1Q1+

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form10-K

Form 10-K

(Mark One)

For the fiscal year ended December 31 2017, 2023

Commission file Number001-35066

IMAX Corporation

(Exact name of registrant as specified in its charter)

(Address of principal executive offices, zip code, telephone numbers)

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

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

None

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes☒ No ☐

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to thisForm 10-K  ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company.company, or an emerging growth Company. See the definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company,” and “emerging growth company” inRule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. □

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). □

Indicate by check mark whether the registrant is a shell Company (as defined inRule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the common shares of the registrant held bynon-affiliates of the registrant, computed by reference to the last sale price of such shares as of the close of trading on June 30, 20172023 was $1,219.7$758.9 million.

As of January 31, 2018,2024, there were 64,902,20152,951,334 common shares of the registrant outstanding.

Document Incorporated by Reference

IMAX CORPORATION

December 31, 20172023

Table of Contents

IMAX CORPORATION

EXCHANGE RATE DATA

Unless otherwise indicated, all dollar amounts in this document are expressed in United States (“U.S.”) dollars.Dollars. The following table sets forth, for the periods indicated, certain exchange rates based on the noon buying rate in the City of New York for cable transfers in foreign currencies as certified for customs purposes by the Bank of Canada (the “Noon Buying Rate”). Such rates quoted are the number of U.S. dollarsDollars per one Canadian dollarDollar and are the inverse of rates quoted by the Bank of Canada for Canadian dollarsDollars per U.S. $1.00. The average exchange rate is based on the average of the exchange rates on the last day of each month during such periods. The Noon Buying Rate on December 31, 20172023 was U.S. $0.7971.$0.7561.

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

Certain statements included in this annual report may constitute “forward-looking statements” within the meaning of the UnitedU.S. States Private Securities Litigation Reform Act of 1995.1995 or “forward-looking information” within the meaning of Canadian securities laws. These forward-looking statements include, but are not limited to, references to future capital expenditures (including the amount and nature thereof), business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, future capital expenditures (including the amount and nature thereof), industry prospects and consumer behavior, plans and references to the future success of IMAX Corporation together with its consolidated subsidiaries (the “Company”)the Company and expectations regarding the Company’sits future operating, financial and technological results. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with the expectations and predictions of the Company is subject to a number of risks and uncertainties, including, but not limited to, risks associated with investments and operations in foreign jurisdictions and any future international expansion, including those related to economic, political and regulatory policies of local governments and laws and policies of the United States and Canada;Canada, as well as geopolitical conflicts; risks related to the Company’s growth and operations in China; the performance of IMAX DMR films;® films and other films released to the IMAX network; the signing of theater systemIMAX System agreements; conditions, changes and developments in the commercial exhibition industry; risks related to currency fluctuations; the potential impact of increased competition in the markets within which the Company operates;operates, including competitive actions by other companies; the failure to respond to change and advancements in digital technology; risks relating to recent consolidation among commercial exhibitors and studios; risks related to brand extensions and new business initiatives; conditions in thein-home andout-of-home entertainment industries; the opportunities (or lack thereof) that may be presented to and pursued by the Company; risks related to cyber-security;cyber-security and data privacy; risks related to the Company’s inability to protect its intellectual property; risks related to climate change; risks related to weather conditions and natural disasters that may disrupt or harm the Company’s intellectual property;business; risks related to the Company’s indebtedness and compliance with its debt agreements; general economic, market or business conditions; risks related to political, economic and social instability; the failure to convert theater system backlog into revenue; changes in laws or regulations; any statements of belief and any statements of assumptions underlying any of the failure to fully realize the projected cost savingsforegoing; other factors and benefits fromrisks outlined in the Company’s restructuring initiative;periodic filings with the United States Securities and Exchange Commission (the “SEC”) or in Canada, the System for Electronic Document Analysis and Retrieval (“SEDAR+”); and other factors, many of which are beyond the control of the Company. Consequently, all of the forward-looking statements made in this annual report are qualified by these cautionary statements, and actual results or anticipated developments by the Company may not be realized, and even if substantially realized, may not have the expected consequences to, or effects on, the Company. The forward-looking statements herein are made only as of the date hereof and the Company undertakes no obligation to update publicly or otherwise revise any forward-looking information,statements, whether as a result of new information, future events or otherwise.

IMAX®, IMAX® Dome, IMAX^® 3D, IMAX^® 3D Dome, Experience It In IMAX®,The IMAXExperience^®,An DMR®, Filmed For IMAXExperience®,An IMAX3D Experience^®, IMAX DMR^®, DMR^®LiveTM, IMAX nXos^Enhanced®, IMAX think big^®, think big^®Stream SmartTM and IMAX Is Believing^SSIMWAVE®, are trademarks and trade names of the Company or its subsidiaries that are registered or otherwise protected under laws of various jurisdictions.

PART I

Item 1.Business

The CompanyIMAX Corporation, together with its consolidated subsidiaries (the “Company” or “IMAX”) is a Canadian corporation that was formed in March 1994 as a result of an amalgamation between WGIM Acquisition Corp. and the former IMAX Corporation (“Predecessor IMAX”). Predecessor IMAX was incorporated in 1967.

GENERAL

TheAs of December 31, 2023, the Company together with itsindirectly owns 71.55% of IMAX China Holding, Inc. (“IMAX China”), whose shares trade on the Hong Kong Stock Exchange. IMAX China is a consolidated subsidiaries, is onesubsidiary of the world’s leadingCompany.

GENERAL

IMAX is a premier global technology platform for entertainment technology companies, specializing in motion picture technologies and presentations.events. Through its proprietary software, auditorium, architecture, patented intellectual property, and specialized equipment, IMAX offers a uniqueend-to-end cinematic solution combining proprietary software, theater architecture and equipment to create the highest-quality, mostsuperior, awe-inspiring immersive motion picture experiencecontent experiences for which the IMAX® brand has become known globally.is globally renowned. Top filmmakers, movie studios, artists, and studioscreators utilize the cutting-edge visual and sound technology of IMAX theaters to connect with audiences in innovative ways, and asways. As a result, IMAX’s theater networkIMAX is among the most important and successful theatricalglobal distribution platforms for major event films around the world.platforms.

The Company’s coreCompany leverages its proprietary technology and engineering in all aspects of its business, which principally consists of:

IMAX theater systemsSystems are based on proprietary and patented image, audio and other technology developed over the course of the Company’s50-year history. history since its founding in 1967. The Company’s customers who purchase, lease or otherwise acquire thefor IMAX theater systems through joint revenue sharing arrangementsSystems are theaterprincipally theatrical exhibitors that operate commercial multiplex theaters, (particularly multiplexes),and, to a much lesser extent, museums, science centers orand destination entertainment sites. The Company generally does not own the locations in the IMAX theaters,network, except for one, and is not an exhibitor, but licensesinstead sells or leases the IMAX System to exhibitor customers along with a license to use its trademarks and ongoing maintenance services for which there is an annual payment by the exhibitor to IMAX.

IMAX has the largest global premium format network, more than double the size of its trademarks along withnearest competitor. As of December 31, 2023, there were 1,772 IMAX Systems operating in 90 countries and territories, including 1,693 commercial multiplexes, 12 commercial destinations, and 67 institutional locations in the sale, lease or contributionCompany’s global network. This compares to 1,716 IMAX Systems operating in 87 countries and territories as of December 31, 2022, including 1,633 commercial multiplexes, 12 commercial destinations, and 71 institutional locations in the Company’s global network. Additional information on the composition of the IMAX theater system. The Company refers to all theaters usingnetwork is provided in the discussion of Marketing and Customers.

IMAX theater system as “IMAX theaters”.Systems provide the Company’s exhibitor customers with a combination of the following benefits:

IMAX theater systems combine:

In addition, certain movies shown in the IMAX network are filmed using proprietary IMAX film cameras or IMAX certified digital cameras, which along with IMAX’s customized guidance and a workflow process provide filmmakers enhanced and differentiated image quality and an IMAX-exclusive film aspect ratio that delivers up to 26% more image onto a standard IMAX movie screen. In select IMAX locations worldwide, movies filmed with IMAX cameras have an IMAX-exclusive 1.43 film aspect ratio, with up to 67% more image.

Together, these components cause audiences in IMAX theaterslocations to feel as if they are a part of theon-screen action, creating a more intense, immersive, and awe-inspiring exciting experience than a traditional theater.conventional cinematic format.

As a result of the immersivenessengineering and superior image and sound qualityscientific achievements that are a hallmark ofThe IMAXExperience®, the Company’s exhibitor customers typically charge a premium for IMAX DMR films overreleased in IMAX’s format versus films exhibited in their other auditoriums. The premium pricing, combined with the higher attendance levels associated with IMAX DMR films, generates incrementalbox-office box office for the Company’s exhibitor customers and for the movie studios releasing their films to the IMAX theater network. The incrementalbox-office box office generated by IMAX DMR films combined with IMAX’s unmatched global network footprint and scale has helped establish IMAX as a key premium distribution and marketing platform for Hollywood and foreign local language movie studios.

The Company’s global content portfolio includes blockbuster films.films, both from Hollywood and local language film industries worldwide; IMAX documentaries, both original and acquired (“IMAX Documentaries”), and IMAX events and experiences in emerging verticals including music, gaming, and sports.

IMAX THEATER NETWORK

The Company believesachieved its second highest grossing year at the global box office (“GBO”) and its highest grossing year at the Domestic, United States and Canada combined, box office in 2023. The year was highlighted by the Company’s highest grossing year for local language films, the $180.4 million in IMAX box office generated by Christopher Nolan’s Oppenheimer, and strong indexing across titles including Super Mario Bros., Guardians of the Galaxy Vol. 3, Spider-Man: Across the Spider-Verse, and Mission Impossible: Dead Reckoning.

A cornerstone of the IMAX theaterbrand for more than 50 years, IMAX recently relaunched its IMAX Documentaries unit to focus on a new generation of narrative-driven original and acquired documentary films, as well as downstream revenue opportunities through partnerships with leading streaming platforms. Additional forthcoming IMAX original documentaries include The Blue Angels and The Elephant Odyssey.

The Company also continues to evolve its platform to bring new, innovative events and experiences to audiences worldwide. During the year, the Company partnered with A24 for the IMAX LiveTM 40th anniversary screening of Jonathan Demme’s Stop Making Sense at the Toronto International Film Festival, which became the highest grossing IMAX Live event of all time. In January 2024, the Company and Pathé Live in partnership with Mercury Studios and Queen Films released Queen Rock Montreal, a concert from 1981, exclusively in 450 IMAX locations globally.

As of December 31, 2023, the Company has a footprint of 252 connected locations in the IMAX network across North America, Europe, and Asia were configured with connectivity to deliver live and interactive content with low latency and superior sight and sound. For more information on the Company’s content, see section “FILM DISTRIBUTION AND POST-PRODUCTION” below.

As a premier global technology platform for entertainment and events, the Company strives to remain at the forefront of advancements in entertainment technology. The Company offers a suite of laser-based digital projection systems (“IMAX Laser Systems”), which deliver increased resolution, sharper and brighter images, deeper contrast, and the widest range of colors available to filmmakers today. The Company further believes that its suite of IMAX Laser Systems are helping facilitate the next major renewal and upgrade cycle for the global IMAX network.

In September 2022, the Company acquired SSIMWAVE Inc. (“SSIMWAVE”), a leader in artificial intelligence (“AI”)-driven video quality solutions for media and entertainment companies. The acquisition of SSIMWAVE marks a significant expansion of the Company’s streaming and consumer technology strategy to deliver the highest quality images on any screen, while also creating cost efficiencies to streaming companies, broadcasters and other companies that transmit visual data — to drive new, recurring revenue and grow its global leadership in entertainment technology. In 2023, the Company formed a new business unit, Streaming and Consumer Technology to focus on in-home entertainment technology. The business unit includes the streaming technology acquired in the SSIMWAVE acquisition as well as IMAX Enhanced® product services.

The Company utilizes AI for image enhancement, streaming technology, and data analysis to improve various aspects of its business. It is one ofactively exploring other global use cases for AI to improve its products, operations, and efficiency.

IMAX NETWORK

The IMAX network is the most extensive premium theater networksnetwork in the world with 1,370 theater systems (1,2721,772 IMAX Systems operating in 90 countries and territories, including 1,693 commercial multiplex,multiplexes, 12 commercial destination, 86 institutional) operating in 75 countries as at December 31, 2017.

The Company believes that over time its commercial multiplex theater network could grow to approximately 2,855 IMAX theaters worldwide from the 1,272 commercial multiplex IMAX theaters in operationdestinations and 67 institutional locations as of December 31, 2017. While2023. The Company currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,693 IMAX Systems operating as of December 31, 2023, representing a market penetration of only 46.8%.

IMAX grew its network by 3.7% in 2023 driven by 128 system installations and ended the year with a backlog of 450 IMAX Systems. The Company continues to grow in the United States and Canada, it believes that the majority of its future network growth will come from international markets.markets outside of China. As atof December 31, 2017, 67.2%2023, 76% of IMAX theater systemsSystems in operationthe global commercial multiplex network were located within international markets (defined as all countries other than the United States and Canada), up from 63.7% as at December 31, 2016, and approximately 90.2% of IMAX theater systems in backlog are scheduled to be installed in international markets, compared to 87.8% as at December 31, 2016.. Revenues and grossbox-officeGBO derived from outside the United States and Canadainternational markets continue to exceed revenues and grossbox-officeGBO from the United States and Canada.

For the year ended December 31, 2023, the Company’s revenue generated from its Greater China continues(which includes the mainland of the People’s Republic of China, Hong Kong, Macau, and Taiwan) operations represents 25% of consolidated revenue, compared to be the Company’s second-largest market, measured by revenues, with approximately 33% of overall revenues generated24% in 2022 and 44% in 2021. Restrictions resulting from the Company’s ChinaCOVID-19 pandemic significantly impacted operations in 2017.China in 2022 and 2023. As atof December 31, 2017,2023, the Company had 544 theaters807 IMAX Systems operating in Greater China andwith an additional 309 theaters206 systems in backlog that are scheduled to be installed in Greater China by 2022.backlog. The Company’s backlog in Greater China represents 61.9%46% of the Company’sits total current backlog.backlog, including system upgrades. The Company’s largest single internationalCompany has a partnership is in China with Wanda Film formerly(“Wanda”) and as of December 31, 2023, through the Company’s partnership with Wanda, Cinema Line Corporation (“Wanda”). Wanda’s total commitment to the Company is for 359 theater systems,there were 376 IMAX Systems operational in Greater China, of which 343 theater systems362 are under the parties’ joint revenue sharing arrangement.arrangements. In December 2023, Beijing Wanda Investment, which owns a 20% stake in Wanda Film Holding, was sold to China Ruyi Holdings, a Tencent Holdings-backed company.

In 2015,(Refer to “Risk Factors – The Company conducts business internationally, which exposes it to uncertainties and risks that could negatively affect its operations, sales and future growth prospects”, “– The Company faces risks in connection with its significant presence in China and the continued expansion of its business there”, “– General political, social and economic conditions can affect the Company’s subsidiary,business by reducing both revenues generated from existing IMAX China Holding, Inc. (“Systems and the demand for new IMAX China”)Systems”, completed an initial public offeringand “– The Company may not convert all of its ordinary shares on the Main Board of the Hong Kong Stock Exchange Limited (the “IMAX China IPO”backlog into revenue and cash flows” in Part I, Item 1A.). Following the IMAX China IPO, the Company continues to indirectly own approximately 67.93% of IMAX China, which remains a consolidated subsidiary of the Company.

PRINCIPAL PRODUCTS AND SERVICES

The Company believes it is the world’s largest designer and manufacturer of specialty premium projection and sound system components for premium large-format theaters around the world, as well asand it is also a significant producer and distributor of large-format films. The Company’s theater systems include specialized IMAX projectors, advanced sound systems and specialty screens.

The Company’s principal products and services are as follows:

The Company assesses and evaluates the Company’s performance based on the operating certain IMAX theaters, camera rentalsresults of the Content Solutions and other miscellaneous items.

These product lines do notTechnology Products and Services segments, which largely reflect the naturedifferent customer bases the Company serves. The Content Solutions segment principally focuses on content enhancement and sourcesdistribution services for the Company’s movie studio customers. The Technology Products and Services segment primarily consists of revenue, orproducts and services for the manner in which management reviews financial information.Company’s exhibitor customers, including the sale, lease and ongoing service of IMAX Systems. The Company’s segmentedsegment information is provided in Part II, Item 7, Management’s Discussion and note 18Analysis of Financial Condition and Results of Operations and Note 21 to the accompanying audited consolidated financial statementsConsolidated Financial Statements in Part II, Item 8 of this Annual Report on Form10-K for the Fiscal Year ended December 31, 2017 (this “2017 Form10-K”), which8.

IMAX FILM REMASTERING

IMAX Film Remastering is incorporated by reference into this Item I.

DigitalRe-Mastering (IMAX DMR)

The Company has developed a proprietary technology known as IMAX DMR, tothat digitallyre-master Hollywood remasters films into IMAX digital cinema package format or15/70-format film for exhibition informats. IMAX theaters. IMAX DMRFilm Remastering digitally enhances the image resolution of motion picture films for projection on IMAX screens while maintaining or enhancing the visual clarity and sound quality to levels for whichTheIMAXExperience is known. In addition, the original soundtrack of a film to be exhibited across the IMAX network is remastered for IMAX digital sound systems. IMAX remastered soundtracks are uncompressed and full fidelity. IMAX sound systems use proprietary loudspeaker systems and proprietary surround sound configurations that ensure every seat in an auditorium is an optimal listening position.

The IMAX DMRFilm Remastering process involves the following:involves:

The original soundtrack of a film to be exhibited in the IMAX theater network isre-mastered for the IMAX digital sound systems in connection with the IMAX DMR release. Unlike the soundtracks played in conventional theaters, IMAXre-mastered soundtracks are uncompressed and full fidelity. IMAX sound systems use proprietary loudspeaker systems and proprietary surround sound configurations that ensure every theater seat is in an optimal listening position.

IMAX films also benefit from enhancements made by individual filmmakers exclusively for the IMAX release of the film. Collectively, the Company refers to these enhancements as “IMAX DNA.” Filmmakers and filmmakers andmovie studios have sought IMAX-specific enhancements in recent years to generate interest in and excitement for their films. Such enhancements include shooting select scenesfilms with IMAX cameras to increase the audience’s immersion in the film and takingto take advantage of the unique dimensions of the IMAX screen by projecting the film in a larger aspect ratio.ratio that delivers up to 26% more image onto a standard IMAX screen. In addition,select IMAX locations worldwide, movies filmed with IMAX cameras have an IMAX-exclusive 1.43 film aspect ratio, with up to 67% more image. The Company has a Filmed For IMAX® program under which filmmakers craft films from their inception in various ways in order to optimize The IMAX Experience. The program includes incremental and bespoke marketing support, which box office metrics demonstrate audiences respond extremely favorably to, and drives higher market share for IMAX.

Management believes that growth in international box office remains an important driver of growth for the upcoming filmsMarvel’s Avengers: Infinity War andCompany. To support continued growth in international markets, the Untitled Avengers Sequel are expected to be shot in their entireties using IMAX cameras.

In 2017, 60 films were converted throughCompany is focused on the IMAX DMR process and released to theaters inexpansion of the IMAX network byand has sought to bolster its international film studios as comparedstrategy, supplementing its slate of Hollywood films with appealing local language films released in select markets, including China, Japan, India, and South Korea.

The following table provides detailed information about the films that were released to 51the Company’s global network during the years ended December 31, 2023 and 2022:

To date, in 2024, 18 titles have been released to the global IMAX network, including three re-releases, and the Company has announced the following 31 DMRadditional 24 titles to be released in 2018 to the IMAX theater network:

2024:

In addition,

The Company remains in active negotiations with all of the major Hollywood studios for additional films to fill out its shortshort- and long-term film slate for the IMAX network. The Company also expects to announce additional local language films and anticipates that the number ofexclusive IMAX DMR filmsevents and experiences to be released to its global network throughout 2024.

FILM DISTRIBUTION AND POST-PRODUCTION

The Company continues to believe that the IMAX theater network in 2018 willserves as a valuable platform to launch and distribute original content. The Company distributes large-format documentary films, primarily to institutional customers. The Company receives as its distribution fee either a fixed amount or a fixed percentage of the box office receipts and, following the recoupment of its costs, is typically entitled to receive an additional percentage of gross revenues as participation revenues.

The ownership rights to such films may be similarheld by the film sponsors, the film investors and/or the Company. As of December 31, 2023, the Company has distribution rights with respect to approximately 60 films, which cover subjects such as space, wildlife, music, sports, history and natural wonders.

In May 2023, the Company announced that Amazon Studios acquired worldwide rights to the 60Company’s original documentary, The Blue Angels, filmed with IMAX DMR filmsdigital certified cameras and produced in collaboration with Dolphin Entertainment, Bad Robot Productions, and Zipper Bros Films. The documentary is expected to be delivered in the second quarter of 2024. In October 2023, Deep Sky, a documentary on NASA’s Webb Telescope in collaboration with Crazy Boat Pictures Ltd. and filmmaker Nathaniel Kahn, was released to the IMAX theaternetwork. In July 2023, the Company also announced the start of production of The Elephant Odyssey, a documentary in collaboration with Beach House Pictures Pte Ltd and China International Communications Group, which is expected to be released in 2025.

In addition, the Company continues to evolve its platform to bring new, innovative IMAX events and experiences to audiences worldwide. As of December 31, 2023, the Company has a footprint of 252 connected locations in the IMAX network across the United States, Canada, Europe, and Asia configured with connectivity to deliver live, interactive content with low latency and superior sight and sound.

In 2023, the Company partnered with Metro-Goldwyn-Studios Inc. (“MGM”) for an IMAX premiere event, consisting of red carpet interviews and behind the scenes footage, followed by a special advanced screening of Creed III, which was released across the IMAX global network. The Company also hosted a reunion of the iconic band Talking Heads at the Toronto International Film Festival, followed by a screening of Stop Making Sense,before the movie was released to the IMAX network more broadly. This became the highest grossing IMAX Live event of all time. These events were broadcast live to much of the IMAX Domestic connected network. In January 2024, the Company and Pathé Live in 2017.partnership with Mercury Studios and Queen Films released Queen Rock Montreal, a concert film from 1981, exclusively in 450 IMAX locations globally.

The Company also provides film post-production and quality control services for large-format films, whether produced by IMAX Systemsor third-parties, and digital post-production services. In addition, the Company also provides IMAX film and digital cameras to content creators under the IMAX certified camera program.

IMAX SYSTEMS

The Company’s primary products are its theater systems.various digital projection systems, which are either sold or leased to exhibitor customers along with a license for the use of the globally recognized IMAX brand. The Company’s digital projection systems include a projector that offers superior image quality and stability and a digital theater control system; a digital audio system delivering up to 12,000 watts of sound; a screen with a proprietary coating technology, and, if applicable,in certain situations, 3D glasses and cleaning equipment. IMAX’s digital projection systemsystems also operatesoperate without the need for analog film prints. Traditional IMAX film-based theater systems contain the same components as the digital projection systems but include a rolling loop15/70-format projector and require the use of analog film prints. Since its introduction in 2008, the vast majority of the Company’s theater sales have been digital systems. Furthermore, a majority of the Company’s existing film-based theater systems have been upgraded, at a cost to the exhibitor, to an IMAX digital system. As part of the arrangement to sell or lease its theater systems, the Company provides extensive advice on theater planning and design and supervision of installation services. Theater systems are also leased or sold with a license for the use of the globally recognized IMAX brand.

The Company’s digital projection system providessystems provide a premium and differentiated experience to moviegoersaudiences that is consistent with what they have come to expect from the IMAX brand, while providing forexhibitor customers with the compelling economics and flexibility that digital technology affords.

As part of the arrangement to sell or lease an IMAX System, the Company provides extensive advice on auditorium planning and design, and supervision of installation services. The terms of each sale or lease arrangement vary according to the configuration of the theater system provided,IMAX System, as well as the cinema market and the film distribution marketmarkets relevant to the geographic location of the customer.

Revenue from theater business arrangements isthe sale or lease of an IMAX System may be recognized at a different time from when cash is collected. See “Critical Accounting Policies” in Item 7 for furthercollected from the exhibitor customer. Further discussion onof the Company’s revenue recognition policies.

IMAX Theater Backlogpolicies is provided in Critical Accounting Estimates in Part II, Item 7 and NetworkNote 2(o) to Consolidated Financial Statements in Part II, Item 8.

The Company’s sales backlog is as follows:

The number of theater systems in the backlog reflects the minimum number of commitments under signed contracts. The dollar value fluctuates depending onfollowing table presents the number of new theater system arrangements signed from year to year, which adds toIMAX Systems that are in the network and in backlog, by configuration, as of December 31, 2023 and the installation and acceptance of theater systems and the settlement of contracts, both of which reduce backlog. Sales backlog typically represents the fixed contracted revenue under signed theater system sale and lease agreements that2022:

IMAX Laser Systems

In 2014, the Company believes will be recognized as revenue upon installation and acceptance of the associated theater. Sales backlog includes initial fees along with the estimated present value of contractual ongoing fees due over the term, however it excludes amounts allocated to maintenance and extended warranty revenues as well as fees (contingent fees) in excess of contractual ongoing fees that may be received in the future.

The value of sales backlog does not include revenue from theaters in whichintroduced its first laser-based digital projection system. Since then, the Company has continued research and development aimed at creating more affordable laser-based solutions with various screen sizes for its commercial multiplex customers. Beginning in 2021, the Company began offering an equityadditional laser-based system product to provide customers with an opportunity to replace and upgrade IMAX Xenon Systems. The Company currently sells two different configurations of its laser systems. The Company believes that IMAX Laser Systems present greater brightness and clarity, higher contrast, a wider color gamut and deeper blacks, consume less power and last longer than other digital projection technologies, and are capable of illuminating the largest screens in the IMAX network.

IMAX Xenon Systems

In 2008, the Company introduced its digital IMAX Xenon System. Prior to 2008, all of the IMAX Systems offered by the Company were film-based and required analog film prints. The Company believes that IMAX Xenon Systems deliver higher quality imagery when compared with IMAX Film Systems.

IMAX Film Systems

IMAX Film Systems include various configurations, including 2D and 3D systems, and screen sizes. Following the introduction of the digital IMAX Xenon System in 2008, the number of IMAX Film Systems in the IMAX network has decreased significantly. However, IMAX’s proprietary format, the IMAX 70mm Film System continues to be a sought after IMAX viewing experience. The existing network of 30 unique locations are being actively supported and leveraged for special event releases throughout the year such as with the 2023 release of Oppenheimer in IMAX 70mm film, which garnered significant consumer interest operating leases, lettersand demand for this format.

The following table provides information about the Company’s system backlog by deal type as of intent or long-term conditional theater commitments. December 31, 2023 and 2022:

The backlog reflects the minimum number of commitments for IMAX Systems according to the signed contracts. The dollar value fluctuates depending on the number of new arrangements signed from year-to-year, which adds to backlog, and the installation and acceptance of IMAX Systems and the settlement of contracts, both of which reduce backlog. The dollar value of backlog typically represents the fixed contracted revenue according to the signed IMAX System sale and lease agreements that the Company expects to recognize as revenue upon installation and acceptance of the associated system, as well as an estimate of variable consideration in sales arrangements. The value of backlog does not include amounts allocated to maintenance and extended warranty revenues or revenue from IMAX Systems in which the Company has an equity interest, operating leases, and long-term conditional theater commitments. The Company believes that the contractual obligations for theater systemIMAX System installations that are listed in salesthe backlog are valid and binding commitments.

From time to time, in the normal course of its business, the Company will have customers who are unable to proceed with a theater systeman IMAX System installation for a variety of reasons, including the inability to obtain certain consents, approvals or financing. Once the determination is made that the customer will not proceed with installation, the agreement with the customer is terminated or amended. If the agreement is terminated, once the Company and the customer are released from all their future obligations under the agreement, all or a portion of the initial rents or fees that the customer previously made to the Company are recognized as revenue. (Refer to “Risk Factors ― The Company may not convert all of its backlog into revenue and cash flows.”)

The following chart shows the numberCertain of the Company’s theater systems by configuration, opened theater network andcontracts contain options for the customer to elect to upgrade system type during the term or to alter the contract structure (for example, from a joint revenue sharing arrangement to a sale) after signing, but before installation. The current backlog as at December 31:information reflects all known elections.

IMAX MAINTENANCE

TheIMAX System arrangements also include a requirement for the Company estimates that it will install approximately 145 new theater systems (excluding upgrades) in 2018. The Company cautions, however, that theater system installations may slip from period to periodprovide maintenance services over the courselife of the Company’s business, usuallyarrangement in exchange for reasons beyond its control.

an extended warranty and annual maintenance fee paid by the exhibitor. Under these arrangements, the Company provides preventative and emergency maintenance services to ensure that each presentation is up to the highest IMAX theater systems consistquality standard. Annual maintenance fees are paid throughout the duration of the following configurations:

IMAX Digital: Xenon Theater Systems. The vast majorityterm of the Company’s theater system signings have been foragreements. (Refer to “Maintenance and Extended Warranty Services” below.)

OTHER PRODUCTS AND SERVICES

Streaming and Consumer Technology

Streaming and Consumer Technology includes the Company’s proprietary xenon-based digital systems.Streaming Technology software offerings and IMAX Enhanced product services. Streaming Technology consists of several software products including:

These AI-powered products allow streaming platforms and broadcasters to automate workflows. The Company believes that its xenon-based digital projection system delivers highthese products allow users to deliver the highest quality imagery comparedviewing experiences to their subscribers while reducing costs.

IMAX Enhanced is a solution to bring The IMAX Experience into the home. IMAX Enhanced provides end-to-end premium technology across streaming content and best-in-class entertainment devices, offering consumers high-fidelity playback of image and sound in the home and beyond, including the following features:

To be certified as IMAX Enhanced, leading consumer electronics manufacturers spanning 4K/8K televisions, projectors, A/V receivers, loudspeakers, soundbars, smartphones, personal computers, tablets, and more must meet a carefully prescribed set of audiovisual performance standards, set by a certification committee, along with other digital systems.some of Hollywood’s leading technical specialists.

At present, certified global device partners include Sony Electronics, Hisense, TCL, LG, Phillips, Hewlett Packard, Xiaomi, Sound United and Honor, among others. As atof December 31, 2017,2023, more than 300 IMAX Enhanced titles have been released across five of the Company had installed 1,250 xenon-based digital theater systemsbiggest streaming platforms worldwide: Disney+, Sony Bravia CORE, Tencent Video, iQiyi and has an additional 467 xenon-based digital theater systemsRakuten TV. Over 15 million IMAX Enhanced certified devices are estimated to be in the market today.

The Company’s collaboration with Disney allows fans to stream 20 Disney titles in IMAX’s expanded aspect ratio at home on Disney+. The presence of IMAX Enhanced on Disney+ provides strong brand exposure for IMAX by expanding the Company’s in-home entertainment footprint to Disney+ and most of its backlog.

IMAX Digital: Laser Theater Systems. The Company introduced its laser-based digital projection system at the end of 2014.150 million global subscribers. The Company believes thethat IMAX laser-based digital projectors present greater brightness and clarity, higher contrast, a wider color gamut and deeper blacks, and consume less power and last longer than existing digital technology, capable of illuminating the largest screens in theEnhanced enables an elevated end-to-end experience on Disney+, with IMAX theater network. As at December 31, 2017, the Company had installed 51 laser-based digital systems. The Companysignature sound coming to subscribers with IMAX Enhanced certified devices. IMAX Enhanced is in the process of developing an updated laser-based projection system, which is targeted primarily for screens in commercial multiplexes.

IMAX Flat Screen and IMAX Dome Theater Systems. IMAX flat screen and IMAX dome systems primarily have been installed in institutions such as museums and science centers. Flat screen IMAX theaters were introduced in 1970, while IMAX dome theaters, which are designed for tilted dome screens, were introduced in 1973. There have been several significant proprietary and patented enhancements to these systems since their introduction. As at December 31, 2017, there were 48 IMAX flat screen and IMAX dome theater systems in the IMAX network, as compared to 56 IMAX flat screen and IMAX dome theater systems as at December 31, 2016. With the introduction of the IMAX digital theater systems, there has been a decrease in the number of IMAX flat screen and IMAX dome theater systems in the network.

IMAX 3D GT and IMAX 3D SR Theater Systems. IMAX 3D theaters utilize a flat screen 3D system, which produces realistic 3D images on an IMAX screen. As at December 31, 2017, there were 21 IMAX 3D GT and IMAX 3D SR theater systems in operation compared to 27 IMAX 3D GT and IMAX 3D SR theater systems in operation as at December 31, 2016. The decrease in the number of 3D GT and 3D SR theater systems is largely attributable to the conversion of existing 3D GT and 3D SR theater systems to IMAX digital theater systems.

New Business Initiatives

The Company is exploring new lines of business outside of its core business, with a focus on alternative location-based entertainment experiences, investments in original content, as well as premium IMAX home entertainment technologies and services.

Virtual Reality

The Company is piloting a comprehensive virtual reality (“VR”) strategy to develop a premium, location-based VR offering that delivers immersive, multi-dimensional experiences, including entertainment content and games, to branded VR centers (“IMAX VR Centers”). Pilot IMAX VR Centers are located in a stand-alone venue and in several multiplexes, and are retrofitted with proprietary VR pods that permit interactive, moveable VR experiences. The Company’s VR initiative is premised on a unique combination of premium content, proprietary design andbest-in-class technology.

In January 2017, the Company launched its flagship pilot IMAX VR Center in Los Angeles. Since that time, the Company has opened six pilot IMAX VR Centers (two in New York City, one in Toronto, one in Manchester, England, one in Shanghai, China and one in Bangkok, Thailand.) The Company continues to evaluate its pilot VR strategy based on several factors, including the overall customer experience, pricing models, throughput, types of content featured and differences in geographic areas.

The Company has also established a virtual reality fund (the “VR Fund”) among the Company, its subsidiary IMAX China and other strategic investors. The VR Fund will help finance the creation of interactive VR content experiences over the next three years for use across all VR platforms, including in the pilot IMAX VR Centers. The VR Fund recently helped finance the production of one interactive VR experience, which debuted exclusively in the pilot IMAX VR Centers in November 2017 before being made available to other VR platforms.

Original Content

In 2017, the Company partnered with Marvel Television Inc. (“Marvel”) and Disney|ABC Television Group toco-produce and premiere theatrically the television series “Marvel’s Inhumans” in IMAX theaters. The first two episodes of the series ran worldwide in IMAX theaters for two weeks in September 2017 and subsequently the series premiered on the ABC network in the U.S. and across other networks internationally. As part of the investment,Company’s next evolutionary step to extend the Company sharesIMAX brand and technology further into new use cases, including streaming entertainment and the consumer electronics market.

(Refer to “Risk Factors ― Failure to respond adequately or in a timely fashion to changes and advancements in technology could negatively affect the economics across the venture, including in both the theatrical and television platforms.Company’s business.”)

Other

The Company continues to believe that the IMAX network serves asderives a valuable platform to launch and distribute original content, especially during shoulder periods. However, the Company expects that future investments in original content will be less capital intensive to the Company thansmall portion of its investment in “Marvel’s Inhumans”.

The Company has also created two film funds to help finance the production of original content. The Company is forming the IMAX China Film Fund (the “China Film Fund”) with its subsidiary IMAX China Holding Inc. (“IMAX China”), its partner CMC and severalrevenue from other large investors to help fund Mandarin language commercial films. The China Film Fund, which is expected initially to be capitalized with over $80.0 million, will target productions that can leverage the Company’s brand, relationships, technology and release windows in China. The China Film Fund is expected toco-finance approximately 15 Mandarin-language tent-pole films over three years, and will target contributions of between $3.0 million and $7.0 million per film. The China Film Fund will operate under an IMAXChina-CMC controlled greenlight committee.

In addition, the Company’s IMAX Original Film Fund (the “Original Film Fund”) was established in 2014 toco-finance a portfolio of 10 original large format films. The Original Film Fund, which is intended to be capitalized with up to $50.0 million, will finance an ongoing supply of original films that the Company believes will be more exciting and compelling than traditional documentaries. The initial investment in the Film Fund was committed to by a third party in the amount of $25.0 million, with the possibility of contributing additional funds. The Company agreed to contribute $9.0 million to the Original Film Fund over five years starting in 2014 and sees the Original Film Fund as a self-perpetuating vehicle designed to generate a continuous flow of high-quality documentary content. As at December 31, 2017, the Original Film Fund has invested $13.4 million toward the development of original films.

IMAX Home Entertainment Technologies and Services

The Company has also announced home theater initiatives,sources including a joint venture with TCL Multimedia Technology Holding Limited (“TCL”) to design, develop, manufacture and sell a premium home theater system. The joint venture has signed agreements with end users for the sale of more than 170 premium home theater systems, and has signed agreements with distributors for the sale of more than 470 home theater systems. The Company does not intend to invest significant capital into the joint venture going forward, and instead expects any additional funding to be provided through third party capital.

Beyond its premium home theater, the Company has also developed other components of a broader home entertainment platform designed to permit customers to view content on a premiumvideo-on-demand basis in their home theaters.

Other

The Company is also a distributor of large-format films, primarily for its institutional theater partners.

Films produced by the Company are typically financed through third parties, whereby the Company will generally receive a film production fee in exchange for producing the film and a distribution fee for distributing the film. The ownership rights to such films may be held by the film sponsors, the film investors and/or the Company. As at December 31, 2017, the Company currently has distribution rights with respect to 46 of such films, which cover such subjects such as space, wildlife, music, history and natural wonders.

Several more recent large-format films that have been distributed by the Company include:A Beautiful Planet, which was released in April 2016 and has grossed over $19.3 million as at the end of 2017;Voyage of Time, which was released in October 2016 and has grossed over $0.5 million as at the end of 2017;Island of Lemurs: Madagascar, which was released in April 2014 and has grossed over $13.8 million as at the end of 2017;Journey to the South Pacific, which was released in 2013 has grossed $13.6 million as at the end of 2017. Large-format films have significantly longer exhibition periods than conventional commercial films and many of the films in the large-format library have remained popular for many decades, including the filmsSPACE STATION,Hubble 3DandT-REX: Back to the Cretaceous.

The Company also provides film post-production and quality control services for large-format films (whether produced internally or externally), and digital post-production services.

As at December 31, 2017, the Company had twoone owned and operated IMAX theaters (December 31, 2016 — two owned and operated IMAX theaters). In addition, the Company hasSystem in Sacramento, California; a commercial arrangement with one theater resulting in the sharing of profits and losses and provideslosses; the provision of management services to three other theaters. The Company also rents itstheaters; renting the Company’s proprietary 2D and 3D large-format film and digital cameras to third party production companies. The Company maintains cameras and other film equipmentcameras; and also offersoffering production advice and technical assistance to both documentary and Hollywood filmmakers.

MARKETING AND CUSTOMERS

The Company markets its theater systemsIMAX Systems through a direct sales force and marketing staff located in offices in Canada, the United States, Greater China, Europe, and Asia. In addition, the Company has agreements with consultants, business brokers and real estate professionals to locate potential customers and theater sitessystem locations for the Company on a commission basis.

TheIMAX currently estimates a worldwide commercial multiplex theater segmentaddressable market of 3,619 locations, of which there are 1,693 IMAX Systems operating as of December 31, 2023, representing a market penetration of only 46.8%. Commercial multiplex systems are the largest part of the IMAX theater network, is the Company’s largest segment, comprising 1,2721,693 IMAX theaters,Systems, or 92.8%96%, of the 1,3701,772 IMAX theaters openSystems in the IMAX network as atof December 31, 2017.2023. The Company’s institutional customers include science and natural history museums, zoos, aquaria, and other educational and cultural centers. The Company also sells or leases its theater systemsIMAX Systems to commercial destinations such as theme parks, private home theaters, tourist destination sites, fairs, and expositions (the Commercial Destination segment). Atexpositions. As of December 31, 2017,2023, approximately 67.2%75% of all openedopen and operational IMAX theatersSystems were in locations outside of the United States and Canada.

The following table outlinesprovides detailed information about the breakdown of the theaterIMAX network by system type and geographic location as atof December 31:31, 2023 and 2022: