Dolphin Entertainment Q3 Revenue Increases to $6.8 Million; Q3 Gross Profit Grows to $1.7 Million

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Continues Integration of 42West Subsidiary, Acquired in March 2017

NEW YORK, NY and LOS ANGELES, CA / ACCESSWIRE / November 17, 2017 / Dolphin Entertainment 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 SUBSIDIARIES
Condensed 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

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,
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.

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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

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