Risk Factors Update Summary

• The Company's business continues to be impacted by the COVID-19 pandemic, with capacity restrictions and safety protocols being lifted and reinstituted, resulting in significant disruption. This change might result in fluctuating revenues and uncertain business operations.
• The percentage of the company's revenues derived outside of the United States and Canada increased from approximately 62% in 2022 to 70% in 2023. This change might result in a higher exposure to international market risks.
• The addition of natural disasters to the risk factors may increase insurance costs.
• The Chinese government's dynamic zero-COVID policy led to temporary lockdowns and closures of theaters, impacting the Company's operations. As of December 31, 2022, approximately 97% of theaters in the global IMAX network were open at various capacities. This change indicates ongoing challenges in the Chinese market.
• The frequency, severity, and duration of natural disasters may increase, impacting the business.
• The number of IMAX Theater Systems in backlog scheduled to be installed in Russia, the CIS, and Ukraine decreased from 22 to 0. This change might result in a decline in future revenue from these regions.
• The Company's liquidity needs may increase materially due to the continued impact of the COVID-19 pandemic, potentially jeopardizing compliance with certain covenants under its credit agreement. This change suggests potential financial strain and increased risk.
• The number of IMAX Theater Systems operational in Greater China decreased from 369 to 375, with an additional 204 systems in backlog. This change might indicate a slower growth rate in the Greater China market.
• Economic downturns, geopolitical tensions, sustained inflation, and supply chain disruptions, including those caused by the COVID-19 pandemic, could impact the Company's revenue generation and increase operating costs. This change highlights the vulnerability of the Company to external economic factors.
• The company's ability to serve customers may be affected by climate and geology factors.
• The success of the IMAX network depends on factors outside the Company's control, such as the availability and performance of films released to IMAX theaters. The Company's ability to select commercially successful films and maintain relationships with movie exhibitors is crucial. This change emphasizes the reliance on external factors for revenue generation.
• The company acquired SSIMWAVE, a leader in AI-driven video quality solutions, which could enhance the company's research and development capabilities. The impact of this change on the company's future performance is uncertain.
• The Company's exploration of new areas of growth, such as original content and in-home entertainment technology, presents potential opportunities but also intensifies competition and carries risks. This change indicates the Company's pursuit of diversification and potential challenges in entering new markets.
• The number of conventional-sized screens in North American commercial multiplexes decreased from approximately 43,800 in 2021 to 24,000 in 2022. This change might indicate a shift in consumer preferences towards other forms of entertainment.
• The Company's acquisition of SSIMWAVE for $19.5 million in cash and 160,547 common shares with additional earnout consideration demonstrates its strategic focus on optimizing its business structure. This change suggests a commitment to enhancing the Company's capabilities and expanding its offerings.
• The company's commercial exhibitor customers are reliant on the availability of retail shopping malls, which compete with online retail websites. Changes in the retail shopping landscape and consumer purchasing patterns could adversely affect the company's business.
• The company's revenue recognition for IMAX Theater Systems sales or lease agreements can vary significantly from the associated cash flows. This change