UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________


FORM 8-K

______________


CURRENT REPORT


Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934


Date of Report (Date of Earliest Event Reported): August 13, 2019

______________

Dolphin Entertainment, Inc.

(Exact Name of Registrant as Specified in its Charter)

______________


Florida

001-38331

86-0787790

(State or Other Jurisdiction

(Commission

(IRS Employer

of Incorporation)

File Number)

Identification No.)


2151 Le Jeune Road, Suite 150-Mezzanine

Coral Gables, FL 33134

(Address of Principal Executive Offices) (Zip Code)


(305) 774-0407

(Registrant’s Telephone Number, Including Area Code)


Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

______________


Securities registered pursuant to Section 12(b) of the Act:  


Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.015 par value per share

DLPN

The Nasdaq Capital Market

Warrants to purchase Common Stock,
$0.015 par value per share

DLPNW

The Nasdaq Capital Market


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).


Emerging growth company  ¨

 


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


 

 

 




 



Item 2.02

Results of Operations and Financial Condition.


The information contained in Item 7.01 of this Current Report on Form 8-K is incorporated by reference in this Item 2.02.


Item 7.01

Regulation FD Disclosure.

On August 13, 2019, Dolphin Entertainment, Inc., a Florida corporation (the “Company”), issued a press release announcing its financial results for the three and six months ended June 30, 2019. A copy of the Company’s earnings press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference in this Item 7.01. The information contained in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.


Item 9.01

Financial Statements and Exhibits.


(d) Exhibits


Exhibit Number

 

Description

99.1

 

Press Release dated August 13, 2019








 


SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 

DOLPHIN ENTERTAINMENT, INC.

 

 

 

 

 

Date:  August 14, 2019

By:  

/s/ Mirta A. Negrini

 

 

Name:

Mirta A. Negrini

 

         

Title:

Chief Financial and Operating Officer

 


















Press Release

 


EXHIBIT 99.1


Dolphin Entertainment Q2 Revenue Increases 20% Year-Over-Year to $6.3 Million

Entertainment Publicity and Marketing revenue increases 23% year-over-year to a record $6.3 million

NEW YORK, NY, LOS ANGELES, CA and MIAMI, FL / ACCESSWIRE / August 13, 2019 / Dolphin Entertainment, Inc. (NASDAQ:DLPN), a leading independent entertainment marketing and premium content development company, announces its financial results for the quarter ended June 30, 2019.

Q2 2019 and Recent Highlights

·

Total revenue increased 20% year-over-year to $6,273,983.


·

Entertainment Publicity and Marketing revenue increased 23% year over year to a record $6,273,983.


·

Operating loss of $(1,202,078), which included direct costs of $1,279,657 and non-cash items from depreciation and amortization of $478,560, compared to operating income of $69,267, which included direct costs of $295,765 and non-cash items from depreciation and amortization of $375,163, in the prior year.


·

Net loss was $(891,867), compared to net income of $170,474 in the prior year.


·

42West and The Door were selected to lead marketing efforts for the 45th annual Saturn Awards.


·

The Door celebrated clients Patrick O'Connell, Kevin Boehm and Rob Katz, who won 2019 James Beard Foundation Awards.


·

Award-Winning creatives John Murnane and James Coulson joined Viewpoint.


·

Viewpoint Creative developed a new brand campaign for Investigation Discovery, America's #1 true crime network.


Bill O'Dowd, CEO of Dolphin Entertainment, commented: "Our Q2 witnessed another historic quarter from our core Entertainment Publicity and Marketing segment, up 23% year over year and reaching a record $6.3 million of revenue."



 


Mr. O'Dowd continued, " As a reminder, there is seasonality in our movie marketing business, with Q2 representing the low point in any given year, as it is the only quarter without any awards business.  Thus, for Q2 revenue to be better than Q1, and to improve by 23% from the prior year for the EPM segment, shows the power of the revenue diversification we are achieving with the creation of our Entertainment Marketing ‘Super Group.’”

Mr. O’Dowd added, “As stated in our Q1 Earnings Release and on our Q1 Earnings Call, we are managing toward revenue growth in 2019.  On the bottom line, our Q2 operating loss, excluding depreciation and amortization expenses, was entirely the result of the seasonality of revenues in our movie marketing division.  With the return of awards season in Q3, we expect continued revenue growth and a much stronger bottom line for the rest of the year, even as we invest in additional personnel, such as the Consumer Products PR team at The Door.”  

Mr. O'Dowd concluded, "On the M&A front, we are confident we’ll have another acquisition done before the end of the year.  Our goal is to have all 6 “core competency” companies of the ‘Super Group’ acquired within 2020.  We believe reaching that goal will accelerate revenue growth even further as the cross-selling of services will amplify exponentially as the number of “sister” companies increase."

Conference Call Information

To participate in this event, dial approximately 5 to 10 minutes before the beginning of the call.
Date, Time: Tuesday, August 13, 2019, at 4:30 p.m. ET
Toll-free: 866-682-6100
International: 862-298-0702
Live Webcast: https://www.investornetwork.com/event/presentation/53248

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
Reference ID: 53248



 


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, except as required by applicable law.

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




 



ITEM 1. FINANCIAL STATEMENTS


DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


 

 

As of
June 30,
2019

 

 

As of
December 31,
2018

 

ASSETS

  

                      

  

  

                      

  

Current

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,559,367

 

 

$

5,542,272

 

Restricted cash

 

 

732,920

 

 

 

732,368

 

Accounts receivable, net of allowance for doubtful accounts of $274,861 and $283,022, respectively.

 

 

2,479,299

 

 

 

3,173,107

 

Other current assets

 

 

614,301

 

 

 

620,970

 

Total current assets

 

 

6,385,887

 

 

 

10,068,717

 

 

 

 

 

 

 

 

 

 

Capitalized production costs, net

 

 

785,039

 

 

 

724,585

 

Intangible assets, net of accumulated amortization of $3,494,560 and $2,714,785, respectively.

 

 

8,086,773

 

 

 

9,395,215

 

Goodwill

 

 

15,996,977

 

 

 

15,922,601

 

Right-of-use asset

 

 

6,529,077

 

 

 

 

Property, equipment and leasehold improvements, net

 

 

1,040,021

 

 

 

1,182,520

 

Investments

 

 

220,000

 

 

 

220,000

 

Deposits and other assets

 

 

534,735

 

 

 

475,956

 

Total Assets

 

$

39,578,509

 

 

$

37,989,594

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Accounts payable

 

$

769,974

 

 

$

944,232

 

Other current liabilities

 

 

6,110,389

 

 

 

7,238,507

 

Line of credit

 

 

1,700,390

 

 

 

1,700,390

 

Put rights

 

 

4,030,280

 

 

 

4,281,595

 

Accrued compensation

 

 

2,625,000

 

 

 

2,625,000

 

Debt

 

 

2,312,461

 

 

 

2,411,828

 

Loan from related party

 

 

1,107,873

 

 

 

1,107,873

 

Contract liabilities

 

 

192,471

 

 

 

522,620

 

Lease liability

 

 

1,408,120

 

 

 

 

Convertible notes payable, net of debt discount

 

 

1,988,462

 

 

 

625,000

 

Notes payable

 

 

283,952

 

 

 

479,874

 

Total current liabilities

 

 

22,529,372

 

 

 

21,936,919

 

Noncurrent

 

 

 

 

 

 

 

 

Put rights

 

 

677,911

 

 

 

1,702,472

 

Convertible notes payable

 

 

1,044,232

 

 

 

1,376,924

 

Notes payable

 

 

769,338

 

 

 

612,359

 

Contingent consideration

 

 

460,000

 

 

 

550,000

 

Lease liability

 

 

5,608,045

 

 

 

 

Other noncurrent liabilities

 

 

 

 

 

1,034,393

 

Total noncurrent liabilities

 

 

8,559,526

 

 

 

5,276,148

 

Total Liabilities

 

 

31,088,898

 

 

 

27,213,067

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 19)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Common stock, $0.015 par value, 200,000,000 shares authorized, 14,394,562 and 14,123,157, respectively, issued and outstanding at June 30, 2019 and December 31, 2018

 

 

215,918

 

 

 

211,849

 

Preferred Stock, Series C, $0.001 par value, 50,000 shares authorized, issued and outstanding at June 30, 2019 and December 31, 2018

 

 

1,000

 

 

 

1,000

 

Additional paid in capital

 

 

103,571,126

 

 

 

105,092,852

 

Accumulated deficit

 

 

(95,298,433

)

 

 

(94,529,174

)

Total Stockholders' Equity

 

 

8,489,611

 

 

 

10,776,527

 

Total Liabilities and Stockholders' Equity

 

$

39,578,509

 

 

$

37,989,594

 




 


 

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


 

 

For the three months ended

 

 

For the six months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenues:

  

                      

  

  

                      

  

  

                      

  

  

                      

  

Entertainment publicity and marketing

 

$

6,273,983

 

 

$

5,121,487

 

 

$

12,523,890

 

 

$

10,577,220

 

Content production

 

 

 

 

 

97,961

 

 

 

78,990

 

 

 

427,153

 

Total revenues

 

 

6,273,983

 

 

 

5,219,448

 

 

 

12,602,880

 

 

 

11,004,373

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct costs

 

 

1,279,657

 

 

 

295,765

 

 

 

2,467,076

 

 

 

865,199

 

Selling, general and administrative

 

 

1,071,460

 

 

 

585,214

 

 

 

1,859,623

 

 

 

1,381,958

 

Depreciation and amortization

 

 

478,560

 

 

 

375,163

 

 

 

960,203

 

 

 

746,343

 

Legal and professional

 

 

449,060

 

 

 

356,002

 

 

 

832,732

 

 

 

844,488

 

Payroll

 

 

4,197,324

 

 

 

3,538,037

 

 

 

8,510,486

 

 

 

7,196,042

 

Total expenses

 

 

7,476,061

 

 

 

5,150,181

 

 

 

14,630,120

 

 

 

11,034,030

 

Income (loss) before other income (expenses)

 

 

(1,202,078

)

 

 

69,267

 

 

 

(2,027,240

)

 

 

(29,657

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

 

 

 

 

(53,271

)

 

 

(21,287

)

 

 

(53,271

)

Acquisition costs

 

 

 

 

 

(34,672

)

 

 

 

 

 

(34,672

)

Change in fair value of warrant liability

 

 

 

 

 

350,115

 

 

 

 

 

 

518,432

 

Change in fair value of put rights

 

 

251,350

 

 

 

333,043

 

 

 

1,778,376

 

 

 

1,416,639

 

Change in fair value of contingent consideration

 

 

360,000

 

 

 

 

 

 

90,000

 

 

 

 

Interest expense and debt amortization expense

 

 

(301,139

)

 

 

(265,992

)

 

 

(589,108

)

 

 

(533,419

)

Total other income (expenses)

 

 

310,211

 

 

 

329,223

 

 

 

1,257,981

 

 

 

1,313,709

 

(Loss) income before income taxes

 

$

(891,867

)

 

$

398,490

 

 

$

(769,259

)

 

$

1,284,052

 

Income taxes

 

 

 

 

 

(228,016

)

 

 

 

 

 

(280,620

)

Net (loss) income

 

$

(891,867

)

 

$

170,474

 

 

$

(769,259

)

 

$

1,003,432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.06

)

 

$

0.01

 

 

$

(0.05

)

 

$

0.08

 

Diluted

 

$

(0.06

)

 

$

(0.01

)

 

$

(0.13

)

 

$

(0.03

)

Weighted average number of shares used in per share calculation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

15,969,926

 

 

 

12,349,014

 

 

 

15,957,085

 

 

 

12,432,872

 

Diluted

 

 

19,172,087

 

 

 

14,032,001

 

 

 

19,671,124

 

 

 

14,533,224

 




 


DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


 

 

For the six months ended

June 30,

 

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

  

                      

  

  

                      

  

Net (loss) income

 

$

(769,259

)

 

$

1,003,432

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

960,203

 

 

 

746,343

 

Amortization of capitalized production costs

 

 

 

 

 

203,560

 

Amortization of beneficial conversion on debt

 

 

72,657

 

 

 

 

Loss on extinguishment of debt

 

 

21,287

 

 

 

53,271

 

Bad debt and recovery of account receivable written off, net

 

 

(115,784

)

 

 

(7,421

)

Change in fair value of warrant liability

 

 

 

 

 

(518,432

)

Change in fair value of put rights

 

 

(1,778,376

)

 

 

(1,416,639

)

Change in fair value of contingent consideration

 

 

(90,000

)

 

 

 

Change in deferred tax

 

 

 

 

 

249,276

 

Change in deferred rent

 

 

 

 

 

40,172

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

809,592

 

 

 

866,534

 

Other current assets

 

 

6,669

 

 

 

(90,211

)

Capitalized production costs

 

 

(60,454

)

 

 

(12,500

)

Deposits and other assets

 

 

(58,779

)

 

 

40,219

 

Contract liability

 

 

(330,149

)

 

 

 

Accrued compensation

 

 

 

 

 

125,000

 

Accounts payable

 

 

(174,258

)

 

 

(363,066

)

Lease liability, net

 

 

100,574

 

 

 

 

Other current liabilities

 

 

346,511

 

 

 

(441,992

)

Other noncurrent liabilities

 

 

(217,713

)

 

 

(491,352

)

Net Cash (Used in) Operating Activities

 

 

(1,277,279

)

 

 

(13,806

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchase of fixed assets

 

 

(37,929

)

 

 

(49,813

)

Net Cash (Used in) Investing Activities

 

 

(37,929

)

 

 

(49,813

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from line of credit

 

 

 

 

 

1,700,390

 

Repayment of the line of credit

 

 

 

 

 

(750,000

)

Proceeds from note payable

 

 

1,110,457

 

 

 

 

Proceeds from issuance of detachable warrants

 

 

89,543

 

 

 

 

Repayment of notes payable

 

 

(38,942

)

 

 

 

Repayment of debt

 

 

(99,367

)

 

 

(1,038,728

)

Sale of common stock and warrants (unit) in Offering

 

 

 

 

 

81,044

 

Employee shares withheld for taxes

 

 

 

 

 

(56,091

)

Exercise of put rights

 

 

(1,365,500

)

 

 

 

Repayment to related party

 

 

 

 

 

(601,001

)

Advances from related party

 

 

 

 

 

(2,515,000

)

Acquisition of Viewpoint

 

 

(230,076

)

 

 

 

Acquisition of The Door

 

 

(771,500

)

 

 

 

42West settlement of change of control provision

 

 

(361,760

)

 

 

(20,000

)

Net Cash (Used in) Financing Activities

 

 

(1,667,145

)

 

 

(3,199,386

)

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

 

(2,982,353

)

 

 

(3,263,005

)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

6,274,640

 

 

 

5,296,873

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH END OF PERIOD

 

$

3,292,287

 

 

$

2,033,868

 

 




 


DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Continued)

(Unaudited)


 

 

For the six months ended

June 30,

 

 

 

2019

 

 

2018

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:

 

 

 

 

 

 

 

 

Interest paid

 

$

151,100

 

 

$

88,047

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF NON CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Conversion of note payable into shares of common stock

 

$

75,000

 

 

$

276,425

 

Issuance of shares of Common Stock related to the acquisitions

 

$

1,000,000

 

 

$

 

Liability for contingent consideration for the acquisitions

 

$

460,000

 

 

$

 

Liability for put rights to the Sellers of 42West

 

$

4,708,191

 

 

$

4,809,371

 

 


Reconciliation of cash, cash equivalents and restricted cash. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the statement of cash flows that sum to the total of the same such amounts shown in the statement of cash flows:


 

 

For the six months ended

June 30,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,559,367

 

 

$

2,033,868

 

Restricted cash

 

 

732,920

 

 

 

 

Total cash, cash equivalents and restricted cash shown in the condensed consolidated statement of cash flows

 

$

3,292,287

 

 

$

2,033,868

 



SOURCE: Dolphin Entertainment