Dolphin Entertainment Reports Third Quarter Financial Results

News provided by

Dolphin Entertainment, Inc.

Nov 19, 2018, 08:32 ET

NEW YORK and LOS ANGELES, Nov. 19, 2018 /PRNewswire/ -- Dolphin Entertainment, Inc. (NASDAQ: DLPN), a leading independent entertainment marketing and premium content production company, announces its financial results for the quarter ended September 30, 2018.

Quarterly and Recent Highlights   

  • Revenue for the three months ended September 30, 2018 was $5.7 million, compared to $6.8 million for the three months ended September 30, 2017.  The decrease in revenue in Q3 2018 is primarily attributable to the life cycle of a feature film that was released in October 2016 and the majority of the revenues from that film being recognized during 2016 and 2017.
  • Entertainment publicity revenue of $5.7 million, compared to $5.4 million in the same period in the prior year.
  • Operating loss of $(0.5) million for the three months ended September 30, 2018 as compared to operating revenue of $1.4 million in the same period in the prior year. The decrease is directly related to a decrease in production and distribution revenues of $1.4 million and an increase in (i) depreciation and amortization expense of $0.3 million related to the intangible assets of The Door; (ii) bad debt reserve of $0.2 million related to receivables from Open Road which filed for bankruptcy and (iii) increase in professional fees related to audit fees for the consolidated companies and tax advisors.
  • Net income of $0.2 million for the three months ended September 30, 2018 compared to net income of $6.2 million for the same period in the prior year. Net income for the three months ended September 30, 2017 includes a gain in the change in fair value of derivative liabilities of $1.4 million and gain on extinguishment of debt of $3.9 million as compared to only $0.4 million of gain in change in fair value of derivative liabilities in the net income for the three months ended September 30, 2018.
  • Stockholders' equity of $14.4 million as of September 30, 2018 compared to stockholders' equity of $2.7 million on September 30, 2017.
  • Acquired top lifestyle and hospitality PR agency, The Door, for aggregate consideration of up to $11 million, which includes performance-based contingent consideration of up to $7 million.
  • Closed a $6.8 million public offering, including the underwriter's overallotment. 2,265,000 shares of common stock were issued at a purchase price to the public of $3.00 per share, with no warrants attached. 
  • Closed a $750,000 registered direct offering of our stock and sold 250,000 shares of common stock at $3.00 per share.
  • 42West's talent team added 4 veteran publicists, following the previously reported departures of three senior publicist in June 2018.
  • The Door added New York icon, the Times Square Alliance, to its formidable client list and announced a significant expansion of its West Coast operations with the signing of five new California-based culinary brands as clients and the addition of a senior executive to its Los Angeles office.
  • 42West launched its ability to create original content for client marketing campaigns.
  • On October 31, 2018, Dolphin acquired Viewpoint Creative, a full-service creative branding and production house, in an immediately accretive transaction.

Dolphin's CEO, Bill O'Dowd, commented: "We remain focused on assembling our 'Super Group' of previously privately-held, already profitable, best-in-class entertainment marketing companies, as evidenced by our acquisitions of The Door during the third quarter and Viewpoint in the current quarter, recognized as the third most powerful PR firm in the country and a leading full-service creative branding and production boutique, respectively. Coupled with four new hires to 42West's Talent PR team in the third quarter, we believe that we are well positioned for continued revenue growth in 2019."

Conference Call Information

To participate in this event, dial-in approximately 5 to 10 minutes before the beginning of the call.
Date, Time:  November 19, 2018, at 9:00 a.m. ET
Toll-free: 877-407-0782

International: 201-689-8567
Live Webcast: http://www.investorcalendar.com/event/41072

Conference Call Replay Information

The replay will be available beginning approximately 1 hour after the completion of the live event.
Toll-free: 877-481-4010
International: 919-882-2331
Reference ID: 41072

About Dolphin Entertainment, Inc.

Dolphin Entertainment is a leading independent entertainment marketing and premium content development company. Through our subsidiaries 42West and The Door, we provide expert strategic marketing and publicity services to many of the top brands, both individual and corporate, in the entertainment and hospitality industries. The Door and 42West are both recognized global leaders in PR services for their respective industries and, in December 2017, the New York Observer listed them, respectively, as the third and fourth most powerful PR firms of any kind in the United States. Dolphin's recent acquisition of Viewpoint Creative adds full-service creative branding and production capabilities to our marketing group. Dolphin's legacy content production business, founded by Emmy-nominated CEO Bill O'Dowd, has produced multiple feature films and award-winning digital series.

Special Note Regarding Forward-Looking Statements
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's 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, and Dolphin Entertainment undertakes no obligation to update publicly any forward-looking statements as a result of new information, future events, or otherwise.

Investor Contact:

James Carbonara
Partner, Hayden IR
[email protected] 
+ 1 646 755 7412

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)


ASSETS

As of September 30,
2018


As of December 31,
2017

Current




Cash and cash equivalents

$                7,112,256


$               5,296,873

Restricted cash

677,354


-

Accounts receivable, net of allowance for doubtful accounts of $531,409 and  $366,280, respectively. 

3,412,585


3,700,618

Other current assets

367,563


422,118

Total current assets

11,569,758


9,419,609

Capitalized production costs

884,585


1,075,645

Intangible assets, net of accumulated amortization of $2,169,782 and $1,043,255, respectively.

9,490,218


8,506,745

Goodwill

16,614,335


12,778,860

Property, equipment and leasehold improvements

1,067,874


1,110,776

Investments

220,000


220,000

Deposits

475,958


485,508

Total Assets

$              40,322,728


$             33,597,143

LIABILITIES




Current




Accounts payable

$                   877,240


$               1,097,006

Other current liabilities

5,585,920


6,487,819

Merger consideration payable

1,000,000


-

Line of credit

1,700,390


750,000

Put Rights

3,273,448


2,446,216

Accrued compensation

2,625,000


2,500,000

Debt

2,756,392


3,987,220

Loan from related party

1,107,873


1,708,874

Deferred revenue

60,074


48,449

Convertible notes payable

625,000


800,000

Notes payable

900,000


300,000

Total current liabilities

20,511,337


20,125,584

Noncurrent




Warrant liability

-


1,441,831

Put Rights

1,909,265


3,779,794

Convertible notes payable, net of discount

1,346,155


75,000

Notes payable

-


600,000

Contingent consideration

1,150,000


-

Deferred tax

201,740


187,537

Other noncurrent liabilities

804,143


1,311,040

Total noncurrent liabilities

5,411,303


7,395,202

Total Liabilities

25,922,640


27,520,786

STOCKHOLDERS' EQUITY




Common stock, $0.015 par value, 200,000,000 shares authorized, xxxx and 10,565,789, respectively, issued and outstanding at September 30, 2018 and December 31, 2017.

209,003


158,487

Preferred Stock, Series C, $0.001 par value, 50,000 authorized, issued and outstanding at September 30, 2018 and December 31, 2017.

1,000


1,000

Additional paid in capital

105,003,434


98,816,550

Accumulated deficit

(90,813,349)


(92,899,680)

Total Stockholders' Equity

$              14,400,088


$               6,076,357

Total Liabilities and Stockholders' Equity

$              40,322,728


$             33,597,143


The notes to the financial statements not included here, are an integral part of these consolidated financial statements.

DOLPHIN ENTERTAINMENT INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)



For the three months ended


For the nine months ended


September 30,


September 30,


2018

2017


2018

2017







Revenues:






Entertainment publicity

$        5,720,264

$         5,409,175


$      16,297,466

$      10,546,716

Production and distribution

-

1,398,839


427,153

4,625,801

Total revenues

5,720,264

6,808,014


16,724,619

15,172,517







Expenses:






Direct costs

333,041

748,365


1,199,165

3,878,629

Selling, general and administrative

1,111,516

698,001


2,547,621

1,956,695

Depreciation and amortization

599,078

321,538


1,345,421

648,848

Legal and professional

601,330

208,637


1,445,818

1,098,728

Payroll 

3,614,139

3,482,246


10,755,111

7,284,734

Total expenses

6,259,104

5,458,787


17,293,136

14,867,634

Income (Loss) before other expenses

(538,840)

1,349,227


(568,517)

304,883







Other Income (Expenses):






Extinguishment of debt 

-

3,881,444


(53,271)

3,877,277

Acquisition costs

(182,504)

-


(217,174)

(745,272)

Loss on disposal of furniture, office equipment and
leasehold improvements

-

-


-

(28,025)

Change in fair value of warrant liability

-

1,396,094


-

7,685,607

Change in fair value of contingent consideration

470,000

(230,000)


470,000

(346,000)

Change in fair value of put rights

(110,840)

200,000


1,305,797

100,000

Interest expense

(277,122)

(424,187)


(810,521)

(1,273,166)

Total other income (loss)

(100,466)

4,823,351


694,831

9,270,421

Income before income taxes

(639,306)

6,172,578


126,314

9,575,304

Income taxes

819,451

-


538,831

-

Net income

$           180,145

$         6,172,578


$           665,145

$        9,575,304

Income (Loss) per Share:






Basic 

$                 0.01

$                  0.66


$                 0.05

$                 1.11

Diluted

$                 0.01

$                  0.44


$               (0.04)

$                 0.20

Weighted average number of shares used
in per share calculation






Basic 

14,565,766

9,336,826


13,151,649

8,640,543

Diluted

14,565,766

10,382,818


15,355,134

9,479,840







The notes to the financial statements not included here, are an integral part of these consolidated financial statements.

SOURCE Dolphin Entertainment, Inc.