Post-Q3, acquired Special Projects and announced multi-year agreement with MasterCard for Midnight Theatre
MIAMI, FL / ACCESSWIRE / November 14, 2023 / Dolphin Entertainment, Inc. (NASDAQ:DLPN), a leading entertainment marketing and premium content production company, announces its financial results for the third quarter ended September 30, 2023.
Bill O'Dowd, CEO of Dolphin Entertainment commented:
"I'm very proud of the team at Dolphin, which increased revenue in Q3 despite enduring two prolonged industry-wide strikes and the distraction of an internal merger for essentially the entire quarter.
On the bottom line, our Q3 operating loss of $2.1 million includes approximately $1.2 million in non-cash charges. Thus, the cash operating loss was approximately $900,000. We believe if it were not for the impact of the two strikes and the one-time costs associated with the internal merger of Be Social and Socialyte, our influencer marketing subsidiaries, to create The Digital Department, we would have achieved a cash operating profit in Q3. And that would have been without the benefit of Special Projects, which we acquired at the start of Q4.
Thus, going forward, once the industry resumes normal operations post-strikes, and with the addition of the revenues and profits of Special Projects, we expect to have consistent cash operating profits.
The effects of the strikes will be felt into Q1, as many movies and tv series have already been pushed out of 2023 and into the spring and summer of 2024, but make no mistake, the industry is excited to get back to work. And Dolphin has not been sitting idle. Quite the contrary, as we have achieved the following highlights, all since our last Earnings Call in the middle of August:
(1) created a market-leading influencer marketing agency, The Digital Department, by merging Be Social and Socialyte;
(2) hosted the Grand Opening of Midnight Theatre (now open 7 days a week), and signed our multi-year partnership with blue-chip marketer Mastercard; and
(3) completed our 7-year journey to build an Entertainment Marketing Earned Media "Super Group" with the acquisition of the best-in-class talent booking and celebrity live event firm, Special Projects.
With these accomplishments, we believe Dolphin is in its strongest position in company history, with highly-diversified revenue sources across seven operating subsidiaries, and expectations of cash operating profits in 2024.
As we look ahead to next year, a landscape of promising opportunities within Dolphin Entertainment and Dolphin Ventures awaits, beginning with the release of (and the revenues from) "The Blue Angels," the first project in our multi-year agreement with IMAX. Also, we believe the aforementioned multi-year partnership between Mastercard and Midnight Theatre validates our investment by indicating the value placed on our venue by the market.
Both our IMAX partnership and our Midnight Theatre venue are just getting started. And each of them are ahead of other Dolphin Ventures that we are equally excited about and are working hard to realize in 2024.
In short, we believe we've weathered the unique storm of this past summer and early fall. Looking ahead, after successfully navigating these temporary headwinds, and after our successful at-the-market raise (no discount, no warrants) of two weeks ago, we find ourselves on stable footing and with the full amount of our targeted cash reserves.
We are confident in our sustainable path forward. We believe this sends a strong message to a current micro-cap market which we expect will reward positive free cash flow, underlining our strategy for creating significant near-term shareholder value."
Q3 2023 and Recent Highlights
- Total revenue for the third quarter ended September 30 2023 increased 3% to $10.2 million year over year
- Operating loss and net loss for the quarter ended September 30, 2023 of $2.1 million and $3.9 million, respectively, includes non-cash items of approximately $1.2 million and $2.4 million, respectively. These include a non-recurring $341,417 impairment of intangible asset, $535,740 of depreciation and amortization and $311,578 of uncollectible accounts receivable primarily due to the write off of our investment in Crafthouse Cocktails. The net loss line also includes a non-recurring write-off of our investment in Crafthouse Cocktails in the amount of approximately $1.2 million under the caption equity in losses of unconsolidated affiliates and approximately $92,000 of debt origination fees related to the Bank Prov term loan expensed as interest expense. This compares to an operating loss and net loss for the quarter ended September 30, 2022 of $1.1 million and $1.3 million, respectively, which included non-cash items from depreciation and amortization of $415,836.
- Loss per share was $0.27 per share based on 14,121,275 weighted average shares outstanding for both basic loss per share and fully diluted loss per share for the three months ended September 30, 2023. Loss per share was $0.14 per share based on 9,664,681 weighted average shares outstanding for basic and 9,793,715 weighted average shares outstanding on a fully diluted loss per share basis, for the three months ended September 30, 2022.
- Cash and cash equivalents of $6.4 million as of September 30, 2023, as compared to $6.1 million as of December 31, 2022, does not include an October 31, 2023 underwritten public offering of 1,400,000 shares of its common stock at a public Offering price of $1.65 per share.
- Dolphin acquired Special Projects, the leading agency in talent booking, creative content, and event production, in an immediately accretive acquisition. With a client roster of world-class brands in the media, entertainment, fashion, and luxury sectors, Special Projects joins preeminent PR firms 42West, Shore Fire Media and The Door, influencer marketing agency The Digital Department, and content studio Viewpoint Creative in the Dolphin Entertainment collection of specialty agencies.
- Special Projects continued partnership as the Talent Booking Partner and Entertainment Consultant for WSJ. Magazine's Innovator Awards, and marked its ongoing collaboration as the Talent Booking Partner and Entertainment Consultant for Town & Country's Annual Philanthropy Summit, which was held at Hearst Tower in New York City on November 2, 2023.
- Midnight Theatre announced its grand opening date of September 22, 2023, added two key roles to the management team, and entered a multi-year partnership with MasterCard.
- Leading influencer subsidiaries, Be Social and Socialyte, announced a merger to form the Digital Dept. The merger creates one of the largest creator management and marketing companies in the U.S. and the only offering 360° strategy, earned media, and production services via Dolphin's network of agencies
- The Door added Giadzy from Giada De Laurentiis, as well as Emeril Lagasse and his son and chef patron, EJ Lagasse, to its growing roster of elite culinary clients and lifestyle brands. The Door also celebrated its ongoing partnership in executing media strategy for the FOOD NETWORK NEW YORK CITY WINE & FOOD FESTIVAL PRESENTED BY CAPITAL ONE , now in its 16th year. This marked the eighth consecutive year that The Door has played an integral role in the festival's success.
- James Beard Award Winning chef and owner of Compère Lapin and Bywater American Bistro in New Orleans, Nina Compton, announced the public sale of memberships to ShaSha Lounge: Social Aid and Pleasure Club, a new cocktail lounge coming to the Crescent City, in collaboration with new charity partner, United Way Southeast Louisiana (UWSELA), the award-winning consumer, lifestyle and hospitality marketing communications agency The Door | idea house, and esteemed celebrity chefs, Stephanie Izard, Marc Forgione, Michelle Bernstein, Rodney Scott, and Tiffani Faison.
- 42West's dedicated fandom and franchise-focused division, BHI, represented an all-time high of 13 clients at San Diego Comic-Con, the largest U.S.-based multi-genre pop culture event.
Conference Call Information
To participate in this event, dial approximately 5 to 10 minutes before the beginning of the call.
Date: November 14, 2023
Time: 4:30pm ET
Toll Free: 888-645-4404; International: 862-298-0702
Webcast: https://www.webcaster4.com/Webcast/Page/2225/49455
Replay:
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About Dolphin Entertainment, Inc.
Dolphin Entertainment is a leading independent entertainment marketing and production company. Through our subsidiaries 42West, The Door and Shore Fire Media, we provide expert strategic marketing and publicity services to many of the top brands, both individual and corporate, in the film, television, music, gaming and hospitality industries. All three PR firms have been ranked among the most recent Observer's "Power 50" PR Firms in the United States. Viewpoint Creative, The Digital Dept. complement their efforts with full-service creative branding and production capabilities as well as social media and influencer marketing services. Special Projects, Dolphin's most recent acquisition, provides talent booking services and event production for high-end clients across the media, entertainment and fashion industries. Dolphin's legacy content production business, founded by Emmy-nominated CEO Bill O'Dowd, has produced multiple feature films and award-winning digital series, and has recently entered into a multi-year agreement with IMAX to co-produce feature documentaries. To learn more, visit: https://www.dolphinentertainment.com.
This press release contains 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements may address, among other things, Dolphin Entertainment Inc.'s offering of common stock as well as expected financial and operational results and the related assumptions underlying its expected results. These forward-looking statements are distinguished by the use of words such as "will," "would," "anticipate," "expect," "believe," "designed," "plan," or "intend," the negative of these terms, and similar references to future periods. These views involve risks and uncertainties that are difficult to predict, and accordingly, Dolphin Entertainment's actual results may differ materially from the results discussed in its forward-looking statements. Dolphin Entertainment's forward-looking statements contained herein speak only as of the date of this press release. Factors or events Dolphin Entertainment cannot predict, including those described in the risk factors contained in its filings with the Securities and Exchange Commission, may cause its actual results to differ from those expressed in forward-looking statements. Although Dolphin Entertainment believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. Dolphin Entertainment undertakes no obligation to update publicly any forward-looking statements as a result of new information, future events, or otherwise, except as required by applicable law.
Contact:
James Carbonara/Hayden IR
(646)-755-7412
[email protected]
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
ASSETS | As of September 30, 2023 | As of December 31, 2022 | ||||||
Current | ||||||||
Cash and cash equivalents | $ | 6,406,646 | $ | 6,069,889 | ||||
Restricted cash | 3,723,868 | 1,127,960 | ||||||
Accounts receivable | ||||||||
Trade, net of allowance of $1,208,726 and $736,820, respectively | 4,993,703 | 6,162,472 | ||||||
Other receivable | 4,299,330 | 5,552,993 | ||||||
Notes receivable | 4,608,962 | 4,426,700 | ||||||
Other current assets | 954,029 | 523,812 | ||||||
Total current assets | 24,986,538 | 23,863,826 | ||||||
Capitalized production costs, net | 2,070,275 | 1,598,412 | ||||||
Employee receivable | 748,085 | 604,085 | ||||||
Right-of-use asset | 5,996,732 | 7,341,045 | ||||||
Goodwill | 22,796,683 | 29,314,083 | ||||||
Intangible assets, net | 8,030,366 | 9,884,336 | ||||||
Property, equipment and leasehold improvements, net | 214,877 | 293,206 | ||||||
Other long term assets | 896,712 | 2,477,839 | ||||||
Total Assets | $ | 65,740,268 | $ | 75,376,832 | ||||
LIABILITIES | ||||||||
Current | ||||||||
Accounts payable | $ | 4,309,920 | $ | 4,798,221 | ||||
Term loan, current portion | 960,503 | 408,905 | ||||||
Notes payable, current portion | 3,380,859 | 3,868,960 | ||||||
Contingent consideration | - | 500,000 | ||||||
Accrued interest - related party | 1,623,921 | 1,744,723 | ||||||
Accrued compensation - related party | 2,625,000 | 2,625,000 | ||||||
Lease liability, current portion | 2,089,297 | 2,073,547 | ||||||
Deferred revenue | 1,923,076 | 1,641,459 | ||||||
Other current liabilities | 6,052,420 | 7,626,836 | ||||||
Total current liabilities | 22,964,996 | 25,287,651 | ||||||
Term loan, noncurrent portion | 4,755,384 | 2,458,687 | ||||||
Notes payable, noncurrent portion | 3,530,000 | 500,000 | ||||||
Convertible notes payable | 5,150,000 | 5,050,000 | ||||||
Convertible notes payable at fair value | 350,000 | 343,556 | ||||||
Loan from related party | 1,107,873 | 1,107,873 | ||||||
Contingent consideration | - | 238,821 | ||||||
Lease liability | 4,613,704 | 6,012,049 | ||||||
Deferred tax liability | 344,432 | 253,188 | ||||||
Warrant liability | 10,000 | 15,000 | ||||||
Other noncurrent liabilities | 18,915 | 18,915 | ||||||
Total Liabilities | 42,845,304 | 41,285,740 | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Preferred Stock, Series C, $0.001 par value, 50,000 authorized, issued and outstanding at September 30, 2023 and December 31, 2022. | 1,000 | 1,000 | ||||||
Common stock, $0.015 par value, 200,000,000 shares authorized, 14,225,487 and 12,340,664 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively. | 213,382 | 185,110 | ||||||
Additional paid in capital | 146,686,953 | 143,119,461 | ||||||
Accumulated deficit | (124,006,371 | ) | (109,214,479 | ) | ||||
Total Stockholders' Equity | $ | 22,894,964 | $ | 34,091,092 | ||||
Total Liabilities and Stockholders' Equity | $ | 65,740,268 | $ | 75,376,832 | ||||
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenues | $ | 10,184,511 | $ | 9,899,013 | $ | 31,100,867 | $ | 29,366,748 | ||||||||
Expenses: | ||||||||||||||||
Direct costs | 185,308 | 837,429 | 621,449 | 2,941,044 | ||||||||||||
Payroll and benefits | 8,382,659 | 7,030,814 | 26,114,881 | 20,947,531 | ||||||||||||
Selling, general and administrative | 2,150,889 | 1,663,288 | 6,023,954 | 4,644,264 | ||||||||||||
Acquisition costs | 4,666 | 315,800 | 8,823 | 315,800 | ||||||||||||
Depreciation and amortization | 535,740 | 415,836 | 1,612,776 | 1,248,621 | ||||||||||||
Impairment of goodwill | - | - | 6,517,400 | - | ||||||||||||
Impairment of intangible asset | 341,417 | - | 341,417 | - | ||||||||||||
Change in fair value of contingent consideration | - | (5,000 | ) | 33,226 | (81,106 | ) | ||||||||||
Legal and professional | 695,188 | 774,613 | 1,955,037 | 2,317,800 | ||||||||||||
Total expenses | 12,295,867 | 11,032,780 | 43,228,963 | 32,333,954 | ||||||||||||
Loss from operations | (2,111,356 | ) | (1,133,767 | ) | (12,128,096 | ) | (2,967,206 | ) | ||||||||
Other (expenses) income: | ||||||||||||||||
Change in fair value of convertible notes | - | 45,642 | (6,444 | ) | 577,522 | |||||||||||
Change in fair value of warrants | - | 10,000 | 5,000 | 105,000 | ||||||||||||
Interest income | 104,303 | 91,722 | 309,424 | 204,943 | ||||||||||||
Interest expense | (604,669 | ) | (217,869 | ) | (1,413,177 | ) | (605,827 | ) | ||||||||
Total other (expenses) income, net | (500,366 | ) | (70,505 | ) | (1,105,197 | ) | 281,638 | |||||||||
Loss before income taxes and equity in losses of unconsolidated affiliates | (2,611,722 | ) | (1,204,272 | ) | (13,233,293 | ) | (2,685,568 | ) | ||||||||
Income tax expense | (31,059 | ) | (7,224 | ) | (91,243 | ) | (21,672 | ) | ||||||||
Net loss before equity in losses of unconsolidated affilates | (2,642,781 | ) | (1,211,496 | ) | (13,324,536 | ) | (2,707,240 | ) | ||||||||
Equty in losses of unconsolidated affiliates | (1,220,547 | ) | (100,223 | ) | (1,467,356 | ) | (143,623 | ) | ||||||||
Net loss | $ | (3,863,328 | ) | $ | (1,311,719 | ) | $ | (14,791,892 | ) | $ | (2,850,863 | ) | ||||
Loss per share: | ||||||||||||||||
Basic | $ | (0.27 | ) | $ | (0.14 | ) | $ | (1.11 | ) | $ | (0.31 | ) | ||||
Diluted | $ | (0.27 | ) | $ | (0.14 | ) | $ | (1.11 | ) | $ | (0.37 | ) | ||||
Weighted average number of shares used in per share calculation | ||||||||||||||||
Basic | 14,121,275 | 9,664,681 | 13,328,138 | 9,307,830 | ||||||||||||
Diluted | 14,121,275 | 9,793,715 | 13,328,138 | 9,437,807 | ||||||||||||
SOURCE: Dolphin Entertainment