Dolphin Entertainment(DLPN) - 2022 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Dolphin Entertainment reported Q1 2022 revenue of $9.18 million, a significantly reduced net loss, and positive operating cash flow Condensed Consolidated Balance Sheets As of March 31, 2022, total assets increased to $54.1 million, liabilities decreased, and equity grew | Balance Sheet Highlights | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $9,624,275 | $7,688,743 | | Total current assets | $18,864,435 | $18,287,359 | | Goodwill | $20,021,357 | $20,021,357 | | Total Assets | $54,143,466 | $52,791,451 | | Liabilities & Equity | | | | Total current liabilities | $16,063,578 | $14,953,271 | | Total Liabilities | $29,426,402 | $29,856,561 | | Total Stockholders' Equity | $24,717,064 | $22,934,890 | Condensed Consolidated Statements of Operations Q1 2022 revenues grew 27.9% to $9.18 million, significantly narrowing the net loss to $0.79 million | Income Statement Highlights | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Revenues | $9,177,125 | $7,177,117 | | Total expenses | $10,140,834 | $8,737,057 | | Loss from operations | ($963,709) | ($1,559,940) | | Net loss | ($792,481) | ($5,271,985) | | Basic Loss per share | ($0.09) | ($0.73) | | Diluted Loss per share | ($0.13) | ($0.73) | Condensed Consolidated Statements of Cash Flows Q1 2022 operating cash flow was $0.82 million, with financing providing $2.29 million, resulting in a $1.94 million net cash increase | Cash Flow Highlights | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $818,363 | ($52,036) | | Net cash used in investing activities | ($1,172,257) | ($525,856) | | Net cash provided by (used in) financing activities | $2,289,426 | ($233,671) | | Net increase (decrease) in cash | $1,935,532 | ($811,563) | | Cash, cash equivalents and restricted cash, end of period | $10,166,158 | $7,825,813 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail accounting policies, revenue disaggregation, stable goodwill, debt, fair value measurements, equity financing, and a new IMAX co-production - All reported revenue of $9.18 million for Q1 2022 was generated by the Entertainment Publicity and Marketing (EPM) segment, with no revenue from the Content Production (CPD) segment[44] - The company's goodwill balance remained unchanged at $20,021,357 as of March 31, 2022, with no impairment indicators identified during the quarter[49][50] - During Q1 2022, the company sold 585,000 shares of common stock under its agreement with Lincoln Park Capital, receiving proceeds of $2,515,350, with an additional $22.5 million remaining available as of March 31, 2022[99] - Subsequent to the quarter end, on June 24, 2022, the company entered into an agreement with IMAX to co-produce and co-finance a documentary on the Blue Angels, with each party funding 50% of the production budget[125] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 27.9% revenue growth to post-COVID recovery, reducing net loss, and highlights the 'Dolphin 2.0' investment strategy and strengthened liquidity - The company is pursuing an investment strategy called "Dolphin 2.0," focusing on acquiring ownership in assets it can market, such as entertainment content, live events, and consumer products, including NFTs, the Midnight Theatre, and Crafthouse Cocktails[128][130] | Key Financial Metrics (Q1 2022 vs Q1 2021) | Q1 2022 | Q1 2021 | Change | | :--- | :--- | :--- | :--- | | Revenues | $9,177,125 | $7,177,117 | +$2.0M | | Payroll and benefits | $6,960,283 | $5,233,116 | +$1.7M | | Net Loss | ($792,481) | ($5,271,985) | +$4.5M | - Total debt was reduced by $0.5 million (8.3%) during the quarter, from $6.2 million at year-end 2021 to $5.7 million as of March 31, 2022[187] Controls and Procedures Management concluded disclosure controls were ineffective as of March 31, 2022, due to un-remediated material weaknesses, with remediation efforts underway - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2022, due to ongoing material weaknesses[212] - Remediation efforts are underway, including developing formal policies for risk assessment, enhancing management review precision, using a third-party consultant for complex transactions, and improving period-end closing procedures[213] PART II — OTHER INFORMATION Legal Proceedings 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[220] Risk Factors No material changes to risk factors have occurred since the 2021 Annual Report on Form 10-K filing - No material changes to risk factors have occurred since the filing of the 2021 Form 10-K[221]