Continues Integration of 42West Subsidiary, Acquired in March 2017
NEW YORK, NY and LOS ANGELES, CA / ACCESSWIRE / November 17, 2017 / Dolphin Entertainment (OTC PINK: DPDM), a publicly-traded independent producer of premium feature films and digital content, and parent company of 42West, one of the largest public relations and marketing services firms in the entertainment industry, today reported financial results for the three- and nine-month periods ended September 30, 2017.
Financial Highlights
- Continued integration of 42West, acquired on March 30, 2017 in a $28 million all-stock transaction
- Q3 revenue of $6.8 million, up from $1.1 million as compared to the same quarter in prior year
- Q3 gross profit of $1.7 million, compared to a gross loss of $10.9 million in the same quarter in prior year
- Q3 net income of $6.2 million, compared to a net loss of $11.5 million in the same quarter in prior year
- Positive shareholder equity of $2.7 million, compared to a shareholder deficit of $31.9 million at December 31, 2016
- Named as agency of record for an online social media and social networking service with more than 2 billion monthly users, committing as much as $1 billion to original content in 2018
- Joe Quenqua joined as a managing director. The former Disney executive is expected to expand the company's offerings in film and digital content and live events
Dolphin's CEO, Bill O'Dowd, commented, "We had a very strong third quarter, which I expect to continue in this unprecedented era of original content creation in the entertainment industry. Beginning with the top line, our third quarter revenue grew significantly, to $6.8 million. A large part of that total growth is attributable to our March 2017 acquisition of 42West, which also experienced solid organic quarterly growth year over year."
Mr. O'Dowd continued, "These strong increases in both revenue and net income have allowed us to greatly improve our balance sheet. For example, in Q3 alone, we reduced our total debt by $6.2 million. Furthermore, our shareholders' equity has also improved dramatically, increasing by over $34 million during the past nine months, and thereby improving to positive $2.7 million from a deficit of $31.9 million."
Financial Results
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESCondensed Consolidated Balance Sheets
(unaudited)
| ASSETS | As of September 30, 2017 | As of December 31, 2016 | ||||||
| Current | ||||||||
| Cash and cash equivalents | $ | 1,957,235 | $ | 662,546 | ||||
| Restricted cash | - | 1,250,000 | ||||||
| Accounts receivable, net of $164,000 of allowance for doubtful accounts | 3,978,865 | 3,668,646 | ||||||
| Other current assets | 450,648 | 2,665,781 | ||||||
| Total current assets | 6,386,748 | 8,246,973 | ||||||
| Capitalized production costs | 2,437,163 | 4,654,013 | ||||||
| Intangible assets, net of $498,666 of amortization | 8,611,334 | - | ||||||
| Goodwill | 14,351,368 | - | ||||||
| Property, equipment and leasehold improvements | 1,111,899 | 35,188 | ||||||
| Investments | 220,000 | - | ||||||
| Deposits | 643,708 | 1,261,067 | ||||||
| Total Assets | $ | 33,762,220 | $ | 14,197,241 | ||||
| LIABILITIES | ||||||||
| Current | ||||||||
| Accounts payable | $ | 1,423,213 | $ | 677,249 | ||||
| Other current liabilities | 5,659,214 | 2,958,523 | ||||||
| Line of credit | 750,000 | - | ||||||
| Put Rights | 947,515 | - | ||||||
| Warrant liability | - | 14,011,254 | ||||||
| Accrued compensation | 2,437,500 | 2,250,000 | ||||||
| Debt | 5,063,846 | 18,743,069 | ||||||
| Loan from related party | 1,734,867 | 684,326 | ||||||
| Deferred revenue | 20,303 | 46,681 | ||||||
| Note payable | 1,800,000 | 300,000 | ||||||
| Total current liabilities | 19,836,458 | 39,671,102 | ||||||
| Noncurrent | ||||||||
| Warrant liability | 2,774,583 | 6,393,936 | ||||||
| Put Rights | 2,752,485 | - | ||||||
| Contingent consideration | 3,973,000 | - | ||||||
| Note payable | 475,000 | - | ||||||
| Other noncurrent liabilities | 1,217,000 | - | ||||||
| Total noncurrent liabilities | 11,192,068 | 6,393,936 | ||||||
| Total Liabilities | 31,028,526 | 46,065,038 | ||||||
| STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Common stock, $0.015 par value, 200,000,000 shares authorized, 9,367,057 and 7,197,761, respectively, issued and outstanding at September 30, 2017 and December 31, 2016. | 140,506 | 215,933 | ||||||
| Preferred Stock, Series C, $0.001 par value, 50,000, 50,000 at September 30, 2017 and December 31, 2016 | 1,000 | 1,000 | ||||||
| Additional paid in capital | 92,829,088 | 67,727,474 | ||||||
| Accumulated deficit | (90,236,900 | ) | (99,812,204 | ) | ||||
| Total Stockholders' Equity (Deficit) | $ | 2,733,694 | $ | (31,867,797 | ) | |||
| Total Liabilities and Stockholders' Equity (Deficit) | $ | 33,762,220 | $ | 14,197,241 | ||||
Condensed Consolidated Statements of Operations
(Unaudited)
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues: | ||||||||||||||||
| Entertainment publicity | $ | 5,409,175 | $ | - | $ | 10,546,716 | $ | - | ||||||||
| Production and distribution | 1,398,839 | 1,140,000 | 4,625,801 | 1,144,157 | ||||||||||||
| Membership | - | 6,225 | - | 27,253 | ||||||||||||
| Total revenues | 6,808,014 | 1,146,225 | 15,172,517 | 1,171,410 | ||||||||||||
| Expenses: | ||||||||||||||||
| Direct costs | 427,926 | 1,375,734 | 2,927,817 | 1,378,173 | ||||||||||||
| Distribution and marketing | 320,439 | 9,237,873 | 950,812 | 9,237,873 | ||||||||||||
| Selling, general and administrative | 628,564 | 370,984 | 1,871,258 | 1,019,641 | ||||||||||||
| Legal and professional | 208,637 | 689,523 | 1,098,728 | 1,576,963 | ||||||||||||
| Payroll | 3,482,246 | 350,264 | 7,284,734 | 1,101,465 | ||||||||||||
| Total expenses | 5,067,812 | 12,024,378 | 14,133,349 | 14,314,115 | ||||||||||||
| Income (Loss) before other expenses | 1,740,202 | (10,878,153 | ) | 1,039,168 | (13,142,705 | ) | ||||||||||
| Other Income (Expenses): | ||||||||||||||||
| Other income | - | - | - | 9,660 | ||||||||||||
| Amortization and Depreciation | (321,538 | ) | (47,369 | ) | (648,848 | ) | (47,369 | ) | ||||||||
| Extinguishment of debt | 3,881,444 | - | 3,877,277 | (5,843,811 | ) | |||||||||||
| Acquisition costs | - | - | (745,272 | ) | - | |||||||||||
| Bad debt | (69,437 | ) | - | (85,437 | ) | - | ||||||||||
| 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 put and contingent consideration | (30,000 | ) | - | (246,000 | ) | - | ||||||||||
| Interest expense | (424,187 | ) | (613,651 | ) | (1,273,166 | ) | (3,768,727 | ) | ||||||||
| Net Income (Loss) | 6,172,578 | (11,539,173 | ) | 9,575,304 | (22,792,952 | ) | ||||||||||
| Net income attributable to noncontrolling interest | $ | - | $ | 1,556 | $ | - | $ | 6,813 | ||||||||
| Net loss attributable to Dolphin Entertainment, Inc. | 6,172,578 | (11,540,729 | ) | 9,575,304 | (22,799,765 | ) | ||||||||||
| Net Income (Loss) | $ | 6,172,578 | $ | (11,539,173 | ) | $ | 9,575,304 | $ | (22,792,952 | ) | ||||||
| Income (Loss) per Share: | ||||||||||||||||
| Basic | $ | 0.66 | $ | (2.16 | ) | $ | 1.11 | $ | (7.37 | ) | ||||||
| Diluted | $ | 0.44 | $ | (2.16 | ) | $ | 0.20 | $ | (7.37 | ) | ||||||
| Weighted average number of shares used in per share calculation | ||||||||||||||||
| Basic | 9,336,826 | 5,337,108 | 8,640,543 | 3,801,626 | ||||||||||||
| Diluted | 10,382,818 | 5,337,108 | 9,479,840 | 3,801,626 | ||||||||||||
About Dolphin Entertainment
Dolphin Entertainment is a leading independent entertainment marketing and premium content development company. Through our recent acquisition of 42West, we provide expert strategic marketing and publicity services to all of the major film studios, and many of the leading independent and digital content providers, as well as for hundreds of A-list celebrity talent, including actors, directors, producers, recording artists, athletes, and authors. 42West is a recognized global leader in PR services for the entertainment industry and, in December 2016, the New York Observer listed 42West as one of the top six most powerful PR firms of any kind in the United States. The strategic acquisition of 42West brings together premium marketing services with premium content production, creating significant opportunities to serve our respective constituents more strategically and to grow and diversify our business. Our content production business is a long established, leading independent producer, committed to distributing premium, best-in-class film and digital entertainment. We produce original feature films and digital programming primarily aimed at family and young adult markets.
Special Note Regarding Forward-Looking Statements
This press release contains forward-looking statements, including our expectations regarding our managing director's expansion of our production and service offerings and our expectations regarding our future financial performance. These statements are based on our current expectations and are subject to certain risks and uncertainties that could cause actual results, performance or achievements to differ materially from those described in the forward-looking statements. These risks and uncertainties include our ability to identify, produce and develop film and digital content and live events that meet industry and client demand; our ability to retain the highly specialized services of Mr. Quenqua; uncertainty that our strategy of hiring of new individuals or teams, including Mr. Quenqua, will positively impact our revenues and profits; our ability to realize the anticipated benefits of the 42West acquisition; adverse events, trends and changes in the entertainment or entertainment marketing industries that could negatively impact 42West's operations and ability to generate revenues; our ability to repay our debt when they become due; as well as other factors beyond our control and the risk factors and other cautionary statements described in our filings with the Securities and Exchange Commission (the "Commission"), including our Annual Report on Form 10-K filed with the Commission on April 17, 2017, as updated by subsequent Quarterly Reports on Form 10-Qs and other current report filings.
Any forward-looking statements included in this press release are made only as of the date of this release. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances. We cannot assure you that projected results or events will be achieved.
Contact:
James Carbonara
Hayden IR
(646)-755-7412
james@haydenir.com
SOURCE: Dolphin Entertainment
