilities for
operating leases of $9.4 million as of January 1, 2022. The standard did not
materially impact our consolidated net earnings and had no impact on cash flows.
See Note 3: Leases in Redbox's Notes to Condensed Consolidated Financial
Statements included elsewhere in this Form 10-Q.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) to simplify the accounting for income taxes. These guidelines remove certain exceptions related to the intra-period tax allocation approach, the method of calculating income taxes in an interim period, and the recognition of deferred tax liabilities for basis differences. external. The guidance also clarifies and simplifies other areas of ASC 740. The adoption of ASU 2019-12 did not have a material impact on the company’s consolidated financial statements and related disclosures.

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