Q4 2019 Earnings Call
[music].
Greetings and welcome to the Gulf and Entertainment fourth quarter 2019 earnings Conference call.
This time, all participants are in listen only mode.
A brief question answer session will follow the formal presentation.
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It is now my pleasure to introduce your host James Carbonara with Hayden IR. Thank you Sir you may begin.
Thank you and once again welcome to Dolphin entertainments fourth quarter full year 2019 earnings call.
With me on coal or below Gallagher, Chief Executive Officer American Mcgrady, Chief Financial Officer.
I'd like to begin the call by reading the Safe Harbor statement.
Statements made pursuant to the safe Harbor for forward looking statements described in the private Securities Litigation Reform Act like a 90 park.
All statements made on the school with exception of historical facts, maybe considered forward looking statements within the meaning of section 27, eight security right in 33 insects and 21 <unk> Securities Exchange Act very prepared for it.
Although the company believes that expectations and assumptions reflected in these forward looking statements or reasonable it makes no assurances that such expectations will prove incorrect.
Actual results may differ materially from those expressed or implied and forward looking statements due to various risks and uncertainties.
For a discussion of such risks 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 Companys I know report on form 10-K, those campaigns and subsequently filed quarterly reports on form 10-Q.
That's what was in other reports that the company files from time to time with the Securities Exchange Commission.
Any forward looking statements included in this earnings call or made only as of the data to school, we do not undertake any obligation to update or supplement any forward looking statements to reflect subsequent knowledge events or circumstances.
Now I would like to turn the call over to build out Chief Executive Officer Dolphin Entertainment Bill. Please proceed.
Thanks, James and thanks, everyone for joining today.
Usual all arrange my comments as follows first I'll highlight our financial results.
Second I'll spend some time for body operational updates.
Third I'll turn it over to mirror to dive deeper into our financial results before having our queuing it.
So first off the financial results.
Well I'm happy to report that results exceeded consensus expectations for both revenues and earnings per share all members of our PR and marketing supergroup had a strong fourth quarter.
Pushing our annual revenues, just perhaps 25 million, which was true.
Represents an 11% increase year over year.
Furthermore, our net loss in the fourth quarter was just $71427, which was less than.
Per share.
This number includes depreciation and amortization costs of $500000 or little over three cents per share.
That's a result also exceeded consensus expectations.
In short revenues are growing and net income is improving at a faster paced projected which we attribute to the cross selling of services between members of our entertainment marketing supergroup.
Turning to operational update I'm sure. The number one question on everyone's mind is what goes the current environment need for Dolphin Entertainment. It's for marketing companies 40 to us the door short fired media you point creative as well as Dolphins M&A strategy in production plants.
I'll answer that question one by one.
But before I do.
In these dark times.
Worth mentioning right off the top.
Tremendous recognition we received in December with the publishing this year's power 50 lives to the top PR firms by the New York Observer.
All three of our PR firms made the list.
With 42 West at number for the highest ranking of any entertainment New York.
Let me put that in perspective for everyone.
It really signifies.
Something special that we think we're building.
First.
There are over 12000 PR firms in this country.
Yes, all three of ours made the top 50.
Secondly, we believe we already only companies Oh more than one PR firm Arnold.
This makes us unique.
It is our differentiating factor.
And it validates what we call or entertainment marketing Super Group led by our three PR firms 42 S for movies and television.
The door for celebrity chefs hospitality and consumer products and shore fire media for music.
Our positions in our respective industries are validated as best in class.
Our companies also represent a platform for future growth.
No one else has.
This is the heart of the investment thesis in default.
More on that later.
But first let's take a look at our companies.
42.
As usual I'll start with our first acquisition afforded to us and.
In this environment.
People are forced to stay at home and not surprisingly viewership across the streaming platforms has increased.
The streaming platforms for our clients.
That's 42 west so keep an increase in projects to promote in the past 30 days.
Last week with one major streaming service alone we signed an order for 11, new series and for movies.
All launching or premiering in the next few months.
Yes streaming services are extremely well positioned in this crisis.
The programming they intend to roll out over the next six months has.
For the most part already been completed and delivered to them.
This is why Ted Sarandos said that looks Steve no disruption due a service for the foreseeable future. They don't have to change that release schedule and watch. This went on its October was you know, we don't think and you want us thinking it will.
So we anticipate receiving a lot of business from the streaming services.
42, what did lose some business in March and April from a closure of the Tribeca Film Festival.
We had several movies that were scheduled to premier during the possible and it's unclear festival will be rescheduled for later date.
However, other than MACOM don't possible. There are no. Other film festival scheduled until the end of August.
Really labor so we feel that the increase in streaming services business should be should should compensate for the Lawson film Festival.
Now I'll switch to the door.
Not surprisingly the doors, our company, which the Corona virus, that's most impacted because they're in the restaurant and hotel business for a good portion of their revenue.
As clients are expected to put the door on hiatus.
Because the restaurants will not have the cash flow, especially in New York in Los Angeles, but really everywhere. These days to afford promotional all their only doing delivery or take out the door open at all.
We're not worried about losing the quiet overall, but we anticipate losing revenue for the second quarter in that business from those clients.
Certainly every hotels not doing well.
And they may close calls for a month or two before they reopen I would tell likes Dan when I'm in Los Angeles for example.
The decision last week to close until May 11.
So for that business, we're assessing the revenue impact.
For the second quarter.
The consumer products division of the door has been less affected by the general economic conditions, and we plan to utilize its time for expanded business development in that area.
On the music side for short fire media.
There's been less impact.
The reason why because music today is different.
The sale of music is pretty much all on mine.
By song, it's digitally its I tunes.
Sadly there are very few record sores anymore.
So the promotional music is also online for the sale of the streaming of it Spotify or Pandora.
We have more than 100 active clients at any one time, the majority of which utilize short hard to promote singles release or an album release.
That's the impact of short fire has been the Lisa.
Up all of our companies.
Viewpoint, as our smallest company and doesn't have a bit big impact either way.
Their corporate videos are still in demand and if anything some corporations many more of them in this environment, because they will need videos to Costar mine for increased digital marketing efforts.
Your brand.
You're not sponsoring events anytime in the next quarter to good because they've all been canceled that business is going to the online companies.
Have you can market online in today's world you're at a huge advantage.
Which is a good segue broke the turned to eminent.
As the old saying goes every challenge presents an opportunity.
You're viewing this environment looking for opportunities and those opportunities can take different forms.
First of all we know that there will be a lot of great talent on the streets.
Many of our competitors all privately held companies have already started to layoffs that.
This presents us with an opportunity to get really great talent there was unavailable for now.
I was inbound calls have already started to happen.
And quite frankly, we anticipate a flood them by the time may rolls around.
Secondly, we think by May we will also have opportunities with companies that were doing very large profits.
And be able to talk to them about bringing them in at very inexpensive prices.
Specifically within large events production industry those companies have almost all closed shop in the past week or two.
It was zero revenue on their books for the next three months.
We think this will represent a tremendous opportunity for us to bring in the right company with a large list of longtime clients when the economy reopens for events.
We have made no secret of our desire to add that type of business to our Super group, we had already been holding conversations in that sector I'm sure to the surprised that no one [laughter] and we have such a tremendous advantage through our re brand name PR firms all of which are extremely attractive delighted that production companies.
For the obvious synergies opposed to client referrals and talent appearances.
We already had very strong interest from companies in this sector to join US now we think that we can create a very compelling when when investment scenario in this area.
The other type of company. We've previously discussed wanting to bring into the supergroup is social media and Influencer marketing.
As mentioned above those companies are positioned extremely well in this environment or brands need to ship their marketing dollars even more on mine.
We're in active conversations Myspace also.
As noted above where the only collection of premium best in class Entertainment marketing companies inside a public company.
This gives us a platform.
Platform to add other pieces, whether they be individuals groups for companies in this environment, our unique position makes it even more attractive to those potential new members.
Our plan has not changed.
We want to finish building the core of the supergroup by the end of this year.
Now, we maybe able to buy much larger company someone could have thought about a month ago the world hadn't changed.
We're looking at those opportunities and seeing if there will be a deal to make.
[music].
Lastly, I'd like to see a few words about production.
We announced our first project entering the casting phrase a move called a movie called sisters before investors.
As a female led comedy where a younger sister mistakenly takes on the tax planning the wedding up or older age type Sr.
We have attach Lisa Thompson to directly it's a fantastic comedy director working on several TV shows currently she recently finished her first feature film.
Of course, many of you know the as an actor, especially from the back to the future movies or from our own NBC sitcom Caroline and city.
Well as I mentioned, we are out casting the project now in a different world, we would be line fill up to shoot the summer fall.
We'll have to see what the development across it looks like these days.
We have a strong pipeline of both film and television projects ready to go I expect we will have a second announcement before we file our 10-Q as well as more clarity on one productions can safely resumed.
To recap we were ahead of pace for both revenues and net income for the fourth quarter.
Gave us great momentum heading into the new year.
We had been in conversations with companies five and six complete our entertainment marketing supergroup.
Clear synergies and growth potential of adding a social media and Influencer marketing company are more clear now than ever before.
For the lives of mass production company, we see this environment, that's an opportunity to potentially add besides the company, we could not considered before.
We will look for the right deal in that space and believe it's done right. It could deliver large organic growth for years to comp.
Also we believe our collection of World class PR companies will be attractive cadence for individuals and teams and small companies like in this environment.
As in any disruption strong will survive and be given opportunities to come out the other side even stronger.
We plan to be nimble and seizing those opportunities.
Obviously, the krona buyers will affect every business ours included the core restaurant hotel business for the door. It will be seriously impacted for the next for the second quarter.
These are uncharted waters for everyone and we May also see client reductions at all of our business and as far far too early to itself.
We'll be able to report more on that and 45 days or so during our Q1 call.
Finally, even though it seems like a lifetime ago I wanted to end my prepared comments looking back at significant events that have transpired in our company since our Q3 earnings call.
It's good to remember what's happened in just the five.
120 days, even though it's hard look back further than 30 days right.
In early December we acquire short fire media, a leading music and entertainment PR agency, we loved Marilyn and her team.
Rebecca Shapiro, Matt Hanks marks out lot. These are extremely strong music PR specialists, and we're very excited to be working with them.
Shortly after that as mentioned earlier, it's worth repeating.
42 of the door and shore fire media all earn spots on the New York observers prestigious PR power 50.
Ah Ah widely respected ranking of 50, most influential PR firms in the country.
Three.
All three.
In the top 50.
Okay. So I did make that clear.
In January of this year.
Our media clients want a collective 11 Grammy awards, including seven and various best album categories.
Pretty good at what they do in February of this year 42, Westwood's all involved in various capacities with 13 films that are under totaling 49 Academy Award nomination and one nine Oscars.
They are pretty good what they did.
Furthermore to add I seem to the cake, Rachel Eberly Executive Vice President of 42 West one the inaugural publicist of the year Award at the 2020, Publicists awards, which feels particularly appropriate since Rachel heads up 42 less work with the Academy Award nominations, Congratulations Rachel it's really awesome the inaugural.
Publicist of your award.
Testing.
And as we mentioned Dolphin Entertainment acquired future comedy scripts sisters before investors and attached Lisa Thompson to direct.
Thank you all again for your time and attention.
We hope everyone stay safe and healthy.
And even from home we remain excited here dolphin, it's always a good feeling to come in ahead of consensus expectations on the financial side and to be in a position of flexibility a strike.
In challenging times, we see the opportunities and we want to take advantage of them.
Now I'll turn it over to mirror to pour more in depth to review of our financials.
Thank you Bill and good morning, as Bill stated earlier total revenue increased 11% year over year, just 6.450 million $931 in the fourth quarter and full year revenue increased 11% to 25.001 million.
In dollars.
Many of the revenue is derived from our entertainment publicity in marketing.
Revenues from our content production segment, where zero and that's like 420.
My team and 86000.
And fourth quarter.
Well the 18 as we previously discussed.
Revenues.
Earned right after the meeting for the film and the decrease in revenue that part of that normal cycle at the motion picture.
Overall operating expenses in Q4, 2019, restaurants, and 97.094 million $810.
Direct cost 1 million course.
118000 could it be month since December 31st let me 19.
Compared to 976826.
Dollars for that quarter ended December 31st 28.
Change is primarily due to having an extra month.
Operation that your point that was acquired until October 31st at 28.
Payroll costs were 4 million $229381.
For the quarter ended December 31st plenty 19, as compared to 3 million.
$507 wait a quarter ended December 30, Christ plenty 18.
Got it changes primarily geared to again, an extra month of having viewpoint and the acquisition I'm sure fire.
Operating loss for the quarter ended December 30 crisis, 28, 2019 with $643879 and it included noncash items that depreciation and amortization up $500792 and that compares to the quarter.
Her ended December 31st plenty 18.
That high operating.
Losses of 3 million back $80080.
And with depreciation and amortization of $633382 and goodwill impairment of $1.857 million.
Net loss.
For the year ended December 31st 2019, with a million $193377, which is seven cents basic loss per share.
On a weighted average number of shares of 16 million 522924.
20 cents diluted loss per share on weighted average number of shares.
21 million 425005 hosting.
For the year ended December 31st 2018, our lossless 2 million right.
Thousands.
$1.
Which is a lot at 22 said on basic.
After share.
I wouldn't weighted average number of shares a 13.773 million.
Hi.
23 cents diluted loss per share six calculated using a weighted average number of shares of 16.159 million flat.
Shares.
That concludes my financial remarks, I'll now ask the operator to open the phone line for team operator can you. Please poll for questions.
Thank you we will now be conducted a question and answer session. If he would like to ask your question. Please press star one on your telephone keypad.
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One moment, please while we pull for questions.
Thank you. Our first question comes from the line of Jack and yard with Maxim. Please proceed with your question.
Hey, good morning, guys. Good to see good. She was sold Fourq results you said a couple of questions.
Hey, Bill you already touched upon this in some detail, but I'm going to revisit that says we looked at 2020 and you know you examine all of your acquired businesses over the past few years no up to the latest short part immediately went back to 42 West I'm, hoping you can share your thoughts on on which business.
As.
Do you expect to be the least impacted due do you know coven 19 implications aside from short fire media.
And then aside from the door, which should those businesses do you expect to be the most most challenged like we're just we're just 42 Wes.
Fit into this.
Sure and Ah. Thanks, Jack further complement or we're very proud of our fourth quarter as well.
The.
ER.
42 West is is.
Benefiting currently from the increase in content on streaming services any desire to promote at four.
A market share quite frankly.
We have two new entrants coming into that space in the next couple of months HBIO, Max and peacocks from Nbcuniversal no longer with the benefit of the Olympics to promote into that launch they're going after rely heavily on original and and the promotional Oh.
I think they're going to have on service.
To drive awareness of the launch.
And in this environment, we're seeing a lot of increased efforts by the streaming services for market position. So we anticipate.
Continued.
Increase in programs to promote.
The unknown for US is the and it's too early to tell is the disruption caused into physical production, which I would say impacts our ability to produce but it impacts the entire industry. So there are you know what may not be immediately obvious is there are a lot of.
Of things like that that.
Such as this where you can't and gather people right. So if you're going to get filled the movies you need 50 to 100 people are more in one place and you can't do that today, So productions worldwide have stopped.
TV shows as well so in the short term for the next 90 days that's easily over comfortable but at this extends into third and fourth quarter there'll be a there'll be a backlog of a pipeline.
That will.
Oh that may not affect our marketing services they'll need to promote something to get people to watch for subscriber than maybe we may have to switch to promoting library content or you'll you might start seeing 10th anniversary specials of things et cetera et cetera, but.
Assuming we can resume production at some point in the third quarter, we don't see an overall impact.
However, there may be certain.
Actors actresses others that may need to take a hiatus two of their shows are not going back into production. So that's a variable.
That that could affect the talent division of course at that total revenue was less than it was in the past.
And especially as our media and streaming division continues to increase and grow it's really the driver a 40 to us so thankfully and our largest division and our largest greed, we're seeing revenue.
Gross and we're also blessed by the timing of the calendar.
We only have one festival that we lost business from Tribeca Con coming up and has been deferred for now we'll see what happens there, but if if if film festivals either switched to online or it's possible to resume them by the time labor day rolls around with should not see an impact there.
Viewpoints, our smallest companies switching to them.
[music].
We haven't heard of clients canceling plans to do that is its just trickier for the life production shoots again, if the larger contracts and involve life production shoots.
We are seeing a pull back on timing for those because when can you go in film somebody talking about their product right I'm, even if it's a room of four people thought people. So.
But the overwhelming majority of videos, we do adult involved that.
And Ah we use we used other footage and Anna late or or graphics. So we'll see what what's in store for the second quarter for them, but right now we have not seen a client.
Reducing order it viewpoint.
That's fantastic.
And then you mentioned you mentioned some detail on you talked a bit door, how you expect that.
It could be one of the more challenge businesses due to this environment and that and then you went on to talk about the consumer Division, but my my line kind of cut out can you just revisit what your thoughts are on the consumer division of within the dark.
Sure.
You know and it's worth noting upfront you know the door.
Has been and is today, eight and absolutely beautifully run company, Charlie and Lois or.
Fantastic at what they do is working PR professionals, but they just built a culture and a company that's just explicit.
And as part of the opportunity and so it really brings home for us within the Dolphin family of four companies you know what most of America must be feeling hard working a growing businesses that all the sun interface with the challenge that it's just impossible to have seen right.
So the.
The restaurant and hotel business overall, I'd I don't need to tell anyone on this phone call. How challenge that is for the next period of time. Therefore, the PR. The those businesses is challenged however, the door also many of our long time followers also remain.
MBR that we invested in the launch of a consumer products division with the door in the first quarter of last year I'm very happy with the growth of that division led by Niccolo and a you know that's an area that we've always wanted to.
Investing and and grow even further because the corporate clients.
One that want access to pop culture in general will see the benefit of our platform of our group of companies.
That if you are large corporate client and have products to launch.
You'd probably want to tap into pulp culture and that means Moody's that means TV that means music that means celebrity chefs that means national events.
So that that division of the door, we think even in these times actually has a tremendous value. So we'll double down on that area. While we're trying to weather the storm of the restaurant hotel business.
Okay got it that's helpful and then just lastly.
Yeah, you've talked about the potential impact on each kind of specific business.
Can you talk in more detail, maybe about what you expect on the cross selling synergies between these businesses. Just just that specifically is that you know how much of that is going to be impacted or how much of the growth and what you expected from cross selling synergies to be impacted going forward.
Well, we're positioning it as a great opportunity to to show the differentiating factor of what we've got right.
Let's just take a step so we think cross selling will be even more attractive to clients in this environment because they won't have separate budgets for every individual vertical we hope so the or we believe b.
Taking a step back.
Cross selling is the person obvious advantage of.
What weve built even though it taking.
Perspective for a moment on.
A single company.
Three of the top 50 PR firms in the country.
Our belief is where the only company that owns more than one.
And all three of those PR firms are in the same industry.
It's not like we own a a communications PR firm, a lobbying PR firm and a health care PR for.
Chris We don't yet three entertainment PR firms and and then like I liked to position it.
Make people think about it what would you do with it.
Well if you had.
The that collection of PR firms I think there's a lot you can do with it.
And one of those is a very compelling offer to consumer products companies and brands to get their message out in an environment today, where much of their.
Marketing dollars many of their marketing dollars are going to need to switch to PR and online because live events are not exist and at the moment and.
The basic economics don't just dictate that no sudden you've got millions and millions of dollars to pay for paid media.
All right so.
As a matter of fact that the television networks are witnessing a decline in advertising revenue while viewership is up.
During this time why is that.
The brands don't all the sudden magically have more dollars are trying to figure out how to save dollars and in that environment. PR is so much more cost effective.
So what we're trying to do is reintroduce our unique platform to reach into pop culture.
To the World from you know we're only.
We've only finished adding the PR piece the last PR Pizza tells us about this compelling story in December or three months into having something that's truly unique.
And we want to take advantage of it and we would be doing that in normal times.
And in these times the opportunities we see our are tremendous.
Awesome. Thank you Bill that's very helpful. That's it for me.
Okay. Thanks, Yeah.
Our next question comes your line of Barry Sine with Clarkson Capital. Please proceed with your question.
Hey, good morning folks.
Good morning, guys.
I want to continue on the same topic.
I thought you did a very good job.
Telling us what you know what the impacts might be I'm, just going back to your comment it sounds like for 42 West alone.
That the current situation, maybe a net positive because of more activity from streaming and the calendar with live events not really impacting award Joe's and so on is that a fair statement.
I believe so with certain money or if we're looking forward. If we're taking a picture of the second quarter.
You know I believe so again, it's it's so hard to predict what the what the talent situation maybe by the end of the quarter. We did lose some business from try backup, but the but the streaming services made up for that for April. So, yes, I I think that we're in a stronger position with 40 to us as we would've been had this not occurred.
And then the door, obviously is going to be most impacted as you've said I believe correct me if I'm wrong I went back I looked at my notes that at the time, you acquired and you talked about that business doing about six and a half million dollars in annual revenue Wonder if that's still.
Operative I'm, assuming most of that goes away as you noted consumer products is a relatively new.
Business for you and then also on the door I'm, a little surprised if I was a restaurant or a hotel and you know I'm management I'd be thinking about how do I get people back in one Tom able to open and that's going to be the PR challenge over the lifetime for restaurants, and hotels getting consumers to come back out.
When some of these stay at home waters are lifted.
Well you know that's a really good point Varian and and that's why this is either.
I'll try and organize my thoughts this is an opportunity that's sometimes when you use the word opportunity people think going out and it.
Getting something new well in this case with the door it's worth its worth.
Reinforcing.
That we haven't lost.
Any clients know client left to go to a different PR firm.
You know the doors strength and legacy with their clients is so strong.
And and.
And <unk>, but the restaurant business is so challenged at the moment. So I think there's there's going to be a 30 day or some period of time window, where the restaurant owner. So just simply thinking about what do I do next how do I apply for the federal aid how do I, you know or make sure that might.
Rent is paid et cetera, but when we start to see the other side of it.
Then their minds going to switch Oh my gosh.
You know, let me start planning for when I can reopen the majority of them that can and it and that's going to be June that's going be July that's going be August whatever. It is then like you say very their bonds going to switch like wholly sugar, how much that make sure I don't open my restaurant to an empty empty.
[music].
Floor, so there's going to be tremendous demand for the ability to.
We believe two to offer PR services and where does.
Opportunity also <unk> you know, we expect a rapid take up book of.
Back to the business so the existing clients will be there where where we see.
Huge opportunity is the fact that in our world the doors as a dominant market position.
But there are competitors are privately held companies. There was privately held companies may not be able to weather. The storm most likely they won't they also tend to be specialist only in restaurants or only in hotels. They don't have consumer products. They don't have brand name celebrity chefs.
So those companies are really suffering and they may just decide to fold shop or that they can't pay their employees certainly.
So we see an opportunity to take advantage of that because when we come out the other side.
Wouldn't it'd be great to have two X or three acts of restaurant in hotel clients because we're.
We're a well established freemium brand name in that World and these these restaurants hotels are going to need PR.
It looks like he accidently disconnected, we'll move on to the next question.
Which comes from Jon Hickman with Ladenburg Thalmann. Please proceed with your question.
And hi, Bill Thanks for taking my questions.
So I want to talk about this.
Drill down a little bit more into this film.
Sisters before Mr. says that when you called it.
Yeah, that's our title.
So why didn't you picked out whenever the other three that you have lined up like.
A year ago.
Sure Yeah, we're excited for the sports movies, we are the we still want to lead with a young blood.
With that said we spent the last year.
That being a really.
We're excited for the slate of both film and television projects, we head to head of development and production in New York Emerson Davis said has built a 10 projects and on each side as we look to re enter that that world with the completion of the supergroup we were ready to go.
Frankly, and the first maybe up sisters before ministers was chosen because.
We felt we could shoot it.
Early in the second after this year, it's it's a wedding comedy we believe weddings are happy time, [laughter] a friend of mine recently.
Debated that somehow I I picture weddings, and I think a blue skies and happiness and it's a comedy so and we thought it would be a good smaller project.
More so for a streaming service, we most likely will position that movie for sale to a net flicks or one of the streaming services and and our sports Moody's, which we intend to put in are built for theatrical we still want to start with young bloodiness as everyone knows youngblood being a remake of a hockey maybe.
Requires snow in winter. So that's why we announced this years before Mr is first we could shoot it before winter and and.
And we had the ability to attach a really great director Lisa Thompson.
During her hiatus. So she was excited to film this before going back into working on on hit television series in the fall.
Of course.
Now I don't know we're casting the movie on one hand casting should go relatively smoothly because actors and actresses are not working so they should have more time to read scripts. These days right.
Hopefully, we'll get the right lead actress we want.
But when can we go back into production that's that's.
You know an unknown, obviously, we expect.
Huh.
Can you talk about how you're funding these production activity.
Well the nice part about the streaming service type movies or that another reason to start with them is is that when you sell it very similar to television, which is where you know dolphin started 25 years ago.
You are the de commissioning streaming service or networks goes television series pays for the production, so and with the streaming services. They do a worldwide buyout. So the they give you the entire pro.
Auction budget, plus a percentage of profit on top.
So you don't go into production unless you have the order and and you you a you know what your profit is gonna be when you make it so there's not the that's a different risk reward calculation right. There's there's zero risk and you get a defined reward whereas versus theatrical films you take some risk and you have an unlimited reward.
So we wanted to start with one of the Netflix type movies, and maybe one or two of those maybe even a television series to start build up some nice revenue and and before we launch and the optical business.
Okay, Hey, thanks, that's it from me.
Sure. Thank you.
My next question.
Our next question comes from the line of Allen Klee with National Securities. Please proceed with your question.
Yeah, Hi, I'm on the.
Financial side can you tell us the status of the dollar amount of the puts outstanding and and your thoughts of resolving that.
Sure Yeah, we're we're down to a little over $2 million of puts.
From where it started three years ago adult at 11 million. So we're.
We're almost on the last of them are effectively are finished at the end of this year and Ah we.
Have a.
[music].
The cash to to pay them and also we know that many of the.
Owners would like to the opportunity to also potentially take some of those puts in stock as they've done in the past so we're very comfortable and.
Excited that you know a year from now puts will be finished.
Okay, Great and then.
I might've missed this but the share count that you're using for your diluted shares outstanding could.
Can you just go through that.
Sure. So we're using a 21 million form in 25000 title Big per day duty and that's basically what we're including in that earnings per share calculation. If that's what.
It's the only ones that that are not anticipated when we did the calculation.
Okay, and then could you just kind of for view.
Your thoughts on your balance sheet and liquidity over.
You know this this stress test periods, how you think about that.
Sure well we.
We are targeting and still well 2020 as a good year to two improve our balance sheet I'm, especially as our plans were to.
Become.
Cash flow positive here.
In 2020 immediately so we.
We feel good about our cash position, we think we're in a position to take advantage of some of those opportunities out there.
We've got.
We expect to renew our line of credit with our commercial bank. This week.
Which is great we have.
Access to.
Ah Ah.
Debt, if we want it.
Or need it which we don't anticipate at this moment and we also may arch are exploring that we may actually qualify since we have less than 500 employees for the federal stimulus package and we'll take a look at that see if it's compelling.
Those interest rate so as we learn more in the next week or two so what we're.
Happy with where we stand now and and look forward to.
Having what we need if we see advantage opportunities we want to take advantage huh.
Okay. Thank you. My last question is just understanding your business a little better in terms of if you're doing marketing or PR is there a way to think about what percent of your revenues come from relationships that it's kind of on a recurring monthly basis.
Versus the amount that comes more of a project and then specific.
Sure well it it's.
It would vary by company and and that and whatnot, but I would say be well definitely the overwhelming majority of our our revenue is from monthly recurring.
[noise] <unk>, well I'm trying to think across all four Trump they said.
Actually it's tough to answer because well it because the the movie and streaming services would be consider I guess project based although we have long standing relationships and sometimes a master scopes of work with the studios are streaming services, so where they add just a dozen times for which new new these were doing right. So it's a kind of a hybrid.
There, we know we're going to be promoting X number of movies for the next quarter or the next to the rest of the year. We just don't know as Asia reshuffled their lineup, which ones we might be promoting that are being or at least in third quarter. For example, we certainly know which ones are up we're promoting for the second quarter. So.
In terms I guess, what you maybe drilling down to Alan.
Helpful. As you know what percentage of our revenues tied to live with US well the live events business that we promote our certainly flagship type properties like when we did the Super Bowl music fast I mean, that's a three day concert series is high high high profile.
But it's it's a as a revenue generator across the companies. It's it's a on the PR side. It's those types of high profile lots of buttons are not a problem probably do not even represents 5% of our total business they're there.
There are significant in the individual but there are only so many lot of those signature loved about so you're part of the reason why we think that in time getting into the live event production business makes a ton of sense for us.
'cause weekend capitalize on the true economics of those and be a have them occurring around the country on a frequent basis.
We also got lucky on the calendar because super bowls that big event for us southeastern ones Big for US both of those have already happened January February and the live events business for us since its centers around so much around the entertainment seeds and really starts the first week of September so.
The summer season tends to be more concert tours are not film festivals or anything like that concert tours are being canceled obviously, but the overwhelming majority of shore fires businesses and promoting an artist that's out on tour because very few artists are out on tour in any given year. The overwhelming majority music's all online.
So you know art and there's a good example, you know we might have like I mentioned on our call well over 100 clients on roster in any given month.
I would say 98% of those clients.
Our looking for support for single or album release, not live event support so.
That gives us an opportunity if we were to get in July the bonds ourselves, but it should not impact our economics too much that were.
A lot of the men's business is down for the next.
Quarter or too.
Okay. Thank you so much.
No my pleasure of where that was helpful.
We have reached the end of the question and answer session I would now like turn the floor back over to management for closing comments.
Wow It always comes so quick [laughter] yeah.
Well I want to thank James Carbonara for reading, a safe Harbor statement without ACOF worse news. Thank you James.
And I.
I want to I want to simply convey that one we hope everyone is staying happy and healthy in these trying times or certainly looking out for our employees. We have many of them in the New York area. We've had a handful what's currently virus symptoms or come through.
Having the illness and on the other side and and its Oh, we start first and foremost thinking about our people.
And then we want to be smart about this time, we built a beautiful platform that should and has proven to be attractive to companies and individuals alike.
Ironically and in a twist to fade I wish it were not true we're more attractive because of this environment or I'm sorry, we're in the environment, but we are very attractive company for the people that work in PR and marketing because were strong we're certainly getting through it and you know many of the places where they've worked.
Forward, they've used as a as us a vendor in the past may not get through this are certainly don't appear to be.
So we're going to see if we can be nimble and take advantage of those opportunities and come out the other side not just as strong as we work, but stronger than we were.
So I hope, we'll have more updates along those lines and just six short weeks when we all get back on the phone for the Q.
I, thank everyone for their time as always and of everyone stays healthy in the meantime.
Thank you guys very much.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.