Dolphin Entertainment 2017 Revenue Increases 238% to $22.4 Million

Dolphin Entertainment 2017 Revenue Increases 238% to $22.4 Million

PR Newswire

NEW YORK and LOS ANGELES, April 4, 2018

NEW YORK and LOS ANGELES, April 4, 2018 /PRNewswire/ -- Dolphin Entertainment (NASDAQ: DLPN), 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, announces its financial results for the full year ended December 31, 2017.

Full Year 2017 Highlights

  • Revenue of $22.4 million, up from $9.4 million as compared to the prior year.
  • Operating loss of $1.1 million compared to an operating loss of $17.7 million in the prior year.
  • Net income of $6.9 million, compared to a net loss of $37.2 million in the prior year.
  • On a pro-forma basis, revenue was $27.1 million, the operating loss was $0.1 million and net income was $8.6 million. Financial information presented on a pro-forma basis assumes that the acquisition of 42West occurred on January 1, 2017 instead of March 30, 2017.
  • On December 21, 2017 uplisted to NASDAQ.
  • On December 26, 2017 announced the closing of a public offering with gross proceeds of $5,011,875.
  • Acquired PR Powerhouse, 42West, on March 30, 2017 in a $28 million all-stock transaction.
  • 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.
  • In July 2017, Joe Quenqua joined as a managing director. The former Disney executive is expected to expand the company's offerings in digital content and live events.

Dolphin's CEO, Bill O'Dowd, commented, "We had a very strong 2017. Revenue grew significantly, to $22.4 million, a 238% increase from the prior year. A substantial part of that total growth continues to be attributable to our March 2017 acquisition of 42West."

Mr. O'Dowd continued, "In 2018 we will continue to drive top and bottom line growth. In our content marketing division, we are already off to a good start having signed many new projects and clients this year. Furthermore, we continue to see opportunities to complement our organic growth by pursuing accretive acquisitions of companies or personnel in the highly-fragmented content marketing space. In terms of producing content, we are focused on moving at least one film into production, thereby generating additional revenues for that business unit and providing optionality in 2019. Collectively, the accomplishments of last year, including our uplisting to NASDAQ, have Dolphin well positioned to maximize shareholder value in 2018 and beyond."

About Dolphin Entertainment, Inc.

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 and recording artists. 42West is a recognized global leader in PR services for the entertainment industry and, in December 2017, the New York Observer listed 42West as one of the top four 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.

Investor Contact:

James Carbonara
Regional Vice President, Hayden IR
[email protected] 
+ 1 646 755 7412

 

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

As of December 31, 2017 and 2016

(Unaudited)

ASSETS

2017

2016

Current


Cash and cash equivalents

$                5,296,873

$                  662,546

Restricted cash

-

1,250,000

Accounts receivable, net of allowance for doubtful accounts of $366,280 and $0 respectively

3,700,618

3,668,646

Other current assets

422,118

2,665,781

Total current assets

9,419,609

8,246,973

Capitalized production costs

1,075,645

4,654,013

Intangible assets, net of 1,043,255 of amortization

8,506,745

-

Goodwill

12,778,860

-

Property, equipment and leasehold improvements

1,110,776

35,188

Investments

220,000

-

Deposits

485,508

1,261,067

Total Assets

$              33,597,143

$             14,197,241

LIABILITIES


Current


Accounts payable

$                1,097,006

$                  677,249

Other current liabilities

6,487,819

2,958,523

Line of credit

750,000

-

Put Rights

2,446,216

-

Warrant liability

-

14,011,254

Accrued compensation

2,500,000

2,250,000

Debt

3,987,220

18,743,069

Loan from related party

1,708,874

684,326

Deferred revenue

48,449

46,681

Note payable

1,100,000

300,000

Total current liabilities

20,125,584

39,671,102

Noncurrent


Warrant liability

1,441,831

6,393,936

Put Rights

3,779,794

-

Note payable

675,000

-

Deferred tax

187,537

-

Other noncurrent liabilities

1,311,040

-

Total noncurrent liabilities

7,395,202

6,393,936

Total Liabilities

27,520,786

46,065,038

STOCKHOLDERS' EQUITY (DEFICIT)






Common stock, $0.015 par value, 200,000,000 shares authorized, 10,565,789 and 7,197,761, respectively,
issued and outstanding at December 31, 2017 and 2016.

158,487

107,967

Preferred Stock, Series C, $0.001 par value, 50,000, 50,000 at December 31, 2017 and 2016

1,000

1,000

Additional paid in capital

98,816,550

67,835,440

Accumulated deficit

(92,899,680)

(99,812,204)

Total Stockholders' Equity (Deficit)

$                6,076,357

$            (31,867,797)

Total Liabilities and Stockholders' Equity (Deficit)

$              33,597,143

$             14,197,241

 

 

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

Consolidated Statements of Operations 

For the years ended December 31, 2017 and 2016

(Unaudited)

2017

2016

Revenues:

Entertainment publicity

$      16,458,929

$                        -

Production and distribution

5,954,115

9,367,222

Membership

-

28,403

Total revenues

22,413,044

9,395,625

Expenses:

Direct costs

4,638,710

10,661,241

Distribution and marketing

1,111,994

11,322,616

Selling, general and administrative

3,156,097

1,225,464

Depreciation and amortization

1,254,643

20,225

Legal and professional

1,806,448

2,405,754

Payroll 

11,550,078

1,462,589

Total expenses

23,517,970

27,097,889

Income (Loss) before other expenses

(1,104,926)

(17,702,264)

Other Income (Expenses):

Other income 

-

9,660

Extinguishment of debt 

4,012,277

(9,601,933)

Acquisition costs

(749,440)

-

Loss on disposal of furniture, office equipment and leasehold improvements

(28,025)

-

Warrant issuance expense

-

(7,372,593)

Change in fair value of warrant liability

9,018,359

2,195,542

Change in fair value of put rights and contingent consideration

(2,301,914)

-

Interest expense

(1,594,940)

(4,718,091)

Total other income (expense)

8,356,317

(19,487,415)

Income (loss) before income taxes

$        7,251,391

$     (37,189,679)

Income tax

338,867

-

Net income (loss)

$        6,912,524

$     (37,189,679)

Deemed dividend on preferred stock

-

5,247,227

Net income (loss) attributable to common shareholders

$        6,912,524

$     (42,436,906)




Income (Loss) per Share:

Basic 

$                 0.72

$                (9.66)

Diluted

$               (0.20)

$                (9.66)

Weighted average number of shares used in per share calculation

Basic 

9,586,986

4,389,096

Diluted

10,608,828

4,389,096

 

 

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2017 and 2016

(Unaudited)

2017

2016




CASH FLOWS FROM OPERATING ACTIVITIES:



Net income (loss)

$

6,912,524

$

(37,189,679)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization

1,254,643

20,225

Amortization of capitalized production costs

3,356,785

7,822,549

Impairment of capitalized production costs

269,444

2,075,000

Bad debt

330,714

-

Loss on extinguishment of debt

2,723

9,601,933

Warrant issuance

-

7,394,850

Loss on disposal of fixed assets

28,025

-

Change in fair value of warrant liability

(9,018,359)

(2,195,542)

Change in fair value of put rights and contingent consideration

2,443,261

-

Compensation paid with shares of common stock (2017 Plan)

330,065

-

Gain on extinguishment of debt

(4,500,000)

-

Changes in operating assets and liabilities:



Accounts receivable

1,343,958

(3,668,646)

Other current assets

2,243,667

-

Prepaid expenses

-

161,250

Related party receivable

-

72,518

Capitalized production costs

(47,861)

619,206

Deposits

821,122

(863,998)

Deferred revenue

1,768

(1,371,687)

Accrued compensation

250,000

185,000

Accounts payable

381,521

(1,393,296)

Deferred tax

187,537

Other current liabilities

1,260,641

3,757,873

Other noncurrent liabilities

507,371

-

Net Cash Provided by (Used in) Operating Activities

8,359,549

(14,972,444)

CASH FLOWS FROM INVESTING ACTIVITIES:



Restricted cash

1,250,000

(1,250,000)

Payment of working capital adjustment (42West)

(185,031)

-

Purchase of fixed assets 

(227,040)

-

Acquisition of 42West, net of cash acquired

13,626

-

Net Cash Provided by (Used in) Investing Activities

851,555

(1,250,000)

CASH FLOWS FROM FINANCING ACTIVITIES:



Proceeds from loan and security agreements

-

12,500,000

Repayment of loan and security agreements

-

(410,000)

Warrant

-

50,000

Sale of common stock

500,000

7,500,000

Sale of common stock and warrants (unit) in Offering 

3,945,284

-

Proceeds from line of credit

750,000

-

Proceeds from notes payable

2,175,000

-

Repayment of notes payable

(700,000)

-

Repayment of debt

(10,255,849)

(4,263,602)

Payment to designated employees 

(481,546)

-

Proceeds from the exercise of warrants

35,100

-

Exercise of put rights

(1,225,000)

-

Advances from related party

1,388,000

320,000

Repayment to related party

(707,766)

(1,204,093)

Net Cash Provided by (Used in) Financing Activities

(4,576,777)

14,492,305

NET  INCREASE IN CASH AND CASH EQUIVALENTS

4,634,327

(1,730,139)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

662,546

2,392,685

CASH AND CASH EQUIVALENTS,  END OF PERIOD

$

5,296,873

$

662,546




SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:









Interest paid

$

77,263

$

156,666

SUPPLEMENTAL DISCLOSURES OF NON CASH FLOW INFORMATION:

Conversion of related party debt and interest to shares of common stock 

$

-

$

3,073,410

Conversion of debt into shares of common stock

$

-

$

3,164,000

Conversion of loan and security agreements, including interest, into shares of common
stock

$

-

$

22,091,388

Conversion of loan and security agreements converted to warrants to purchase shares of
common stock


7,034,990

Payment of certain accounts payable with shares of common stock

$

58,885

$

-

Issuance of shares of Common Stock pursuant to 2017 Plan

$

330,065

$

-

Issuance of shares of Common Stock related to the 42West Acquisition

$

14,320,351

$

-

 

 

DOLPHIN ENTERTAINMENT, INC AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders' Equity (Deficit)

For the year ended December 31, 2017 and 2016

(Unaudited)



Additional

Total

Preferred Stock

Common Stock

Paid-in

Non controlling

Accumulated 

Stockholders

Shares 

Amount

Shares 

Amount

Capital

interest

Deficit

Equity (Deficit)

 Balance December 31, 2015 

217,150

$

232,043

2,047,309

$

30,709

$

26,510,949

$

2,977,808

$

(62,615,428)

$

(32,863,919)

 Net loss for the year ended
December 31, 2016 

-

-

-

-

-

-

(37,189,679)

(37,189,679)

 Income attributable to the non
controlling interest 

-

-

-

-

-

7,097

(7,097)

-

Return of capital to noncontrolling
member

-

-

-

-

-

(14,200)

-

(14,200)

Acquisition of 25% interest in
Dolphin Kids Clubs LLC

-

-

-

-

(921,122)

(2,970,705)

-

(3,891,827)







Issuance of common stock during the
year ended December 31, 2016

-

-

187,572

2,814

1,872,189

-

-

1,875,003

Extinguishment of debt at a price of
$5.00

-

-

3,078,980

46,185

37,236,640

-

-

37,282,824

Issuance of common stock for
convertible debt

316,400

4,746

3,159,254

3,164,000

Preferred stock dividend related to
exchange of Series A for Series B
Preferred Stock

50,000

100,000

-

-

(5,227,247)

-

-

(5,127,247)

Issuance  and conversion of Series B
Preferred

(165,000)

(330,000)

1,567,500

23,513

6,246,735

-

-

5,940,247







Retirement of Series A Preferred

(52,150)

(1,043)

-

-

(1,041,957)

-

-

(1,043,000)

 Balance December 31, 2016 

50,000

$

1,000

7,197,761

$

107,966

$

67,835,440

$

-

$

(99,812,204)

$

(31,867,798)

 Balance December 31, 2016 

50,000

$

1,000

7,197,761

$

107,967

$

67,835,440

$

-

$

(99,812,204)

$

(31,867,797)

 Net income for the year ended
December 31, 2017 

-

-

-

-

-

-

6,912,524

6,912,524







Sale of common stock during the year
ended December 31, 2017

-

-

50,000

750

499,250

-

-

500,000







Sale of common stock and warrants
(unit) through an offering pursuant to a
Registration Statement on Form S-1

-

-

1,215,000

18,225

3,927,059

-

-

3,945,284

Issuance of shares from partial
exercise of Warrant E and exercise of
Warrants J and K

-

-

1,332,885

19,993

9,960,107

-

-

9,980,100

Issuance of shares for payment of
services

6,140

92

61,487

61,579

Issuance of shares related to
acquisition of 42West

-

-

837,415

12,562

14,307,789

-

-

14,320,351

Shares issuable for contingent
consideration

-

-

-

-

3,644,251

-

-

3,644,251

Shares issued per equity
compensation plan

-

-

59,320

890

329,175

-

-

330,065







Shares retired from exercise of puts

-

-

(132,859)

(1,993)

(1,748,007)

-

-

(1,750,000)







Effect of reverse stock split on
cumulative amount of par value

-

-

127

1

(1)

-

-

-

 Balance September 30, 2017 

50,000

$

1,000

10,565,789

$

158,487

$

98,816,550

$

-

$

(92,899,680)

$

6,076,357

 

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SOURCE Dolphin Entertainment

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