SmallCapInvestor.com reporter Jennifer Schonberger is reporting from the 20th Roth Capital Partners Annual OC Growth Stock Conference this week in Dana Point, Calif. The conference features presentations from more than 300 small-cap companies.

After 40 years of being reliant on analogue for film production, IMAX Corp. (Nasdaq: IMAX) has converted its antiquated business model to digital and formed joint ventures with movie studios and theaters that, according to IMAX’s CEO, will turn around the ailing company next year.

With its analogue model, the maker of digital and film-based motion picture technologies and large-format two-dimensional and three-dimensional film presentations had astronomical costs upfront that made it difficult to expand its movie offerings.

“IMAX film prints were the size of Volkswagons and they weighed about 400 pounds,” said Richard Gelfond, CEO of IMAX, in a presentation yesterday at the Roth OC Growth Stock Conference in Dana Point, Calif. “More importantly, they cost $25,000 per print 2D and $40,000 per print in 3D. In the digital world, it’s a hard drive and the cost of the print rounds out to free.”

Last year was a transitional one for the company, in which IMAX committed its resources to amending its business model for the transfer to digital.  

“Going digital will enable IMAX to cut costs, expand film offerings and boost revenues and earnings,” Gelfond said. “We will be cash-flow positive this year. The third and fourth quarters next year will see a real turnaround with sales of digital picking up.”

By moving to digital and its subsequent lower costs, IMAX has tripled its box office Hollywood pictures due to the shorter time frame to format a film for an IMAX showing, dramatically reduced costs associated with that and increased flexibility. The cost for the exhibitor to put up an IMAX film used to be $4 million to $5 million; now it costs $150,000.

These factors have expanded movie studio alliances for IMAX beyond its primary relationship with Warner Brothers; now Paramount and Dreamworks have jumped on board, allowing IMAX to show a wider selection of mainstream films. In particular, deal volume is up with Dreamworks, Gelfond said.

With its augmented selection of Hollywood films, the small cap has garnered what it calls “the techie crowd,” a core customer base that consists of 15- to 30-year-old males who typically order videos on demand to watch on their state-of-the-art televisions in the comfort of their own home.

“We’ve made it such that this demographic can’t achieve the IMAX experience in their house,” Gelfond said. “They’ll have to keep coming back to us if they want the IMAX experience.”

By lowering the costs, IMAX has also increased the ease of implementing IMAX in conventional theaters. In December, the Toronto-based company enlarged its footprint in the United States when it signed a deal with AMC Entertainment to provide 100 digital-projection systems, doubling the number of 3-D outlets in the United States.

“[Now] through 2010 will be big growth years,” Gelfond said.