The concept is to "photograph" each individual frame in the film and build up an AVI video from these frames.
A machine vision camera is used together with a macro lens to focus directly on the film frame in the projector gate. The film is lit from the rear using an RGB LED lighting system.
Each time a frame arrives in the gate after pulldown, a sensor detects this and tells the control system to open the camera shutter, flash the LEDs on and then close the shutter. The resulting image is transferred from the camera to host PC where it is displayed for preview and also saved to disk if capture is enabled.
Frames can be stored separately as TIFF, BMP or JPG files or, more usually, can be combined directly into an AVI file.
Capture rate is not important as it has no bearing on the resulting playout rate of a captured AVI file. Generally, the speed is limited by the resolution of the captured image and the Firewire bus. 30fps is possible with a 1024x768 camera, my IMI 1388x1036 is limited to 15fps with its Firewire 1394A bus (400 Mb/s). In practice, 10fps is a nice rate to allow timely user adjustments if required during capture.

The LED driver and Motor Control board is controlled via a USB connection to the PC. Motor control and LED exposure control can be local via hardware rotary controls and/or via software simulation of these controls using the mousewheel.