Greetings, and welcome to the Moving Image Technologies Third Quarter 2024 Earnings Call. At this time all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Brian Siegel, Vice President of Investor Relations and Strategic Communications for Moving iMage Technologies. Thank you. You may begin.

Thank you, Operator. Good morning, and welcome to Moving iMage Technologies earnings conference call webcast. With me today is Chairman and CEO, Philip Rafnson, who will provide an industry overview, Co-founder and Executive VP of Sales and Marketing, Joe Delgado, who will provide a strategy and business overview, and our CFO Bill Greene. For those of you that have not seen today's release, it is available on the investor section of our website. Before beginning, I would like to remind everyone that except for historical information, the matters discussed in this presentation are forward statements that involve several risks and uncertainties. Words like believe, expect, and anticipate mean that these are our best estimates as of this writing, but that there can be no assurances of expected or anticipated results or events will actually take place. Actual future results could differ materially from those statements. Further information on the company's risk factors is contained in the company's quarterly and annual reports filed with the SEC. Now I'd like to turn the call over to Phil. Take it away.

Thank you, Brian, and thank you all for joining us today. I'm Philip Rafnson, CEO of Moving iMage Technologies, or MIT. As you look at MIT as an investment, industry and company-specific factors will contribute to our future performance. First, I'll address the cinema industry as it stands today, and then Joel will discuss why we're so excited about the future, where we are introducing potentially disruptive technologies into cinema, Esports, stadiums, arenas, and other live entertainment venues. Historically, our business has been cyclical, driven by new technology and technology upgrade cycles, which has caused lumpiness in our results. We are currently still in the early days of one right now, where newer technologies such as laser projectors with upgraded servers, new screens, and smart sound systems are being purchased to replace older technologies. Additionally, we are seeing cinema owners build new theaters and upgrade or refurbish older ones. These new theaters often include new amenities such as dine-in, bars, and more, all with the idea of making going to a movie a destination experience. Prior to the actors and writers strike during the second half of 2023, the industry was normalizing and heading toward pre-COVID box office levels. Unfortunately, the now settled Hollywood strikes impacted the industry during the later part of 2023 and are expected to be a headwind for box office growth in 2024 due to the delays in filming and releasing of new content. This has had a trickle down effect on our business in 2024, but we are cautiously optimistic about the momentum starting to return as we get closer to 2025. Before turning the call over to Joe, I'd like to thank our dedicated employees. Without them, we would not be in what I believe is the strongest position we've ever been in as a company from an operational, financial, product, and competitive perspective. Thank you, Joe.

Thank you, Phil, and good morning, everyone. I'll start by briefly reviewing our business and providing updates on each area. Today's cinema is our core legacy business, which consists of FF&E projects and selling our proprietary U.S. manufactured goods and third-party technologies. As Phil mentioned, this part of our business has historically been more cyclical and lumpy. With project start dates often being pushed out, as we've seen so far this year due to the strikes. Additionally, FF&E projects tend to be at the low end of our gross margin profile, although there continues to be strong operating leverage in this part of the business. Given the lower margin profile lumpiness and timing factors, I just mentioned, a major part of our strategy going forward is to shift our mix towards higher margin products as well as smooth out the lumpiness and cyclicality. For cinema, this includes expanding our existing lineup of over 50 proprietary manufactured products, including our ADA compliance products and Caddy lines. By manufacturing these products, we can significantly increase our blended margins on FF&E projects and our overall company gross margin when sold a la carte. Additionally, our partnership with LEA Professional for smart power amplifiers is a potential source of growth and margin expansion for both FF&E projects and a la carte sales. There are two parts of this opportunity. First is power amplifier attrition. On average, each movie screen needs 5 to 6 power amps per screen and these tend to have annual attrition rates of 5%-10%. We estimate the total installed market for power amps in North America to be about $630 million, so the annual TAM is around $30million to 60 million. Given LEA is so confident in its product quality with a warranty that is two times the industry standard, combined…

Thanks Joe and thank you everyone for attending our earnings call. I'm going to spend a little time reviewing our model and then I'll take you through the quarter call by Q&A. Historically, our legacy FF&E projects have been the key driver for our business making up roughly 60% to 65% of revenue. As Joe and Phil mentioned, FF&E projects are more cyclical and can often see start dates pushed out as we've seen over the past three quarters due to the strikes. We serve as a project manager, procuring and reselling FF&E in services for refurbishing, upgrading, and building new theaters. Since a large part of these projects involve pass-through costs with a small margin added in, project margins are in the mid-teens. We have several routes to improve these margins, including upselling installation services scoping our proprietary manufactured products into the project through the resale of higher margin technology products, including projectors and servers and more recently sound system products through our relationship with LEA Professional. Next, we sell our high-margin proprietary manufactured offering, la carte, which have margins ranging from 35% to 55% and include our fabrication, caddy, and ADA compliance products. Additionally, since we are in the early days of a multi-year technology upgrade cycle, we receive discrete orders for servers, projectors, and LEA power amps, all of which have gross margins above the company average. In the near future, as our emerging products like MiTranslator, CineQC, and what we are calling E-caddy hit the market and start to scale, we expect our mix to shift even more significantly away from FF&E as these products will likely have 50% plus gross margins. Now, moving to our third quarter results, we reported revenue of $3.9 million up 4% versus last year. Gross profit decreased to $0.7 million…

Thank you. At this time, we'll be conducting a question and answer session. [Operator Instructions]. Ladies and gentlemen, I'm showing no questions at this time. This will conclude our Q&A session and thus concludes our call today. We thank you for your interest and participation. You may now disconnect your lines. End of Q&A: