Q4 2022 Dolphin Entertainment Inc Earnings Call
Speaker 1: I.
Speaker 2: Greetings and welcome to the Dolphin Entertainment 4th Quarter 2022 Earnings Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If you wish to enter the Q&A queue at any time, please press star 1 on your touch-tone phone.
Speaker 2: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, James Carbonara, Investor Relations. You may begin.
Speaker 3: Thank you, operator. And once again, welcome to Dolphin Entertainment's fourth quarter full year 2022 earnings call. With me on the call are Bill O'Dowd, chief executive officer, and Mircea Negrini, chief financial officer.
Speaker 3: I'd like to begin the call by reading the Safe Harbor statement.
Speaker 3: 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 Section 27A of the Securities Act of 1933.
Speaker 3: in Section 21e 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.
Speaker 3: For discussion of such risk factors and uncertainties which could cause actual results to differ from those expressed or implied in the four looking Statements they see risk factors detailed in the company's annual report on form 10k Contained and subsequent filed reports on form 10q
Speaker 3: 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.
Speaker 3: Now I'd like to turn the call over to Bill O'Dowd, Chief Executive Officer of Dolphin Entertainment. Bill, please proceed.
Speaker 4: Thanks, James. And hi, everyone. Good afternoon, and thank you for joining us today. As always, we'll start with the review of some financial and operating highlights.
Speaker 4: followed by a full financial review, and then open it up for Q&A.
Speaker 4: So from a financial highlights perspective, the fourth quarter set a new record for us with revenue of $11.1 million.
Speaker 4: First time we passed 11 million in the quarter. Full year 2022 revenue exceeded our target, increasing 13% year over year to a record $40.5 million. Also in 2022, our balance sheet continued to improve as followers of our company know.
Speaker 4: Our put obligations have all been finished, and we now have only one remaining earn-out from our previous acquisitions left to go, which will be paid this spring. Thus, our below-the-line items that need to be fairly valued will be cut in half, from four such line items to just two, which will dramatically simplify our financial reporting going forward. For more information, visit www.fema.gov
Speaker 4: Furthermore, the two remaining items, one of them are outstanding warrants of which there are only 20,000. That's right, just 20,000 warrants.
Speaker 4: And the other is the last remaining convertible note, which needs to be fair valued, which only has a principal amount of $500,000.
Speaker 4: Thus, as we near the completion of the acquisition strategy that built our supergroup, the volatility in net earnings that resulted from needing to fair value large amounts of puts and earn-out consideration is nearing its completion, which will allow us to more closely align our net income results with the metric we measure ourselves by, which is actual operating income, less depreciation and amortization.
Speaker 4: To put it simply, what was a more complicated balance sheet over the past several years has been tremendously streamlined and simplified and I think we're a stronger company for it.
Speaker 4: Now let's move to some operational updates. I'm thrilled to begin with the news released this morning. A veteran Fortune 500 executive, Ellie Doty, has joined Dolphin as Chief Marketing Officer. I would like to take a few minutes to explain the strategic importance of this position. Okay, first off.
Speaker 4: Ellie has over 20 years of experience in high profile positions at major enterprises like Burger King, including being CMO there, Taco Bell, KFC, including being a CMO there, and Chili's, including being CMO there, which have shaped her into a formidable brand strategist and creative leader.
Speaker 4: Since leaving Burger King a little over a year ago, Ellie caught her eye by flexing this brand building expertise across several other sectors, including hospitality, tech, beauty, and lifestyle, assisting startups with creating long-term brand building, growth strategies, and more.
Speaker 4: And Dolphin is at the next stage of its growth. I mean, this is strategic for us, not just because we brought in a CMO of Ellie's caliber, but because specifically we expect to bring in multiple 2.0 opportunities over the next 12 to 24 months.
Speaker 4: opportunities like craft house cocktails, wherein we get paid a cash fee.
Speaker 4: to secure the services of the various dolphin agencies working on the account, but also where we receive equity in the product or services we are marketing.
Speaker 4: Some of these swings at the plate, since it's opening day of baseball, right? Some of these will work, some will not. However, they all have a much better chance at success with Dolphins agencies working for them. River
Speaker 4: they agree or they would not be willing to offer revenue and equity in exchange for our supergroup supporting them.
Speaker 4: And furthermore, all of these opportunities need a point person within Dolphin to interact with the partner and guide the best plan for success.
Speaker 4: With Ellie's background, that person is her. Ellie has built marketing plans that range the gamut from startups with literally no money to an annual budget of $400 million at Burger King.
Speaker 4: She came up in the business through brand strategy, which is the path we value the most. As opposed to media planning, let's say, which is all well and good but isn't helpful to many startups or early stage brands that don't have any money to pay for media, right? So you can media plan all you want, but if you don't have money to pay for it, what's the point?
Speaker 4: Whereas brand building is essential. We expect that the vast majority of not all of our 2.0 opportunities will be brands that need building to hit their goals and dreams. Collectively, we have the ability to do that at scale. We need someone with the time and experience to guide our partners to the best results. And for the companies we are receiving an equity stake in. hardcore obsidian advice to make sure that everyone has the best parts of themselves. Levi's and random sales pork Isn't just,
Speaker 4: So basically that is the why about Ellie. And now I'm going to talk about the why now. Because we're starting to prep for the immediate future, one in which we expect to increase the pace of our 2.0 opportunity evaluations and negotiations. I know many listeners out there really.
Speaker 4: really like opportunities such as craft house cocktails for dolphin.
Speaker 4: are willing to pay us cash and equity.
Speaker 4: to tap into our ability to reach consumers at scale. They believe that what we have and what we can do can be game-changing for them. It's that simple. And from our business perspective,
Speaker 4: receive cash along with the equity.
Speaker 4: It's a win-win and we get to fairly monetize what we have put together.
Speaker 4: the ability to access consumers at scale through every major vertical of pop culture. Movies, television, music, gaming, culinary, hospitality, and consumer products.
Speaker 4: Who else has that ability? We believe we have a strong pipeline of those opportunities and we need it to organize ourselves to be able to execute on a slate of such opportunities and that's why we hired Ellie now. Lastly, as CMO, part of Ellie's role, we are all part of Ellie's role.
Speaker 4: on Dolphin's growing executive leadership team will be traditional to design and execute a communications plan that for the first time turns the spotlight on ourselves, communicating what we have built and giving an additional platform to both the work we are doing and to the incredible leaders within our Dolphin family.
Speaker 4: Currently, Ellie is collaborating with a team across Dolphin agencies to update the company's branding, messaging, and materials. She too is a huge believer that the most powerful marketing is earned.
Speaker 4: which is to say public relations and influencer marketing. And she is working hard to develop new messaging methods to share our unique story.
Speaker 4: Okay, so as we continue with Q4 2022 and recent highlights, Ellie's addition then becomes even more impactful due to the fact that in Q4 we expanded the number of companies in our supergroup.
Speaker 4: To that end, in mid-November, we announced that Dolphin had brought leading influencer marketing agency Socialite into our family of best-in-class entertainment marketing agencies.
Speaker 4: along with our West Coast influencer firm, Be Social. Together, the two agencies represent over 200 leading creator talent with hundreds of millions of followers on social media. Socialite and Be Social operating under one roof immediately creates an unrivaled bi-coastal combination.
within the influencer marketing industry and we think gives us the entertainment industry's leading influencer marketing firm to go along with our best in class PR firms 42S, Surefire, and The Door.
Part of the reason that is so important is because the influencer marketing industry has experienced strong double-digit kegger over the past five years, increasing from global brand spend of less than $2 billion in 2016.
to an estimate of 14 billion in 2022. That's a 7x according to the Grand View research. And honestly, if we're being transparent, we think those numbers may be low. Influencer marketing is just exploding. And anecdotally, I don't think there's anybody on this call that isn't aware of influencers on YouTube, on Instagram, on TikTok.
that have enormous followings and enormous brand appeal.
With social- like-and-be social, we now expect that influencer marketing will represent 25% or more of our revenues in 2023. And because influencer marketing is absolutely one of the fastest growing segments on all the marketing, we expect that percentage of our overall revenues to grow in the coming years.
Speaking of influence, Shorefire Media, Dolphin's industry leading music PR firm, had its influence shine in Q4 2022 and year to date in 2023. Shorefire represented clients who collectively earned an incredible 45 nominations for the 2023 Grammy Awards. And then in February ,
those clients received a collective 14 Grammy Awards including song of the year for Bonnie Raitt and Best New Artist for Samara Joy. And for those who ever want to know...
then I would say Surefire just gave a master class in that.
for especially those last two awards. Bonnie Raitt and Samara Joy are extremely talented artists.
that benefited from a beautifully run PR campaign to pull off upset wins into the biggest awards at the Grammys, right? Song of the Year and Best New Artist. Incredible.
Also, let me just give a quick word on 42 West, our film and television PR powerhouse. Their work on Top Gun Maverick supported a worldwide box office total of almost $1.5 billion, the biggest of our client Tom Cruise's career to date.
Additionally, its Top Gun Oscar campaign resulted in six Oscar nominations and an Academy Award for Best Sound. This all on top of running nearly 100 Emmy nomination campaigns.
Last September , holy sugar. And sticking with our PR firms for the moment, The Door, our leading culinary, hospitality, and lifestyle PR firm, had a busy fourth quarter that included placements for client Rachel Ray and Variety, work on campaigns for Haagen-Dazs, and TAL Hospitality Group.
Given a few words to be social, previously mentioned, Dolphins West Coast Influencer Marketing Group. They had a busy quarter that included a holiday showroom, as well as influencer partnerships with Victoria's Secret, Wall Street Journal, Cartier, Canada Goose, Resi, and American Express to name a few.
Lastly, to say a few words about Viewpoint Creative, Dolphins' respective creative relations agency and video production boutique, Viewpoint's working Q4 and Year-to-Date included a brand-dimitch campaign for CBS News, New York, NBCP Cox Sunday Night Football Promos.
witness those live watching the games many times, and PayPal, of course. Okay, now 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.
As many of you know, in 2022, Pan Asian restaurant Hidden Leaf at the Midnight Theatre in Manhattan West opened. Midnight Theatre also held its soft opening and has partnered with MasterCard as presenting sponsor for its programming. Dolphin manages all aspects of publicity and marketing for Midnight Theatre and Hidden Leaf.
and facilitates talent and commercial relationships within the entertainment and culinary industries. Dolphin also holds a meaningful ownership stake in the venture. Throughout its soft launch we have held several private events.
some of which were full buyouts. We continue to ramp many of which were also movie or television premieres. We continue to ramp up the original programming in the theater as well as nearing completion of the development of our own magic show, which we expect to begin previews here coming up in Q2 with full opening of the theater.
We're very excited for that. Turning to NFTs, in Q4 we were pleased to report that our flagship NFT collection, Creaser Chronicles, minted on the Solana blockchain, featuring 7,777 custom-crafted avatars designed by Anthony Francisco.
generated more than 13,000 in sole in primary sales at the mid time equaling about $435,000. Many of you remember that occurred over 90 minutes on a Sunday afternoon. We credit as a complete sellout. We can 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 all that said though, despite the success of this initial collection, as noted in our Q3 earnings call, we have paused the development of any new NFT collections while we wait to see if there is an improvement in overall market sentiment towards these products, as well as a reinstatement of secondary royalties for new collections from the leading platforms.
It was also in 2022 that we announced a multi-year agreement with IMAX to jointly finance the development and production of a slate of feature-length documentaries for the global market. The first project, Greenlit, is the Blue Angels, developed and co-produced by J.J. Abrams' Bad Robot Productions and Zipper Brothers Films. The Blue Angels started filming last summer and has nearly finished production.
We expect the film to hit IMAX theaters in the second half of this year.
And on a side note, this film looks real, here really good. You can never predict hits in this business, but I've been doing project financing for entertainment content since 1996. So I would say keep an eye out for this one. We look forward to sharing more details in the coming weeks, but man, it looks good.
Additionally, during 2022, we drove value for Craft House Cocktails, a pioneering brand of ready-to-drink, all-natural classic cocktails created by world-renowned mixologist Charles Jolie and esteemed restaurateur Matt Lindner. This is an arrangement that I mentioned at the top of the call, wherein Dolphin received an ownership stake in the company.
and is compensated to manage publicity and marketing for the brand through our network evidences. All of these Dolphin Ventures or Dolphin 2.0 projects are at various stages of development and will begin to create meaningful revenues for us here. We expect in 2023.
As I mentioned in the beginning, with Ellie joining as CMO, we will be focused on building a slate of ventures where we put up no cash.
get paid cash and receive ownership stakes generally between five and ten percent of the companies.
where our agencies can accelerate their growth. When we ramp up to full speed on the evaluation, negotiation, and execution of these deals.
We expect to be able to add about three to four of those types of deals for us each year And so within a very short period of time those deals will create meaningful cash flow and will represent significant upside for dolphin across the slate.
So in summary, 2022 is a great year for us, highlighted by the acquisition of Socialite, the 50-50 deal with IMAX.
and the soft opening of Midnight Theatre, and we expect 2023 to be even better. We had double digit growth crossing over 40 million in revenue. We certainly expect strong double digit revenue growth again this year, with positive results from our 2.0 ventures to share as well. Lastly, we expect 2023 will be the year we complete the original vision of our super group with the acquisition of a live events production company.
that will give us the ability to take ownership stakes in that vertical as well, which is highly strategic for us since our PR firms already market some of the country's most well-known food and music festivals among many other live events. I could not be prouder of what Dolphin has built, where we are today, and the path we are on for this year and beyond to maximize shareholder value and to provide exciting opportunities across a broad range of entertainment.
Thank you for joining us. And to that end, I'll turn it over to Mayorton.
early first 2022 was approximately $40.5 million, 13% above the revenues for the year ended December 31, 2021 of approximately $35.7 million. Overall operating expenses for the year ended December 31, 2022 were approximately $45.1 million.
compared to approximately $41.2 million in the prior year. Operating expenses are composed of direct costs, payroll and benefits, selling general and administrative costs, SG&A, acquisition costs, impairment of goodwill, change in fair value, and continuing consideration.
depreciation and amortization, and legal and professional fees. Direct costs for the year ended December 31, 2022, or $3.6 million compared to $3.9 million the prior year.
Payroll costs were approximately $29 million compared to $24 million in the prior year. SG&A expenses for the year ended December 31, 2022, were approximately $6.6 million compared to $5.8 million in the prior year.
Legal and professional fees for the year ended December 31, 2022 were approximately $2.9 million compared to $2 million in the prior year.
Operating loss for the year ended December 31, 2022, of approximately $4.6 million, including non-cash items from depreciation and amortization, of $1.8 million, impairment of goodwill of approximately $900,000, and a loss of $2.7 million.
a gain in the fair value of contingent consideration of approximately $47,000, and non-recurring costs consisting of acquisition costs in the amount of approximately $500,000 and legal and professional fees in the amount of approximately $600,000 related to the fair value of contingent
to the restatement of our 2021 third quarter financial statements, the change in the audit firm, a financing arrangement, and the filing of our Form S-1.
This compares to an operating loss for the year ended December 31, 2021 of $5.5 million, which includes non-cash items from depreciation and amortization of $1.9 million and changes to the fair value of contingent consideration of $3.7 million.
Net loss for the year ended December 31, 2022, of $4.7 million, includes non-cash items from depreciation and amortization of $1.8 million, impairment of goodwill of approximately $900,000, gain in the change of fair value of contingent consideration of approximately 47,000,000.
of our Form S-1 and gains from the changes in the fair value of certain liabilities of approximately $800,000.
This compares to net loss for the year ended December 31, 2021 of $6.5 million, which included non-cash items from depreciation and amortization of $1.9 million, $3.7 million from changes in the fair value of contingent consideration.
and $3.1 million from the changes in fair value of certain liabilities offset by a gain on the forgiveness of the Paycheck Protection Program loans of approximately $3 million.
Basic loss per share for the year ended December 31, 2022, was $0.49 per share based on 9,799,021 weighted average shares outstanding and fully diluted loss per share was $0.56 per share based on 9,926,000.
$7,926 weighted average shares outstanding. This compares to 85 cents of basic and fully diluted loss per share based on 7,614,774 weighted average shares outstanding in the prior year.
unrestricted cash and cash equivalents of $6.1 million as compared to $7.7 million.
as of December 31, 2021.
That concludes my financial remarks. I will now ask the operator to open the phone lines for Q&A. Operator, can you please pull for questions?
Certainly. At this time we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, please press star 1 if you have a question at this time. And one moment while we poll for questions.
And we did have a question in queue. And once again, ladies and gentlemen, it's star one if you wish to ask a question. And the first question is coming from Alan Plea from Maxim Group.
Alan, your line is live. Yes, hi, good afternoon and congrats on so many things.
Just so I'm trying to understand the momentum and.
If I want to try to strip out like NFTs to think of it, it's reasonable to say the 433,000 that won't repeat. Is there anything else like extra money you were making on Dolphin 1.0 of marketing them that was material that we should think cuts back in 1923?
No, actually, and thank you for the kind words that start out. I have no ideas whether I could just say special thanks to their work with us.
But if anything, 2022, removing NFTs is a net positive for us in 2023, not because we weren't successful in selling that collection and Charlie Doug yellow and the whole team did a great job. But you know, we invested over the course of maybe 15 months over a million dollars in building out our NFT capabilities.
is a good start, right, to recoup a million. But as you can see, since we paused the NFT business, just by not doing NFTs, you know, 2023 should be a net of 600,000 or so, 400 to $600,000 better.
just because we don't have to re-expense the build of the platform.
With that said, if we ever restart NFTs, then we don't expect nearly the type of expense to put up another collection of them because we don't have to do so many actions more than once. So it's a shame where NFTs headed after.
We spent so much time and energy building an expertise in that, but we'll see if they come back. Okay, great. And then, if I have to guesstimate a little bit of 2.0 revenues in 23, the big picture way to think about it of stuff is that – Okay, thank you.
You might get something from Midnight Theatre and Hidden Leaf maybe more in the second half if you have the full launch of Midnight Theatre in the second quarter.
Um, IMAX movie could be more like a third quarter event. Is there anything else I should be thinking about besides those two things? Well, those two are pretty big. Yeah, and with Midnight Theatre getting to...
then that'll be meaningful. The IMAX movie could be very meaningful based on what we've seen so far and that will be our expectation is that'll be in theaters late Q3 so that's nice.
So yeah, those are those are certainly two things we want to highlight. We have some more two point opportunities we expect to generate some revenue in the second half of this year that will be announcing in the coming weeks. Certainly that we're excited by. But nothing we want to announce right now.
Okay, thank you.
So socialite, it's.
So socialite, it's...
I think you would publish somewhere that I think that they did like four and a half million in nine months of
22. So that's going to be a big benefit for your 23 numbers.
Is there a way to think about if it's going to happen, of synergies between them and be social that we could see in a human being?
23. Oh yeah, thank you for that question now. I mean we were blessed to bring social light in to compliment be social and and and then obviously we'll we'll look at opportunities to.
have those companies come even closer together, if you will. But there's highly strategic, they benefit and complement each other. The scale that on the, each company has two main divisions. They have a talent management division. And by combining the two, we have scale to compete with.
And we think we have established a leading, if not the leading influencer management firm.
On the brand side, the other division, it gives us highly complementary skills. Socialite does paid campaigns. So when a brand pick one, yeah. They're hoping to make it the way the various different companies Hour of Beta battered the market but have not managed it. upgrade to a brand that is this more Mamen made a lot of their profits.
Airbnb comes and says we want to do a fall campaign, we have a million dollar budget. Will you help us identify the right influencers based on the demographics we want to hit, go contract with them, organize the campaign, make sure the influencers do what they're supposed to do on the time they're supposed to do it, report back to us the metrics, etc.
that's paid. And typically Socialite takes a percentage of the overall campaign. So 20-30% of a million dollars.
Be Social does organic campaigns where the brands may come to them and say, hey, we don't have money to spend on the influencers, but we'll give out sample products, free products if you can get them to try it and post about it. And we'll pay you a fee of 20, 30, 40, $50,000 for each of those campaigns.
and do more volume of them. The reason why it's highly complimentary besides now owning a leading agency, if not the leading agency, for each type of influencer campaign is that not just can you offer both services now in-house, but many journeys.
The reason why it's highly complementary besides now owning a leading agency, if not the leading agency, for each type of influencer campaign is that not just can you offer both services now in-house, but many brands.
run both types of influencer campaigns within the same campaign. They could have both paid and organic to support their fall launch. But certainly almost every brand runs each type of campaign at some point throughout a year. So you get longer client relationships, deeper client relationships, as they say, a bigger share of clients wallet.
And you just have a lot more ways to cross sell in the influencers as well. So, and we're now fully bi-coastal. V Social was only in the West Coast. Now we have New York as well. We have Miami. We have Nashville. So everywhere where our PR firms have offices, we now actually have on the ground.
influencer marketing people as well. And that shouldn't be understated. And in today's world where, you know, breaking marketing down into two buckets, paid media and earned media, earned media is the province of public relations and influencer marketing. They're the two legs that.
that you stand on in our media. And as long time listeners have heard, for every company that can afford a paid media campaign, there are nine companies I think that can't.
And so these brands that launch will need PR and influencer marketing to get their word out and get their products and services noticed. And so you really want to have influencer marketing to complement PR. And you want both.
Thank you. When I look at the other PR and marketing firms that you have in your portfolio, what are the drivers for organic growth in 23?
Well, a couple of things, and we're starting to see it. One, the cross-selling just keeps going, right? So that's what's driving our organic growth. One before Socialite, and 21, many of you remember.
how fast we were growing just organically from, I think it was 7.2 million to Q1 to 8.6 and Q2 to 9.4 and Q3 and 10.5 and Q4 and that was all organic. There was no acquisition in there. That happens because we're getting better at creating synergies between our companies. But then secondly, you can go after different types of clients.
So, PayPal has been one for a while, but we've signed other clients now that are, let's call it traditional Fortune 500s or large companies that don't have a direct tie to entertainment, but they want to use pop culture to get the word out about their product. And quite frankly, if you have any consumer facing product, you could probably use pop culture to create consumer awareness, right? That's right, people.
So now if we market ourselves, that could be to Wall Street, that could be to our own stakeholders, but that could be to the broader business community, corporate community. And all of a sudden, we've got something different. And there are a lot of chief marketing officers, digital marketing officers, social marketing officers out there, and these companies are trying to figure out how do we get our word out? And here's Dolphin over here that has all these different services and all this different type of reach using pop culture. And you can't fake it. You can't just say, oh, we're a traditional PR firm, we'll get you into entertainment. How are you gonna do that? Versus Dolphin, where we can say, well, we promote James Bond, Top Gun, Mission Impossible, Bruce Springsteen, Chancellor.
And quite frankly, that should be one of those things I was mentioning that should happen in the second half of this year. This will go on sale in the next few weeks.
Thank you again, Charlie. It's the Charlie D'Augello show on Westwood 1 slash dolphin fourth quarter earnings call. The door again has done a great job bringing that, ideating that with Nina and her husband and bringing that to life. And so it's about to.
It's about to kick off and we couldn't be more excited for that because with success in New Orleans, many people that listened on previous earnings call know that we have a very scalable model there since Nina and Charlie and the team have brought in other celebrity chefs to do guest appearances, for lack of a better word, at the lounge and restaurant in New Orleans.
that could become the home for the same concept in other cities. So whether it's Michelle Bernstein in Miami or Rodney Scott in Charleston or Stephanie Eisard in Chicago, you know, we're hopeful for that. And I don't know if many of you listening saw the profile, was it last week in the New York Times, about just the proliferation of membership-only restaurants in Palm Beach, in Florida where I'm from.
interesting profile in the times. You know we see that just burgeoning and and by the way if you're not familiar with this concept I mean the initiation fees to join a restaurant only club in Palm Beach start at ten thousand in many places routinely twenty thousand and there's some that go as high as two hundred and fifty thousand dollars
Whee! That's quite an initiation fee for a restaurant that you then go pay to have a meal at. So this type of idea of private membership clubs, which and the hybrid, that's what Nina will do, you know, open to the public but also a private membership club is something we're very interested in and that we feel we're uniquely positioned to promote. And that could be a massive growth driver.
I'm not just talking about Shawshaw, but just the general category of those type establishments over the next three to five years. Because the economics are extremely appealing if you can market them and get the membership. Seems like we're well positioned to help people that want to do that.
My last two questions are financial related. How do you think about operating expense growth in 23 relative to revenue?
Well, you'll see the jump in SG&A in 22 to 23.
to jump in SG&A in 21 or 22 to 23, it'll it'll come
Also be a little bit of a jump in 23. Sorry 21 20. Yeah, 20 21 22 It'll be a little bit of a jump 23 as we you know, as we have socialite for a full year but We don't expect operating expense
increases beyond typical payroll increases. We like where we are in terms of operating expenses. Some of it will go down because again we're not expensing the building of an NFT business. But I don't expect any surprises. Obviously we highlighted to that.
The change in audit firms was an expense that we didn't anticipate prior to the year. It's a one-time expense of $600,000. We don't anticipate having that again this year. So, and other related expenses to the change in audit firms. So, yeah, we feel pretty good about not having some of the recurring. Some of those one-time costs just won't recur. So, we don't anticipate any.
was an expense that we didn't anticipate prior to the year. It's a one-time expense of $600,000. We don't anticipate having that again this year. So, and other related expenses to the change in audit firms. So, yeah, we feel pretty good about not having some of the recurring, some of those one-time costs just won't recur. So, we don't anticipate anything on the horizon.
would cause our operating expenses to jump up. Okay, great. I don't know if you can answer this. Maybe I could ask this offline, but I just was trying to get a sense of your operating income for the quarter was around a minus three million.
But then if I add back the various one-time items you mentioned of impairment of goodwill, change in fair value, contingent, non-recurring, I think I get to around 880,000 of kind of a, this is back of the envelope, but just to leave it to us.
I don't know if you can tell me a sanity check on that makes sense or we could take it offline.
Well, we can go through each of those numbers offline. Happy to do it. Yeah, I mean, you know, we had we have relatively significant non-cash expenses and then there's one-time charges. So it's kind of why we highlight it so people can see that we're you know, we hit 40 million in revenue. What do we expect?
to do double digit growth on that this year. It wouldn't surprise us if we're 50 plus and we expect to be EBITDA positive. We measure ourselves by operating income and taking away the non-cash charges like depreciation and amortization. That's how we know if we feel like we're doing well. So we're transitioning Dolphin into that stage where we want to be and expect to be cash positive.
on an annual basis and then we have these 2.0 opportunities such as provide that you know really great upside you know if you have something that could pay off seven figure profits to you from a from a successful 2.0 venture when you've got a 40 million dollar 50 million dollar revenue company and and single digit millions of profit and cash that could that could double your profit triple your profit it's it's meaningful to a company our size.
So that's the mousetrap we've built. And, you know, I know, Alan, you've been with us from the beginning. You've seen it from when we acquired 42 West and wanted to uplist to NASDAQ and hopefully build a group for those on the call that have known us for a while to see where we are now. Seven acquisitions later, one more to go to complete the original vision of building a supergroup that would be unique in the market.
that would be cash positive and then have the upside of these 2.0 opportunities. You know, we're pretty far along in that story now. So very lucky, feel very blessed about that. Okay, fantastic. Thank you for answering all my questions.
Sure. Thank you. There were no other questions from the lines. I will now hand the call back to Bill O'Dowd for closing
Thank you. There were no other questions from the lines. I will now hand the call back to Bill O'Dowd for closing remarks. Okay, well thank you.
I did get an email from someone wondering if we were going to represent James Carbonara for his singing career through Shorefire. We have not successfully signed James, but those who know James maybe you want to push him in our direction. He maybe he'll sing the safe harbor statement on the Q1 earnings call. That would be very exciting for all of us. And for Wall Street, I'm sure.
Thank you everybody. I know many of you have heard our video on this call. We're on our Q3. You're seeing the progress, hopefully quarter over quarter of our company and what we think we're building. And as you heard me say to the last of Alan's questions, we certainly like where we are. And 2023 is an exciting year for us because we collect revenue from it.
in the future. So thanks everybody for both listening to this call and joining us on this journey. Look forward to the one in just about six weeks.