Dolphin Entertainment, Inc.

Please stand by, your program is about to begin. If you need assistance during your conference today, please press star zero. Good day, everyone, and welcome to today's Dolphin Entertainment third quarter 2022 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one on your touchstone phone. You may withdraw yourself from the queue by pressing star and two. Please note this call will be recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mr. James Carbonara, Investor Relations. Please go ahead, sir.

Thank you, operator. And once again, welcome to Dolphin's third quarter 2022 earnings call. With me on the call are Bill O'Dowd, Chief Executive Officer, and Myritha Nagrini, Chief Financial Officer. I'd like to begin the call by reading the Safe Harbor Statement. This statement is made pursuant to the Safe Harbor Statement for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. All statements made on this call with the exception of historical facts may be considered forward-looking statements within the Section 27A of the Securities Act of 1933 and Section 21A of the Securities Exchange Act of 1934. Although the company believes that expectations and assumptions Reflected in these forward-looking statements are reasonable. It makes no assurances that such expectations will prove to have been correct. Actual results may differ materially from those expressed or implied in the forward-looking statements due to various risks and uncertainties. For discussion of such risk factors and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see risk factors detailed in the company's annual report on Form 10-K. contained in subsequent filed reports on Form 10-Q, as well as in other reports that the company files from time to time with the Securities and Exchange Commission. Any forward-looking statements included in this earnings call are made only as of the date of this call. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent knowledge, events, or circumstances. Now, I'd like to turn the call over to Bill O'Dowd, Chief Executive Officer of Dalton Entertainment. Bill, please proceed.

Thanks, James, and hi, everyone. Good afternoon, and thank you for joining us today. As you might expect, I'll start off the call by spending some time with the breaking news of today's bringing of social light into the dolphin family, followed by an update on various dolphin initiatives and a full financial review, and then we'll open it up for Q&A. So here we go. I'll begin by giving a brief description of social light. The company was founded in 2011, the early days of social media marketing, to say the least. Socialite 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. Socialite has a client roster of more than 125 market-leading influencers, including Shannon Kramer, Lauren Bushnell Lane, Kat Sadler, and Mary Fitzgerald. For this high-end roster of talent, Socialite secures thousands of campaigns each year with such leading brands as Amazon, American Express, Bose, Cartier, Target, and more. So Socialite has the talent roster and manages the talent's careers and secures campaigns for the talent. Socialite has a sister agency, Lighthouse, which also came into the Dolphin family, which represents some of the world's most iconic brands, providing the full suite of services for influencer campaigns, from strategy and casting through execution and delivery with in-depth analytics and reporting. So Lighthouse comes at it from the brand side, and the company delivers hundreds of campaigns annually with current and recent clients, including Airbnb, Amazon, American Express, Ann Taylor, Armani Beauty, Audi, Conde Nast, Etsy, Keurig Dr. Pepper, Michael Kors, Perrier, Prada, Ralph Lauren, and W Hotels. Okay, so now that you know a little bit about Socialite, let me describe why this is a highly strategic acquisition for us. I'll give you three reasons. First, this gives us scale in influencer marketing. With BeSocial and Socialite under one roof, we now have what we consider to be the leading influencer marketing agency in the entertainment industry, to go along with our three market-leading PR firms in each of those verticals. 200 influencers on roster, with hundreds of millions of collective social media followers. And now, we have an unmatched presence in the two U.S. capitals for influencer marketing, with New York-based Socialite and Los Angeles-based BeSocial. Secondly, that scale allows us to take full advantage of the very strong brand spend growth across influencer marketing. It's not just that in today's day and age, influencer marketing represents the, quote, other half, unquote, of earned media, along with PR. It's which verticals we are uniquely positioned to cross-sell for the benefit of the scale we just achieved. Let me share some relevant stats. The influencer marketing industry has experienced strong double-digit CAGR over the past five years, increasing from global brand spend of less than $2 billion in 2016 to over $10 billion in 2021, with estimates of more than $14 billion in 2022, according to Grandview Research. So it's less than $2 billion in 2016, expected to be over $14 billion this year. So the industry is only growing, as any brand marketer can tell you. But which categories use influencer marketing the most? Now you will see why it is so strategic for Dolphin. Again, citing Grandview Research here, in 2021, fashion and lifestyle was the largest segment with 29% of total spend. which is the exact specialty of Socialite, Lighthouse, and BeSocial. Great. We've now built scale and leadership in the largest segment of the extremely fast-growing influencer marketing industry. But what about additional growth? Well, the second largest segment in 2021, with 23% of total spend, was food and entertainment, the exact specialty of Dolphin's three market-leading PR firms. which any food and entertainment marketer can tell you. So over 50% of total brand spend in influencer marketing last year went into fashion, beauty, lifestyle, food, and entertainment, the exact verticals represented by our super group. That would be over $7 billion this year out of the 14. Collectively, the Dolphin companies represent approximately 1,000 clients, including global celebrities, feature films, television series, streaming services, musicians, venues, festivals, video game publishers, esports teams and leagues, culinary celebrities, hotels, toy companies, consumer product brands, and Web3 and NFT projects, as well as awards campaigns for nominees in over 100 Oscar, Emmy, and Grammy categories in 2022 alone. Speaking plainly, when an influencer is considering where to call home or a brand is considering how an influencer campaign can get them noticed by the general consumer through the broad lens of pop culture and entertainment, we believe we have a unique proposition in the marketplace. And for our PR firms, the door cannot open a restaurant or hotel in today's environment without an influencer marketing campaign. Our PR firm, Surefire, would find a strong influencer marketing campaign extremely beneficial in launching a single, an album, or a concert tour. And if you don't think social media is important to launching music these days, you are respectfully living under a rock. You get the idea. Now the third reason why this acquisition was so strategic for Dolphin after giving us scale and access to take advantage of the fast-growing influencer marketing industry generally and in our verticals specifically. The third reason why this acquisition was so strategic for Dolphin is because at the elite levels of socialite and be social, the influencers on rosters themselves have amassed large enough followings to where they are celebrities in their own right, and many have ambitions to be positioned to, quote, cross over, unquote, into traditional media, and many more have launched a wide array of consumer products and business ventures. Our group is uniquely positioned to take advantage of this market opportunity. As influencers and celebrities seek to further spread their interests and monetize their platforms and followings, the rate at which they have been launching brands and products continues to rise. The categories of beauty, lifestyle, and fashion are particularly well suited to influencer product launches, as demonstrated by the countless examples in recent years. Perhaps the highest upside growth opportunity for Dolphin's scale with Socialite and BeSocial is to focus on pitching, facilitating, and sharing in the revenues created by influencer brands and content, which will generate further recurring revenue and value for Dolphin and its shareholders. Okay. So now that you know about Socialite and our strategic rationale for bringing them into the Dolphin family, let me state that this transaction is immediately accretive. Socialite has strong revenues and profits. They are growing, and like with BeSocial, we believe we can grow them even faster by cross-selling their services to clients across our PR firms. With Socialite and BeSocial, we now expect that influencer marketing will represent 25% or more of our revenues in 2023, And for more than that, I don't want to get ahead of our 10Q and 8K pilings, so more on those topics will wait until after we have released that information. For final details, Socialite and its 40-employee team will continue to operate under its own name out of Dolphin's New York and LA offices with, if I say so, the very impressive CEO, Sarah Boyd, and its entire staff welcomed into the Dolphin family of agencies. Furthermore, Socialite Chairman, Evan Lozado, will continue as an advisor to Dolphin. All right. Let's shift gears to turn to providing updates on projects where Dolphin and its shareholders have equity and participate in the upside that our best-in-class marketing companies regularly enable for our clients. And by the way, for which going forward, Socialite will provide another asset to use for the benefit of these ownership stakes. Since we last spoke in August, We've held a soft opening on September 21st for Midnight Theater, a new restaurant and variety theater in New York's Manhattan West, Brookfield Properties' latest neighborhood development between 9th and 10th Avenues and West 31st and 33rd Streets. The night before our soft opening, we prepped the theater with Peacock's premiere of new romantic comedy, Meet Cute. Midnight Theater's red carpet was stacked with national media covering the arrival of the film's stars, Pete Davidson and Kaley Cuoco. We had a sold-out show last Monday with the British singer, Ray, While we seek to continue to ramp up the original programming in the theater through the holiday season and into the winter, by which time we expect to be open every day of the week, the private events business in the theater is already off to a terrific start. In the short time since the soft opening, we have held well over a dozen private events, some of which were full buyouts, meaning both the theater and the restaurant, and the clients are top tier, including our programming sponsor MasterCard, as well as Accenture, Ernst & Young, both of whom happen to be neighbors inside Manhattan West Share Tower, and L'Oreal, Paramount, Riot Games for a really cool League of Legends event with MasterCard, and Showtime. Now, turning to NFTs, on October 3rd, just after the quarter ended, we were pleased to report that our flagship NFT collection, Creature Chronicles, an intergalactic immersive storytelling experience from former Marvel Studios artist Anthony Francisco, sold out in about 90 minutes on the afternoon of Sunday, October 2nd. The first Creature Chronicles collection, developed and marketed by Dolphin's Web3 division, We Come in Peace, was minted on the Solana blockchain and features 7,777 custom-crafted avatars, generating more than 13,175 SOL in primary sales and mint time equaling about $435,000. We credit the success of the project to the stunning visuals from Anthony, the commitment of our team, and the dedication of our community. We are very proud of this success. With that said, though, we are very aware of the recent developments in the crypto space and will continue to monitor the space as we decide on prudent paths forward, with our NFT business. I would like to point out that Dolphin has no exposure in the pending FTX bankruptcy proceedings, and we have no assets inside FTX wallets. Our most recent announcement in late October was about a partnership with Nina Compton, the James Beard Award-winning chef and owner of Comper Lapine and Bywater American Bistro in New Orleans, to open together Shasha Lounge, a membership cocktail club and lounge in the Crescent City. Dolphin will be providing marketing services for fees and receiving a meaningful ownership stake in the venture as well. The announcement was made as part of the first annual Fresh Mint Festival, New Orleans Web 3 conference and festival, where Dolphin executives moderated a panel on how Web 3 and NFTs are impacting the face of the food and beverage and hospitality industries. What I really like about this initiative is its inclusion of a variety of other celebrity chefs involved and its clear line of sight for national expansion and success. From the get-go, five major celebrity chefs have joined the ownership group. Mark Forgione from New York, Stephanie Izard from Chicago, Michelle Bernstein from Miami, Rodney Scott from Charleston, and Tiffany Faison from Boston. Right about now, James Carbonara is salivating. Each of these chefs will visit New Orleans every year and offer custom menu items and cocktails for the general public. and also provides unique experiences for those who become members. That alone immediately distinguishes this concept. And if you're a foodie, you know all five of those names to go along with Nina Compton, six of the 12 chefs. But it also allows for the national expansion I mentioned. Upon success in New Orleans, Cha Cha can be brought to each of the other celebrity chefs' hometowns where they would have control of the concept and the menu and also take the largest share of profits. supported by all of the other chefs in the network for a visit each year. In all, there will be a total of 12 celebrity chefs in the initial rollout of Shasha, so you can see the scalability of the project. Shasha Lounge is a truly brilliant concept developed by The Door in partnership with Nina Compton and her management team, and it's in alignment with The Door's professional expertise in marketing culinary destinations and the Dolphin family's passion for charitable giving. Nina's pledge that a portion of membership and lounge sales will go to support future disaster relief in New Orleans is a gracious and forward-thinking win-win. And honestly, to give Nina her due, that was the starting point for the creative development of what became ShawShaw. And being a native Miamian, I know what it's like to get hit hard by hurricanes. So special shout-out to Nina Compton on this earnings call. Thank you for joining us on this ride. and to walk through the financials. I'll now turn it over to Myrta Negrini, our CFO.