10. Condensed Consolidated Statements of Operations – Supplemental Information

The following table summarizes the Company's selling expenses (reversals), including sales commissions and other selling expenses such as direct advertising and marketing expenses, which are recognized within Costs and Expenses Applicable to Revenues in the Condensed Consolidated Statements of Operations, for three and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30,
	2022				2021
(In thousands of U.S. Dollars)	Sales Commissions		Other Selling Expenses		Sales Commissions		Other Selling Expenses
Technology sales(1)	$	269	$	254	$	259	$	144
Image enhancement and maintenance services(2)		—		3,678		—		3,292
Technology rentals(3)		225		363		51		675
Total	$	494	$	4,295	$	310	$	4,111


	Nine Months Ended September 30,
	2022					2021
(In thousands of U.S. Dollars)	Sales Commissions			Other Selling Expenses		Sales Commissions		Other Selling Expenses
Technology sales(1)	$	316		$	454	$	701	$	481
Image enhancement and maintenance services(2)		—			11,443		—		6,006
Technology rentals(3)		(64	)		1,093		214		1,356
Total	$	252		$	12,990	$	915	$	7,843

(1)

Sales commissions paid prior to the recognition of the related revenue are deferred and recognized upon the client acceptance of the IMAX Theater System. Direct advertising and marketing costs for each theater are expensed as incurred.

(2)

Film exploitation costs, including advertising and marketing costs, are expensed as incurred.

(3)

Sales commissions related to joint revenue sharing arrangements accounted for as operating leases are recognized in the month they are earned by the salesperson, which is typically the month in which the theater system is installed, and are subject to subsequent performance-based adjustments.

Included in Selling, General and Administrative Expenses for the three and nine months ended September 30, 2022 is a net loss of $(1.2) million and $(3.0) million, respectively, (2021 — net loss of $(0.6) million and net gain of $1.1 million, respectively) resulting from changes in exchange rates related to RMB denominated monetary assets and liabilities. See Note 17(c) for additional information.

See Note 6 for a description of the material terms of the Company's collaborative joint revenue sharing arrangements. The accounting policy for the Company's joint revenue sharing arrangements is disclosed in Note 3(p) of the Company's audited Consolidated Financial Statements in its 2021 Form 10-K.

Revenue attributable to transactions arising between the Company and its customers under joint revenue sharing arrangements are recorded within Revenues — Technology Sales (for hybrid joint revenue sharing arrangements) and Revenues — Technology Rentals (for traditional joint revenue sharing arrangements). For the three and nine months ended September 30, 2022, such revenues totaled $13.5 million and $46.2 million, respectively (2021 — $10.9 million and $29.9 million, respectively). (See Note 14(a) for a disaggregated presentation of the Company's revenues.)

In an IMAX DMR arrangement, the Company receives a percentage of the box office receipts from a third party who owns the copyright to a film in exchange for converting the film into IMAX DMR format and distributing it through the IMAX network. The fee earned by the Company in a typical IMAX DMR arrangement averages approximately 12.5% of box office receipts (i.e. gross box office receipts less applicable sales taxes), except for within Greater China, where the Company receives a lower percentage of net box office receipts for certain Hollywood films. The accounting policy for the Company's IMAX DMR arrangements is disclosed in Note 3(p) of the Company's audited Consolidated Financial Statements in its 2021 Form 10-K.

Revenue attributable to transactions arising between the Company and its customers under IMAX DMR arrangements are included in Revenues – Image Enhancement and Maintenance Services. For the three and nine months ended September 30, 2022, such revenues totaled $19.9 million and $67.1 million, respectively (2021 — $15.7 million and $39.4 million, respectively). (See Note 14(a) for a disaggregated presentation of the Company's revenues.)

In certain film arrangements, the Company co-produces a film with a third party whereby the third party retains the copyright and certain other rights to the film. In some cases, the Company obtains exclusive theatrical distribution rights to the film. Under these arrangements, both parties contribute to the funding of the production, distribution and exploitation costs associated with the film.

As of September 30, 2022, the Company is party to one co-produced film arrangement, which represents the VIE total assets balance of $1.5 million and liabilities balance of $0.3 million and three other co-produced film arrangements, the terms of which are similar. The accounting policies relating to co-produced film arrangements are disclosed in Notes 3(b) and 3(p) of the Company's 2021 Form 10-K.

For the three and nine months ended September 30, 2022, an expense of $0.2 million and $0.6 million, respectively (2021 — $0.2 million and $0.3 million, respectively) attributable to transactions between the Company and other parties involved in the production of the films have been included in Costs and Expenses Applicable to Revenues – Image Enhancement and Maintenance Services.