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What changed in Dolphin Entertainment, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Dolphin Entertainment, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+273 added−268 removedSource: 10-K (2024-04-01) vs 10-K (2023-03-31)

Top changes in Dolphin Entertainment, Inc.'s 2023 10-K

273 paragraphs added · 268 removed · 177 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

42 edited+21 added−30 removed33 unchanged
Biggest changeIn addition, 42West’s CEO, Amanda Lundberg, The Door’s CEO, Charlie Dougiello, and President, Lois O’Neill, and Shore Fire’s President Marilyn Laverty are all longtime PR practitioners, with decades of experience, and are widely recognized as among the top communications strategists in the entertainment, hospitality and music industries, as evidenced by the market reputation of their companies; and · Our Ability to Offer Interrelated Services —we believe that our ability to offer influencer marketing expertise and creative branding opportunities for our 42West, The Door and Shore Fire clients, primarily through the services of Be Social, Socialyte and Viewpoint, will allow us to expand and grow our relationships with existing clients and also attract new ones. · Our Ability to Offer Services Across Multiple Verticals of Entertainment – we believe that our ability to offer relationship access and marketing reach across all of the film, television, podcast, music, celebrity chef, hospitality, gaming and e-sports industries will be attractive to marketers of consumer products who desire a broad campaign across pop culture, which will allow us to expand our client base and grow the size of our campaigns.
Biggest changeLastly, Nicole Vecchiarelli and Andrea Oliveri, Co-CEOs of Special Projects, are considered best-in-class in celebrity curation and booking; · Our Ability to Offer Interrelated Services —we believe that our ability to offer influencer marketing expertise, experiential marketing, and creative branding opportunities for our 42West, The Door and Shore Fire clients, primarily through the services of The Digital Dept., Special Projects and Viewpoint, will allow us to expand and grow our relationships with existing clients and also attract new ones; and, · Our Ability to Offer Services Across Multiple Verticals of Entertainment – we believe that our ability to offer relationship access and marketing reach across all of the film, television, podcast, music, celebrity chef, hospitality, gaming and e-sports industries will be attractive to marketers of consumer products who desire a broad campaign across pop culture, which will allow us to expand our client base and grow the size of our campaigns.
We plan to significantly expand Shore Fire’s presence in other major music markets, including Los Angeles, Nashville and Miami, which we believe will provide access to potential clients across a wide array of popular musical genres, including pop, country and Latin. Expand and grow The Door through the expansion of its Consumer Products PR business.
We plan to significantly expand Shore Fire’s presence in other major music markets, including Los Angeles, Nashville and Miami, which we believe will provide greater access to potential clients across a wide array of popular musical genres, including pop, country and Latin. Expand and grow The Door through the expansion of its Consumer Products PR business.
We believe Shore Fire is the largest public relations agency in the music business, representing top recording artists in multiple genres, songwriters, music producers, record labels, music industry businesses, venues, trade organizations, authors, comedians, social media personalities and cultural institutions.
We believe Shore Fire is the largest public relations agency in the music business, representing top recording artists in multiple genres, songwriters, music producers, record labels, music industry businesses, venues, trade organizations, authors, social media personalities and cultural institutions.
Expand and grow Shore Fire Media to serve more clients in more genres of music and in more markets . For over 30 years, Shore Fire has been a leader in providing public relations and marketing services to a broad array of songwriters, recording artists, publishers and others within the music industry, all from its headquarters in Brooklyn.
Expand and grow Shore Fire Media to serve more clients in more genres of music and in more markets . For over 30 years, Shore Fire has been a leader in providing public relations and marketing services to a broad array of songwriters, recording artists, publishers and others within the music industry, primarily from its headquarters in Brooklyn.
We believe that we compete on the basis of the following competitive strengths: · Market Reputations of 42West, Shore Fire and The Door — 42West, Shore Fire and The Door consistently rank among the most prestigious and powerful public relations firms in the United States (each ranking in the Top 50 Most Powerful PR Firms in recent rankings, as published by the New York Observer), which is a significant competitive advantage given the nature of the entertainment marketing and public relations industry, in which “perception is power;” · An Exceptional Management Team— our CEO, Mr.
We believe that we compete on the basis of the following competitive strengths: · Market Reputations of 42West, Shore Fire and The Door — 42West, Shore Fire and The Door consistently rank among the most prestigious and powerful public relations firms in the United States (each ranking in the Top 50 Most Powerful PR Firms in various recent years, as published by the New York Observer), which is a significant competitive advantage given the nature of the entertainment marketing and public relations industry, in which “perception is power;” · An Exceptional Management Team— our CEO, Mr.
We believe that the launch and growth of a large number of streaming services over the last three years represents tremendous organic growth opportunities for 42West, due to the increase in potential new clients and a larger number of individual projects to promote.
We believe that the launch and growth of a large number of streaming services over the last five years represents tremendous organic growth opportunities for 42West, due to the increase in potential new clients and a larger number of individual projects to promote.
Our public relations and marketing professionals at The Door develop and execute marketing and publicity strategies for dozens of restaurant and hotel groups annually, as well as for individual chefs, live events, and consumer-facing corporations.
Our public relations and marketing professionals at The Door develop and execute marketing and publicity strategies for dozens of restaurant and hotel groups annually, as well as for individual chefs, live events, and consumer-facing corporations. The Digital Dept.
We believe that our “marketing super group” is unique in the industry, as a collection of best-in-class service providers across a variety of entertainment and lifestyle verticals.
We believe that our “marketing super group” is unique in the industry, as a collection of best-in-class earned media service providers across a variety of entertainment and lifestyle verticals.
We call these investments “Dolphin 2.0” (with “Dolphin 1.0” being the underlying businesses of each of our subsidiaries). 1 Simply put, we seek to own some of the assets we are marketing. Specifically, we want to own assets where our experience, industry relationships and marketing power will most influence the likelihood of success.
We call these investments “Ventures,” or “Dolphin 2.0” (with “Dolphin 1.0” being the underlying businesses of each of our subsidiaries). Simply put, we seek to own some of the assets we are marketing. Specifically, we want to own assets where our experience, industry relationships and marketing power will most influence the likelihood of success.
We also have offices located at: · 600 3 rd Avenue, 23 rd Floor, New York, New York 10016, · 37 West 17 th Street, 5 th Floor, New York, New York, 10011; · 1840 Century Park East, Suite 200, Los Angeles, California 90067; and · 12 Court Street, Suite 1800, Brooklyn, New York 11201; Available Information The Company’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available free of charge through the “Investor Relations” section of the Company’s website, www.dolphinentertainment.com, as soon as reasonably practical after they are filed with the Securities and Exchange Commission (“SEC”).
We also have offices located at: · 600 3 rd Avenue, 23 rd Floor, New York, New York 10016, · 1840 Century Park East, Suite 200, Los Angeles, California 90067; and · 12 Court Street, Suite 1800, Brooklyn, New York 11201 Available Information The Company’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available free of charge through the “Investor Relations” section of the Company’s website, www.dolphinentertainment.com, as soon as reasonably practical after they are filed with the Securities and Exchange Commission (“SEC”).
ITEM 1. BUSINESS Overview We are a leading independent entertainment marketing and premium content development company. Through our subsidiaries, 42West LLC (“42West”), The Door Marketing Group LLC (“The Door”), Shore Fire Media, Ltd (“Shore Fire”), Viewpoint Computer Animation, Inc. (“Viewpoint”), Be Social Public Relations, LLC (“Be Social”), B/HI Communications, Inc.
ITEM 1. BUSINESS Overview We are a leading independent entertainment marketing and production company. Through our subsidiaries, 42West LLC (“42West”), The Door Marketing Group LLC (“The Door”), Shore Fire Media, Ltd (“Shore Fire”), Viewpoint Computer Animation, Inc. (“Viewpoint”), Be Social Public Relations, LLC (“Be Social”), B/HI Communications, Inc.
Entertainment Publicity and Marketing 42West Through 42West, an entertainment public relations agency, we offer talent publicity, entertainment (motion picture and television) marketing, video game and eSports marketing, and strategic communications services.
Entertainment Publicity and Marketing 42West Through 42West, an entertainment public relations agency, we offer talent publicity, entertainment (motion picture and television) marketing, video game and eSports marketing, entertainment consumer product marketing, and strategic communications services.
Prior to its acquisition, 42West grew to become one of the largest independently-owned public relations firms in the entertainment industry, and in March 2022 (the most recent year of such rankings), 42West was ranked #2 in the annual rankings of the nation’s Power 50 PR firms by the New York Observer, the highest position held by an entertainment PR firm.
Prior to its acquisition, 42West grew to become one of the largest independently-owned public relations firms in the entertainment industry, and in March 2022, 42West was ranked #2 in the annual rankings of the nation’s Power 50 PR firms by the New York Observer, the highest position held by an entertainment PR firm.
The Door’s market-leading position in both the food and hospitality verticals, with many clients that have consumer-facing products and the need for attendant marketing campaigns, has provided the Company with the requisite experience for a successful entry into the high-margin consumer products PR business with potential clients both inside and outside of the food and hospitality verticals.
The Door’s market-leading position in both the food and hospitality verticals, with many clients that have consumer-facing products and the need for attendant marketing campaigns, has provided the Company with the requisite experience for a successful expansion across the high-margin consumer products PR business with potential clients both inside and outside of the food and hospitality verticals.
Enhanced by Dolphin’s acquisitions of Be Social, Socialyte and Viewpoint, 42West has the ability to both structure influencer marketing campaigns and create promotional and marketing content for clients, which are critical services for entertainment content marketers in today’s digital world.
Enhanced by Dolphin’s acquisitions of The Digital Dept. and Viewpoint, 42West has the ability to both structure influencer marketing campaigns and to create promotional and marketing content for clients, which are critical services for entertainment content marketers in today’s digital world.
Likewise, the Board of Directors is composed 29% of women. 6 Other Compensation and Benefits The Company offers competitive compensation and benefits packages that meet the needs of its employees, including equity incentive awards, retirement plans, health, dental, and vision benefits, basic life insurance and short and long-term disability coverage, among other benefits.
Likewise, the Board of Directors is composed of 57% women and minorities. 5 Other Compensation and Benefits The Company offers competitive compensation and benefits packages that meet the needs of its employees, including equity incentive awards, retirement plans, health, dental, and vision benefits, basic life insurance and short and long-term disability coverage, among other benefits.
We believe that complementary businesses, such as live event production companies and PR firms in other entertainment verticals, can create synergistic opportunities that may increase profits and operating cash flow. For Dolphin 2.0, we are focused on driving growth through the following efforts: Build a portfolio of premium film, television and digital content.
We believe that complementary businesses, such as PR firms in other entertainment verticals, can create synergistic opportunities that may increase profits and operating cash flow. For Ventures, or Dolphin 2.0, we are focused on driving growth through the following efforts: Build a portfolio of premium film, television and digital content.
Through 42West, The Door and Shore Fire, Be Social and Socialyte can offer their services to several new verticals, including motion picture and television content, podcasts, musical artists and labels, restaurant groups, hotels and resorts, the travel industry, the gaming and e-sports industry, and the marketers of broader consumer products.
Through 42West, The Door and Shore Fire, The Digital Dept. can offer their services to several new verticals, including motion picture and television content, podcasts, musical artists and labels, restaurant groups, hotels and resorts, the travel industry, the gaming and e-sports industry, and the marketers of broader consumer products.
We conduct training and development in our subsidiaries to ensure our employees maintain the quality for which we are known. As of March 10, 2023, we had 244 full-time employees, all of which are located within the United States.
We conduct training and development in our subsidiaries to ensure our employees maintain the quality for which we are known. As of March 6, 2023, we had 245 full-time employees, all of which are located within the United States.
The film is expected to be released in IMAX theaters in the second half of 2023. 2 Growth Opportunities and Strategies For Dolphin 1.0, we are focused on driving growth through the following efforts: Expand and grow 42West to serve more clients with a broad array of interrelated services.
The film is expected to be released in IMAX theaters in May of 2024. 1 Growth Opportunities and Strategies For Dolphin 1.0, we are focused on driving growth through the following efforts: Expand and grow 42West to serve more clients with a broad array of interrelated services.
Lastly our fourth Dolphin 2.0 investment was made in June, 2022, when we entered into a multi-year deal with IMAX to jointly finance the development and production of a slate of feature-length documentaries for the global market . The first project under this deal is for “The Blue Angels,” co-produced by legendary Hollywood filmmaker J.J.
By way of example, our first content investment was made in June 2022, when we entered into a multi-year deal with IMAX to jointly finance the development and production of a slate of feature-length documentaries for the global market . The first project under this deal is for “The Blue Angels,” co-produced by legendary Hollywood filmmaker J.J.
Thus, we believe that our subsidiaries, Be Social and Socialyte provide a critical competitive advantage in the acquisition of new clients in the entertainment and lifestyle marketing space and will continue to fuel topline revenue growth as the average revenue per client increases with the cross-selling of influencer marketing services.
Thus, we believe that The Digital Dept. will be able to provide a critical competitive advantage in the acquisition of new clients in the entertainment and lifestyle marketing space and will continue to fuel topline revenue growth as the average revenue per client increases with the cross-selling of influencer marketing services.
Furthermore, influencer marketing campaigns are also considered essential to so many consumer products earned media campaigns in today’s online marketplace, creating large cross-selling opportunities between our PR agencies and Be Social’s and Socialyte’s expertise and services. We believe that our expanding portfolio of public relations and marketing companies will continue to attract future acquisitions.
Furthermore, influencer marketing campaigns are also considered essential to the earned media campaigns of so many consumer products in today’s online marketplace, creating large cross-selling opportunities between our PR agencies and The Digital Dept.’s expertise and services. We believe that our expanding portfolio of earned media marketing companies will continue to attract future acquisitions.
Viewpoint’s capabilities run the full range of creative branding and production, from concept creation to final delivery, and include: brand strategy, concept and creative development, design & art direction, script & copywriting, live action production & photography, digital development, video editing & composite, animation, audio mixing & engineering, project management and technical support.
Viewpoint’s capabilities run the full range of creative branding and production, from concept creation to final delivery, and include: brand strategy, concept and creative development, design & art direction, script & copywriting, live action production & photography, digital development, video editing & composite, animation, audio mixing & engineering, project management and technical support. 4 Content Production Dolphin Films and Dolphin Digital Studios Dolphin Films is a content producer of motion pictures.
Finally, we believe that marketing strategies that will be developed by our best-in-class entertainment PR and marketing companies will drive our creative content, thus creating greater potential for profitability. Promotion of Midnight Theatre.
Finally, we believe that marketing strategies that will be developed by our best-in-class entertainment PR and marketing companies will drive our creative content, thus creating greater potential for profitability. Develop Live Events.
(“B/HI”) and Socialyte LLC (“Socialyte”) we provide expert strategic marketing and publicity services to many of the top brands, both individual and corporate, in the motion picture, television, music, gaming, culinary, hospitality and lifestyle industries. 42West (Film and Television, Gaming), Shore Fire (Music), and The Door (Culinary, Hospitality, Lifestyle) are each recognized global PR and marketing leaders for the industries they serve.
(“B/HI”), The Digital Dept, LLC (“The Digital Dept.”) formerly known as Socialyte LLC (“Socialyte”) and Special Projects Media, LLC (“Special Projects”) we provide expert strategic marketing and publicity services to many of the top brands, both individual and corporate, in the motion picture, television, music, gaming, culinary, hospitality and lifestyle industries. 42West (Film and Television, Gaming), Shore Fire (Music), and The Door (Culinary, Hospitality, Lifestyle) are each recognized global PR and marketing leaders for the industries they serve.
Content Production Dolphin Films and Dolphin Digital Studios Dolphin Films is a content producer of motion pictures. We own the rights to several scripts that we intend to produce at a future date. Dolphin Digital Studios creates original content to premiere online. We own several concepts and scripts that we intend to further develop and produce at a future date.
We own the rights to several scripts that we intend to produce at a future date. Dolphin Digital Studios creates original content to premiere online. We own several concepts and scripts that we intend to further develop and produce at a future date.
Diversity and Inclusion Dolphin and our subsidiaries are committed to diversity and inclusion, and our culture reinforce these values on a day-to-day basis, beginning with our leadership team. Our leadership team, which includes our Chief Executive Officer, Chief Financial and Operating Officer and the leaders of our subsidiaries, is composed 70% of women.
Diversity and Inclusion Dolphin and our subsidiaries are committed to diversity and inclusion, and our culture reinforces these values on a day-to-day basis, beginning with our leadership team. Our leadership team, which includes our Chief Executive Officer, Chief Financial and Operating Officer, Vice-President of Human Resources and the leaders of our subsidiaries, is composed of 75% women and minorities.
Lytehouse, Socialyte’s sister agency, represents some of the world's most iconic brands, providing a full suite of services for paid influencer campaigns, from strategy and casting, through execution and delivery, with in-depth analytics and reporting.
The Digital Dept.’s brands division represents some of the world's most iconic brands, providing a full suite of services for paid influencer campaigns, from strategy and casting, through execution and delivery, with in-depth analytics and reporting.
The entertainment publicity and marketing segment is composed of 42West, Shore Fire, The Door, Viewpoint, Be Social and Socialyte and provides clients with diversified services, including public relations, entertainment content marketing, strategic communications, social media and influencer marketing, creative branding, and the production of promotional video content. The content production segment is composed of Dolphin Films, Inc.
The entertainment publicity and marketing segment is composed of 42West, Shore Fire, The Door, Viewpoint, The Digital Dept. and Special Projects and provides clients with diversified services, including public relations, entertainment content marketing, strategic communications, social media and influencer marketing, celebrity booking, creative branding, and the production of promotional video content.
We plan to significantly increase the number of consumer products PR accounts at The Door. Such accounts often generate higher monthly fees and longer-term engagements than any other of our customer verticals. Diversify Viewpoint’s Client Base.
We plan to significantly increase the number of consumer products PR accounts at The Door. Such accounts often generate higher monthly fees and longer-term engagements than any other of our customer verticals. Expand The Digital Dept.’s Talent Roster + Platform Presence.
The ability for Viewpoint to reach clients of 42West, The Door and Shore Fire provides Viewpoint with the opportunity to diversify its client base, while allowing 42West, The Door and Shore Fire to increase their service offerings to, existing and future clients, potentially driving increased revenues. Diversify Be Social’s and Socialyte’s Client Bases.
The ability for The Digital Dept. to reach clients of 42West, The Door and Shore Fire provides The Digital Dept. with the opportunity to diversify its client base, while allowing 42West, The Door and Shore Fire to increase their service offerings to, existing and future clients, potentially driving increased revenues. Expand The Digital Dept.’s Influencer Event Business to New Markets.
Additionally, we have endeavored to create a “marketing super group,” combining marketing, public relations, branding, and digital production, that will serve as a platform for organic growth via the cross-selling of services among our subsidiaries.
With respect to our entertainment publicity and marketing segment, we have endeavored to create an “earned media marketing super group,” combining marketing, public relations, influencer marketing, celebrity sponsorships and talent booking, experiential marketing, branding, and digital production, that will serve as a platform for organic growth via the cross-selling of services among our subsidiaries.
The ability for Be Social and Socialyte to reach clients of 42West, The Door and Shore Fire provides Be Social and Socialyte with the opportunity to diversify their client bases, while allowing 42West, The Door and Shore Fire to increase their service offerings to, existing and future clients, potentially driving increased revenues.
The ability for Special Projects to reach clients of 42West, The Door and Shore Fire provides Special Projects with the opportunity to expand its clientele, while allowing 42West, The Door and Shore Fire to increase their service offerings to existing and future clients, potentially driving increased revenues. 2 Opportunistically grow through complementary acquisitions.
Through 42West, Shore Fire and The Door, we compete against other public relations and marketing communications companies, as well as independent and niche agencies to win new clients and maintain existing client relationships. Through Viewpoint, Be Social and Socialyte, we compete against other creative branding and influencer marketing agencies as well as in-house teams at many of our clients.
Competition The businesses in which we engage are highly competitive. Through 42West, Shore Fire and The Door, we compete against other public relations and marketing communications companies, as well as independent and niche agencies to win new clients and maintain existing client relationships.
(B/HI is considered a division of 42West throughout the rest of our discussion.) Viewpoint adds full-service creative branding and production capabilities to our marketing group and Be Social and Socialyte provide influencer marketing capabilities through their roster of highly engaged social media influencers.
(B/HI is considered a division of 42West throughout the rest of our discussion.) Viewpoint adds full-service creative branding and production capabilities to our marketing group. Be Social and Socialyte, collectively rebranded as The Digital Dept., provides influencer marketing capabilities through divisions dedicated to influencer talent management, brand campaign strategy and execution, and influencer event ideation and production.
This leads us to seek investments in the following categories of assets: 1) Content; 2) Live Events; and 3) Consumer Products. The first of our 2.0 investments was in the new world of NFTs (Non-Fungible Tokens). Initially, we had seen a large opportunity in this sector.
This leads us to seek investments in the following categories of assets: 1) Content; 2) Live Events; and 3) Consumer Products.
Our capabilities include global game releases (web, console and mobile), independent releases, eSports tournament and league publicity, and various gaming events. 4 Strategic Communications Our strategic communications team advises brands and non-profits seeking to utilize entertainment and pop culture in their marketing campaigns.
Our capabilities include product launch and feature releases, media strategy, and industry conference execution. Strategic Communications Our strategic communications team advises brands and non-profits seeking to utilize entertainment and pop culture in their marketing campaigns.
Socialyte is an influencer marketing powerhouse, with teams in New York, Los Angeles, Miami and Nashville representing some of the most sought-after creators, from digital-only to celebrity-level talent. Combined, Be Social and Socialyte have a client roster of more than 200 market-leading influencers.
The Digital Dept. has a talent management roster of more than 200 market-leading influencers, representing some of the most sought-after creators, from digital-only to celebrity-level talent.
(“Dolphin Films”) and a department within Dolphin, which produce and distribute feature films and digital content. With respect to our entertainment publicity and marketing segment, we currently see a favorable environment for organic growth.
The content production segment is composed of Dolphin Films, Inc. (“Dolphin Films”) and a department within Dolphin, which develop, produce and distribute feature films, television and digital content.
Be Social and Socialyte are leading influencer marketing agencies, with a specialization in the beauty, fashion and wellness industries.
The Digital Dept. has a division dedicated to working with brands to create the strategy and subsequently execute influencer marketing campaigns, with a specialization in the beauty, fashion and wellness industries.
Be Social and Socialyte Through Be Social and Socialyte, our influencer marketing agencies, we offer brand marketing services ( both paid and organic influencer marketing campaigns) and management for individual influencers . Be Social is a recognized leader in its field, especially within the beauty, fitness and wellness industries.
Through The Digital Dept. we offer management for individual influencers, brand marketing services (both paid and organic influencer marketing campaigns) and influencer event development and production services , with teams in New York, Los Angeles, Miami and Nashville.
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The original content budgets of many large studios and streaming services have grown considerably the past few years and are expected to continue to do so for the foreseeable future.
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Special Projects is the entertainment industry’s leading celebrity booking firm, specializing in uniting brands and events with celebrities and influencers across the entertainment, media, fashion, consumer product and tech industries.
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Furthermore, we have seen the entrance of large streaming services such as Disney+, Apple TV, Peacock (from NBCUniversal), HBO Max, Paramount+ and Discovery, all to compete with Netflix, Amazon and Hulu.
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The Digital Dept. has a well-known influencer talent management roster, representing over 200 individual talent that tend to specialize in the beauty, fashion and wellness industries, and that tend to use Instagram as their primary user engagement platform.
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We believe that the foremost differentiating factor for all of these platforms will be original programming and, consequently, it is anticipated that there will be an increase of tens of billions of dollars in programming spent across the market.
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We plan to strategically scale into new verticals with significant potential, including the highly lucrative skin care/cosmetics/beauty vertical, which has a long history of branding and co-marketing partnerships with the entertainment industry. Additionally, broadening our talent pool across platforms like TikTok and YouTube will allow us to offer brand partners premium access to the coveted Young Adult segment.
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We also believe that each of these original shows will need substantial public relations and marketing campaigns to drive consumer awareness of both the shows themselves and the respective platforms on which to find them.
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These are sizable addressable markets that add another dimension to our growth strategy. We believe they present promising avenues for further diversification and expansion. Diversify The Digital Dept.’s Brand Client Bases.
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Even without broad consumer adoption, the NFT market grew dramatically in 2021, from an estimated $250 million in 2020 to over $40 billion in 2021, according to Bloomberg.
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The Digital Dept. has a division dedicated to producing influencer “showrooms,” wherein The Digital Dept. rents a venue and hosts up to 200 influencers over 2 days to sample a wide variety of beauty, fashion and wellness products. Since 2021, The Digital Dept. has hosted multiple such showrooms per year, all in Los Angeles.
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We had believed the NFT market would continue to grow at a rapid pace for years to come, driven by the combination of 1) the ability of consumers to purchase using a credit card (and not just with cryptocurrencies); 2) consumer-friendly pricing options (previously not readily available due to large “gas fees” charged by both sellers and buyers of NFTs to offset the energy consumption required to “mint” the NFT for sale); and 3) popular entertainment and pop culture collectibles being offered.
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We plan to add additional showrooms in New York City and Miami, to further expand this successful format. Leverage Special Projects’ Industry Reputation and Position to Expand Clientele.
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In March 2021, we announced our intentions to enter into the production and marketing of NFTs. In August, 2021, we announced we would develop and launch NFT collections across all major entertainment industry verticals (film, television, music, gaming, etc.).
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Special Projects already books celebrity talent to marquee events across the entertainment, media, fashion, consumer product and tech verticals. 42West, Shore Fire and The Door all have multiple clients that regularly seek to book celebrities for commercial endorsement or seek to host events with celebrity attendance to garner out-sized media coverage.
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In October, 2021, we announced the hiring of Anthony Francisco, former Senior Visual Development Artist at Marvel Studios, and designer of many iconic characters in the Marvel Cinematic Universe, to be Creative Director of our NFT studios.
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With the acquisition of Special Projects, Dolphin now has the expertise in house to develop and produce live events. 42West, Shore Fire, The Door and The Digital Dept. all have market-leading expertise in promoting live events, through public relations and influencer marketing respectively, from movie and television premieres, award shows, music festivals, food festivals, and many more.
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And in December, 2021, we unveiled our first collection, entitled “Creature Chronicles: Exiled Aliens,” a generative art collection of 10,000 unique avatars created by Mr. Francisco. On October 2, 2022, the Company minted and offered for sale a collection of 7,777 Creature Chronicles: Exiled Aliens NFTs.
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We believe we can conceive and execute our own live events, whether B2C or B2B, that leverage our ability to book celebrity talent, as well as run best-in-class earned media marketing campaigns to attract sponsors and attendance. Develop Consumer Products.
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The collection generated approximately 13,175 Solana (“SOL”) equivalent to approximately $429,000 on the date of the sale, of which we netted approximately $300,000.
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We believe there are many consumer product categories that have strong historical influence from either celebrities, influencers or the entertainment industry in general, including liquor, cosmetics, skin care, fashion, supplements, and wellness products, to name just a few.
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Despite the success of a “sold out” collection (in approximately 90 minutes on a Sunday afternoon), we no longer have immediate plans to design and sell additional NFT collections, due to the tremendously uncertain macro environment surrounding cryptocurrencies in general (still the primary payment form for NFTs), and NFTs in particular.
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Across our PR firms and The Digital Dept., we represent both brands in these verticals, as well as many individual celebrities and influencers, with proprietary consumer products in these verticals.
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Our second Dolphin 2.0 investment was made in October, 2021, when we acquired an ownership stake in Midnight Theatre, a state-of-the-art contemporary variety theater and restaurant in the heart of Manhattan.
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We believe we can conceive and partner with leading producers and distributors across several consumer product verticals to launch a wide variety of products that leverage our ability to access celebrity and influencer talent, as well as run best-in-class earned media marketing campaigns to launch brand awareness, maintain brand prominence, and enhance sales and distribution efforts.
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An anchor of Brookfield Properties’ recently opened $4.5 billion Manhattan West development, the Midnight Theatre held its soft opening in September 2022 and is expected to be fully operating by fourth quarter of 2023. The Midnight Theatre will feature three distinct experiences for guests: the theatre itself; a separate pan-Asian restaurant, Hidden Leaf; and a ground-level café.
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Our capabilities include global game releases (web, console and mobile), independent releases, eSports tournament and league publicity, and various gaming events. 3 Entertainment Consumer Product Marketing We provide marketing direction, public relations counsel and media strategy for leading toy companies, consumer product companies and divisions of major entertainment studios, and entertainment memorabilia companies.
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We manage all aspects of publicity and marketing for the venue (both theatre and restaurant), as well as facilitate talent and commercial relationships within the entertainment and culinary industries. The Midnight Theatre will have a weekly schedule of performances and immersive experiences across music, comedy, Broadway, and narrative magic shows programmed at the 160-seat venue.
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And, The Digital Dept.’s events division produces both proprietary showrooms to connect brands and influencers, as well as custom events for specific brands, at locations across Los Angeles, New York and Miami. Special Projects Special Projects is a creative content, and special events agency that elevates media, fashion, and lifestyle brands through the unique use of celebrities and storytelling.
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The contemporary variety theatre integrates state-of-the-art 270 degree projection mapped visuals into live performances, allowing for unprecedented intimacy between performers and guests. The Midnight Theatre also has built in live-stream capabilities, allowing for events inside the theatre to expand beyond into other theaters, people’s homes and corporate offices.
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Trusted by both companies and public figures, Special Projects creates opportunities that garner press, build engagement, drive sales, and uniquely position our partners within the zeitgeist. Its core services include talent strategy and partnerships, event activation and guest list curation, and brand amplification through celebrities, influencers, and culture-defining personalities.
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The theatre will be available to host live streamed podcasts, comedy specials, music events, Broadway cabarets, corporate keynote events and more. Hidden Leaf, the modern pan-Asian restaurant concept on the second floor of The Midnight Theatre space, led by acclaimed restauranteur Josh Cohen, commenced operations on July 2022.
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Its keen trend-spotting and cultural forecasting abilities allow us to keep our finger on the pulse of pop culture and highlight new talents before they hit the mainstream.
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The restaurant features a 75-seat dining room, 20-seat private dining room and a 40-seat lounge/bar area. Hidden Leaf will be open for both lunch and dinner and will incorporate world-class food with interactive elements such as table-side prep, wine consignments, and memberships.
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In June 2022, we entered into an agreement with IMAX Corporation (“IMAX”) to co-produce and co-finance a documentary motion picture on the flight demonstration squadron of the United States Navy called the Blue Angels. IMAX and Dolphin each agreed to fund 50% of the production budget which was estimated at approximately $4 million.
Removed
Our third Dolphin 2.0 investment was made in December, 2021, when we acquired an ownership stake in Crafthouse Cocktails, a pioneering brand of ready-to-drink, all-natural classic cocktails created by world renowned mixologist, Charles Joly and esteemed restaurateur, Matt Lindner.
Added
On November 7, 2023, the Company agreed to pay and paid an additional $250,000, which represented 50% of the estimated additional production costs to complete the documentary. As of December 31, 2023, we had paid $2,250,000 in connection with this agreement. The Blue Angels is expected to be released in May of 2024.
Removed
Founded in 2013, Crafthouse Cocktails is an award-winning pioneer in the premium ready-to-drink cocktail category, with eight different, made-from-scratch cocktails, using all-natural ingredients and premium craft spirits, available in more than 2,000 retail locations nationally.
Added
Through Viewpoint and The Digital Dept., we compete against other creative branding and influencer marketing agencies as well as in-house teams at many of our clients. Through Special Projects, we compete with other celebrity booking or live event production companies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

38 edited+6 added−16 removed61 unchanged
Biggest changeDuring this period, we issued approximately (i) 2.7 million aggregate shares of our common stock as consideration or earnout consideration for 42West, The Door, Shore Fire, Viewpoint, Be Social, B/HI and Socialyte acquisitions; (ii) 1.2 million to certain holders of convertible notes and warrants that exercised their right to convert all or a portion of their convertible notes or warrants; (iii) 1.7 million to Lincoln Park Capital Fund LLC related to our purchase agreement with them and (iv) 43,000 as stock compensation to certain employees.
Biggest changeDuring this period, we issued approximately (i) 5.1 million aggregate shares of our common stock as consideration or earnout consideration for acquisitions; (ii) 2.8 million to Lincoln Park Capital Fund LLC related to our purchase agreement with them; (iii) 1.4 million shares through an offering pursuant to a Registration Statement on Form S-3; (iv) 0.6 million to certain holders of convertible notes that exercised their right to convert all or a portion of their convertible notes; and (v) 0.2 million as stock compensation to certain employees.
Identifying suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to identify suitable candidates or complete acquisitions in a timely manner, on a cost-effective basis or at all. Even if we complete an acquisition, we may not realize the anticipated benefits of such transaction.
Identifying suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to identify suitable candidates or complete acquisitions in a timely manner, on a cost-effective basis or at all. 10 Even if we complete an acquisition, we may not realize the anticipated benefits of such transaction.
On August 10, 2022, the Company entered into a new purchase agreement (the “LP 2022 Purchase Agreement”) with Lincoln Park, pursuant to which Lincoln Park committed to purchase up to $25 million of our common stock. Concurrently with the execution of the LP 2022 Purchase Agreement, we issued 57,313 shares of common stock to Lincoln Park as a commitment fee.
On August 10, 2022, the Company entered into a purchase agreement (the “LP 2022 Purchase Agreement”) with Lincoln Park, pursuant to which Lincoln Park committed to purchase up to $25 million of our common stock. Concurrently with the execution of the LP 2022 Purchase Agreement, we issued 57,313 shares of common stock to Lincoln Park as a commitment fee.
The client’s perception of the quality of an agency’s creative work and the agency’s reputation are critical factors in determining its competitive position. 10 The success of our entertainment publicity and marketing business depends on its ability to consistently and effectively deliver marketing and public relations services to its clients.
The client’s perception of the quality of an agency’s creative work and the agency’s reputation are critical factors in determining its competitive position. The success of our entertainment publicity and marketing business depends on its ability to consistently and effectively deliver marketing and public relations services to our clients.
Such issuances of additional securities would further dilute the equity interests of our existing shareholders, perhaps substantially, and may further exacerbate any or all of the above risks. The Series C Convertible Preferred Stock has super voting rights that may adversely affect our shareholders.
Such issuances of additional securities would further dilute the equity interests of our existing shareholders, perhaps substantially, and may further exacerbate any or all of the above risks. 11 The Series C Convertible Preferred Stock has super voting rights that may adversely affect our shareholders.
As a result, we may need to (i) issue additional equity, which could substantially dilute the value of your share holdings, (ii) sell a portion or all of our assets, including any project rights which might have otherwise generated revenue, or (iii) cease operations. 7 We currently have substantial indebtedness which may adversely affect our cash flow and business operations and may affect our ability to continue to operate as a going concern.
As a result, we may need to (i) issue additional equity, which could substantially dilute the value of your share holdings, (ii) sell a portion or all of our assets, including any project rights which might have otherwise generated revenue, or (iii) cease operations. 6 We currently have substantial indebtedness which may adversely affect our cash flow and business operations and may affect our ability to continue to operate as a going concern.
To the extent we acquire additional businesses, we will also require additional funding in the future to support our operations. The most likely source of future funds presently available to us will be through the sale of equity capital. Any sale of share capital will result in dilution to existing stockholders.
To the extent we acquire additional businesses, we will also require additional funding in the future to support our operations. The most likely source of future funds presently available to us will be through the sale of equity capital. Any sale of share capital will result in dilution to existing shareholders.
As of December 31, 2022, we had outstanding convertible notes payable that as of the date of this report are still outstanding in the aggregate principal amount of $5.1 million, which are convertible using a 90-day trading average stock price.
As of December 31, 2023, we had outstanding convertible notes payable that as of the date of this report are still outstanding in the aggregate principal amount of $5.1 million, which are convertible using a 90-day trading average stock price.
O’Dowd that prohibits the conversion of Series C Convertible Preferred Stock into common stock unless the majority of the independent directors of the board of directors vote to remove the restriction. The stock restriction agreement will be immediately terminated upon a change of control as defined in the agreement.
O’Dowd in 2020 prohibits the conversion of Series C Convertible Preferred Stock into common stock unless the majority of the independent directors of the Board vote to remove the restriction. The stock restriction agreement will be immediately terminated upon a change of control as defined in the agreement.
Additionally, the sale of a substantial number of shares of our common stock to Lincoln Park, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales, which could have a materially adverse effect on our business and operations.
Additionally, the sale of a substantial number of shares of our common stock to Lincoln Park, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales, which could have a materially adverse effect on our business and operations. 12 ITEM 1B.
The success of our marketing subsidiaries, therefore, depend on our ability to continue to successfully maintain such client relationships should the principal sellers or other key employees leave our company.
The success of our marketing subsidiaries, therefore, depends on our ability to continue to successfully maintain such client relationships should the principal sellers or other key employees leave our Company.
The table below sets forth our total principal amount of debt as of December 31, 2022 and 2021.
The table below sets forth our total principal amount of debt as of December 31, 2023 and 2022.
December 31, 2022 2021 Related party debt (noncurrent) $ 1,107,873 $ 1,107,873 Notes payable (current and noncurrent) $ 1,368,960 $ 1,176,644 Convertible notes payable (current and noncurrent) $ 5,050,000 $ 3,400,000 Convertible notes payable – fair value option $ 343,556 $ 998,135 Term loan (current and noncurrent) $ 2,867,592 $ — Non-convertible promissory note – Socialyte (current) $ 3,000,000 $ — Our indebtedness could have important negative consequences, including: · our ability to obtain additional financing for working capital, capital expenditures, future productions or other purposes may be impaired or such financing may not be available on favorable terms or at all; · we may have to pay higher interest rates upon obtaining future financing, thereby reducing our cash flows; and · we may need a substantial portion of our cash flow from operations to make principal and interest payments on our indebtedness, reducing the funds that would otherwise be available for operations and future business opportunities.
December 31, 2023 2022 Related party debt (noncurrent) $ 1,107,873 $ 1,107,873 Notes payable (current and noncurrent) $ 3,880,000 $ 1,368,960 Convertible notes payable (current and noncurrent) $ 5,100,000 $ 5,050,000 Convertible note payable – fair value option $ 355,000 $ 343,556 Term loan (current and noncurrent) $ 5,482,614 $ 2,867,592 Line of credit $ 400,000 $ — Non-convertible promissory note – Socialyte (current) $ 3,000,000 $ 3,000,000 Our indebtedness could have important negative consequences, including: · our ability to obtain additional financing for working capital, capital expenditures, future productions or other purposes may be impaired, or such financing may not be available on favorable terms or at all; · we may have to pay higher interest rates upon obtaining future financing, thereby reducing our cash flows; and · we may need a substantial portion of our cash flow from operations to make principal and interest payments on our indebtedness, reducing the funds that would otherwise be available for operations and future business opportunities.
The market price for our common stock may be influenced by many factors, including the following: · announcements of state-of-the-art means of content production and entertainment publicity and marketing, or those of companies that are perceived to be similar to us; · announcements related to any delays in production or rollout of entertainment content; · our ability to meet or exceed the rapidly-changing expectations of our clients; · news that audience acceptance of and interest in our digital media productions, and therefore the commercial success of our content production business, is lower or higher than we expected; · our ability to adapt to rapid change in technology, forms of delivery, storage, and consumer preferences related to digital content; · announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us, our strategic collaboration partners or our competitors; · variations in our financial results or those of companies that are perceived to be similar to us; · trading volume of our common stock; · developments concerning our collaborations or partners; · the impact of any local or global pandemic and its effect on us; 8 · the perception of the entertainment publicity and marketing or digital content production by the public, legislatures, regulators and the investment community; · developments or disputes concerning intellectual property rights; · significant lawsuits, including patent or stockholder litigation; · our ability or inability to raise additional capital and the terms on which we raise it; · sales of our common stock by us or our stockholders; · declines in the market prices of stocks generally or of companies that are perceived to be similar to us; and · general economic, industry and market conditions.
The market price for our common stock may be influenced by many factors, including the following: · announcements of state-of-the-art means of content production and entertainment publicity and marketing, or those of companies that are perceived to be similar to us; · announcements related to any delays in production or rollout of entertainment content; · our ability to meet or exceed the rapidly-changing expectations of our clients; · news that audience acceptance of and interest in our digital media productions, and therefore the commercial success of our content production business, is lower or higher than we expected; · our ability to adapt to rapid change in technology, forms of delivery, storage, and consumer preferences related to digital content; · announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us, our strategic collaboration partners or our competitors; · variations in our financial results or those of companies that are perceived to be similar to us; · trading volume of our common stock; · developments concerning our collaborations or partners; · the impact of any local or global pandemic and its effect on us; · the perception of the entertainment publicity and marketing or digital content production by the public, legislatures, regulators and the investment community; · developments or disputes concerning intellectual property rights; · significant lawsuits, including patent or shareholder litigation; · our ability or inability to raise additional capital and the terms on which we raise it; · sales of our common stock by us or our shareholders; · declines in the market prices of stocks generally or of companies that are perceived to be similar to us; and · general economic, industry and market conditions. 7 Our management has determined that our disclosure controls and procedures and our internal controls over financial reporting are not effective as we have identified material weaknesses in our internal controls.
Our ability to generate net profit in the future will depend on our ability to realize the financial benefits from the operations of 42West, The Door, Shore Fire, Viewpoint, Be Social and Socialyte and the success of our Dolphin 2.0 initiatives, as no single project is likely to generate sufficient revenue to cover our operating expenses.
Our ability to generate net profit in the future will depend on our ability to realize the financial benefits from the operations of 42West, The Door, Shore Fire, Viewpoint, The Digital Dept. and Special Projects and the success of our Dolphin 2.0 initiatives, as no single project is likely to generate sufficient revenue to cover our operating expenses.
If we cannot successfully exploit emerging technologies or if the marketing strategies we choose misinterpret cultural or social trends and prove to be incorrect or ineffective, any of these could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.
If we cannot successfully exploit emerging technologies or if the marketing strategies we choose misinterpret cultural or social trends and prove to be incorrect or ineffective, any of these could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects. 9 A significant labor dispute in our clients’ industries could have a material adverse effect on our business.
We have a history of net losses and may continue to incur net losses. We have a history of net losses and may be unable to generate sufficient revenue to achieve profitability in the future. For the fiscal years ended December 31, 2022 and 2021, respectively, our net loss was $4,780,135 and $6,462,303.
We have a history of net losses and may continue to incur net losses. We have a history of net losses and may be unable to generate sufficient revenue to achieve profitability in the future. For the fiscal years ended December 31, 2023 and 2022, respectively, our net loss was $24,396,725 and $4,780,135.
The success of our entertainment publicity and marketing business operated by 42West, The Door, Viewpoint, Shore Fire, Be Social and Socialyte, our marketing subsidiaries, substantially depends on our ability to retain the services of their former owners and certain key employees.
The success of our entertainment publicity and marketing business operated by 42West, The Door, Viewpoint, Shore Fire, The Digital Dept. and Special Projects, our marketing subsidiaries, substantially depends on our ability to retain the services of their former owners and certain key employees.
Clients may terminate or reduce their relationships with us on short notice. As is customary in the industry, our marketing subsidiaries’ agreements with their respective clients generally provide for termination by either party on relatively short notice, usually 30 days.
As is customary in the industry, our marketing subsidiaries’ agreements with their respective clients generally provide for termination by either party on relatively short notice, usually 30 days. Consequently, these clients may choose to reduce or terminate their relationships with us, on a relatively short time frame and for any reason.
If we are unable to maintain compliance with Nasdaq listing requirements, our stock could be delisted, and the trading price, volume and marketability of our stock could be adversely affected. Our common stock is listed on the Nasdaq Capital Market.
Your voting rights will be diluted as a result of these super voting rights. If we are unable to maintain compliance with Nasdaq listing requirements, our stock could be delisted, and the trading price, volume and marketability of our stock could be adversely affected. Our common stock is listed on the Nasdaq Capital Market.
Controls and Procedures of this Annual Report on Form 10-K, management concluded that for the years ended December 31, 2022 and 2021, our internal control over financial reporting was not effective and we identified several material weaknesses. Our management concluded that our disclosure controls and procedures were not effective due to material weaknesses in our internal control over financial reporting.
As disclosed in Part II, Item 9A. Controls and Procedures of this Annual Report on Form 10-K, management concluded that for the years ended December 31, 2023 and 2022, our internal control over financial reporting was not effective and we identified several material weaknesses.
Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, financial condition and operating results. 12 Risks Related to our Common Stock and Preferred Stock We have recently issued, and may in the future issue, a significant amount of equity securities and, as a result, your ownership interest in our company has been, and may in the future be, substantially diluted and your investment in our common stock could suffer a material decline in value.
Risks Related to our Common Stock and Preferred Stock We have recently issued, and may in the future issue, a significant amount of equity securities and, as a result, your ownership interest in our Company has been, and may in the future be, substantially diluted and your investment in our common stock could suffer a material decline in value.
Although we maintain monitoring practices and protections of our information technology to reduce these risks, there can be no assurance that our efforts will prevent the risk of a security breach of our databases or systems that could adversely affect our business. 9 We will require additional financing, and we may not be able to raise funds on favorable terms or at all.
Although we maintain monitoring practices and protections of our information technology to reduce these risks, there can be no assurance that our efforts will prevent the risk of a security breach of our databases or systems that could adversely affect our business.
In addition, economic downturns could lead to reduced public demand for varying forms of entertainment for which we are engaged to provide public relations and media strategy and promotional services.
In addition, economic downturns could lead to reduced public demand for varying forms of entertainment for which we are engaged to provide public relations and media strategy and promotional services. Such reduced demand for our services could have a material adverse effect on our revenues and results of operations.
Our accumulated deficit was $109,214,479 and $104,434,344 at December 31, 2022 and 2021, respectively.
Our accumulated deficit was $133,611,204 and $109,214,479 at December 31, 2023 and 2022, respectively.
Furthermore, a delisting could adversely affect our ability to issue additional securities and obtain additional financing in the future or result in a loss of confidence by investors or employees. 13 The sale or issuance of our common stock to Lincoln Park may cause dilution and the sale of the shares of common stock acquired by Lincoln Park, or the perception that such sales may occur, could cause the price of our common stock to fall.
Furthermore, a delisting could adversely affect our ability to issue additional securities and obtain additional financing in the future or result in a loss of confidence by investors or employees.
From January 1, 2021 to December 31, 2022, the number of shares of our common stock issued and outstanding has increased from 6,690,579 to 12,340,664 shares.
From January 1, 2022 to December 31, 2023, the number of shares of our common stock issued and outstanding has increased from 8,020,381 to 18,219,531 shares.
Risks Related to Our Entertainment Publicity and Marketing Business Our business could be adversely affected if we fail to retain the principal sellers, and other key employees of 42West, The Door, Viewpoint, Shore Fire, Be Social and Socialyte and the clients they serve.
Furthermore, we may incur debt in the future, and may not have sufficient funds to repay our future indebtedness or may default on our future debts, jeopardizing our business viability. 8 Risks Related to Our Entertainment Publicity and Marketing Business Our business could be adversely affected if we fail to retain the principal sellers, and other key employees of 42West, The Door, Viewpoint, Shore Fire, The Digital Dept. and Special Projects and the clients they serve.
ITEM 1A. RISK FACTORS Risks Related to our Business and Financial Condition Our results of operations are highly susceptible to unfavorable economic conditions. We are exposed to risks associated with weak or uncertain regional economic conditions and disruptions in the financial markets.
ITEM 1A. RISK FACTORS Risks Related to our Business and Financial Condition Our results of operations are highly susceptible to unfavorable economic conditions. Economic downturns often severely affect the marketing services industry.
Our customary business, legal and financial due diligence with the goal of identifying and evaluating the material risks involved may be unsuccessful in ascertaining or evaluating all such risks.
These transactions can involve significant challenges and risks, including that the transaction does not advance our business strategy or fails to produce a satisfactory return on our investment. Our customary business, legal and financial due diligence with the goal of identifying and evaluating the material risks involved may be unsuccessful in ascertaining or evaluating all such risks.
We have a large and diverse client base, and at any given time, one or more of our clients may experience financial difficulty, file for bankruptcy protection or go out of business. Unfavorable economic and financial conditions, such as the events surrounding the COVID-19 global outbreak, could result in an increase in client financial difficulties that affect us.
If our clients experience financial distress, or seek to change or delay payment terms, it could negatively affect our own financial position and results. We have a large and diverse client base, and at any given time, one or more of our clients may experience financial difficulty, file for bankruptcy protection or go out of business.
Our management has determined that our disclosure controls and procedures and our internal controls over financial reporting are not effective as we have identified material weaknesses in our internal controls. As disclosed in Part II, Item 9A.
Our management concluded that our disclosure controls and procedures were not effective due to material weaknesses in our internal control over financial reporting.
In the past, including in connection with the outbreak of the COVID-19 pandemic, some clients have responded to weak economic and financial conditions by reducing their marketing budgets, which include discretionary components that are easier to reduce in the short term than other operating expenses. This pattern may recur in the future.
Some of our corporate clients may respond to weak economic performance by reducing their marketing budgets, which are generally discretionary in nature and easier to reduce in the short-term than other expenses related to operations.
The holder of Series C Convertible Preferred Stock is entitled to vote together as a single class on all matters upon which common stockholders are entitled to vote. Your voting rights will be diluted as a result of these super voting rights. On November 12, 2020, we entered into a stock restriction agreement with Mr.
As of December 31, 2023, the Series C Preferred Stock is entitled to 23,694,699 votes which is approximately 57% of our voting securities. The holder of Series C Convertible Preferred Stock is entitled to vote together as a single class on all matters upon which common shareholders are entitled to vote.
The direct impact on us included reduced revenues, write-offs of accounts receivable and expenditures billable to clients, and negatively impacted our operating cash flow. Risks Related to Acquisitions We are subject to risks associated with acquisitions and we may not realize the anticipated benefits of such acquisitions.
Unfavorable economic and financial conditions, could result in an increase in client financial difficulties that affect us. The direct impact on us may include reduced revenues, write-offs of accounts receivable and expenditures billable to clients, and may negatively impact our operating cash flow.
A significant labor dispute in our clients’ industries could have a material adverse effect on our business.
Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, financial condition and operating results.
We regularly undertake acquisitions that we believe will enhance our service offering to our clients. These transactions can involve significant challenges and risks, including that the transaction does not advance our business strategy or fails to produce a satisfactory return on our investment.
Risks Related to Acquisitions We are subject to risks associated with acquisitions and we may not realize the anticipated benefits of such acquisitions. We regularly undertake acquisitions that we believe will enhance our service offering to our clients.
Such reduced demand for our services could have a material adverse effect on our revenues and results of operations. 11 If our clients experience financial distress, or seek to change or delay payment terms, it could negatively affect our own financial position and results.
In addition, economic downturns could lead to reduced public demand for varying forms of entertainment for which we are engaged to provide public relations and media strategy and promotional services. Such reduced demand for our services could have a material adverse effect on our revenues and results of operations.
Removed
Following the severe downturn in most markets following the outbreak of the COVID-19 pandemic, the global economy continues to be challenging.
Added
We will require additional financing, and we may not be able to raise funds on favorable terms or at all. We had negative working capital of $6.7 million as of December 31, 2023.
Removed
Economic downturns or uncertainty about the strength of the global economy in general, or economic conditions in certain regions or market sectors, and caution on the part of marketers, can have an effect on the demand for advertising and marketing communication services.
Added
For example, the Writers Guild of America (“WGA”) went on strike between May 2 and September 27 , 2023 and the Screen Actors Guild-American Federation of Television and Radio Artists (“SAG-AFTRA”) went on strike between July 14 and November 9 , 2023.
Removed
In addition, market conditions can be and have been adversely affected by natural and human disruptions, such as natural disasters, public health crises, severe weather events, military conflict or civil unrest. Our industry can be affected more severely than other sectors by an economic downturn and can recover more slowly than the economy in general.
Added
The combination of both WGA and SAG-AFTRA being on strike and the duration of each of the strikes adversely affected the revenues of 42West during the year ended December 31, 2023. Clients may terminate or reduce their relationships with us on short notice.
Removed
Furthermore, unexpected revenue shortfalls can result in misalignments of costs and revenues, resulting in a negative impact to our operating margins. If our business is significantly adversely affected by unfavorable economic conditions or other market disruptions that adversely affect client spending, the negative impact on our revenue could pose a challenge to our operating income and cash generation from operations.
Added
The Series C Convertible Preferred Stock is held by Dolphin Entertainment LLC, an entity owned by Mr. O’Dowd. As of December 31, 2023, Series C Preferred Stock is convertible into 4,738,940 shares of our common stock. A stock restriction agreement entered into with Mr.
Removed
We had negative working capital of $1,423,825 as of December 31, 2022.
Added
On September 27, 2022, the Company’s shareholders approved an amendment to the terms of the Series C Convertible Preferred Stock included in our Articles of Incorporation to increase the number of votes per share of common stock the Series C is convertible into from three votes per share to five votes per share.
Removed
Furthermore, we may incur debt in the future, and may not have sufficient funds to repay our future indebtedness or may default on our future debts, jeopardizing our business viability. The profitability of our investments is uncertain.
Added
The sale or issuance of our common stock to Lincoln Park may cause dilution and the sale of the shares of common stock acquired by Lincoln Park, or the perception that such sales may occur, could cause the price of our common stock to fall.
Removed
During 2021, we acquired an ownership stake in Midnight Theatre, a contemporary variety theater and restaurant in Manhattan and in Crafthouse Cocktails, a brand of ready-to-drink, all-natural classic cocktails. During the year ended December 31, 2022, we incurred losses related to our investment in Midnight Theatre and Crafthouse Cocktails in the amount of $246,789.
Removed
We also started an NFT studio to produce and market NFTs. On October 2, 2022, the Company minted and offered for sale a collection of 7,777 NFTs, titled Creature Chronicles: Exiled Aliens . The collection generated approximately 13,175 Solana (“SOL”) equivalent to approximately $429,000 on the date of the sale.
Removed
Investments in these new ventures entail risks those businesses will fail to perform in accordance with expectations. In undertaking these investments, we will incur certain risks, including the expenditure of funds on, and the devotion of management’s time to, synergies that may not come to fruition.
Removed
Additional risks inherent in these investments include risks that the ventures will not achieve anticipated success and that estimates of the costs of bringing these ventures to profitability may prove inaccurate. Expenses may also be greater than anticipated.
Removed
Consequently, these clients may choose to reduce or terminate their relationships with us, on a relatively short time frame and for any reason.
Removed
The Series C Convertible Preferred Stock is held by Dolphin Entertainment LLC, an entity owned by Mr. O’Dowd. Except as required by law, holders of Series C Convertible Preferred Stock will only have voting rights once the independent directors of the Board determine that an optional conversion threshold (as defined in the Series C Certificate of Designation) has occurred.
Removed
On November 12, 2020, such determination by the Board was made, and the holder of Series C Convertible Preferred Stock (indirectly Mr. O’Dowd) is entitled to super voting rights of three votes for each share of common stock into which such holder’s shares of Series C Convertible Preferred Stock could then be converted.
Removed
As of December 31, 2022 and 2021, the Series C Preferred Stock could be converted into 4,738,940 shares of our common stock and the holder was entitled to 14,216,819 votes, which is approximately 55% of our voting securities.
Removed
During 2022, we received deficiency notices from Nasdaq informing us that because we had not filed our Form 10-K for the year ended December 31, 2021 and our Form 10-Q for the quarter ended March 31, 2022, we were no longer compliant with Nasdaq Listing Rule 5250(c)(1), which requires listed companies to timely file all required periodic financial reports with the Securities and Exchange Committee.
Removed
On July 19, 2022, after filing both the Form 10-K for the year ended December 31, 2021 and the Form 10-Q for the quarter ended March 31, 2022, Nasdaq notified us that we were in compliance with the Nasdaq listing requirements.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFor our entertainment publicity and marketing business, we lease three office spaces in New York City, New York and one office space in Los Angeles, California. We believe that our properties are sufficient to meet our current and projected business needs.
Biggest changeFor our entertainment publicity and marketing business, we lease one office space in each of Manhattan, New York, Brooklyn, New York and Los Angeles, California. We believe that our properties are sufficient to meet our current and projected business needs.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+0 added−0 removed1 unchanged
Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders of our Common Stock Our common stock trades on The Nasdaq Capital Market under the symbol “DLPN.” As of March 23, 2023, there were approximately 302 shareholders of record, of our issued and outstanding shares of common stock based on information provided by our transfer agent.
Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders of our Common Stock Our common stock trades on The Nasdaq Capital Market under the symbol “DLPN.” As of March 25, 2024, there were approximately 305 shareholders of record, of our issued and outstanding shares of common stock based on information provided by our transfer agent.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

95 edited+69 added−45 removed44 unchanged
Biggest changeFinancing Activities Net cash provided by financing activities was $10.9 million for the year ended December 31, 2022, an increase of $7.0 million from net cash provided by financing activities of $3.9 million for the year ended December 31, 2021. 22 Net cash provided by financing activities for the year ended December 31, 2022 mainly related to: Inflows: · $5.8 million of proceeds from the Lincoln Park equity line of credit described below; · $3.1 million proceeds from convertible and non-convertible notes payable and · $2.9 million proceeds from the term loan related to the Socialyte acquisition; Outflows: · $0.3 of repayment of notes payable; and · $0.6 payment of B/HI contingent consideration; Net cash provided by financing activities for the year ended December 31, 2021 mainly related to: Inflows: · $6.0 million of proceeds from convertible notes payable Outflows: · $1.0 million from the exercise of put rights; · $0.9 million of repayment of the term loan; and · $0.1 million of repayment of notes payable.
Biggest changeNet cash provided by financing activities for the year ended December 31, 2022 mainly related to: Inflows: · $5.8 million of proceeds from the Lincoln Park equity facility; · $3.1 million proceeds from convertible and non-convertible notes payable and · $2.9 million proceeds from the BankProv term loan.
Fair values of net assets acquired are calculated using expected cash flows and industry-standard valuation techniques. Fair values of earn-out liabilities are estimated using income approaches such as discounted cash flows or option pricing models. Due to the time required to gather and analyze the necessary data for each acquisition, U.S.
Fair values of net assets acquired are calculated using expected cash flows and industry-standard valuation techniques. Fair values of earn-out liabilities are estimated using income approaches such as discounted cash flows or option pricing models. 28 Due to the time required to gather and analyze the necessary data for each acquisition, U.S.
We expect our current cash position, cash expected to be generated from our operations and other availability of funds, as detailed below, to be sufficient to meet our debt requirements. 2022 Lincoln Park Transaction On August 10, 2022, the Company entered into a new purchase agreement (the “LP 2022 Purchase Agreement”) and a registration rights agreement (the “LP 2022 Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which the Company could sell and issue to Lincoln Park, and Lincoln Park was obligated to purchase, up to $25,000,000 in value of its shares of common stock from time to time over a 36-month period.
We expect our current cash position, cash expected to be generated from our operations and other availability of funds, as detailed below, to be sufficient to meet our debt requirements. 23 2022 Lincoln Park Transaction On August 10, 2022, the Company entered into a purchase agreement (the “LP 2022 Purchase Agreement”) and a registration rights agreement (the “LP 2022 Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which the Company could sell and issue to Lincoln Park, and Lincoln Park was obligated to purchase, up to $25,000,000 in value of its shares of common stock from time to time over a 36-month period.
Dolphin’s legacy content production business, founded by Emmy-nominated Chief Executive Officer, Bill O’Dowd, has produced multiple feature films and award-winning digital series, primarily aimed at family and young adult markets. 15 We have established an acquisition strategy based on identifying and acquiring companies that complement our existing entertainment publicity and marketing services and content production businesses.
Dolphin’s legacy content production business, founded by our Emmy-nominated Chief Executive Officer, Bill O’Dowd, has produced multiple feature films and award-winning digital series, primarily aimed at family and young adult markets. 14 We have established an acquisition strategy based on identifying and acquiring companies that complement our existing entertainment publicity and marketing services and content production businesses.
Impairment would then be measured as the excess of the asset’s carrying value over its fair value. See Note 6 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further discussion.
Impairment would then be measured as the excess of the asset’s carrying value over its fair value. See Note 5 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further discussion.
In June 2022, we entered into an agreement with IMAX Corporation (“IMAX”) to co-produce and co-finance a documentary motion picture on the flight demonstration squadron of the United States Navy called the Blue Angels. IMAX and Dolphin have each agreed to fund 50% of the production budget which is estimated at approximately $4 million.
In June 2022, we entered into an agreement with IMAX Corporation (“IMAX”) to co-produce and co-finance a documentary motion picture on the flight demonstration squadron of the United States Navy called the Blue Angels. IMAX and Dolphin each agreed to fund 50% of the production budget which was estimated at approximately $4 million.
We believe it is more likely than not that the deferred tax asset will not be realized and we have accordingly recorded a full valuation allowance as of both December 31, 2022 and 2021.
We believe it is more likely than not that the deferred tax asset will not be realized and we have accordingly recorded a full valuation allowance as of both December 31, 2023 and 2022.
The income tax expense for years ended December 31, 2022 reflect the accrual of a valuation allowance in connection with the limitations of our indefinite lived tax assets to offset our indefinite lived tax liabilities.
The income tax expense for years ended December 31, 2023 and 2022 reflect the accrual of a valuation allowance in connection with the limitations of our indefinite lived tax assets to offset our indefinite lived tax liabilities.
Investing Activities Net cash used in investing activities for the year ended December 31, 2022 was $7.9 million, which related primarily to: Outflows: · $3.1 million of issuance of notes receivable; · $4.7 million payment related to the acquisition of Socialyte, net of cash acquired; and · $72,200 purchases of fixed assets.
Net cash used in investing activities for the year ended December 31, 2022 was $7.9 million, which related primarily to: Outflows: · $3.1 million of issuance of notes receivable; · $4.7 million payment related to the acquisition of Socialyte, net of cash acquired; and · $0.1 million purchases of fixed assets.
The Company evaluated the contract that includes the right to require Lincoln Park to purchase shares of common stock in the future (“put right”) considering the guidance in ASC 815-40, “Derivatives and Hedging — Contracts on an Entity’s Own Equity” (“ASC 815-40”) and concluded that it is an equity-linked contract that does not qualify for equity classification, and therefore requires fair value accounting.
The Company evaluated the contract that includes the right to require Lincoln Park to purchase shares of common stock in the future (“put right”) considering the guidance in ASC 815-40, “ Derivatives and Hedging — Contracts on an Entity’s Own Equity ” (“ASC 815-40”) and concluded that it is an equity-linked contract that does not qualify for equity classification, and therefore requires fair value accounting.
See “Special Note Regarding Forward-Looking Statements” for additional factors relating to such statements and see “Risk Factors” included in Item 1A of this Annual Report on Form 10-K. Our past operating results are not necessarily indicative of operating results in any future periods. Overview We are a leading independent entertainment marketing and premium content development company.
See “Special Note Regarding Forward-Looking Statements” for additional factors relating to such statements and see “Risk Factors” included in Item 1A of this Annual Report on Form 10-K. Our past operating results are not necessarily indicative of operating results in any future periods. Overview We are a leading independent entertainment marketing and production company.
At a meeting held on September 27, 2022, our stockholders approved the issuance of up to $25 million of shares of our common stock pursuant to the LP 2022 Purchase Agreement.
At a meeting held on September 27, 2022, our shareholders approved the issuance of up to $25 million of shares of our common stock pursuant to the LP 2022 Purchase Agreement.
The Company has analyzed the terms of the freestanding put right and has concluded that it has an insignificant value as of December 31, 2022. 2021 Lincoln Park Transaction On December 29, 2021, we entered into a purchase agreement (the “LP 2021 Purchase Agreement”) and a registration rights agreement (the “LP 2021 Registration Rights Agreement”) with Lincoln Park.
The Company has analyzed the terms of the freestanding put right and has concluded that it has insignificant value as of December 31, 2023. 2021 Lincoln Park Transaction On December 29, 2021, we entered into a purchase agreement (the “LP 2021 Purchase Agreement”) and a registration rights agreement (the “LP 2021 Registration Rights Agreement”) with Lincoln Park.
We earn revenues primarily from the following sources: (i) celebrity talent services; (ii) content marketing services under multiyear master service agreements in exchange for fixed project-based fees; (iii) individual engagements for entertainment content marketing services for durations of generally between three and six months; (iv) strategic communications services; (v) engagements for marketing of special events such as food and wine festivals; (vi) engagement for marketing of brands; (vii) arranging strategic marketing agreements between brands and social media influencers and (viii) content production of marketing materials on a project contract basis.
We earn revenues primarily from the following sources: (i) celebrity talent services; (ii) content marketing services under multiyear master service agreements in exchange for fixed project-based fees; (iii) individual engagements for entertainment content marketing services for durations of generally between three and six months; (iv) strategic communications services; (v) engagements for marketing of special events such as food and wine festivals; (vi) engagement for marketing of brands; (vii) arranging strategic marketing agreements between brands and social media influencers or celebrities, (viii) curating and booking celebrities for live events; and (ix) content production of marketing materials on a project contract basis.
The convertible promissory note at fair value matures on March 4, 2030 and as of December 31, 2022, we had a balance of $0.3 million in noncurrent liabilities related to this convertible promissory note measured at fair value.
The convertible promissory note at fair value matures on March 4, 2030 and as of December 31, 2023, we had a balance of $0.4 million in noncurrent liabilities related to this convertible promissory note measured at fair value.
Similar to the Convertible notes discussed above, our historical experience has been that these convertible notes are converted into shares of the Company’s common stock prior to their maturity date and not settled through payment of cash.
Similar to the Convertible notes discussed above, our historical experience has been that these convertible notes payable at fair value are converted into shares of the Company’s common stock prior to their maturity date and not settled through payment of cash.
The balance of each convertible promissory note and any accrued interest may be converted at the noteholder’s option at any time at a conversion price based on a 90-day average closing market price per share of the common stock.
The balance of each convertible note payable and any accrued interest may be converted at the noteholder’s option at any time at a purchase price based on a 90-day average closing market price per share of the common stock.
Additionally, we have state net operating loss carryforwards amounting to $52.9 million that begin to expire in 2029. A portion of the carryforwards may expire before being applied to reduce future income tax liabilities.
Additionally, we have state net operating loss carryforwards amounting to $57.8 million that begin to expire in 2029. A portion of the carryforwards may expire before being applied to reduce future income tax liabilities.
Under applicable rules of the NASDAQ Capital Market, we could not issue or sell more than 19.99% of the shares of our common stock outstanding immediately prior to the execution of the LP 2022 Purchase Agreement to Lincoln Park under the LP 2022 Purchase Agreement without stockholder approval.
Under applicable rules of the NASDAQ Capital Market, the Company could not issue or sell more than 19.99% of the shares of Common Stock outstanding immediately prior to the execution of the LP 2022 Purchase Agreement to Lincoln Park under the LP 2022 Purchase Agreement without shareholder approval.
During the year ended December 31, 2022, we amortized $1.5 million that was recorded in our consolidated statement of operations related to our intangible assets.
During the year ended December 31, 2023, we amortized $2.1 million that was recorded in our consolidated statement of operations related to our intangible assets.
For the goodwill value assigned to Viewpoint, we concluded the fair value of that reporting unit’s goodwill was below its carrying amount. As a result, an impairment charge of $0.9 million was recorded during the year ended December 31, 2022. No impairment charges were recorded during the year ended December 31, 2021.
For the goodwill value assigned to that reporting unit, we concluded the fair value of that reporting unit’s goodwill was below its carrying amount. As a result, an impairment charge of $0.9 million was recorded during the year ended December 31, 2022.
Further details on each item are discussed below. See Note 17 – Fair Value Measurements in the notes to the audited consolidated financial statements, included elsewhere in this Annual Report on Form 10-K, for information pertaining to acquisition-related fair value adjustments. Goodwill Goodwill results from business combination acquisitions.
Further details on each item are discussed below. See Note 16 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K , for information pertaining to acquisition-related fair value adjustments. Goodwill Goodwill results from business combination acquisitions.
The decrease in direct costs is mainly driven by an increase of $0.5 million related to NFT production and marketing costs for the year ended December 31, 2022, that were not present in the same period in 2021, offset by approximately $1.0 million decrease in direct costs primarily attributable to a decrease in Viewpoint’s revenue as compared to the year ended December 31, 2021.
The decrease in direct costs is mainly driven by $0.9 million in direct costs related to NFT production and marketing costs for the year ended December 31, 2022, that were not present in the same period in 2023, as well as a $1.5 million decrease in direct costs primarily attributable to a decrease in Viewpoint’s revenue as compared to the year ended December 31, 2022.
If a triggering event has occurred, an impairment analysis is required. The impairment test first requires a comparison of undiscounted future cash flows expected to be generated over the useful life of an asset to the carrying value of the asset. If the carrying value of the asset exceeds the undiscounted cash flows, the asset would not be deemed recoverable.
The impairment test first requires a comparison of undiscounted future cash flows expected to be generated over the useful life of an asset to the carrying value of the asset. If the carrying value of the asset exceeds the undiscounted cash flows, the asset would not be deemed recoverable.
We completed the Socialyte acquisition during 2022 and intend to complete at least one acquisition during 2023, but there is no assurance that we will be successful in doing so, whether in 2023 or at all.
We completed the Special Projects acquisition during 2023 (discussed below), and intend to complete at least one acquisition during 2024, but there is no assurance that we will be successful in doing so, whether in 2024 or at all.
Net Loss Net loss was approximately $4.8 million or $0.49 per share based on 9,799,021 weighted average shares outstanding for basic loss per share and $0.56 per share based on 9,926,926 weighted average shares outstanding on a fully diluted basis for the year ended December 31, 2022.
Net loss was approximately $4.8 million or $0.49 per share based on 9,799,021 weighted average shares outstanding for basic loss per share and $0.56 per share based on 9,926,926 weighted average shares outstanding on a fully diluted basis for the year ended December 31, 2022 Net loss for the years ended December 31, 2023 and 2022, respectively, were related to the factors discussed above.
Nonconvertible Promissory Notes As of December 30, 2022, we have outstanding unsecured nonconvertible promissory notes in the aggregate amount of $1.4 million which bear interest at a rate of 10% per annum and mature between June 2023 and November 2024.
Nonconvertible Promissory Notes As of December 30, 2023, we have outstanding unsecured nonconvertible promissory notes in the aggregate amount of $3.9 million which bear interest at a rate of 10% per annum and mature between November 2024 and March 2029.
See Note 5 – Acquisitions in the notes to the audited consolidated financial statements, included elsewhere in this Annual Report on Form 10-K, for information pertaining to acquisition-related fair value adjustments.
See Note 4 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K , for information pertaining to acquisition-related fair value adjustments.
Warrants issued with convertible notes payable issued in 2020, were initially measured at fair value at the time of issuance and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date, with changes in estimated fair value of each respective warrant liability recognized as other income or expense.
None of the decrease in the value of the convertible notes was attributable to instrument specific credit risk. 20 Change in fair value of warrants – Warrants issued with the convertible note payable issued in 2020, were initially measured at fair value at the time of issuance and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date, with changes in estimated fair value of each respective warrant liability recognized as other income or expense.
Selling, general and administrative expenses increased by approximately $0.7 million for the year ended December 31, 2022, as compared to the year ended December 31, 2021.
Selling, general and administrative expenses increased by approximately $1.9 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
The key indicators of the financial condition and operating performance of our business are revenues, direct costs, payroll and benefits, selling, general and administrative expenses, legal and professional expenses, other income/expense and net income.
How We Assess the Performance of Our Business In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators of the financial condition and operating performance of our business are revenues, direct costs, payroll and benefits, selling, general and administrative expenses, legal and professional expenses, other income/expense and net income.
We believe that complementary businesses, such as live event production, can create synergistic opportunities and bolster profits and cash flow. We have identified potential acquisition targets and are in various stages of discussion with such targets.
We believe that complementary businesses, such as public relations companies in new and distinct entertainment verticals, can create synergistic opportunities and bolster profits and cash flow. We have identified potential acquisition targets and are in various stages of discussion with such targets.
Pursuant to the terms of the LP 2021 Purchase Agreement, at the time we signed the LP 2021 Purchase Agreement and the LP 2021 Registration Rights Agreement, we issued 51,827 shares of common stock to Lincoln Park as consideration for its commitment (“commitment shares”) to purchase shares of our common stock under the LP 2021 Purchase Agreement.
Pursuant to the terms of the LP 2022 Purchase Agreement, at the time the Company signed the LP 2022 Purchase Agreement and the LP 2022 Registration Rights Agreement, the Company issued 57,313 shares of common stock to Lincoln Park as consideration for its commitment (“LP 2022 commitment shares”) to purchase shares of our common stock under the LP 2022 Purchase Agreement.
Three of the convertible notes may not be converted at a price less than $2.50 per share and four of the convertible notes may not be converted at a price less than $2.00 per share.
For the remaining convertible notes, three may not be converted at a price less than $2.50 per share and four of the convertible notes payable may not be converted at a price less than $2.00 per share, which were their original terms.
Subsequent to December 31, 2022, the Company sold 250,000 shares of common stock at prices ranging between $1.88 and $2.27 pursuant to the LP 2022 Purchase Agreement and received proceeds of $529,450.
Subsequent to December 31, 2023, the Company sold 350,000 shares of common stock at prices ranging between $1.27 and $1.53 pursuant to the LP 2022 Purchase Agreement and received proceeds of $495,200.
We have also established an investment strategy, “Dolphin 2.0,” based upon identifying opportunities to develop internally owned assets, or acquire ownership stakes in others’ assets, in the categories of entertainment content, live events and consumer products. We believe these categories represent the types of assets wherein our expertise and relationships in entertainment marketing most influences the likelihood of success.
We have also established an investment strategy, “Ventures” or “Dolphin 2.0,” based upon identifying opportunities to develop internally owned assets, or acquire ownership stakes in others’ assets, in the categories of entertainment content, live events and consumer products.
We expect that our relationship with social media influencers will provide us the ability to offer these services to our existing clients in the entertainment and consumer products industries and will be accretive to our revenue.
We expect that our relationship with social media influencers will provide us the ability to offer these services to our existing clients in the entertainment and consumer products industries and will be accretive to our revenue. · Celebrity Booking and Live Event Programming – We arrange for brands and events to book celebrity and influencer talent.
Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, see Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
See Note 13 and Note 16 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K , for information pertaining to acquisition-related fair value adjustments. Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, see Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
As a result, an impairment charge of $0.9 million was recorded during the year ended December 31, 2022. No impairment charges were recorded during the year ended December 31, 2021.
As a result, an impairment charge of $0.9 million was recorded during the year ended December 31, 2022. Impairment of intangible assets was $0.3 million for the year ended December 31, 2023.
We account for goodwill in accordance with FASB ASC No. 350, Intangibles—Goodwill and Other (“ASC 350”). Goodwill is not amortized; however, it is assessed for impairment at least annually, or more frequently if triggering events occur. The Company’s annual assessment is performed in the fourth quarter.
Goodwill is not amortized; however, it is assessed for impairment at least annually, or more frequently if triggering events occur. The Company’s annual assessment is performed in the fourth quarter.
During the year ended December 31, 2022, the fair value of the 2020 warrants that were not exercised decreased by approximately $0.1 million; therefore, we recorded a gain in the change in the fair value of the warrants for the year ended December 31, 2022 for those amounts, on our consolidated statements of operations.
During the year ended December 31, 2023 and 2022, the fair value of the warrants decreased by $10.0 thousand and $0.1 million, respectively; therefore, we recorded gains in the change in the fair value of the warrants for the year ended December 31, 2023 and 2022 for those amounts, on our consolidated statements of operations.
Through our subsidiaries 42West, Shore Fire 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. 42West, Shore Fire and The Door are each recognized global leaders in PR services for the respective industries they serve.
Our common stock trades on The Nasdaq Capital Market under the symbol “DLPN.” Through our subsidiaries 42West, Shore Fire 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. 42West (Film and Television, Gaming), Shore Fire (Music), and The Door (Culinary, Hospitality, Lifestyle) are each recognized global PR and marketing leaders for the industries they serve.
We earn entertainment publicity and marketing revenues primarily through the following: · Talent – We earn fees from creating and implementing strategic communication campaigns for performers and entertainers, including Oscar, Tony and Emmy winning film, theater and television stars, directors, producers, celebrity chefs and Grammy winning recording artists.
For these revenue streams, we collect fees through either fixed fee monthly retainer agreements, fees based on a percentage of contracts or project-based fees. 15 We earn entertainment publicity and marketing revenues primarily through the following: · Talent – We earn fees from creating and implementing strategic communication campaigns for performers and entertainers, including Oscar, Tony and Emmy winning film, theater and television stars, directors, producers, celebrity chefs and Grammy winning recording artists.
The intangible assets consist primarily of customer relationships, trade names and non-compete agreements. 26 Intangible assets are initially recorded at fair value and are amortized using the straight-line method over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
Intangible assets are initially recorded at fair value and are amortized using the straight-line method over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If a triggering event has occurred, an impairment analysis is required.
During the year ended December 31, 2022, the holder of one convertible note issued during 2021 converted the principal balance of $0.5 million into 125,604 shares of common stock at a conversion price of $3.98 per share.
During the year ended December 31, 2023, the Company paid $50,000 to a noteholder as partial repayment for the convertible promissory note. During the year ended December 31, 2022, the holder of one convertible promissory note issued during 2021 converted the principal balance of $500,000 into 125,604 shares of common stock at a conversion price of $3.98 per share.
Other Income and Expenses For the years ended December 31, 2022 and 2021, other income and expenses consisted primarily of: (1) gain on extinguishment of debt; (2) changes in the fair values of (i) put rights, (ii) warrants, and (iii) convertible notes; (3) acquisition costs; and (4) interest expense.
Other Income and Expenses For the years ended December 31, 2023 and 2022, other income and expenses consisted primarily of: (1) changes in the fair values of convertible notes and warrants; (2) interest income; and (3) interest expense.
RESULTS OF OPERATIONS Year ended December 31, 2022 as compared to year ended December 31, 2021 Revenues For the years ended December 31, 2022 and 2021, our revenues were as follows: December 31, 2022 2021 Revenues: Entertainment publicity and marketing $ 40,058,880 $ 35,705,305 Content production 446,678 21,894 Total revenue $ 40,505,558 $ 35,727,199 18 Revenues from entertainment publicity and marketing increased by approximately $4.4 million, or 12%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
RESULTS OF OPERATIONS Year ended December 31, 2023 as compared to year ended December 31, 2022 Revenues For the years ended December 31, 2023 and 2022, our revenues were as follows: December 31, 2023 2022 Revenues: Entertainment publicity and marketing $ 43,067,557 $ 40,058,880 Content production 55,518 446,678 Total revenue $ 43,123,075 $ 40,505,558 Revenues from entertainment publicity and marketing increased by approximately $3.0 million, or 8.0%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
As of December 31, 2022, we have approximately $49.1 million of pre-tax net operating loss carryforwards for U.S. federal income tax purposes that begin to expire in 2028; federal net operating losses generated after December 31, 2017 have an indefinite life and do not expire.
To the extent the tax assets are unable to offset the tax liabilities, we have recorded a deferred expense for the tax liability (a “naked credit”). 21 As of December 31, 2023, we have approximately $54.0 million of pre-tax net operating loss carryforwards for U.S. federal income tax purposes that begin to expire in 2028; federal net operating losses generated after December 31, 2017 have an indefinite life and do not expire.
LIQUIDITY AND CAPITAL RESOURCES Cash Flows Year Ended December 31, 2022 2021 Statement of Cash Flows Data: Net cash used in operating activities $ (4,027,227 ) $ (1,318,717 ) Net cash used in investing activities (7,919,355 ) (3,025,856 ) Net cash provided by financing activities 10,913,806 3,937,823 Net decrease in cash and cash equivalents and restricted cash (1,032,776 ) (406,750 ) Cash and cash equivalents and restricted cash, beginning of period 8,230,626 8,637,376 Cash and cash equivalents and restricted cash, end of period $ 7,197,849 $ 8,230,626 21 Operating Activities Net cash used in operating activities was $4.0 million for the year ended December 31, 2022, an increase of $2.7 million from cash used in operating activities of $1.3 million for the year ended December 31, 2021.
LIQUIDITY AND CAPITAL RESOURCES Cash Flows Year Ended December 31, 2023 2022 Statement of Cash Flows Data: Net cash used in operating activities $ (4,617,167 ) $ (4,027,228 ) Net cash used in investing activities (4,537,174 ) (7,919,355 ) Net cash provided by financing activities 9,517,183 10,913,806 Net decrease in cash and cash equivalents and restricted cash 362,842 (1,032,777 ) Cash and cash equivalents and restricted cash, beginning of period 7,197,849 8,230,626 Cash and cash equivalents and restricted cash, end of period $ 7,560,691 $ 7,197,849 Operating Activities Net cash used in operating activities was $4.6 million for the year ended December 31, 2023, an increase of $0.6 million from cash used in operating activities of $4.0 million for the year ended December 31, 2022.
The entertainment publicity and marketing segment is composed of 42West, The Door, Shore Fire, Viewpoint, Be Social, B/HI and Socialyte and provides clients with diversified services, including public relations, entertainment content marketing, strategic communications, social media marketing, creative branding, and the production of promotional video content. The content production segment is composed of Dolphin Films, Inc.
The entertainment publicity and marketing segment is composed of 42West, The Door, Shore Fire, Viewpoint, The Digital Dept. and Special Projects, and provides clients with diversified services, including public relations, entertainment content marketing, strategic communications, influencer marketing, celebrity booking and live event production, creative branding, and the production of promotional video content.
For the year ended December 31, 2022 we recorded a change in the fair value of the convertible notes issued in 2020 in the amount of a gain of $0.7 million.
For the years ended December 31, 2023 and 2022, we recorded changes in the fair value of the convertible note issued in 2020 in the amount of a loss of $11.4 thousand and a gain of $0.7 million, respectively.
The note bears interest at a rate of 10% per annum and matures on March 31, 2028. Nonconvertible Promissory Notes – Socialyte As discussed in Note 5 and Note 15 to our consolidated financial statements, as part of the acquisition of Socialyte, we entered into an unsecured promissory note amounting to $3.0 million (“Socialyte Promissory Note”).
The nonconvertible promissory note bears interest at 10% and matures on January 16, 2029. 25 Nonconvertible Promissory Notes – Socialyte As discussed in Note 4 and Note 14 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K , as part of the acquisition of Socialyte, we entered into an unsecured promissory note amounting to $3.0 million (“Socialyte Promissory Note”).
During the year ended December 31, 2022, excluding the additional commitment shares disclosed above, the Company sold 548,000 shares of common stock at prices ranging between $1.92 and $3.72 pursuant to the LP 2022 Purchase Agreement and received proceeds of $1,436,259.
During the year ended December 31, 2023, the Company sold 1,150,000 shares of common stock at prices ranging between $1.65 and $2.27 pursuant to the LP 2022 Purchase Agreement and received proceeds of $2.2 million.
The LP 2021 Purchase Agreement was terminated effective August 12, 2022 and the Company did not sell any shares pursuant to this agreement subsequent to that date. During the year ended December 31, 2021, excluding the commitment shares mentioned above, the Company did not sell any shares of common stock under the LP 2021 Purchase Agreement.
The LP 2021 Purchase Agreement was terminated effective August 12, 2022 in connection with the LP 2022 Purchase Agreement and the Company did not sell any shares pursuant to this agreement subsequent to that date.
The Company recorded a $76,100 gain and $1.2 million loss for the year ended December 31, 2022 and 2021, respectively. · Be Social : The Company recorded a $28,200 and $0.6 million loss for the year ended December 31, 2022 and 2021, respectively.
The Company recorded a $76.1 thousand gain for the year ended December 31, 2022. · Be Social : The Company recorded losses of $33.2 thousand and $28.2 thousand for the years ended December 31, 2023 and 2022, respectively.
For the year ended December 31, 2022, the content production segment revenue was derived was from the sale of the our NFT collection and from the domestic distribution of Believe , a feature film that was released in 2013, as we have not distributed any other projects.
For the years ended December 31, 2023 and 2022, our content production segment derived revenues from the domestic distribution of Believe , a feature film that was released in 2013. In addition, during the year ended December 31, 2022, the content production segment recognized revenue from the minting and sale of an NFT collection titled Creature Chronicles: Exiled Aliens.
No equity gains or losses have been recorded for the year ended December 31, 2021. Income Tax Benefit We had an income tax expense of $0.2 million for the year ended December 31, 2022, compared to an expense of $37.4 thousand for year ended December 31, 2021.
Income Tax Benefit We had an income tax expense of $0.05 million for the year ended December 31, 2023, compared to an expense of $0.2 million for the year ended December 31, 2022.
We have not yet determined if these projects would be produced for digital, television or theatrical distribution. 17 We have completed development of several feature films, which means that we have completed the script and can begin pre-production once financing is obtained.
We have completed development of several feature films, which means that we have completed the script and can begin pre-production once financing is obtained.
If the fair value of the reporting unit exceeds its carrying amount, there is no impairment. If not, we recognize an impairment equal to the difference between the carrying amount of the reporting unit and its fair value, not to exceed the carrying amount of goodwill.
If the fair value of the reporting unit exceeds its carrying amount, there is no impairment.
Additionally, for the year ended December 31, 2021, we derived revenues from the content production segment from the domestic distribution of our feature film Believe. We expect to generate income in our content production segment in the second half of 2023 with the release of “The Blue Angels” documentary motion picture, discussed in the “Project Development and Related Services”.
We expect to generate income from our content production segment during 2024 with the release of “The Blue Angels” documentary motion picture, discussed in the “Project Development and Related Services” above.
Payroll and benefits expenses increased by approximately $5.0 million for the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily due to additional headcount in 2022 to support the growth of our business, salary increases to our employees, stock compensation issued to our employees under the 2017 Plan in the amount of approximately $0.2 million and inclusion of Socialyte payroll for the period between November 14, 2022 and December 31, 2022 in the amount of approximately $0.6 million, which were not present in the year ended December 31, 2021.
Payroll and benefits expenses increased by approximately $6.1 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily related to an increase of $4.1 million for a full year of Socialyte payroll in 2023 compared to only 1.5 months in 2022, $0.5 million of Special Projects payroll for the period between October 2, 2023 and December 31, 2023, and an increase of $1.7 million payroll due to additional headcount and salary increases to our employees in 2023, offset by $0.2 million of stock compensation issued to our employees in 2022.
These increases were partially offset by: · $0.2 million reduction in rent expense primarily due to subleasing several of our offices and leases that expired. Acquisition costs for the year ended December 31, 2022 were $0.5 million, primarily related to our acquisition of the membership interest of Socialyte LLC on November 14, 2022.
These increases were partially offset by: · $0.1 million impairment of an ROU asset in 2022; and · $0.1 million of rent expense due to an office lease that expired. Acquisition costs for the year ended December 31, 2023 were $0.1 million, related to our acquisition of Special Projects on October 2, 2023.
The embedded conversion feature of a convertible note issued in 2019 met the criteria for a derivative. The fair value of these convertible notes and embedded conversion feature are remeasured at every balance sheet date and any changes are recorded on our consolidated statements of operations.
The fair value of the convertible note is re-measured at every balance sheet date and any changes are recorded on our consolidated statements of operations.
We are in various stages of internal development and outside conversations on a wide range of opportunities within Dolphin 2.0. We intend to enter into additional investments during 2023, but there is no assurance that we will be successful in doing so, whether in 2023 or at all.
We intend to enter into additional investments during 2024, but there is no assurance that we will be successful in doing so, whether in 2024 or at all.
(3) Selling, general and administrative expenses – includes all overhead costs except for payroll, depreciation and amortization and legal and professional fees that are reported as a separate expense item. (4) Acquisition costs include professional fees incurred as part of the acquisition of our subsidiaries.
Included within direct costs are immaterial impairments for any of our content production projects. (2) Payroll and benefits expenses – includes wages, stock-based compensation, payroll taxes and employee benefits. (3) Selling, general and administrative expenses – includes all overhead costs except for payroll, depreciation and amortization and legal and professional fees that are reported as a separate expense item.
It is our experience that convertible notes, including their accrued interest are converted into shares of the Company’s common stock and not settled through payment of cash. Although we are unable to predict the noteholder’s intentions, we do not expect any change from our past experience.
At the moment of conversion, accrued interest related to this note amounted to $5,278 and was paid in cash. It is our experience that convertible notes, including their accrued interest are converted into shares of the Company’s common stock and not settled through payment of cash.
The table below sets forth the percentage of total revenue derived from our two segments for the years ended December 31, 2022 and 2021: December 31, 2022 2021 Revenues: Entertainment publicity and marketing 98.9 % 99.9 % Content production 1.1 % 0.1 % Total revenue 100.0 % 100.0 % 16 Entertainment Publicity and Marketing (“EPM”) Our revenue is directly impacted by the retention and spending levels of existing clients and by our ability to win new clients.
The table below sets forth the percentage of total revenue derived from our segments for the years ended December 31, 2023 and 2022: December 31, 2023 2022 Revenues: Entertainment publicity and marketing 99.9 % 98.9 % Content production 0.1 % 1.1 % Total revenue 100 % 100 % 17 Expenses Our expenses consist primarily of: (1) Direct costs – includes certain costs of services, as well as certain production costs, related to our entertainment publicity and marketing business.
Legal and professional fees increased by approximately $0.9 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily to due primarily to: (1) entering into the 2022 Lincoln Park agreement and related filing of the Registration Statement on Form S-1 during the third quarter of 2022 and (2) legal, consulting and audit fees related to our restatement of the September 30, 2021 Form 10-Q, revisions of the Forms 10-Q for March 31, 2021 and June 30, 2021 included in our Form 10-K filed on May 26, 2022, and fees associated with our change of auditors.
Legal and professional fees decreased by approximately $0.4 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, due to legal, consulting and audit fees incurred during the first quarter of 2022 related to our restatement of the unaudited condensed consolidated financial statements as of, and for the three and nine month period ended September 30, 2021 included in our Form 10-Q for that period, and our revisions of the unaudited condensed consolidated financial statements as of and for the three month period ended March 31, 2021 and as of and for the three and six month period ended June 30, 2021, included in our Forms 10-Q for March 31, 2021 and June 30, 2021, respectively, all of which was disclosed in our consolidated financial statements included in our Form 10-K filed on May 26, 2022.
The fair value of the related contingent consideration is measured at every balance sheet date and any changes recorded on our consolidated statements of operations. (7) Legal and professional fees – includes fees paid to our attorneys, fees for investor relations consultants, audit and accounting fees and fees for general business consultants.
(9) Change in fair value of contingent consideration – includes changes in the fair value of the contingent earn-out payment obligations for the Company’s acquisitions. The fair value of the related contingent consideration is measured at every balance sheet date and any changes recorded on our consolidated statements of operations.
Expenses For the years ended December 31, 2022 and 2021, our operating expenses were as follows: December 31, 2022 2021 Expenses: Direct costs $ 3,566,336 $ 3,879,409 Payroll and benefits 28,947,730 23,819,327 Selling, general and administrative 6,572,020 5,836,235 Acquisition costs 480,939 22,907 Impairment of goodwill 906,337 — Change in fair value of contingent consideration (47,285 ) 3,754,221 Depreciation and amortization 1,751,211 1,905,354 Legal and professional 2,903,412 2,013,436 Total expenses $ 45,080,700 $ 41,230,889 Direct costs are mainly attributable to the EPM segment and decreased by approximately $0.3 million for the year ended December 31, 2022, as compared to the year ended December 31, 2021.
We expect to generate income in our content production segment in the summer of 2024 with the release of the Blue Angels documentary film. 18 Expenses For the years ended December 31, 2023 and 2022, our operating expenses were as follows: December 31, 2023 2022 Expenses: Direct costs $ 946,962 $ 3,566,336 Payroll and benefits 35,030,257 28,947,730 Selling, general and administrative 8,434,549 6,572,020 Acquisition costs 116,151 480,939 Impairment of goodwill 9,484,215 906,337 Impairment of intangible assets 341,417 — Write-off of notes receivable 4,108,080 — Change in fair value of contingent consideration 33,226 (47,285 ) Depreciation and amortization 2,253,619 1,751,211 Legal and professional 2,485,096 2,903,412 Total expenses $ 63,233,572 $ 45,080,700 Direct costs are mainly attributable to the EPM segment and decreased by approximately $2.6 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
(“Dolphin Films”) and Dolphin Digital Studios, which produce and distribute feature films and digital content. Revenues For the years ended December 31, 2022 and 2021, we derived substantially all of our revenues from our entertainment publicity and marketing segment.
Revenues For the years ended December 31, 2023 and 2022, we derived substantially all of our revenues from our entertainment publicity and marketing segment. The entertainment publicity and marketing segment includes revenues from Special Projects from the Special Projects Closing Date through December 31, 2023.
Net loss was approximately $6.5 million or $0.85 per share based on 7,614,774 weighted average shares outstanding on a basic and on a fully diluted basis for the year ended December 31, 2021. Net loss for the years ended December 31, 2022 and 2021, respectively, were related to the factors discussed above.
Net Loss Net loss was approximately $24.4 million or $1.69 per share based on 14,413,154 weighted average shares outstanding for basic loss per share and on a fully diluted basis for the year ended December 31, 2023.
As of December 31, 2022, in connection with its acquisitions of 42West, The Door, Viewpoint, Shore Fire, Be Social, B/HI and Socialyte we have a balance of $29.3 million of goodwill on our consolidated balance sheets which management has assigned to the entertainment publicity and marketing segment.
As of December 31, 2023, in connection with the acquisitions of our subsidiaries, we have a balance of $25.2 million of goodwill on our consolidated balance sheets which management has assigned to the entertainment publicity and marketing segment. We account for goodwill in accordance with ASC 350, “ Intangibles—Goodwill and Other” (“ASC 350”).
Equity in losses of unconsolidated affiliates Equity in earnings or losses of unconsolidated affiliates includes our share of income or losses from equity investees. For the year ended December 31, 2022, we recorded losses of $0.2 million, $0.1 million from each of our equity investments in Midnight Theater and Crafthouse Cocktails, respectively.
During the year ended December 31, 2023 and prior to the impairment, we recorded losses of $88.0 thousand from our equity investment in Crafthouse Cocktails, compared to losses of $0.1 million for the year ended December 31, 2022, respectively.
Intangible assets In connection with the acquisitions of 42West, The Door, Viewpoint, Shore Fire, Be Social, B/HI and Socialyte, the Company acquired in aggregate an estimated $18.7 million of intangible assets with finite useful lives initially estimated to range from 2 to 13 years.
Intangible assets In connection with the acquisitions of our subsidiaries, the Company acquired in aggregate an estimated $22.5 million of intangible assets with finite useful lives initially estimated to range from 2 to 13 years. The intangible assets consist primarily of customer relationships, trade names and non-compete agreements.
The purchase price for the accelerated and additional accelerated purchases shall be equal to the lesser of 96% of (i) the closing sale price on the accelerated purchase date, or (ii) such date’s volume weighted average price. 23 Pursuant to the terms of the LP 2022 Purchase Agreement, at the time the Company signed the LP 2022 Purchase Agreement and the LP 2022 Registration Rights Agreement, the Company issued 57,313 shares of common stock to Lincoln Park as consideration for its commitment (“LP 2022 commitment shares”) to purchase shares of our common stock under the LP 2022 Purchase Agreement.
The purchase price for the accelerated and additional accelerated purchases shall be equal to the lesser of 96% of (i) the closing sale price on the accelerated purchase date, or (ii) such date’s volume weighted average price.
During the fourth quarter of 2022, we bypassed the optional qualitative assessment and performed a quantitative assessment. We concluded that, except as it relates to Viewpoint, it is more likely than not that the fair value of the reporting unit was not less than its carrying amount.
During the fourth quarter of 2022, we bypassed the optional qualitative assessment and performed a quantitative assessment that determined that the fair value was greater than the carrying value with the exception of one of its reporting units in the entertainment publicity and marketing segment.
Content Production (“CPD”) Project Development and Related Services We have a team that dedicates a portion of its time to identifying scripts, story treatments and novels for acquisition, development and production. The scripts can be for either digital, television or motion picture productions.
We believe the expansion of brands seeking celebrity and/or influencer endorsements, as well as celebrity and/or influencers to attend brand-sponsored live events, will drive growth and revenue for the next several years. 16 Content Production (“CPD”) Project Development and Related Services We have a team that dedicates a portion of its time to identifying scripts, story treatments and novels for acquisition, development and production.
Pursuant to the LP 2021 Purchase Agreement, we issued an additional 37,019 commitment shares on March 7, 2022. During the year ended December 31, 2022, excluding the additional commitment shares disclosed above, we sold 1,035,000 shares of common stock at prices ranging between $3.47 and $5.15, pursuant to the LP 2021 Purchase Agreement and received proceeds of $4,367,640.
During the year ended December 31, 2022, the Company sold 1,035,000 shares of common stock at prices ranging between $3.47 and $5.15 and received proceeds of $4.4 million. 24 Convertible Notes Payable During the year ended December 31, 2023, the Company issued three convertible notes payable in the aggregate amount of $1,000,000.
We have acquired the rights to certain scripts that we intend to produce and release in the future, subject to obtaining financing.
The scripts can be for either digital, television or motion picture productions. We have acquired the rights to certain scripts that we intend to produce and release in the future, subject to obtaining financing. We have not yet determined if these projects would be produced for digital, television or theatrical distribution.

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