Dolphin Entertainment Announces Record Quarterly Revenue of $12.0 Million and Adjusted Operating Income of $0.3 Million in Q4

Expands TAM by entering multiple new verticals in Q4 2023, and 2024, highlighted by:

October 2023 Acquisition of Premiere Talent Booking, Creative Content, and Event Agency, SPECIAL PROJECTS

January 2024 Introduction of Skin Care & Beauty Division within Influencer Marketing and Talent Management subsidiary The Digital Dept.

February 2024 Launch of Young Adult Division within The Digital Dept.

MIAMI, FL / ACCESSWIRE / March 28, 2024 / Dolphin Entertainment, Inc. (NASDAQ:DLPN), a leading entertainment marketing and premium content production company, announces its financial results for the fourth quarter ended December 31, 2023.

Bill O'Dowd, CEO of Dolphin Entertainment commented:

"In Q4 2023 Dolphin achieved record revenue of $12.0 million, an increase of 8% year over year, despite the impact of two lengthy industry-wide strikes. Even more impressively, the team delivered positive Adjusted Operating Income of $0.3 Million in the face of such headwinds. Moving forward, following the industry's return to normalcy post-strikes, we foresee positive Adjusted Operating Income on a continuous annual basis, which marks Dolphin's next stage of evolution after the completion of our acquisition strategy and the formation of our Entertainment Marketing Super Group (with Special Projects joining Dolphin in Q4).

Now we turn our attention to delivering synergy and organic growth between our companies, and to marketing the Ventures in which we have ownership stakes. This work has already started, and some big milestones will be achieved in the next few weeks.

  • Our "Blue Angels" documentary, produced under our multi-year partnership with IMAX, will debut in IMAX theaters on May 17 and on Amazon Prime on May 23, just in time for Memorial Day Weekend.
  • Q2 will also see the launch of the first product ideated by Dolphin that is in partnership with one of the A-list celebrities on our talent rosters.
  • Later in the year, we expect to make the announcement of the first of Dolphin's owned or co-owned live events, to occur in late 2024 or in 2025.

Content, consumer products and live events will be the cornerstones of our Ventures, and with Special Projects' expertise in curated, celebrity-inclusive live events, we now have the capability to launch Ventures across all 3 categories of focus. Importantly, we expect Dolphin will receive ownership stakes in the majority of these Ventures without the requirement of a cash investment.

Thus, with a focus on organic growth amongst our best-in-class marketing companies, and the launch of exciting Ventures in a steady cadence, we believe we're poised for sustained growth in both revenue and Adjusted Operating Income (the financial metric by which we measure ourselves)."

Q4 2023 and Recent Highlights

  • Total revenue for the fourth quarter ended December 31 2023 was $12.0 million, an increase of 8% over the same period in 2022.
  • Adjusted operating income(1) of $0.3 million for the three months ended December 31, 2023 as compared to $0.1 million of adjusted operating income(1) for the same period in 2022.
  • Operating expenses for the fourth quarter of 2023 were $20.0 million, including depreciation and amortization of $0.6 million and nonrecurring expenses of (i) $4.1 million to write off notes receivable, (ii) $3.0 million impairment of goodwill, (iii) $0.1 million of acquisition related costs and (iv) $0.1 million impairment of capitalized production costs. Operating expense for the fourth quarter of 2022 were $14.1 million, including depreciation and amortization of $0.5 million and nonrecurring expenses of (i) 0.9 million impairment of goodwill (ii) $0.2 million of acquisition related costs and (iii) $1.4 million of changes in fair value of contingent consideration.
  • Net loss for the quarter was $9.6 including depreciation and amortization of $0.6 million, interest expense of $1.0 million, $0.7 million of equity losses in unconsolidated affiliates, and nonrecurring expenses of (i) $4.1 million to write off notes receivable, (ii) $3.0 million impairment of goodwill, (iii) $0.1 million of acquisition related costs and (iv) $0.1 million impairment of capitalized production costs. Net loss for the same period in prior year was $3.3 million including depreciation and amortization of $0.5 million, interest expense of $0.2 million, equity losses in unconsolidated affiliates of $0.1 million and nonrecurring expenses of (i) 0.9 million impairment of goodwill, (ii) $0.2 million of acquisition related costs and (iii) $1.4 million of changes in fair value of contingent consideration.
  • Loss per share was $0.54 per share based on 17,632,822 weighted average shares outstanding for both basic loss per share and fully diluted loss per share for the three months ended December 31, 2023. Loss per share was $0.29 per share based on 11,256,578 weighted average shares outstanding for both basic loss per share and fully diluted loss per share for the three months ended December 31, 2022.
  • Cash and cash equivalents of $6.4 million as of December 31, 2023, as compared to $6.1 million as of December 31, 2022.

(1)The Company has provided adjusted operating income information that has not been prepared in accordance with GAAP. This measure is defined below in the section "Use of non-GAAP measures.

  • Dolphin acquired Special Projects, the leading agency in talent booking, creative content, and event production. With a client roster of world-class brands in the media, entertainment, fashion, and luxury sectors, Special Projects joins preeminent PR firms 42West, Shore Fire Media and The Door, influencer marketing agency The Digital Department, and content studio Viewpoint Creative in the Dolphin Entertainment collection of specialty agencies.
  • 42West
    • Rebranded its operating division formerly known as award-winning independent PR agency Bender/Helper Impact (BHI) to Fandoms & Franchises (F&F)
    • Helped clients secure four wins at the 96th Academy Awards, and receive two dozen nominations
    • Drove performance and global interest for critical, commercial and Awards-season successes 'The Boy and the Heron' and 'Godzilla Minus One'
  • 42West and Shore Fire Media
    • Conducted more than half a dozen PR campaigns for clients at the 2024 SXSW Film Festival
    • Scored big at the 81st Golden Globes, supporting clients in the attainment of multiple awards and more than a dozen nominations
  • Shore Fire Media
    • Represented clients who received a collective nine Grammy Awards, and over two dozen nominations, in a broad range of categories - including Pop, R&B, Folk, Jazz, Gospel, Roots, Arrangement, Instruments and Vocals, and Best Boxed or Special Limited Edition Package - highlighting the diversity of its roster across a multitude of genres and disciplines.
  • The Door
    • Marked eight consecutive years representing the Food Network New York City Wine & Food Festival presented by Capital One
    • Added new client Giadzy from Giada De Laurentiis the Emmy-award winning television personality, New York Times bestselling cookbook author, restaurateur and entrepreneur, to its growing roster of elite culinary clients and lifestyle brands.
  • The Digital Dept.
    • Partnered with Glowlab to introduce a specialized talent management division catering to skincare experts and dermatologists, led by Glowlab's Founder, Susan Yara, who also founded Naturium, which was acquired by E.L.F. Beauty for $355 million in September 2023.
    • Established a Young Adult (YA) division in partnership with The Osbrink Agency, focusing on nurturing the creativity of young creators from Gen Z and Gen Alpha in the digital space.
    • Hosted BRANDEdit Holiday Showroom in Hollywood, featuring 150+ creators testing and sharing beauty, wellness, and lifestyle essentials with their audience.
  • Special Projects
    • Partnered once more with The Academy Museum of Motion Pictures, as the talent relations partner for its third annual gala
    • Continued its ongoing collaboration as the Talent Booking Partner and Entertainment Consultant for Town & Country's Annual Philanthropy Summit
    • Celebrated its continued partnership as the Talent Booking Partner and Entertainment Consultant for WSJ. Magazine's Innovator Awards
    • In February, made its mark on New York Fashion Week collaborating with CHANEL, Gucci and Valentino on their respective boutique openings and events
  • Viewpoint Creative
    • Announced its extensive partnership with the Massachusetts State Lottery, specializing in digital graphic design and animation services.
    • Received Four Muse Awards for extraordinary craft that shapes compelling narratives and leaves a lasting impact on audiences.

Conference Call Information

To participate in this event, dial in approximately 5 to 10 minutes before the beginning of the call.

Date: March 28, 2024
Time: 4:30pm ET
Toll Free: 888-506-0062 International: 973-528-0011 Participant Access Code: 744698
Webcast: https://www.webcaster4.com/Webcast/Page/2225/50241

Replay

Toll Free: 877-481-4010 International: 919-882-2331 Replay Passcode: 50241
Webcast Replay https://www.webcaster4.com/Webcast/Page/2225/50241

About Dolphin Entertainment, Inc.

Dolphin Entertainment is a leading independent entertainment marketing and production company. Through our subsidiaries 42West, The Door and Shore Fire Media, we provide expert strategic marketing and publicity services to many of the top brands, both individual and corporate, in the film, television, music, gaming and hospitality industries. All three PR firms have been ranked among the most recent Observer's "Power 50" PR Firms in the United States. Viewpoint Creative, The Digital Dept. complement their efforts with full-service creative branding and production capabilities as well as social media and influencer marketing services. Special Projects, Dolphin's most recent acquisition, provides talent booking services and event production for high-end clients across the media, entertainment and fashion industries. Dolphin's legacy content production business, founded by Emmy-nominated CEO Bill O'Dowd, has produced multiple feature films and award-winning digital series, and has recently entered into a multi-year agreement with IMAX to co-produce feature documentaries. To learn more, visit: https://www.dolphinentertainment.com.

This press release contains 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements may address, among other things, Dolphin Entertainment Inc.'s offering of common stock as well as expected financial and operational results and the related assumptions underlying its expected results. These forward-looking statements are distinguished by the use of words such as "will," "would," "anticipate," "expect," "believe," "designed," "plan," or "intend," the negative of these terms, and similar references to future periods. These views involve risks and uncertainties that are difficult to predict, and accordingly, Dolphin Entertainment's actual results may differ materially from the results discussed in its forward-looking statements. Dolphin Entertainment's forward-looking statements contained herein speak only as of the date of this press release. Factors or events Dolphin Entertainment cannot predict, including those described in the risk factors contained in its filings with the Securities and Exchange Commission, may cause its actual results to differ from those expressed in forward-looking statements. Although Dolphin Entertainment believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. Dolphin Entertainment undertakes no obligation to update publicly any forward-looking statements as a result of new information, future events, or otherwise, except as required by applicable law.

Contact:

James Carbonara/Hayden IR
(646)-755-7412
james@haydenir.com

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31, 2023 and 2022
(unaudited)

2023 2022
ASSETS
Current
Cash and cash equivalents
$ 6,432,731 $ 6,069,889
Restricted cash
1,127,960 1,127,960
Accounts receivable:
Trade, net of allowance of $1,456,752 and $736,820, respectively
5,817,615 6,162,472
Other receivables
6,643,960 5,552,993
Notes receivable
- 4,426,700
Other current assets
701,335 523,812
Total current assets
20,723,601 23,863,826
Capitalized production costs, net
2,295,275 1,598,412
Employee receivable
796,085 604,085
Right-of-use assets
5,599,736 7,341,045
Goodwill
25,220,085 29,314,083
Intangible assets, net
11,209,664 9,884,336
Property, equipment and leasehold improvements, net
194,223 293,206
Other long-term assets
216,305 2,477,839
Total Assets
$ 66,254,974 $ 75,376,832
LIABILITIES
Current
Accounts payable
$ 6,892,349 $ 4,798,221
Term loan, current portion
980,651 408,905
Revolving line of credit
400,000 -
Notes payable, current portion
3,500,000 3,868,960
Contingent consideration
- 500,000
Accrued interest - related party
1,718,009 1,744,723
Accrued compensation - related party
2,625,000 2,625,000
Lease liability, current portion
2,192,213 2,073,547
Deferred revenue
1,451,709 1,641,459
Other current liabilities
7,694,114 7,626,836
Total current liabilities
27,454,045 25,287,651
Noncurrent
Term loan, noncurrent portion
4,501,963 2,458,687
Notes payable, noncurrent portion
3,380,000 500,000
Convertible notes payable
5,100,000 5,050,000
Convertible notes payable at fair value
355,000 343,556
Loan from related party
1,107,873 1,107,873
Contingent consideration
- 238,821
Lease liability
4,068,642 6,012,049
Deferred tax liability
306,691 253,188
Warrant liability
5,000 15,000
Other noncurrent liabilities
18,915 18,915
Total Liabilities
46,298,129 41,285,740
STOCKHOLDERS' EQUITY
Preferred Stock, Series C, $0.001 par value, 50,000 shares authorized, 50,000 shares issued and outstanding at December 31, 2023 and 2022
1,000 1,000
Common stock, $0.015 par value, 200,000,000 shares authorized, 18,219,531 and 12,340,664 shares issued and outstanding at December 31, 2023 and 2022, respectively
273,293 185,110
Additional paid in capital
153,293,756 143,119,461
Accumulated deficit
(133,611,204 ) (109,214,479 )
Total Stockholders' Equity
19,956,845 34,091,092
Total Liabilities and Stockholders' Equity
$ 66,254,974 $ 75,376,832

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the years ended December 31, 2023 and 2022
(unaudited)

2023 2022
Revenues
$ 43,123,075 $ 40,505,558
Expenses:
Direct costs
946,962 3,566,336
Payroll and benefits
35,030,257 28,947,730
Selling, general and administrative
8,434,549 6,572,020
Acquisition costs
116,151 480,939
Impairment of goodwill
9,484,215 906,337
Impairment of intangible assets
341,417 -
Write-off of notes receivables
4,108,080 -
Change in fair value of contingent consideration
33,226 (47,285 )
Depreciation and amortization
2,253,619 1,751,211
Legal and professional
2,485,096 2,903,412
Total expenses
63,233,572 45,080,700
Loss from operations
(20,110,497 ) (4,575,142 )
Other (expenses) income:
Change in fair value of convertible notes
(11,444 ) 654,579
Change in fair value of warrants
10,000 120,000
Interest income
2,877 309,012
Interest expense
(2,085,107 ) (864,814 )
Total other income (expense), net
(2,083,674 ) 218,777
Loss before income taxes and equity in losses of unconsolidated affiliates
$ (22,194,171 ) $ (4,356,365 )
Income tax expense
(53,504 ) (176,981 )
Net loss before equity in losses of unconsolidated affiliates
(22,247,675 ) (4,533,346 )
Equity in losses of unconsolidated affiliates
(2,149,050 ) (246,789 )
Net loss
$ (24,396,725 ) $ (4,780,135 )
Loss per share:
Basic
$ (1.69 ) $ (0.49 )
Diluted
$ (1.69 ) $ (0.56 )
Weighted average number of shares used in per share calculation
Basic
14,413,154 9,799,021
Diluted
14,413,154 9,926,926

Use of Non-GAAP Financial Measures

In order to provide greater transparency regarding our operating performance, the financial results in this press release refer to a non-GAAP financial measure that involves adjustments to GAAP results. Non-GAAP financial measures exclude certain income and/or expense items that management deems are not directly attributable to the Company's core operating results and/or certain items that are inconsistent in amounts and frequency, making it difficult to perform a meaningful evaluation of our current or past operating performance.

Adjusted operating income or loss is defined by Dolphin as (loss) income from operations before: (i) depreciation and amortization, (ii) write-off of assets, (iii) impairment of goodwill or intangible assets, (iv) acquisition costs, (v) employee stock compensation, (vi) change in fair value of contingent consideration, (vii) bad debt expense and (viii) and impairment of capitalized production costs.

Management believes that the presentation of operating results using this non-GAAP financial measure provides useful supplemental information for investors by providing them with the non-GAAP financial measure used by management for financial and operational decision making, planning and forecasting and in managing the business. This non-GAAP financial measure does not replace the presentation of financial information in accordance with U.S. GAAP financial results, should not be considered a measure of liquidity and is unlikely to be comparable to non-GAAP financial measures provided by other companies.

Reconciliation of GAAP loss from operations to non-GAAP income from operations
(unaudited)


For the three months ended December 31,
2023 2022
Revenues (GAAP)
$ 12,022,208 $ 11,138,810
Expenses:
Direct costs
325,513 625,292
Payroll and benefits
8,915,376 8,000,199
Selling, general and administrative
2,410,595 1,927,756
Acquisition costs
107,328 165,139
Impairment of goodwill
2,966,815 906,337
Write-off of notes receivables
4,108,080 -
Change in fair value of contingent consideration
- 1,392,493
Depreciation and amortization
640,843 502,590
Legal and professional
530,059 585,612
Total expenses (GAAP)
20,004,609 14,105,418
Loss from operations (GAAP)
$ (7,982,401 ) $ (2,966,608 )
Adjustments to GAAP measure:
Acquisition costs
107,328 165,139
Impairment of goodwill
2,966,815 906,337
Write-off of notes receivables
4,108,080 -
Change in fair value of contingent consideration
- 1,392,493
Depreciation and amortization
640,843 502,590
Bad debt expense
353,062 64,840
Impairment of capitalized production costs
25,000 -
Stock compensation
86,788 48,946
Income from operations (non-GAAP) $ 305,515 $ 113,737

SOURCE: Dolphin Entertainment, Inc.



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