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)

Financial Data and Key Metrics Changes - Dolphin Entertainment achieved record quarterly revenue of $12 million for Q4 2023, an increase of 8% year-over-year [21][41][81] - Adjusted operating income was approximately $300,000 for Q4 2023, compared to $100,000 for the same period in 2022 [41][42] - Operating loss for Q4 2023 was approximately $8 million, while net loss was approximately $9.6 million, including non-cash and nonrecurring items [95][96] - Cash and cash equivalents stood at $6.4 million as of December 31, 2023, compared to $6.1 million a year earlier [97] Business Line Data and Key Metrics Changes - The digital department performed strongly in Q4, achieving its goals despite the merger distractions [102] - The skincare segment is expected to be a significant growth area, with plans to launch products annually [103] - The acquisition of Special Projects is anticipated to enhance cross-selling opportunities and synergies across various companies [82] Market Data and Key Metrics Changes - The company faced significant headwinds from industry strikes, particularly the actor strike, which impacted promotional activities for films [99][100] - Despite these challenges, the company managed to secure high-profile clients and partnerships, contributing to its revenue growth [21][41] Company Strategy and Development Direction - Dolphin Entertainment aims to expand its digital department and establish a fully scaled influencer management company [31][65] - The company is focusing on launching ventures in the alcoholic beverage space, with Staple Gin set to hit the market in Q2 2024 [39][40] - The strategy includes leveraging marketing expertise without significant capital investment, positioning the company for growth and shareholder value [116][117] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the normalization of business operations post-strikes, expecting a return to normalcy by the end of Q2 2024 [105] - The company anticipates strong organic growth driven by new ventures and collaborations, with a robust pipeline of opportunities [64][71] Other Important Information - The Blue Angels documentary is expected to generate approximately $3.75 million from the acquisition agreement, providing a 75% ROI [34][88] - The company has identified a new operator for the MasterCard Midnight Theater to revitalize the venue and improve profitability [113][115] Q&A Session Summary Question: How will the business normalize in 2024 after the strikes? - Management noted that the actor strike had a significant impact, but they are optimistic about recovery as many films were pushed to 2024 [99][100] Question: How did the digital department perform in Q4? - The digital department met its goals and successfully merged teams, maintaining stability during a critical selling season [102] Question: What are the expectations for the skincare and beauty categories? - The skincare segment is a key focus, with plans to launch products annually, and the beauty category is expected to grow significantly [103] Question: What is the outlook for the Blue Angels documentary? - The documentary is anticipated to perform well, with a strong promotional strategy in place for its theatrical release [88][92] Question: What are the plans for the MasterCard Midnight Theater? - The company is actively seeking a new operator to revitalize the restaurant and improve overall venue performance [113][115]

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)

Financial Data and Key Metrics Changes - Total revenue for Q2 2023 increased by 11% to $11 million compared to Q1 2023, marking the second highest quarterly revenue performance in the company's history [68][78] - Operating loss for Q2 2023 was $7.4 million, with a net loss of $8 million, which included noncash items of over $7.1 million related to a nonrecurring $6.5 million impairment of goodwill [69][79] - Cash and cash equivalents were $7 million as of June 30, 2023, down from $7.9 million as of March 31, 2023 [91] Business Line Data and Key Metrics Changes - The influencer marketing segment, combining Be Social and Socialyte, is expected to represent 25% or more of total revenues in 2023, with significant growth anticipated in the coming years [10][84] - The Door, a marketing communications agency, welcomed new clients and secured projects with renowned culinary figures, enhancing its portfolio [7] - Viewpoint, the creative agency, worked on productions for notable brands, indicating a diverse project pipeline [8] Market Data and Key Metrics Changes - The influencer marketing industry has experienced strong double-digit CAGR over the past five years, growing from less than $2 billion in 2016 to over $14 billion in 2022 [63] - The company anticipates a strong second half of the year, driven by seasonal trends in influencer marketing and upcoming projects [67][111] Company Strategy and Development Direction - The company aims to merge Be Social and Socialyte to create a leading influencer marketing agency, expanding its services across various entertainment verticals [84][118] - The partnership with IMAX for the Blue Angels documentary is expected to generate significant revenue, with projections of over $3.5 million [80][88] - The company is focusing on expanding into live events and enhancing its influencer marketing capabilities, particularly in the culinary and athletic sectors [87][118] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the second half of the year, citing multiple catalysts and a strong operational momentum from Q1 to Q2 [5][67] - The impact of the ongoing writer and actor strikes is expected to be minimal, as current projects have already been produced [92] - The company is well-positioned to capitalize on the growing influencer marketing space and anticipates significant revenue growth from upcoming projects [10][111] Other Important Information - The company has successfully removed all contingent consideration liabilities from its balance sheet, marking a significant milestone [4] - A one-time noncash goodwill impairment was recognized due to a decline in market capitalization, allowing for a reset of the company's financials [15][79] Q&A Session Summary Question: Update on ShaSha Lounge memberships - Memberships were recently put on sale, and the company is nearing the financial threshold to begin construction [19] Question: Revenue recognition from Amazon - Revenue from the Amazon deal is expected to be recognized in the first half of next year, with some payments anticipated in the current calendar year [20] Question: Impact of actor and writer strikes - The talent division's revenue will see a slight dip, but it represents a small fraction of overall revenue [38] Question: Timing for Blue Angels release - The film is anticipated to be released in Q1 2024, with considerations for the best release date [109] Question: Future of influencer marketing - The company sees significant opportunities in expanding influencer marketing beyond traditional sectors, including events specifically for influencers [118]