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 touchtone 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's 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 Mirta Negrini, 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 a 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 Dolphin 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 Socialyte into the Dolphin family, followed by an update on various Dolphin initiatives and a full financial review. Then we'll open it up for Q&A. Here we go. I'll begin by giving a brief description of Socialyte. The company was founded in 2011, the early days of social media marketing, to say the least. Socialyte Socialyte is an influencer marketing powerhouse with teams in New York, Los Angeles, Miami, and Nashville, representing some of the most sought-after creators, from digital-only to celebrity-level talent. Socialyte has a client roster of more than 125 market-leading influencers, including Jana Kramer, Lauren Bushnell Lane, Catt Sadler, and Mary Fitzgerald. For this high-end roster of talent, Socialyte secures thousands of campaigns each year with such leading brands as Amazon, American Express, Bose, Cartier, Target, and more. Socialyte has the talent roster and manages the talent's careers and secures campaigns for the talent. Socialyte has a sister agency, Lytehouse, 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. Lytehouse 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, Condé Nast, Etsy, Keurig Dr. Pepper, Michael Kors, Perrier, Prada, Ralph Lauren, and W Hotels. Okay, now that you know a little bit about Socialyte, 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 Be Social and Socialyte 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. Now we have an unmatched presence in the two U.S. capitals for influencer marketing with New York-based Socialyte and Los Angeles-based Be Social. 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 Grand View Research. It's less than $2 billion in 2016, expected to be over $14 billion this year. The industry is only growing, as any brand marketer can tell you. Which categories use influencer marketing the most? Now you will see why it is so strategic for Dolphin. Again, citing Grand View Research here, in 2021, fashion and lifestyle was the largest segment with 29% of total spend, which is the exact specialty of Socialyte, Lytehouse, and Be Social. Great. We've now built scale and leadership in the largest segment of the extremely fast-growing influencer marketing industry. 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. 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 supergroup. That would be over $7 billion this year out of the $14 billion. Collectively, the Dolphin companies represent approximately 1,000 clients, including global celebrities, feature films, television series, streaming services, musicians, venues, festivals, video game publishers, e-sports 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. For our PR firms, The Door cannot open a restaurant or hotel in today's environment without an influencer marketing campaign. Our PR firm, Shore Fire, would find a strong influencer marketing campaign extremely beneficial in launching a single, an album, or a concert tour. 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 Socialyte 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, crossover, 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 Socialyte and Be Social 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 Socialyte and our strategic rationale for bringing them into the Dolphin family, let me state that this transaction is immediately accretive. Socialyte has strong revenues and profits. They are growing, and like with Be Social, we believe we can grow them even faster by cross-selling their services to clients across our PR firms. With Socialyte and Be Social, we now expect that influencer marketing will represent 25% or more of our revenues in 2023. For more than that, I don't want to get ahead of our 10-Q and 8-K filings, so more on those topics will wait until after we have released that information. For final details, Socialyte and its 40-employee team will continue to operate under its own name out of Dolphin's New York and L.A. offices, with, if I say so, the very impressive CEO, Sarah Boyd, and its entire staff welcomed into the Dolphin family of agencies. Furthermore, Socialyte chairman Evan Luzzatto will continue as an advisor to Dolphin. All right. Whew. Let's shift gears in terms of 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. By the way, for which going forward, Socialyte 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 Theatre, 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 Theatre's red carpet was stacked with national media covering the arrival of the film stars Pete Davidson and Kaley Cuoco. We had a sold-out show last Monday with the British singer Raye. 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. 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, One Manhattan West, and L'Oréal, 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 we'll 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 Compère Lapin 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 Web3 conference and festival, where Dolphin executives moderated a panel on how Web3 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 and its clear line of sight for national expansion and success. From the get-go, five major celebrity chefs have joined the ownership group. Marc Forgione from New York, Stephanie Izard from Chicago, Michelle Bernstein from Miami, Rodney Scott from Charleston, and Tiffani 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 provide unique experiences for those who become members. That alone immediately distinguishes this concept. If you're a foodie, you know all five of those names to go along with Nina Compton, six of the 12 chefs. It also allows for the national expansion I mentioned. Upon success in New Orleans, ShaSha 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. Honestly, to give Nina her due, that was the starting point for the creative development of what became ShaSha. 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 Mirta Negrini, our CFO. Thank you, Bill, and good afternoon, everyone. I will now discuss results for the quarter ended September 30, 2022. Revenues for the quarter were approximately $9.9 million as compared to approximately $9.4 million for the quarter ended September 30, 2021. Overall operating expenses for the quarter ended September 30, 2022, were approximately $11 million compared to approximately $10.5 million in the same period of the prior year. Operating expenses are composed of direct costs, payroll and benefits, selling, general, and administrative costs, SG&A, acquisition costs, depreciation and amortization, legal and professional fees, and changes in the fair value of contingent consideration. Direct costs decreased by approximately $200,000 to approximately $837,000. The decrease is primarily attributable to the decrease in Viewpoint's revenue in comparison with the same period in the prior year, as Viewpoint incurs third-party costs related to the production of marketing materials, which are included in direct costs. Payroll and benefit expenses increased by approximately $1.2 million to approximately $7 million, primarily due to additional headcount in 2022 to support the growth of our business and stock compensation issued to our employees under the 2017 plan. SG&A costs were approximately the same during the three months ended September 30, 2022, as compared to the same period in the prior year. Acquisition costs of approximately $300,000 were primarily legal and professional fees related to the Socialyte deal. There were no acquisition costs during the same period in the prior year. Legal and professional fees increased by approximately $300,000 to approximately $800,000. The increase is primarily due to legal and auditor fees associated with the Lincoln Park agreement and the filing of the S-1, and consulting fees for the implementation of a new enterprise resource planning system. These are all one-time costs. Operating loss for the quarter ended September 30, 2022, of $1.1 million includes non-cash items from depreciation and amortization of $415,836. A gain in the change of fair value of contingent consideration of $5,000 as compared to an operating loss of $1.1 million for the quarter ended September 30, 2021, which included non-cash items from depreciation and amortization of $475,207, and a loss in the change of fair value of contingent consideration of $1.1 million. Net loss of approximately $1.3 million or $0.14 per share based on 9,664,681 weighted average shares outstanding for basic loss per share and $0.14 per share based on 9,793,715 weighted average shares on a fully diluted loss per share basis for the three months ended September 30, 2022. The net loss of $1.3 million includes non-cash items from depreciation and amortization of $415,836. A gain in the change of fair value of contingent consideration of $5,000. A gain in the change of fair value of warrants and convertible notes of $55,642, and a loss from the equity investments of unconsolidated affiliates of approximately $100,000. Net income was $141,651 or $0.02 per share based on 7,740,085 weighted average shares outstanding for both basic and diluted earnings per share for the three months ended September 30, 2021. Net income for the quarter ended September 30, 2021 of $141,651 includes non-cash items from depreciation and amortization of $475,207, a loss in the change of fair value of contingent consideration of $1.1 million, a loss in the change of fair value of warrants and convertible notes of $278,923, and a net gain of $1.7 million from the extinguishment of debt. That concludes my financial remarks. I will now ask the operator to open the phone line for Q&A. Operator, would you please poll for questions? Thank you. At this time, if you would like to ask a question, please press the star and one on your touch-tone phone. You may remove yourself from the queue at any time by pressing star two. Once again, that is star and one to ask a question. First, we'll go to James Carbonara with our Investor Relations. Thank you, operator, and hi, Bill. Allen Klee, Maxim Group, emailed in four questions. The first one is: What is your plan on NFTs given all that's happening with FTX current prices and volumes? Sure. This is unusual. I'll pretend you're Allen, James. So what's our plan? Yeah. We need to evaluate it, to be quite honest. I mean, the crypto space is obviously in quite a bit of turmoil right now. We've weathered and pushed the launch of Creature Chronicles to out past what was supposed to be the crypto winter, the spring and summer. We had a very successful launch. I don't know where crypto is gonna go from here, and we need to just take it day by day without making any hard promises one way or the other. As I mentioned in the Alan may not have heard it because if he was emailing his questions. As I mentioned in my prepared remarks, you know, we don't have any exposure on the FTX side. We'll see what it all means as we go forward and kind of live it day by day. We do believe we have an expertise in being able to market in that space, and it's proven by Creature Chronicles, proven by the hard work the team does for a variety of clients every day. I don't know that we can commit today to knowing what the future is gonna hold. Right. His next one, which I think you may have already addressed, was, you know, please provide an update on Midnight Theatre and Hidden Leaf. Yeah. I mean, just put a little color on those prepared remarks. You know, it's for those who haven't seen it. I mean, the space is gorgeous. The theater's gorgeous. The restaurant's gorgeous. Theater's unique. Those walls that are interactive, you know, high fidelity projection mapping allow for some really cool experiences. We knew. Yeah, I was educated during the process about how popular space would be for private events. The team believed in that. They knew it from the beginning. Brookfield was very complimentary of the concept for private events during the construction phase. It seems to be proving true. In these first few weeks, as I mentioned, some of the names, I mean, not only did they book the theater for private events without even being fully open, I think to a sponsor of those private events, they all wanna come back for more. It's a really nice environment and brand new space, so you know it gives us. You know, private events are lifeblood for any venue. Just by definition, you only do a private event if it's gonna bring you in more revenue and profit than if you just held your own programming. Or else you just keep your own programming in there, right? It's an encouraging sign ahead of, you know, getting our programming right and getting it up seven days a week. Great. His third of his four questions is: Any other changes in 2.0 initiatives? Well, he probably would've liked the comments about ShaSha. I mean, you know, I know that there are some of our folks probably listening to this call that really like the ShaSha model, and so do we. You know, it's not just the ShaSha itself model, as I was talking about in the prepared remarks, but you know, we do feel like you know, having access to this super group only bolstered by Socialyte right now gives us an opportunity to participate in the revenues or profits of clients or in equity of clients or initiatives. We've done a couple of those deals in the past. ShaSha is one that combines that concept of, you know, being a client and we can market ShaSha and get paid to market ShaSha, but also have a meaningful ownership percentage in it, invested to help make ShaSha in New Orleans, you know, more of a success and help expand it nationally. That's a very good deal for both sides and we feel very good about that. Those types of deals where we get, you know, a little bit of the best of both worlds are very appealing. To Charlie Dougiello and the credit of The Door, they were there from the ground floor ideating what that could be. There's an example of, quite frankly, the vision of putting a super group together, you know, that they could. Each of our senior leaders and quite frankly all the staff can have ideas that can lead to ideas to outcomes like ShaSha and which are. You know, we're talking about a James Beard Award-winning chef right? Nina Compton is pretty darn big, and a group of 12 celebrity chefs is a pretty big deal. I think to just open up a lounge that's open to the public, but also has a membership program component. There's a good example of what I said, I think something that we're excited about in 2.0 since we last spoke. Great. Allen's last question: Any commentary related to outlook? Yeah, sure. Let's see. Well, I mean, you know, obviously, whatever I would've said before Socialyte would change with Socialyte, right? Oh, and by the way, just for a fun commentary, I was thinking about just how to convey in brief comments, you know, the growth of the influencer marketing industry to those who may not be as familiar with it. I went back and I remember when Dolphin was producing shows with Nickelodeon, we were starting to dabble with online content. This is before Netflix went streaming with House of Cards or even before that with the Norwegian series, Lilyhammer. Back about 2008, we had Zoey 101 that's Class Fight on the air. I remember having the first conversations with digital groups at CAA and others, and brands didn't have social media budgets, let alone departments. Facebook, I think, somebody can correct me if I'm wrong, went public in 2006. Could be wrong. I think that's about right. I looked up from 2008 when we were playing, beginning to play with space, and we made an original series for AOL and Facebook, by the way, called Aim High. This is a great trivia question. What was the average time an American spent on social media in 2008, two years after Facebook went public? It was eight minutes a day. Last year, it was two hours and 24 minutes a day. Average. You know, it's not a surprise that brands followed eyeballs and the eyeballs of the average American. As you get younger, even more so. Two hours and 24 minutes a day is what I read online yesterday. I just get that stat, and I was like, "Wow." Socialyte will change things, but obviously on both revenue and profit. You know, as I look back at Q3, I'm happy with our revenue growth. I think that had Creature Chronicles gone in Q3 instead of Q4, you know, we would've had a double-digit revenue growth story again year-over-year. We're still on pace for the $40 million of revenue this year without Socialyte. I do think that Q3 would look vastly different if we didn't have the non-cash charges and the non-recurring expenses and the acquisition costs and the professional legal fees. I mean, our run rate for professional legal fees should be in the $350 range, maybe between there and $400. It was a little elevated in last year's Q3 because we had to file the baby shelf, which obviously, you know, whenever you do a registration statement like that, it's expensive. It was again this year for the reasons Mirta mentioned. You know, if you took away those one-time expenses of the professional legal fees and that are above normal and the transaction costs and the non-cash depreciation, then, you know, we wouldn't miss probably a small profit, would've been a bigger profit, half a million or so, which we've been happier with if Creature Chronicles launched two days earlier. It's. You know, I think our outlook stays the same. You know, we're happy with our Q4 shaping up what our revenue's gonna be. Then obviously next year, you know, our profits will increase, our revenues will significantly increase, both will actually, and we're excited about that. I think that's a fair summary. As I mentioned in the prepared remarks, we now have an influencer marketing combination that is equivalent to any one of our PR firm's verticals. The combination of Socialyte and Be Social will represent about 25% of our company's revenue. That's very meaningful, and that's on par with each of our three PR verticals, right? Obviously. It's a strong-legged stool, and I think that PR and influencer marketing, as the two legs of earned media, they're gonna complement each other like peanut butter and jelly. The back and forth of it's gonna be tremendous, create a tremendous flywheel for us as it has with Be Social. Be Social, it's grown very well within our family, and I expect the same with Socialyte. Thank you, Bill. That concludes the questions received from Allen Klee of Maxim Group. I'll hand it back to the operator. Operator? Thank you. At this time, this will conclude our Q&A session. I'll turn it back to management for any additional or closing remarks. Oh, man, I missed both Allen voice and another question. Well, thank you. Thank you for listening and obviously a very exciting day. I don't wanna bury the lead, as they say in the PR business. I could not be more thrilled to add Socialyte to the Dolphin family. The management team, as I quickly alluded to in the prepared remarks, are outstanding. The CEO, Sarah Boyd, is a whirlwind and very impressive and great leader. Same with Amanda Sorensen on the brand, Roy Peters out of Los Angeles. I've really enjoyed getting to know them. Have a lot of respect for the Luzzatto family, Mark and Evan. They're very kind people and I know that they're gonna be allies of Dolphin for years to come and significant shareholders in Dolphin. It's an exciting time for Dolphin and I really am very, very happy about this transaction heading into the holiday season, which as anyone knows, is the prime season for influencer marketing. You know, it's not out of the ordinary that half the profits or more can come in the fourth quarter. I hope we all have a holiday season. If I don't talk to everyone on the call before then, our best to you and yours, and look forward to the next time we get an opportunity to speak. Thank you, everybody. Thank you. This concludes today's call. Thank you for your participation. You may disconnect at any time.