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Dolphin Entertainment(DLPN) - 2024 Q1 - Quarterly Report
DLPNDolphin Entertainment(DLPN)2024-05-15 20:16
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Revenue and Growth - For the three months ended March 31, 2024, total revenue increased to 15.24million,upfrom15.24 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 11.81million,anincreaseofapproximately11.81 million, an increase of approximately 1.9 million compared to the prior year, while content production revenue was 3.42million,attributedto"TheBlueAngels"documentary[134][136].−Theentertainmentpublicityandmarketingsegmentaccountedfor783.42 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 0.22millioninthesameperiodof2023,primarilydueto0.22 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 9.57million,upfrom9.57 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 1.98million,aslightincreasefrom1.98 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 0.3millionor0.3 million or 0.02 per share, compared to a net loss of approximately 3.0millionor3.0 million or 0.23 per share for the same period in 2023[150]. - Cash used in operating activities was 983,229forthethreemonthsendedMarch31,2024,adecreasefrom983,229 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 0.1millionforthethreemonthsendedMarch31,2024,primarilyduetothewrite−offofnotesreceivableinQ42023[145].−Interestexpenseincreasedby0.1 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 20.0millionasofMarch31,2024,from20.0 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 900,000toitsCEO′sbrother,withaninterestrateof10900,000 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 5,800,000securedtermloan,a5,800,000 secured term loan, a 750,000 secured revolving line of credit, and a 400,000commercialcard,refinancingthepreviouscreditfacilitywithBankProv[176][177].−TheBKUTermLoanhasan8.10400,000 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 5,482,614asofDecember31,2023[181].−TheCompanymustmaintainaminimumdebtservicecoverageratioof1.25:1.00andamaximumfundeddebt/EBITDAratioof3.00:1.00undertheBankUnitedCreditFacility,andwasincompliancewiththesecovenantsasofMarch31,2024[180].−TheCompanyrecordedapproximately5,482,614 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 400,000asofMarch31,2024,withnousageoftheBKUCommercialCardduringthesameperiod[181][183].OtherFinancialInformation−Thechangeinfairvalueofcontingentconsiderationresultedinalossof400,000 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 25,000fortheconvertiblenoteatfairvalueforthethreemonthsendedMarch31,2024,comparedtoalossof25,000 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].−TheCompanyrecordedinterestexpenseof495,200[160]. - The Company recorded interest expense of 127,750 related to convertible notes payable for the three months ended March 31, 2024, compared to 144,556forthesameperiodin2023[165].−TheSocialytePromissoryNote,amountingto144,556 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].