Financial Data and Key Metrics Changes - Revenue for Q3 2023 was $10.2 million, representing a 3% increase year-over-year despite industry-wide strikes and an internal merger distraction [9][36] - Operating loss for Q3 2023 was $2.1 million, which includes approximately $1.2 million in noncash charges [9][37] - Net loss for Q3 2023 was $3.9 million, including nonrecurring write-offs and noncash items totaling approximately $2.4 million [15][37] - Cash and cash equivalents stood at $6.4 million as of September 30, 2023, compared to $6.1 million at the end of 2022 [63] Business Line Data and Key Metrics Changes - The merger of influencer marketing agencies created a new digital department, which is expected to drive growth in new verticals such as sports and culinary [4][10] - Operating expenses for Q3 2023 were approximately $12.3 million, up from $11 million in Q3 2022, with payroll costs increasing to approximately $8.4 million [14][37] Market Data and Key Metrics Changes - The company anticipates a return to normal operations post-strikes, with expectations of cash flow positivity by Q2 2024 [20][42] - The partnership with Mastercard is expected to enhance the visibility and value of the Midnight Theatre venue, which is located in a significant $4.5 billion complex in Manhattan [33][36] Company Strategy and Development Direction - Dolphin Entertainment aims to expand its influencer marketing capabilities and diversify revenue sources across seven operating subsidiaries [6][10] - The acquisition of Special Projects is seen as a strategic move to enhance the company's position in the live events market and leverage synergies with existing PR firms [12][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the challenges posed by industry strikes and anticipates a strong recovery in Q1 2024 [32][42] - The company believes it is in its strongest position in history, with a diversified revenue base and expectations of cash operating profits in 2024 [6][10] Other Important Information - The company has completed a seven-year journey to build an entertainment marketing Super Group, culminating in the acquisition of Special Projects [5][35] - The Midnight Theatre has begun operations seven days a week and is expected to host various events, including performances by renowned artists [33][36] Q&A Session Summary Question: When is the Blue Angels project expected to go into theaters? - The Blue Angels project is expected to be in theaters by Q2 2024, with revenue recognition anticipated upon delivery of the film [39] Question: Do clients pay more when they win awards? - Yes, clients typically pay a retainer during award campaigns and may receive bonuses for nominations, which can extend the duration of the campaign [40] Question: What is the expected impact of the Mastercard partnership on Midnight Theatre? - The partnership is expected to provide financial stability and operational support, enhancing the venue's profile and event offerings [45] Question: How does the company plan to grow its influencer marketing business? - The company plans to build out new verticals in influencer marketing, with a focus on sports and other areas, leveraging the recent merger [44] Question: Will there be any exits from equity stakes in products or companies in 2024? - The company anticipates potential exits in the second half of 2024, depending on the performance of certain products and partnerships [49]

PART I — FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company reported increased revenue but a significantly widened net loss due to impairment charges, with declining assets and equity [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$65.7 million** due to goodwill impairment, while liabilities rose and equity significantly declined Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | Sep 30, 2023 ($) | Dec 31, 2022 ($) | | :--- | :--- | :--- | | **Total Assets** | **$65,740,268** | **$75,376,832** | | Cash and cash equivalents | $6,406,646 | $6,069,889 | | Goodwill | $22,796,683 | $29,314,083 | | **Total Liabilities** | **$42,845,304** | **$41,285,740** | | Total debt (Current + Noncurrent) | $19,234,619 | $13,737,981 | | **Total Stockholders' Equity** | **$22,894,964** | **$34,091,092** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue increased to **$31.1 million**, but net loss significantly widened to **$14.8 million** due to impairment charges and higher expenses Statement of Operations Summary (Unaudited) | Metric | Nine Months Ended Sep 30, 2023 ($) | Nine Months Ended Sep 30, 2022 ($) | | :--- | :--- | :--- | | **Revenues** | **$31,100,867** | **$29,366,748** | | Total Expenses | $43,228,963 | $32,333,954 | | Impairment of goodwill | $6,517,400 | $0 | | Loss from operations | $(12,128,096) | $(2,967,206) | | **Net loss** | **$(14,791,892)** | **$(2,850,863)** | | **Diluted loss per share** | **$(1.11)** | **$(0.37)** | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations was **$4.5 million**, offset by **$7.4 million** from financing, resulting in a **$2.9 million** cash increase Cash Flow Summary (Unaudited) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 ($) | Nine Months Ended Sep 30, 2022 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,492,645) | $(3,634,388) | | Net cash used in investing activities | $(21,893) | $(3,172,544) | | Net cash provided by financing activities | $7,447,203 | $4,169,351 | | **Net increase (decrease) in cash** | **$2,932,665** | **$(2,637,581)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, significant impairments, debt refinancing, and subsequent events including an acquisition and public offering - All revenue for the three and nine months ended September 30, 2023, was generated by the Entertainment Publicity and Marketing (EPM) segment, with no revenue from the Content Production (CPD) segment[37](index=37&type=chunk) - A goodwill impairment of **$6,517,400** was recorded in Q2 2023 due to a sustained low market capitalization relative to book value, which was considered a triggering event[42](index=42&type=chunk)[43](index=43&type=chunk) - An intangible asset impairment of **$341,417** was recorded in Q3 2023 for the trademarks and trade names of Socialyte and Be Social, following their rebranding into "The Digital Dept."[45](index=45&type=chunk) - The company's investment in Crafthouse Cocktails was fully impaired by **$1,169,587** during Q3 2023 after Crafthouse failed to secure a new funding round[58](index=58&type=chunk) - On September 29, 2023, the company refinanced its debt, entering into a new loan agreement with BankUnited for a **$5.8 million** term loan and a **$750,000** revolving line of credit, which was used to repay the existing BankProv facility[83](index=83&type=chunk) - Subsequent to the quarter end, on October 31, 2023, the company raised gross proceeds of approximately **$2.31 million** through an underwritten public offering of **1.4 million** shares at **$1.65** per share[140](index=140&type=chunk) - On October 2, 2023, the company acquired Special Projects Media LLC for approximately **$10.0 million**, consisting of **$5.0 million** in cash and **2.5 million** shares of common stock[141](index=141&type=chunk)[142](index=142&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses revenue growth from acquisitions, increased net loss due to impairments and payroll, and strategic investments in content and live events - The company operates in two segments: Entertainment Publicity and Marketing (EPM) and Content Production (CPD). The EPM segment includes subsidiaries like 42West, The Door, and the newly formed 'The Digital Department' (from Be Social and Socialyte)[145](index=145&type=chunk) - The 'Dolphin Ventures' investment strategy focuses on acquiring ownership stakes in assets where the company's marketing expertise can influence success, such as content, live events, and consumer products. Key investments include Midnight Theatre and 'The Blue Angels' documentary[144](index=144&type=chunk)[146](index=146&type=chunk) Nine-Month Revenue Comparison (2023 vs 2022) | Segment | Nine Months Ended Sep 30, 2023 ($) | Nine Months Ended Sep 30, 2022 ($) | | :--- | :--- | :--- | | Entertainment publicity and marketing | $31,100,867 | $29,366,748 | | Content production | $0 | $0 | | **Total revenue** | **$31,100,867** | **$29,366,748** | - Payroll and benefits expenses for the nine months ended Sep 30, 2023, increased by **$5.2 million** compared to the prior year, primarily due to the inclusion of Socialyte payroll (**$3.5 million**) and other salary increases[161](index=161&type=chunk)[166](index=166&type=chunk) - The company expects to generate income in its Content Production segment in early 2024 from the release of 'The Blue Angels' documentary, from which it estimates it will derive approximately **$3.5 million**[148](index=148&type=chunk)[153](index=153&type=chunk) - Total debt increased to **$19.2 million** as of September 30, 2023, from **$13.7 million** at year-end 2022, an increase of **$5.5 million**[187](index=187&type=chunk) [Controls and Procedures](index=52&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls and procedures were ineffective due to un-remediated material weaknesses, with remediation efforts underway - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were not effective as of September 30, 2023[232](index=232&type=chunk) - The ineffectiveness is due to material weaknesses disclosed in the Form 10-K for the year ended December 31, 2022, which have not been remediated[232](index=232&type=chunk) - Remediation efforts are underway, including developing formal policies, enhancing review precision, using a third-party consultant, improving closing procedures, and reevaluating monitoring activities[233](index=233&type=chunk)[235](index=235&type=chunk) PART II — OTHER INFORMATION [Legal Proceedings](index=54&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not aware of any pending litigation expected to materially affect its financial position or operations - As of the report date, the company is not aware of any pending litigation[238](index=238&type=chunk) [Risk Factors](index=54&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes have occurred to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022[239](index=239&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECU RITIES%20AND%20USE%20OF%20PROCEEDS) No unregistered sales of equity securities or use of proceeds were reported for the period - None[240](index=240&type=chunk) [Exhibits](index=55&type=section&id=ITEM%206.%20EXHIBITS) The report lists various exhibits filed with the SEC, including CEO/CFO certifications and Inline XBRL data files - Exhibits filed include CEO/CFO certifications (31.1, 31.2, 32.1, 32.2) and XBRL data files[244](index=244&type=chunk)

Dolphin Entertainment, Inc. (NASDAQ:DLPN) Q2 2023 Results Conference Call August 14, 2023 4:30 PM ET Company Participants James Carbonara - IR Bill O’Dowd - CEO Mirta Negrini - CFO Conference Call Participants Allen Klee - Maxim Group Operator Greetings, and welcome to Dolphin Entertainment's Second Quarter 2023 Earnings Call. [Operator Instructions]. Please note that this conference is being recorded. I will now turn the conference over to your host, James Carbonara, Investor Relations. You may begin. Jam ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ——————— FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number: 001-38331 DOLPHIN ENTERTAINMENT, INC. (Exact name of registrant as specified in its charter) ——————— (State or othe ...

Dolphin Entertainment, Inc. (NASDAQ:DLPN) Q1 2023 Earnings Conference Call May 15, 2023 4:30 PM ET Company Participants James Carbonara – Managing Partner-Hayden IR, Inc. Bill O'Dowd – Chief Executive Officer Mirta Negrini – Chief Financial Officer Conference Call Participants Allen Klee – Maxim Group Operator Good day, everyone, and welcome to today's Dolphin Entertainment First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ——————— FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number: 001-38331 DOLPHIN ENTERTAINMENT, INC. (Exact name of registrant as specified in its charter) ——————— Indicate by c ...

Dolphin Entertainment, Inc. (NASDAQ:DLPN) Q4 2022 Earnings Conference Call March 30, 2023 4:30 PM ET Company Participants James Carbonara - Managing Partner-Hayden IR, Inc. William O'Dowd - Chief Executive Officer Mirta Negrini - Chief Financial Officer Conference Call Participants Allen Klee - Maxim Group Operator Greetings, and welcome to the Dolphin Entertainment Fourth Quarter 2022 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-38331 DOLPHIN ENTERTAINMENT, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 150 Alhambra C ...

Financial Data and Key Metrics Changes - Revenues for Q3 2022 were approximately $9.9 million, an increase from approximately $9.4 million in Q3 2021, reflecting a year-over-year growth [32] - Operating expenses for Q3 2022 were approximately $11 million, compared to approximately $10.5 million in the same period of the prior year [32] - Net loss for Q3 2022 was approximately $1.3 million or $0.14 per share, compared to a net income of $141,651 or $0.02 per share in Q3 2021 [38][40] Business Line Data and Key Metrics Changes - Direct costs decreased by approximately $200,000 to approximately $837,000, primarily due to a decrease in Viewpoint's revenue [33] - Payroll and benefit expenses increased by approximately $1.2 million to approximately $7 million, attributed to additional headcount and stock compensation [34] - Acquisition costs of approximately $300,000 were primarily related to the Socialyte deal, with no acquisition costs in the same period last year [35] Market Data and Key Metrics Changes - The influencer marketing industry has seen strong growth, with global brand spend increasing from less than $2 billion in 2016 to over $10 billion in 2021, and expected to exceed $14 billion in 2022 [13][14] - Over 50% of total brand spend in influencer marketing in 2021 was in fashion, beauty, lifestyle, food, and entertainment, which are the specialties of Dolphin's agencies [16] Company Strategy and Development Direction - The acquisition of Socialyte is seen as a strategic move to enhance scale in influencer marketing, positioning Dolphin as a leading agency in the entertainment industry [10][12] - The company aims to leverage the growth in influencer marketing, expecting it to represent 25% or more of revenues in 2023 [22] - Dolphin is focusing on expanding its presence in the influencer marketing space, particularly in verticals like fashion and entertainment [15][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in influencer marketing and the company's ability to capitalize on this trend [48] - The CEO noted that the company is on pace for $40 million in revenue for the year without Socialyte, indicating strong underlying business performance [48] - Management acknowledged the challenges in the crypto space but emphasized Dolphin's lack of exposure to the FTX bankruptcy [27] Other Important Information - The company successfully launched its NFT collection, Creature Chronicles, generating over $435,000 in primary sales [26] - Dolphin is involved in a partnership to open ShaSha Lounge, a membership cocktail club in New Orleans, which includes a meaningful ownership stake [28][30] Q&A Session Summary Question: What is your plan on NFTs, given the current market conditions? - Management stated that they need to evaluate their NFT strategy due to the turmoil in the crypto space but emphasized their expertise in marketing within that sector [42] Question: Please provide an update on the Night Theatre and Hidden Leaf. - Management highlighted the success of the Midnight Theatre's soft opening and the strong demand for private events, indicating a positive outlook for the venue [44] Question: Any other changes in 2.0 initiatives? - Management discussed the ShaSha project as an example of a successful initiative that combines client marketing with equity participation [46] Question: Any commentary related to outlook? - Management expressed confidence in the growth of influencer marketing and its impact on revenue and profit, noting that the acquisition of Socialyte will significantly enhance their market position [47]

PART I [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements for Dolphin Entertainment, Inc. as of September 30, 2022, and for the three and nine-month periods then ended, including balance sheets, statements of operations, cash flows, changes in stockholders' equity, and accompanying notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2022, total assets increased to **$55.7 million** from **$52.8 million** at year-end 2021, driven by increases in notes receivable and right-of-use assets, while total liabilities decreased to **$26.7 million** from **$29.9 million**, primarily due to a reduction in contingent consideration and convertible notes, leading to an increase in total stockholders' equity to **$29.0 million** from **$22.9 million** Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | Sep 30, 2022 ($) | Dec 31, 2021 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 4,452,562 | 7,688,743 | | Notes receivable | 4,323,153 | 1,510,137 | | Goodwill | 20,021,357 | 20,021,357 | | **Total Assets** | **55,725,468** | **52,791,451** | | **Liabilities & Equity** | | | | Total current liabilities | 15,502,876 | 14,953,271 | | Total Liabilities | 26,745,527 | 29,856,561 | | Total Stockholders' Equity | 28,979,941 | 22,934,890 | | **Total Liabilities and Stockholders' Equity** | **55,725,468** | **52,791,451** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the third quarter of 2022, the company reported a net loss of **$1.3 million**, compared to a net income of **$0.1 million** in Q3 2021, while for the nine months ended September 30, 2022, the net loss was **$1.5 million**, an improvement from a net loss of **$3.8 million** in the same period of 2021, with revenue growth offset by increased operating expenses, particularly in payroll and benefits Key Operating Results (Unaudited) | Metric | Q3 2022 ($) | Q3 2021 ($) | Nine Months 2022 ($) | Nine Months 2021 ($) | | :--- | :--- | :--- | :--- | :--- | | Revenues | 9,899,013 | 9,399,432 | 29,366,748 | 25,219,793 | | Loss from operations | (1,133,767) | (1,071,711) | (1,608,534) | (2,433,265) | | Net (Loss) Income | (1,311,719) | 141,651 | (1,492,191) | (3,780,392) | | Basic (Loss) EPS | (0.14) | 0.02 | (0.16) | (0.50) | | Diluted (Loss) EPS | (0.14) | 0.02 | (0.23) | (0.50) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2022, net cash used in operating activities was **$3.6 million**, a significant shift from **$0.5 million** provided by operations in the prior year period, with net cash used in investing activities of **$3.2 million** primarily for notes receivable, and net cash provided by financing activities of **$4.2 million** largely from an equity line of credit, resulting in an overall decrease in cash and restricted cash by **$2.6 million** during the period Cash Flow Summary (Unaudited, Nine Months Ended Sep 30) | Activity | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | (3,634,388) | 519,960 | | Net cash used in investing activities | (3,172,544) | (525,856) | | Net cash provided by financing activities | 4,169,351 | 4,563,305 | | **Net (decrease) increase in cash** | **(2,637,581)** | **4,557,409** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide details on accounting policies and financial statement line items, highlighting revenue entirely from the Entertainment Publicity and Marketing segment, stable goodwill of **$20.0 million**, a decrease in total debt to **$4.8 million**, and significant financing through Lincoln Park equity agreements, with subsequent events including the acquisition of Socialyte, LLC for **$13 million** plus potential earn-outs and a co-production agreement with IMAX - All reported revenue for the three and nine months ended September 30, 2022, came from the Entertainment Publicity and Marketing (EPM) segment, with no revenue from the Content Production (CPD) segment[49](index=49&type=chunk) - Goodwill remained unchanged at **$20,021,357** as of September 30, 2022, with no impairment indicators identified during the period[54](index=54&type=chunk)[55](index=55&type=chunk) - Total debt decreased from **$6.2 million** at year-end 2021 to **$4.8 million** as of September 30, 2022[70](index=70&type=chunk) - The company sold a total of **1,280,000 shares** of common stock under its 2021 and 2022 Lincoln Park agreements during the nine months ended September 30, 2022, receiving total proceeds of approximately **$5.05 million**[112](index=112&type=chunk)[118](index=118&type=chunk) - On June 24, 2022, the company entered into a co-production and co-financing agreement with IMAX for a documentary called "The Blue Angels," committing to fund **50%** of the production budget, with **$1.5 million** paid towards this by September 30, 2022[152](index=152&type=chunk) - Subsequent to the quarter end, on November 14, 2022, the company acquired Socialyte, LLC for **$13 million**, paid through a combination of cash, stock, and a promissory note, plus a potential **$5 million** earn-out[158](index=158&type=chunk)[159](index=159&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=36&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's performance, highlighting revenue growth driven by the entertainment publicity and marketing segment, the "Dolphin 2.0" strategy focusing on acquiring ownership in content, live events, and consumer products with initial investments in NFTs, Midnight Theatre, and Crafthouse Cocktails, and detailing operational results where increased payroll and professional fees offset revenue gains, with liquidity supported by cash from operations and financing activities, including equity line agreements with Lincoln Park [Overview and Strategy](index=36&type=section&id=Overview%20and%20Strategy) Dolphin operates as an entertainment marketing and content production company with two segments: Entertainment Publicity and Marketing (EPM) and Content Production (CPD), pursuing a "Dolphin 2.0" investment strategy to acquire ownership stakes in assets it can promote, including content, live events, and consumer products, with initial investments in an NFT collection, an ownership interest in the Midnight Theatre in Manhattan, and an interest in Crafthouse Cocktails - The company's "Dolphin 2.0" strategy is to invest in and own an interest in assets it markets, focusing on content, live events, and consumer products[162](index=162&type=chunk)[164](index=164&type=chunk) - Key Dolphin 2.0 investments include the "Creature Chronicles" NFT collection which generated **~$435,000**, an ownership stake in the Midnight Theatre, and an interest in Crafthouse Cocktails[166](index=166&type=chunk)[167](index=167&type=chunk)[169](index=169&type=chunk) - The company entered into a co-production agreement with IMAX for the documentary feature "The Blue Angels"[170](index=170&type=chunk)[182](index=182&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Revenues increased by **$0.5 million** (**5.3%**) for Q3 2022 and **$4.1 million** (**16.3%**) for the nine months ended Sep 30, 2022, compared to the prior year periods, driven entirely by the Entertainment Publicity and Marketing segment, while total expenses also rose, led by a **$4.2 million** year-to-date increase in payroll and benefits due to higher headcount and stock compensation, and a significant swing in the fair value of contingent consideration from a **$1.3 million loss** in 2021 to a **$1.4 million gain** in 2022 contributed to a reduced net loss for the nine-month period Revenue Comparison (YoY) | Period | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Three Months** | 9,899,013 | 9,399,432 | +499,581 | +5.3% | | **Nine Months** | 29,366,748 | 25,219,793 | +4,146,955 | +16.4% | - Payroll and benefits expenses increased by **$1.2 million** for Q3 and **$4.2 million** for the nine-month period year-over-year, due to additional headcount and stock compensation[194](index=194&type=chunk) - The change in fair value of contingent consideration shifted from a **$1.3 million loss** for the first nine months of 2021 to a **$1.4 million gain** in the same period of 2022[193](index=193&type=chunk)[199](index=199&type=chunk) - Legal and professional fees increased by **$1.0 million** for the nine-month period year-over-year, primarily due to costs associated with the Lincoln Park agreement, financial restatements, and a change of auditors[200](index=200&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily managed through cash from operations and financing arrangements, with **$3.6 million** in cash used in operations for the nine months ended Sep 30, 2022, and **$5.1 million** in proceeds secured from its equity line of credit with Lincoln Park, while total debt was reduced by **$1.4 million** to **$4.8 million** during the first nine months of 2022, and subsequent to the quarter, the company issued **$1.3 million** in new convertible notes and took on a **$3.0 million** secured loan to partially finance the Socialyte acquisition - Cash used in operating activities was **$3.6 million** for the nine months ended Sep 30, 2022, compared to cash provided by operating activities of **$0.5 million** in the prior year period[215](index=215&type=chunk)[216](index=216&type=chunk) - The company received **$5.1 million** in proceeds from its equity line of credit agreements with Lincoln Park during the first nine months of 2022[219](index=219&type=chunk)[228](index=228&type=chunk)[235](index=235&type=chunk) - Total debt was reduced by **22.0%** from **$6.2 million** at Dec 31, 2021, to **$4.8 million** at Sep 30, 2022[224](index=224&type=chunk) - Subsequent to quarter-end, the company issued **$1.3 million** in convertible promissory notes and took on a **$3.0 million** five-year secured loan to finance the Socialyte acquisition[240](index=240&type=chunk)[253](index=253&type=chunk) [Controls and Procedures](index=50&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that as of September 30, 2022, the company's disclosure controls and procedures were not effective due to previously disclosed material weaknesses in the 2021 Form 10-K that have not yet been fully remediated, with remediation efforts underway including developing formal policies, enhancing management review precision, using a third-party consultant for complex transactions, and reevaluating monitoring activities - The CEO and CFO concluded that disclosure controls and procedures were **not effective** as of September 30, 2022, due to previously identified material weaknesses[264](index=264&type=chunk) - Remediation efforts are underway, including developing formal policies, enhancing management review, using a third-party consultant, and improving period-end closing procedures[265](index=265&type=chunk) PART II — OTHER INFORMATION [Legal Proceedings](index=52&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not aware of any pending litigation that is expected to have a material effect on its financial position, results of operations, or cash flows - As of the report date, the Company is **not aware of any pending litigation**[271](index=271&type=chunk) [Risk Factors](index=52&type=section&id=ITEM%201A.%20RISK%20FACTORS) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - No material changes to risk factors from the Annual Report on Form 10-K for the year ended December 31, 2021 have been reported[272](index=272&type=chunk) [Other Information](index=52&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section details the acquisition of Socialyte, LLC on November 14, 2022, for a total consideration of **$13 million**, consisting of **$5 million** in cash, **1,346,257 shares** of common stock, and a **$3 million** promissory note, with a potential additional **$5 million** earn-out, where the cash portion was partially financed by a **$3 million** secured loan, and the shares issued to the seller were unregistered, relying on an exemption under the Securities Act - On November 14, 2022, the Company acquired **100%** of the membership interests of Socialyte, LLC, a social media influencer marketing agency[276](index=276&type=chunk) - The acquisition consideration was **$13 million** plus a potential **$5 million** earn-out, with payment including **$5 million cash**, **1,346,257 common shares**, and a **$3 million promissory note**[278](index=278&type=chunk) - The acquisition was partially financed with a **$3 million**, five-year secured term loan from Bank Prov[278](index=278&type=chunk) [Exhibits](index=54&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the quarterly report, including the Membership Interest Purchase Agreement for the Socialyte acquisition, CEO and CFO certifications, and Inline XBRL data files