Dolphin Entertainment(DLPN) - 2024 Q4 - Annual Report

Revenue Performance - Total revenue for the year ended December 31, 2024, was $51,684,984, an increase of approximately $8,561,909 or 19.9% compared to $43,123,075 in 2023[144] - Revenue from the entertainment publicity and marketing segment increased by approximately $5.2 million, or 12.1%, from $43,067,557 in 2023 to $48,263,843 in 2024[144] - The content production segment generated revenue of $3,421,141 in 2024, compared to only $55,518 in 2023, marking a significant increase[141] - The entertainment publicity and marketing segment accounted for 93.4% of total revenue in 2024, down from 99.9% in 2023[141] - Revenues from content production increased by approximately $3.4 million for the year ended December 31, 2024, primarily due to the release of The Blue Angels documentary film[147] - The company recorded revenue of $3,421,141 related to the Amazon Agreement for the distribution rights of The Blue Angels documentary during the year ended December 31, 2024[215] Expenses and Financial Performance - Total expenses for the year ended December 31, 2024, were $62.2 million, a decrease of approximately $1.1 million compared to $63.2 million in 2023[148] - Direct costs increased by $2.3 million for the year ended December 31, 2024, attributed to $1.8 million of capitalized production costs for The Blue Angels and increased subsidiary revenues[148] - Payroll and benefits expenses rose by approximately $3.1 million for the year ended December 31, 2024, mainly due to a full year of Special Projects payroll and new hires[149] - Impairment of goodwill was $6.7 million for the year ended December 31, 2024, down from $9.5 million in 2023[153] - Net loss for the year ended December 31, 2024, was approximately $12.6 million or $1.22 per share, compared to a net loss of $24.4 million or $3.39 per share in 2023[167] Cash Flow and Investments - Net cash used in operating activities was approximately $0.2 million for the year ended December 31, 2024, a significant improvement from $5.0 million in 2023[169] - Cash and cash equivalents at the end of the period increased to $9.1 million as of December 31, 2024, compared to $7.6 million at the end of 2023[169] - Net cash used in investing activities for the year ended December 31, 2024 was $2.5 million, a decrease from $4.5 million in 2023[171] Debt and Financing - Total debt increased to $22.4 million as of December 31, 2024, up from $19.3 million in 2023, reflecting a $3.1 million increase[172] - The current portion of debt rose to $5.4 million from $4.9 million, primarily due to a $0.6 million increase in the current portion of the Bank United Credit Facility[173] - Interest expense related to convertible notes payable was $510,250 for the year ended December 31, 2024, down from $543,472 in 2023[186] - The principal balance of convertible promissory notes was $5.1 million as of December 31, 2024, recorded as noncurrent liabilities[185] - The company entered into a BankUnited Loan Agreement on September 29, 2023, consisting of a $5,800,000 secured term loan, a $750,000 revolving line of credit, and a $400,000 commercial card[204] - A second BankUnited Loan Agreement for $2.0 million was established on December 6, 2024, to finance the acquisition of Elle Communications, LLC, maturing in December 2027[205] Acquisitions and Strategic Initiatives - The acquisition of Elle Communications on July 15, 2024, involved a total consideration of approximately $4.7 million, including $1.9 million in cash and 961,000 shares of common stock[130] - The company has established an acquisition strategy to identify and acquire complementary businesses to enhance profits and cash flow[127] - The company plans to enter into Venture investments during 2025, focusing on entertainment content, live events, and consumer products[128] Goodwill and Impairment - The company recorded a goodwill impairment of $6.5 million in Q3 2024 due to a decline in stock price and adjusted revenue projections[220] - The company recognized an impairment of $341,417 for trademarks and trade names during the year ended December 31, 2023, due to rebranding efforts[225] Accounting and Market Risk - The company evaluates convertible debt agreements to determine if they contain both liability and equity components, classifying them as compound financial instruments[230] - Fair values of convertible debt are estimated using pricing models such as the Monte Carlo Simulation, which involves significant judgment and is subject to error risk[231] - Recent accounting pronouncements are discussed in Note 2 of the consolidated financial statements included in the Annual Report on Form 10-K[232] - Quantitative and qualitative disclosures about market risk are not required for smaller reporting companies[233]