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Digital Cinema Destinations Corp., (DCIN)

F3Q13 Earnings Call

May 14, 2013 4:30 pm ET

Executives

Robert Rinderman – Investor Relations and Corporate Communications

A. Dale Mayo – Chairman and Chief Executive Officer

Brian Pflug – Chief Financial Officer

Analysts

Eric Wold – B. Riley & Co. LLC

John Tinker – Maxim Group LLC

James C. Goss – Barrington Research Associates, Inc.

Ross Silver – Vista Partners LLC

Presentation

Operator

Ladies and gentlemen thank you for standing by. Welcome to the Digiplex’s Fiscal 2013 Third Quarter Financial Results Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded Tuesday, May 14, 2013.

And now, it’s my pleasure to turn the conference over to Mr. Robert Rinderman, Digiplex Investor Relations. Please go ahead, sir.

Robert Rinderman

Thank you very much, Jason. Good afternoon, everyone. This call and webcast may contain forward-looking statements related to the company’s future operating results. Such statements are based upon current expectations and assumptions and may involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These risks and uncertainties are detailed from time to time in our SEC filings. Digiplex’s actual performance may differ materially because of these or other factors as discussed in the management’s discussion and analysis section of our filings.

Copies of which can be obtained from the SEC or via digiplexdest.com. All information discussed as of today May 14, 2013 and the company undertakes no obligation to update any statements or expectations from prior conversations. Today’s call is being webcast live over the Internet and a replay will be available on the corporate website for a minimum of 30 days.

I will now turn the call over to Chairman and CEO, Bud Mayo; who is joined by CFO, Brian Pflug; and Senior Vice President, Chuck Goldwater. Bud?

A. Dale Mayo

Thanks, Rob, and thanks to all of you for joining us today. At the conclusion of my opening commentary, Brian will cover the company’s fiscal Q3 financials. Following a very strong December quarter for the industry, including well attended holiday cinema drilling season for domestic box office performance in the March 13 quarter was somewhat underwhelming, following 12.4% compared to last year.

To be clear, the year-over-year box comparison was a challenging one from a start, as the March 2012 quarter had risen more than 20% a year ago. Although the June quarter got off to a somewhat sluggish start, the recent release of Ironman 3 as the all important pre-summer movie going season off to a rousing start. This domestic opening weekend receipts of more than $174 million made at the second best box office debut in history.

Looking at the big picture of what we are striving to accomplish here at Digiplex, in the future when our circuit is considerably larger and all of the requisite at digital technology isn’t place for playing alternative content at all of our locations. And our social media and target marketing are further differentiating us from our peers slower quarterly periods when Hollywood titles don’t play as well as they did in this quarter, over times, when our strategy will cruelly shine and make the most sense.

Focusing on an enhanced capacity utilization during the shoulder periods of the movie slate, especially Monday through Thursday, when theatres are traditionally, virtually empty, is one of the keys for us.

As we have been saying, Digiplex is offering a peak at the future of theatrical exhibition. And if we’re successful and demonstrate that we can make our platform strategy work that may expect a large number of other exhibitors in many respects the industry to want to follow our lead. Speaking of innovation, Digiplex recently became the first major exhibitor offer special presentations of select Hollywood titles in Spanish language.

We started with G.I. Joe in early April and have also presented Oblivion, as well as Ironman 3 with Star Trek up next. It’s a good example of leveraging our digital platform to bring our customers the best entertainment options available in any language. Our DigiNext initiative is a key example of our long-term business plan and another creative way we are capitalizing on presenting and [eventizing] quality alternative programs such as intriguing documentaries on important issues of our time.

This is obviously a new concept for theatrical exhibitors who have historically played a more passive role in showing whatever Hollywood sends their way. With our DigiNext alliance with Nehst Studios, we actually get the chance to curate our own content while capitalizing on some of the ancillary incremental revenues after the theatrical run.

Many of our patrons have also told us they especially enjoyed our live Q&As with cast and crew members we starred them and produced these unique features. Our first season of eight releases has covered a wide range of subject matter from gun control to the healthcare system. Last month, we had a successful presentation launch of Kinderblock 66: Return To Buchenwald, and this has been our best attempt in DigiNext title to date. In this way, we are successfully diversifying our entertainment offerings without increasing our cost of content.

Digiplex’s key role is giving these titles a theatrical release throughout our growing circuit and putting our hyper-local marketing machine to work in order to garner additional publicity and awareness not only within the local communities where we operate, but also generally setting up media buzz from that various other outlets such as all forms of social media, bloggers and trade publications for our Digiplex and DigiNext brands. Also, to supplement our admissions receipts we participate as a 50-50 partner in the net downstream and ancillary revenues, but this includes revenues from DVD sales, digital downloads, television licensing and other relating sources, including international rights in most cases.

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