Financial Data and Key Metrics Changes - Q3 2024 revenue increased by 24.5% year-over-year to $12.7 million, with year-to-date revenues up 26.6% to $39.4 million [7][35] - Adjusted operating income improved to $492,000 in Q3 2024 from an adjusted operating loss of $850,000 in Q3 2023, with year-to-date adjusted operating income at $1.4 million compared to a loss of $2.7 million in the same period last year [7][41] - The company expects to exceed $50 million in revenue for the full year 2024 and achieve positive adjusted operating income [7][35] Business Line Data and Key Metrics Changes - 42West maintained its dominant position in entertainment PR, achieving significant results at major industry events and expanding into anime and gaming [8][10] - Shore Fire Media had a landmark quarter in music, with clients receiving 26 nominations for the 2025 GRAMMYs [12][13] - The Digital Department secured 137 new talent signings and expanded its BRANDEdit Influencer Showroom to New York Fashion Week [14][15] Market Data and Key Metrics Changes - The women's sports market is identified as significantly undervalued with immense growth potential, leading to the launch of Always Alpha, a management firm dedicated to women's sports [20][21] - The partnership with Loti AI aims to enhance digital protection for clients, addressing the growing need for safeguarding digital presence [27][28] Company Strategy and Development Direction - The company is focusing on cross-selling opportunities across its various business lines and expanding its impact PR division [46][66] - Always Alpha is expected to be a major growth driver, leveraging existing expertise in celebrity management and brand development [22][24] - The partnership with Loti AI positions the company as a leader in ethical AI use in entertainment and marketing [31][63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue growth and positive adjusted operating income, highlighting the strong performance across all business segments [35][36] - The company anticipates 2025 to be a pivotal year with multiple new ventures and continued growth in influencer marketing and women's sports [68][69] Other Important Information - The company plans to launch a shareholder rewards program in January 2025, offering exclusive access to client products and events [39] - The acquisition of Elle Communications is expected to enhance capabilities in the impact investing industry [10][11] Q&A Session Summary Question: What were the main factors contributing to the revenue growth this quarter? - Management attributed the 24.5% year-over-year revenue growth to multiple factors, including strong performance from special projects and organic growth from legacy PR firms [44][46] Question: Can you highlight new business in the Digital Department? - Management noted strong growth in the talent management division and successful expansions into new markets, with Q4 expected to be particularly strong [47][50] Question: How much revenue was recognized from the Blue Angels content licensing agreement? - The company received over $3.4 million from the Blue Angels project, with $2.6 million recognized as revenue in Q3 2024 [52] Question: What are the priorities for 2025? - Management indicated a focus on organic growth, expanding Always Alpha, and developing new ventures similar to Staple Gin [65][68]

Revenue Growth - For the nine months ended September 30, 2024, total revenue increased to $39,367,418, up from $31,100,867 for the same period in 2023, representing a growth of approximately 26.6%[150] - Revenue from the entertainment publicity and marketing segment for the three months ended September 30, 2024, was $12,682,437, an increase of approximately $2.5 million compared to $10,184,511 in the same period of 2023[150] - Revenue from content production for the nine months ended September 30, 2024, was $3,421,141, attributed to the release of "The Blue Angels" documentary film[151] - The entertainment publicity and marketing segment accounted for 91.3% of total revenue for the nine months ended September 30, 2024, while content production contributed 8.7%[141] - The increase in revenue for the nine months ended September 30, 2024, was primarily driven by growth in 42West and the inclusion of $3.2 million from Special Projects and Elle, which were not present in 2023[150] Acquisitions and Investments - The company completed the acquisition of Special Projects in 2023 and Elle Communications, LLC in July 2024, aiming to enhance its entertainment publicity and marketing services[125] - The company has established an acquisition strategy to identify and acquire complementary businesses in the entertainment sector to create synergistic opportunities[125] - The company plans to enter into additional investments in 2024 under its "Ventures" strategy, focusing on entertainment content, live events, and consumer products[126] Expenses and Profitability - The company’s expenses include direct costs related to film production, payroll and benefits, and legal and professional fees, impacting overall profitability[144][145] - Total expenses for the three months ended September 30, 2024, were $20.8 million, an increase from $12.3 million in the same period of 2023, while for the nine months, expenses rose to $48.5 million from $43.2 million[152] - Direct costs increased by $69.0 thousand for the three months and $2.2 million for the nine months ended September 30, 2024, attributed to increased subsidiary revenues and $1.8 million of capitalized production costs being amortized[152] - Payroll and benefits expenses rose by approximately $1.2 million for the three months and $2.2 million for the nine months ended September 30, 2024, primarily due to the inclusion of Special Projects and Elle payroll expenses[153] - Selling, general, and administrative expenses decreased by approximately $0.3 million for the three months and $0.4 million for the nine months ended September 30, 2024, mainly due to reduced office rent and improved collections[154] - Acquisition costs related to the acquisition of Elle were $0.1 million for the three months and $0.2 million for the nine months ended September 30, 2024[155] Net Loss and Cash Flow - Net loss for the three months ended September 30, 2024, was approximately $8.7 million or ($0.80) per share, compared to a net loss of $3.9 million or ($0.55) per share for the same period in 2023[169] - Net cash used in operating activities was $1.0 million for the nine months ended September 30, 2024, a change of $3.9 million from $4.9 million used in the same period of 2023[172] - Cash flows used in investing activities for the nine months ended September 30, 2024, were $2.5 million, primarily related to notes receivable and the acquisition of Elle[173] - Cash flows provided by financing activities for the nine months ended September 30, 2024, were $2.5 million, mainly from related party loans and an equity line of credit[174] Debt and Financing - Total debt increased to $20.7 million as of September 30, 2024, up from $19.3 million as of December 31, 2023, primarily due to an increase in related party nonconvertible promissory notes[176] - The company expects to meet its debt obligations of approximately $4.9 million over the next twelve months with its current cash position and operational cash generation[177] - The company has outstanding unsecured nonconvertible promissory notes totaling $3,880,000 as of September 30, 2024, with interest rates at 10% per annum[189] - The company entered into a loan agreement with BankUnited, which includes a $5.8 million secured term loan and a $750,000 secured revolving line of credit[200] - As of September 30, 2024, the principal balance under the BKU Term Loan was $4,755,384, down from $5,482,614 as of December 31, 2023[204] - Interest expense related to convertible notes payable was $382,750 for the nine months ended September 30, 2024, compared to $414,880 for the same period in 2023[183] Impairment and Legal Matters - Impairment of goodwill was $6.5 million for the three months and $6.7 million for the nine months ended September 30, 2024, due to declines in market capitalization and lack of positive market response[158] - The company has filed a lawsuit against the seller of Socialyte regarding the Socialyte Purchase Agreement, which may impact future cash flows[193] Forward-Looking Statements and Risks - The company emphasizes that forward-looking statements are based on assumptions and assessments of historical trends and current conditions[210] - Risks that could lead to actual results differing from forward-looking statements are detailed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023[212] - The company does not guarantee future performance and acknowledges that many risks are outside of its control[211]

Financial Performance - Q3 2024 revenue increased by 24.5% year-over-year to $12.7 million, up from $10.2 million in Q3 2023[1] - Adjusted operating income for Q3 2024 was $0.5 million, compared to an adjusted operating loss of $(0.8) million in Q3 2023[1] - Nine-month 2024 revenue rose 26.6% to $39.4 million, with adjusted operating income of $1.4 million versus a $(2.7) million loss in the same period last year[1] - Revenues for the three months ended September 30, 2024, were $12,682,437, a 24.6% increase from $10,184,511 for the same period in 2023[19] - Adjusted income (loss) from operations for the nine months ended September 30, 2024, was $1,389,027, compared to a loss of $(2,730,278) for the same period in 2023[23] Expenses and Losses - Operating expenses for Q3 2024 totaled $20.8 million, significantly higher than $12.3 million in Q3 2023, driven by goodwill impairment of $6.5 million[3] - Total expenses for the three months ended September 30, 2024, were $20,837,136, compared to $12,295,867 in the prior year, reflecting a 69.8% increase[19] - The net loss for the three months ended September 30, 2024, was $8,692,389, compared to a net loss of $3,863,328 for the same period in 2023, indicating a 125.5% increase in losses[19] - The company reported a basic loss per share of $0.80 for the three months ended September 30, 2024, compared to a loss of $0.55 per share in the same period of 2023[19] - The company incurred impairment of goodwill amounting to $6,671,557 for the nine months ended September 30, 2024[19] Equity and Liabilities - Total stockholders' equity decreased to $13,601,069 as of September 30, 2024, down from $19,956,845 at the end of 2023, representing a decline of 31.6%[18] - The accumulated deficit increased to $(144,254,818) as of September 30, 2024, compared to $(133,611,204) at the end of 2023, reflecting a worsening of 8.5%[18] - Total liabilities and stockholders' equity decreased to $57,300,517 as of September 30, 2024, down from $66,254,974 at the end of 2023, a decline of 13.9%[18] Market and Strategic Developments - The company has a market cap trading at approximately 0.25x the current year 2024 estimated revenue guidance of $50 million[1] - Dolphin acquired Elle Communications in July 2024, a profitable PR firm with access to the $1.164 trillion global impact investing industry[4] - The launch of Always Alpha, the first management firm dedicated to women's sports, aims to revolutionize talent management for female athletes[5] - Partnership with Loti AI provides clients with AI-powered protection against unauthorized digital content, marking Dolphin's strategic entry into AI technology[7] - Dolphin received a cash installment of $2.6 million from its content licensing agreement related to The Blue Angels, with box office numbers surpassing initial projections[8] Share Information - The weighted average number of shares outstanding for the three months ended September 30, 2024, was 10,930,286, compared to 7,060,638 for the same period in 2023, indicating a 54.5% increase[19]

Financial Data and Key Metrics Changes - Total revenue for Q2 2024 was $11.4 million, a 4% increase from Q2 2023, bringing first half revenue to $26.6 million [18][19] - Adjusted operating loss for Q2 was $100,000, while the first half of 2024 generated a positive adjusted operating income of approximately $900,000 [3][19] - Net loss for Q2 2024 was approximately $1.6 million, compared to a net loss of $7.8 million for the same period in 2023 [19][20] - Cash and cash equivalents increased to $9.8 million as of June 30, 2024, compared to $7.6 million as of December 31, 2023 [19] Business Line Data and Key Metrics Changes - The acquisition of Elle Communications enhances the company's capabilities in impact PR, which is a growing sector [4][6] - 42West led multiple award-winning campaigns at the 2024 Tribeca Festival, showcasing the effectiveness of the company's marketing efforts [7] - The Digital Department executed a successful influencer strategy for Crocs, demonstrating the strength of the influencer marketing segment [10] Market Data and Key Metrics Changes - The impact investing industry currently manages over $1.1 trillion in assets worldwide, indicating a significant market opportunity for the company [6] - The company anticipates a strong second half of the year, with expectations for revenue to exceed $50 million for fiscal year 2024, aiming for over 20% year-over-year growth [3][4] Company Strategy and Development Direction - The company is shifting focus from acquisition strategies to growing margins and cash flow, with plans to expand into sports as a new vertical [4][16] - The acquisition of Elle Communications is part of a strategy to enhance impact PR capabilities and leverage celebrity influence for social good [6][17] - The company aims to secure ownership stakes in content creation, consumer products, and live experiences without cash outlay [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive adjusted operating income for the full year 2024 and beyond, highlighting a shift towards financial flexibility [4][18] - The company is excited about the opportunities in the sports sector and plans to treat athletes as influencers, which aligns with current market trends [24][25] - Management emphasized the importance of organic growth and internal referrals, expecting margin expansion and cash flow growth [39][40] Other Important Information - The film "Blue Angels" achieved significant box office success and is expected to generate ongoing returns for the company [12][13] - The launch of Staple Gin, developed in partnership with Rachael Ray, has received positive initial feedback and multiple awards [13][38] Q&A Session Summary Question: How to think about seasonality in Q3 versus Q4? - Management indicated that Q4 is typically the best quarter due to increased influencer marketing campaigns for the holiday season [20][21] Question: Plans for entering the sports sector? - The company plans to build the sports business organically, treating athletes as influencers and leveraging existing marketing strategies [22][24] Question: Potential for recurring revenue from live events? - Management expressed interest in creating annual events that could generate recurring revenue, similar to successful ventures in the past [30][31] Question: Updates on consumer product ventures? - The company is planning to announce another consumer product venture by the end of the year, with a focus on liquor and skincare products [33][35] Question: Tracking performance of Staple Gin? - Management suggested looking at subscription services and industry publications to track the performance of Staple Gin [36][37]

Revenue Performance - For the six months ended June 30, 2024, total revenue was $26,684,981, an increase of approximately $5,768,625 compared to $20,916,356 for the same period in 2023[119]. - Revenue from the entertainment publicity and marketing segment for the three months ended June 30, 2024 was $11,449,089, up from $11,024,935 in the same period of 2023, reflecting an increase of approximately $424,154[119]. - Revenue from content production for the six months ended June 30, 2024 was $3,421,141, attributed to the release of "The Blue Angels" documentary film[120]. - The acquisition of Special Projects in 2023 contributed approximately $1.6 million in revenue for the six months ended June 30, 2024, which was not present in 2023[119]. - The entertainment publicity and marketing segment accounted for 86.9% of total revenue for the six months ended June 30, 2024, while content production accounted for 13.1%[116]. - The company recorded $3,421,141 in revenue related to the Amazon Agreement for "The Blue Angels" during the six months ended June 30, 2024[115]. Expenses and Losses - Total expenses for the three months ended June 30, 2024, were approximately $12.57 million, a decrease from $18.48 million for the same period in 2023, while total expenses for the six months ended June 30, 2024, were $27.64 million compared to $30.93 million in 2023[121]. - Payroll and benefits expenses increased by approximately $0.5 million and $1.0 million for the three and six months ended June 30, 2024, respectively, primarily due to the inclusion of Special Projects payroll expenses[122]. - Net loss for the three months ended June 30, 2024, was approximately $1.6 million or $(0.08) per share, compared to a net loss of approximately $8.0 million or $(0.60) per share for the same period in 2023[129]. Cash Flow and Debt - Cash provided by operating activities was $0.66 million for the six months ended June 30, 2024, a change of $3.77 million from cash used in operating activities of $3.1 million for the same period in 2023[132]. - Total debt amounted to $20.9 million as of June 30, 2024, an increase of $1.6 million from $19.3 million as of December 31, 2023[135]. - Cash and cash equivalents at the end of the period were $9.85 million as of June 30, 2024, compared to $8.13 million at the end of the same period in 2023[131]. - Cash flows provided by financing activities for the six months ended June 30, 2024, were $2.76 million, compared to $4.05 million for the same period in 2023[134]. Impairment and Tax - Impairment of goodwill was $0.2 million for both the three and six months ended June 30, 2024, compared to $6.5 million for the same periods in 2023[123]. - The company recorded an income tax expense of approximately $23.5 thousand and $47.1 thousand for the three and six months ended June 30, 2024, respectively[128]. Stock and Financing Activities - The company sold 950,000 shares of its common stock during the six months ended June 30, 2024, receiving proceeds of $1.19 million[137]. - As of June 30, 2024, the Company has ten convertible notes payable outstanding with a principal balance of $5,100,000 recorded in noncurrent liabilities[140]. - Interest expense related to convertible notes payable was $127,500 for Q2 2024, a decrease of 10% from $141,583 in Q2 2023[140]. - The Company recorded gains in fair value of $40,000 for Q2 2024, compared to $4,000 in Q2 2023, indicating a significant increase in fair value[142]. - The Company has outstanding unsecured nonconvertible promissory notes totaling $3,880,000, with interest expenses of $97,000 for Q2 2024, down from $153,468 in Q2 2023[144]. - The Socialyte Promissory Note, amounting to $3,000,000, has accrued interest of $30,000 for Q2 2024, with no payments made during the period[146]. - The Company entered into a loan agreement with BankUnited, including a $5,800,000 secured term loan and a $750,000 revolving line of credit[150]. - As of June 30, 2024, the principal outstanding under the BKU Term Loan was $5,002,520, a decrease from $5,482,614 as of December 31, 2023[154]. - The Company recorded interest expense of $68,760 for the Mock Notes in Q2 2024, compared to $27,621 in Q2 2023, reflecting an increase in interest costs[149]. - The BankUnited Loan Agreement requires the Company to maintain a minimum debt service coverage ratio of 1.25:1.00 and a maximum funded debt/EBITDA ratio of 3.00:1.00[152]. - The Company has filed a lawsuit against the seller of Socialyte related to the Socialyte Purchase Agreement, impacting the payment schedule of the promissory note[146]. Strategic Initiatives - The company has established an acquisition strategy to identify and acquire complementary businesses, with the acquisition of Elle Communications, LLC completed in July 2024[102]. - The company plans to enter into additional investments in 2024 under its "Ventures" strategy, focusing on entertainment content, live events, and consumer products[103]. - The company expects growth in its Talent departments due to increasing demand for strategic communication services in the entertainment industry[107]. - The company has a stable client base and continues to grow organically through referrals and new business solicitations[106].

Financial Performance - Total revenue for Q2 2024 was $11.4 million, a 4% increase compared to Q2 2023[2] - Adjusted operating income for H1 2024 was $0.9 million, compared to an adjusted operating loss of $1.9 million for H1 2023[3] - Operating loss for Q2 2024 was $1.1 million, significantly improved from an operating loss of $7.5 million in Q2 2023[2] - Revenues for the three months ended June 30, 2024, were $11,449,089, a 3.9% increase from $11,024,935 for the same period in 2023[19] - Net loss for the three months ended June 30, 2024, was $(1,624,458), compared to a net loss of $(7,959,244) for the same period in 2023, representing a 79.6% improvement[19] - Adjusted (loss) income from operations (non-GAAP) for the three months ended June 30, 2024, was $(136,956), compared to $(52,758) for the same period in 2023[22] - The company reported a loss per share of $(0.08) for the three months ended June 30, 2024, compared to $(0.60) for the same period in 2023[19] Cash and Liabilities - Cash and cash equivalents increased to $9.8 million as of June 30, 2024, up from $7.6 million as of December 31, 2023[4] - Total current liabilities decreased to $26,010,166 as of June 30, 2024, from $27,454,045 as of December 31, 2023, a reduction of 5.3%[17] - Total liabilities decreased to $45,145,965 as of June 30, 2024, from $46,298,129 as of December 31, 2023, a decline of 2.5%[17] - Total stockholders' equity increased to $20,427,970 as of June 30, 2024, from $19,956,845 as of December 31, 2023, a growth of 2.4%[18] Operating Expenses - Operating expenses for Q2 2024 were $12.6 million, down from $18.5 million in Q2 2023[3] - Total expenses for the three months ended June 30, 2024, were $12,568,554, a decrease from $18,475,674 for the same period in 2023, reflecting a 32.0% reduction[22] - Payroll and benefits expenses increased to $9,195,018 for the three months ended June 30, 2024, from $8,677,493 for the same period in 2023, an increase of 6.0%[19] Business Developments - The film "Blue Angels" grossed $2,082,327 at the box office during its one-week IMAX run, debuting at 1 on Prime Video[5] - The newly launched Staple Gin received a Double Gold and a 96-point rating at the 15th Annual New York International Spirits Competition[5] - The acquisition of Elle Communications aims to enhance Dolphin's capabilities in the Impact PR space[6] - Dolphin anticipates launching a sports company to complement its entertainment market position[1] - The company expects to close on its next Ventures opportunity, continuing its strategy of generating immediate service revenues[1] Share Information - The company had a weighted average number of shares outstanding of 19,446,310 for the three months ended June 30, 2024, compared to 13,212,311 for the same period in 2023, an increase of 47.0%[19]

Revenue and Growth - For the three months ended March 31, 2024, total revenue increased to $15.24 million, up from $9.89 million in the same period of 2023, representing a growth of approximately 54%[134]. - Revenue from the entertainment publicity and marketing segment was $11.81 million, an increase of approximately $1.9 million compared to the prior year, while content production revenue was $3.42 million, attributed to "The Blue Angels" documentary[134][136]. - The entertainment publicity and marketing segment accounted for 78% of total revenue for the three months ended March 31, 2024, while content production contributed 22%[131]. Expenses and Costs - Direct costs rose to $2.32 million for the three months ended March 31, 2024, compared to $0.22 million in the same period of 2023, primarily due to $1.8 million of capitalized production costs for "The Blue Angels"[137]. - Payroll and benefits expenses increased to $9.57 million, up from $9.05 million in the prior year, mainly due to the inclusion of Special Projects payroll expenses[138]. - Selling, general and administrative expenses were $1.98 million, a slight increase from $1.87 million, primarily due to the inclusion of Special Projects expenses[139]. Acquisitions and Strategic Initiatives - The company completed the acquisition of Special Projects in 2023 and plans to pursue at least one additional acquisition in 2024[121]. - The company is in various stages of discussions for potential acquisitions that complement its existing services in entertainment publicity and marketing[121]. - The company has established an investment strategy, "Ventures" or "Dolphin 2.0," focusing on developing internally owned assets and acquiring stakes in entertainment content, live events, and consumer products[122]. Financial Performance - Net loss for the three months ended March 31, 2024, was approximately $0.3 million or $0.02 per share, compared to a net loss of approximately $3.0 million or $0.23 per share for the same period in 2023[150]. - Cash used in operating activities was $983,229 for the three months ended March 31, 2024, a decrease from $1,424,822 in the same period in 2023[152]. - Interest income decreased by approximately $0.1 million for the three months ended March 31, 2024, primarily due to the write-off of notes receivable in Q4 2023[145]. - Interest expense increased by $0.1 million for the three months ended March 31, 2024, attributed to higher convertible and nonconvertible notes and term loans outstanding[146]. Debt and Financing - Total debt increased to $20.0 million as of March 31, 2024, from $19.3 million as of December 31, 2023, primarily due to an increase in related party nonconvertible promissory notes[156]. - The Company issued a nonconvertible promissory note of $900,000 to its CEO's brother, with an interest rate of 10% per annum, maturing on January 16, 2029, and recorded $18,500 in interest expense for the three months ended March 31, 2024[175]. - The BankUnited Loan Agreement includes a $5,800,000 secured term loan, a $750,000 secured revolving line of credit, and a $400,000 commercial card, refinancing the previous credit facility with BankProv[176][177]. - The BKU Term Loan has an 8.10% fixed interest rate, with principal and interest payable monthly based on a 5-year amortization schedule[179]. - As of March 31, 2024, the outstanding principal under the BKU Term Loan was $5,244,498, down from $5,482,614 as of December 31, 2023[181]. - The Company must maintain a minimum debt service coverage ratio of 1.25:1.00 and a maximum funded debt/EBITDA ratio of 3.00:1.00 under the BankUnited Credit Facility, and was in compliance with these covenants as of March 31, 2024[180]. - The Company recorded approximately $4,206 in amortization of debt origination costs as part of interest expense for the three months ended March 31, 2024[182]. - The BKU Line of Credit had a principal balance of $400,000 as of March 31, 2024, with no usage of the BKU Commercial Card during the same period[181][183]. Other Financial Information - The change in fair value of contingent consideration resulted in a loss of $15.5 thousand for the three months ended March 31, 2023, with the contingent consideration settled on April 25, 2023[141]. - The company recorded a gain in fair value of $25,000 for the convertible note at fair value for the three months ended March 31, 2024, compared to a loss of $10,444 for the same period in 2023[169]. - The company sold 350,000 shares of common stock during the three months ended March 31, 2024, generating proceeds of $495,200[160]. - The Company recorded interest expense of $127,750 related to convertible notes payable for the three months ended March 31, 2024, compared to $144,556 for the same period in 2023[165]. - The Socialyte Promissory Note, amounting to $3,000,000, matured on September 30, 2023, with interest expense recorded at $30,000 for the three months ended March 31, 2024[174]. Compliance and Reporting - The Company is subject to financial covenants that are tested semi-annually on a trailing twelve-month basis[180]. - The Company’s financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and assumptions that could materially impact the consolidated financial statements[184][185]. - Forward-looking statements in the Quarterly Report are based on assumptions and are subject to risks and uncertainties that could cause actual results to differ materially[190][192]. Upcoming Releases - The Blue Angels documentary is set to be released in theaters on May 17, 2024, and will be available for streaming on Amazon Prime Video on May 23, 2024[130].

Financial Data and Key Metrics Changes - Total revenue for Q1 2024 was $15.2 million, a 54% increase compared to $9.9 million in Q1 2023, and a 27% increase over the previous quarterly record of $12 million set in Q4 2023 [5][24] - The company reported positive adjusted operating income of $1 million, a significant improvement from the adjusted operating loss of $1.9 million in Q1 2023, representing a sequential increase of 236% over the positive operating income of $23 million reported for Q4 2023 [6][24] - Operating expenses for Q1 2024 were $15.1 million, compared to $12.5 million in Q1 2023 [24] Business Line Data and Key Metrics Changes - The Blue Angels documentary contributed $3.4 million in revenue during Q1 2024, with expectations for additional revenue as it enters institutional IMAX theaters [16][24] - The digital department expanded its capabilities by partnering with GlowLab for skincare and Osbrink for a young adult division, indicating a strategic move to tap into the growing influencer market [13][36] Market Data and Key Metrics Changes - The company anticipates significant revenue from the Blue Angels documentary through its extended run in institutional theaters, which could provide a lucrative multi-year box office tail [17] - The liquor market is highlighted as a new growth area, with the successful launch of Staple Gin, which has already gained recognition as the highest-rated American gin [20][21] Company Strategy and Development Direction - The company is focused on organic expansion among its marketing entities and launching complementary ventures, aiming for sustained growth in revenue and adjusted operating income [6][7] - The strategy includes securing ownership stakes in ventures without capital outlay, which is expected to unlock compounding returns and continuous value creation [7][23] - The company plans to announce a new operating partner for its restaurant theater, Midnight Theater, within May 2024 [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth potential, emphasizing that the first quarter results validate their strategy and that they are just getting started [23][68] - The company expects the second half of the year to be stronger, traditionally seeing higher performance due to increased influencer marketing during the holiday season [47] Other Important Information - Cash and cash equivalents were $7.5 million as of March 31, 2024, compared to $7.6 million as of December 31, 2023 [25] - The company is evaluating opportunities in the liquor space and aims to introduce a skincare product by 2025 [64] Q&A Session Summary Question: Can you provide details on the revenue and production costs for Blue Angels? - Management indicated that while immediate revenue may not be significant in the next quarters, substantial revenue is expected once the film is in theaters and IMAX institutional theaters [28] Question: How many institutional theaters are contracted for Blue Angels? - Management expects the film to play in 150 to 200 institutional theaters, anticipating a long revenue tail from this distribution [29] Question: What is the performance of the digital department with the new verticals? - The digital department has seen immediate revenue and profit from the new skincare and young adult divisions, with significant potential for expansion in the beauty market [36] Question: Can you elaborate on the marketing strategy for Staple Gin? - The partnership with Rachael Ray and Do Good Spirits is expected to elevate the brand through innovative marketing strategies, with plans for national distribution [39] Question: What are the expectations for operating expenses in the coming quarters? - Management noted that operating expenses may vary with revenue, particularly in relation to the amortization of production costs for projects like Blue Angels [48]

PART I [Business](index=6&type=section&id=Item%201.%20BUSINESS) Dolphin Entertainment is an independent entertainment marketing and production company focused on owning assets it markets [Growth Opportunities and Strategies](index=8&type=page&id=Growth%20Opportunities%20and%20Strategies) The company's growth strategy involves expanding its core marketing business and developing a portfolio of owned content and live events - **Dolphin 1.0 (Core Business) Growth:** - Expand 42West to serve more streaming service clients and enter video gaming/e-sports - Grow Shore Fire's presence in Los Angeles, Nashville, and Miami - Expand The Door's high-margin consumer products PR business - Scale The Digital Dept.'s influencer talent roster and expand into new markets like New York and Miami - Leverage Special Projects' reputation to expand its celebrity booking clientele - Selectively pursue complementary acquisitions[28](index=28&type=chunk)[32](index=32&type=chunk)[38](index=38&type=chunk) - **Dolphin 2.0 (Ventures) Growth:** - Build a portfolio of premium film, television, and digital content - Develop and produce proprietary live events, leveraging in-house booking and promotion expertise - Develop consumer products in categories like liquor, cosmetics, and fashion by partnering with producers and leveraging celebrity/influencer talent[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) [Entertainment Publicity and Marketing](index=9&type=page&id=Entertainment%20Publicity%20and%20Marketing) This segment comprises specialized subsidiaries offering comprehensive marketing services across entertainment, hospitality, and lifestyle industries - **42West:** Offers talent publicity, entertainment marketing (film, TV, gaming), and strategic communications. Ranked 2 in the New York Observer's Power 50 PR firms in March 2022[42](index=42&type=chunk) - **Shore Fire:** Represents top musical artists, songwriters, record labels, and cultural institutions[48](index=48&type=chunk) - **The Door:** A leading PR agency for hospitality, lifestyle, and consumer products, including celebrity chefs and food festivals[49](index=49&type=chunk) - **The Digital Dept.:** Provides influencer talent management for over 200 creators, brand marketing campaigns, and event production[50](index=50&type=chunk) - **Special Projects:** A creative agency specializing in celebrity talent strategy, event activation, and brand amplification[51](index=51&type=chunk) - **Viewpoint:** A boutique creative branding and production agency known for producing promotional videos for leading cable networks[52](index=52&type=chunk) [Content Production](index=11&type=page&id=Content%20Production) The Content Production segment develops and produces films and digital series, notably the co-produced "The Blue Angels" documentary with IMAX - In June 2022, the company entered an agreement with IMAX to co-produce and co-finance a documentary on the Blue Angels[54](index=54&type=chunk) - Dolphin and IMAX each agreed to fund 50% of the production budget. As of December 31, 2023, Dolphin had paid a total of **$2,250,000** towards the project[54](index=54&type=chunk) - The film is expected to be released in May 2024[55](index=55&type=chunk) - The company operates in two reportable segments: Entertainment Publicity and Marketing (EPM) and Content Production[21](index=21&type=chunk) - The EPM segment is a marketing "super group" composed of subsidiaries including 42West, The Door, Shore Fire, Viewpoint, The Digital Dept., and Special Projects, providing a wide range of marketing services[19](index=19&type=chunk)[21](index=21&type=chunk) - The company's "Ventures" or "Dolphin 2.0" strategy focuses on owning assets it markets, specifically in Content, Live Events, and Consumer Products[24](index=24&type=chunk)[25](index=25&type=chunk) - A significant content investment is a multi-year deal with IMAX to co-finance and produce documentaries, with the first project being "The Blue Angels," co-produced with J.J. Abrams' Bad Robot Productions, set for a May 2024 release[26](index=26&type=chunk)[27](index=27&type=chunk) [Risk Factors](index=13&type=section&id=Item%201A.%20RISK%20FACTORS) The company faces significant financial risks including net losses and high debt, alongside business risks like competition and client retention - The company has a history of net losses, reporting a net loss of **$24.4 million** in 2023 and **$4.8 million** in 2022, with an accumulated deficit of **$133.6 million** as of December 31, 2023[64](index=64&type=chunk) | Debt as of December 31, | 2023 | 2022 | | :--- | :--- | :--- | | Related party debt (noncurrent) | $1,107,873 | $1,107,873 | | Notes payable (current and noncurrent) | $3,880,000 | $1,368,960 | | Convertible notes payable (current and noncurrent) | $5,100,000 | $5,050,000 | | Convertible note payable – fair value option | $355,000 | $343,556 | | Term loan (current and noncurrent) | $5,482,614 | $2,867,592 | | Line of credit | $400,000 | $— | | Non-convertible promissory note – Socialyte (current) | $3,000,000 | $3,000,000 | - Management has identified material weaknesses in internal controls over financial reporting, which could lead to misstatements in financial statements[73](index=73&type=chunk) - The entertainment industry strikes by the WGA and SAG-AFTRA in 2023 adversely affected the revenues of the 42West subsidiary[84](index=84&type=chunk) - The Series C Convertible Preferred Stock, held by an entity owned by the CEO, holds approximately **57%** of the company's voting power, giving the holder significant influence over business matters[96](index=96&type=chunk)[98](index=98&type=chunk) [Unresolved Staff Comments](index=22&type=section&id=Item%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports that it has no unresolved staff comments from the SEC - None[104](index=104&type=chunk) [Cybersecurity](index=22&type=section&id=Item%201C.%20CYBERSECURITY) The company has not experienced any material cybersecurity incidents and maintains policies overseen by the Director of Information Technology and Audit Committee - The Company is not aware of any cybersecurity threats or incidents to date that have materially affected its operations or financial condition[105](index=105&type=chunk) - The Audit Committee of the Board of Directors oversees the company's cybersecurity risk management and receives updates from the Director of Information Technology at least annually[109](index=109&type=chunk) [Properties](index=22&type=section&id=Item%202.%20PROPERTIES) The company does not own any real property, leasing all its office spaces in Coral Gables, Manhattan, Brooklyn, and Los Angeles - The company does not own any real property and leases all its office spaces[111](index=111&type=chunk) - Leased office locations include Coral Gables, FL; Manhattan, NY; Brooklyn, NY; and Los Angeles, CA[64](index=64&type=chunk)[111](index=111&type=chunk) [Legal Proceedings](index=22&type=section&id=Item%203.%20LEGAL%20PROCEEDINGS) The company reports that it currently has no material legal proceedings - The company currently does not have any material legal proceedings[113](index=113&type=chunk) [Mine Safety Disclosures](index=23&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This section is not applicable to the company - Not applicable[114](index=114&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=24&type=section&id=Item%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on The Nasdaq Capital Market under "DLPN", with approximately 305 shareholders of record as of March 25, 2024 - Common stock trades on The Nasdaq Capital Market under the symbol "DLPN"[116](index=116&type=chunk) - As of March 25, 2024, there were approximately **305** shareholders of record[116](index=116&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes the company's financial performance, including revenue growth, significant net losses, liquidity challenges, and critical accounting estimates [Results of Operations (2023 vs. 2022)](index=28&type=page&id=Results%20of%20Operations) In 2023, revenues increased by 8.0% to $43.1 million due to acquisitions, but net loss widened to $24.4 million from impairments and write-offs | Financial Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | **$43,123,075** | **$40,505,558** | **+8.0%** | | Entertainment Publicity & Marketing Revenue | $43,067,557 | $40,058,880 | +7.5% | | Content Production Revenue | $55,518 | $446,678 | -87.6% | | **Total Expenses** | **$63,233,572** | **$45,080,700** | **+40.3%** | | Impairment of Goodwill | $9,484,215 | $906,337 | +946.4% | | Write-off of Notes Receivable | $4,108,080 | $— | N/A | | Payroll and Benefits | $35,030,257 | $28,947,730 | +21.0% | | **Net Loss** | **($24,396,725)** | **($4,780,135)** | **+410.4%** | | **Loss Per Share (Basic)** | **($1.69)** | **($0.49)** | **+244.9%** | - The increase in revenue was primarily driven by **$4.7 million** from a full year of Socialyte and **$1.0 million** from the newly acquired Special Projects[139](index=139&type=chunk) - A goodwill impairment charge of **$9.5 million** was recorded in 2023, compared to **$0.9 million** in 2022[147](index=147&type=chunk) - The company wrote off **$4.1 million** in notes receivable from Midnight Theatre in 2023[153](index=153&type=chunk) - The company impaired its equity method investments in Midnight Theatre and Crafthouse Cocktails, resulting in a total impairment of **$2.1 million** recorded within equity in losses of unconsolidated affiliates[160](index=160&type=chunk)[162](index=162&type=chunk) [Liquidity and Capital Resources](index=34&type=page&id=Liquidity%20and%20Capital%20Resources) The company reported negative working capital and increased debt to $19.3 million in 2023, relying on financing activities for liquidity - The company had negative working capital of **$6.7 million** as of December 31, 2023 and expects to need additional funding for operations over the next 12 months[77](index=77&type=chunk) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($4,617,167) | ($4,027,228) | | Net cash used in investing activities | ($4,537,174) | ($7,919,355) | | Net cash provided by financing activities | $9,517,183 | $10,913,806 | - Total debt increased by **40.9%** to **$19.3 million** as of Dec 31, 2023, from **$13.7 million** in the prior year, primarily due to a **$5.5 million** term loan related to a refinancing transaction[172](index=172&type=chunk) - The company utilized its equity facility with Lincoln Park Capital, selling **1,150,000** shares for proceeds of **$2.2 million** in 2023[178](index=178&type=chunk) - In connection with the "The Blue Angels" documentary, the company received its first installment of **$777,905** from IMAX on February 22, 2024[206](index=206&type=chunk)[512](index=512&type=chunk) [Critical Accounting Estimates](index=41&type=page&id=Critical%20Accounting%20Estimates) Critical accounting estimates involve fair value assessments of goodwill and intangible assets, leading to significant impairment charges in 2023 - Critical estimates include fair value of acquisitions, goodwill, intangible assets, contingent consideration, and convertible debt[208](index=208&type=chunk) - Goodwill is tested for impairment annually or when triggering events occur. A quantitative test was performed in Q2 2023 due to the company's market capitalization falling below its book value, leading to a **$6.5 million** impairment. An additional **$3.0 million** was impaired during the annual review[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) - Intangible assets, primarily customer relationships and trade names, are amortized and reviewed for impairment. In 2023, a **$341,417** impairment was recognized on trademarks and trade names due to the rebranding of Socialyte and Be Social into "The Digital Dept."[216](index=216&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section is not required for smaller reporting companies, and therefore, no information is provided - Not required for smaller reporting companies[224](index=224&type=chunk) [Financial Statements and Supplementary Data](index=44&type=section&id=Item%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section contains the company's audited consolidated financial statements for the fiscal years ended December 31, 2023 and 2022, as audited by their independent registered public accounting firm - This item includes the Report of Independent Registered Public Accounting Firm and the following audited financial statements: - Consolidated Balance Sheets - Consolidated Statements of Operations - Consolidated Statements of Cash Flows - Consolidated Statements of Changes in Stockholders' Equity - Notes to Consolidated Financial Statements[226](index=226&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=44&type=section&id=Item%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[227](index=227&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that as of December 31, 2023, the company's disclosure controls and internal control over financial reporting were not effective due to material weaknesses - The CEO and CFO concluded that disclosure controls and procedures were not effective as of December 31, 2023[229](index=229&type=chunk) - Material weaknesses were identified in several areas: - **Control Environment, Risk Assessment, and Monitoring:** Lack of structure, insufficient resources, and ineffective risk identification - **Control Activities and Information/Communication:** Deficiencies in IT general controls (user access, segregation of duties), lack of formal accounting policies, and inadequate review controls for complex areas like business combinations and revenue recognition[234](index=234&type=chunk)[236](index=236&type=chunk) - Management's remediation plan includes developing formal policies, enhancing management review, engaging a third-party consultant for complex transactions, implementing a new ERP system, and reevaluating monitoring activities[237](index=237&type=chunk)[238](index=238&type=chunk) [Other Information](index=47&type=section&id=Item%209B.%20OTHER%20INFORMATION) The company reports that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the fourth quarter - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the fourth quarter[242](index=242&type=chunk) PART III [Directors, Executive Officers, and Corporate Governance](index=48&type=section&id=Item%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%2C%20AND%20CORPORATE%20GOVERNANCE) Information for this item is incorporated by reference from the company's Proxy Statement for the 2024 Annual Meeting of Shareholders - Information is incorporated by reference from the Proxy Statement for the 2024 Annual Meeting of Shareholders[245](index=245&type=chunk) [Executive Compensation](index=48&type=section&id=Item%2011.%20EXECUTIVE%20COMPENSATION) Details regarding executive compensation are incorporated by reference from the company's Proxy Statement for the 2024 Annual Meeting of Shareholders - Information is incorporated by reference from the Proxy Statement for the 2024 Annual Meeting of Shareholders[246](index=246&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=48&type=section&id=Item%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information on security ownership by beneficial owners and management is incorporated by reference from the company's Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2024 Annual Meeting of Shareholders[247](index=247&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=48&type=section&id=Item%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Disclosures on related party transactions and director independence are incorporated by reference from the company's Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2024 Annual Meeting of Shareholders[248](index=248&type=chunk) [Principal Accounting Fees and Services](index=48&type=section&id=Item%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) Information regarding principal accounting fees and services is incorporated by reference from the company's Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2024 Annual Meeting of Shareholders[249](index=249&type=chunk) PART IV [Exhibit and Financial Statement Schedules](index=49&type=section&id=Item%2015.%20EXHIBIT%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists documents filed as part of the Annual Report, including financial statements and an index of exhibits - The financial statements required by Item 8 are included with the report[252](index=252&type=chunk) - No financial statement schedules are filed[252](index=252&type=chunk) - An index of exhibits filed with the report or incorporated by reference is provided[253](index=253&type=chunk)[254](index=254&type=chunk) [Form 10-K Summary](index=50&type=section&id=Item%2016.%20FORM%2010-K%20SUMMARY) The company has not provided a Form 10-K summary - None[258](index=258&type=chunk)

Dolphin Entertainment, Inc. (NASDAQ:DLPN) Q4 2023 Earnings Conference Call March 28, 2024 4:30 PM ET Company Participants James Carbonara - Hayden IR Bill O'Dowd - Chief Executive Officer Mirta Negrini - Chief Financial Officer Conference Call Participants Allen Klee - Maxim Operator Greetings. Welcome to the Dolphin Entertainment Fourth Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructi ...