Earnings Call: Q2 2021

Aug 16, 2021

Quarterly report

Good day, ladies and gentlemen, and welcome to the Dolphin Entertainment Second Quarter 2021 Earnings Conference Call. All lines have been placed in Investor Relations. Sir, the floor is yours. Thank you. And once again, welcome to Dolphin Entertainment's Q2 2021 earnings call. On the call are Bill O'Dav, Chief Executive Officer and Mirtan Negrini, Chief Financial Officer. I would like to begin the call by reading the Safe Harbor statement. On the call. This statement is made pursuant to the Safe Harbor statement for forward looking statements described in the Private Securities Litigation Reform Act of 1995. On the call with the exception of historical facts may be considered forward looking statements within the meaning of Section 27A of the Securities Act of 1933 in Section 21A of the Securities Exchange Act of 1934. Although the company believes the expectations and assumptions reflected in these forward looking statements are reasonable, and 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 ks 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. In the quarter. 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 Now I would like to turn the call over to Bill O'Dowd, Chief Executive Officer of Dolphin Entertainment. Bill, please proceed. Well, thanks, James, and hi, everyone. Good afternoon, and thank you for joining us today. Now James has asked me to follow our traditional format where I start by discussing our financials at a high level and then speak about Dolphin 1.0 in the 2nd quarter and then move to our recent launch of Dolphin 2.0 and announcements regarding NFTs. But James, hold on your seat, brother, because I'm going to break from format. This, I realize, may be unconventional. But I would like to first pay tribute to those who have been following Dolphin since before March 23 this year. I think everyone knows that date, the one when we made our first Dolphin 2.0 announcement in NFTs and the trading in our stock went nuclear. No, I want to speak to those who have been with us even before January of this year when we made our last acquisition. Yes, I want to speak to the OG stakeholders and investors, some of in place. We have followed us since we first spoke of our dream of building an entertainment marketing supergroup at LD Micro in December 2016 when we were in OTC stock and hadn't even brought 42 West into the family yet. And I want to speak to those who I met the following year during our roadshow prior to our uplifting to NASDAQ in December 2017. Yes, those are the people I want to speak to right now, to James Carbonara of Hayden IR, who is the first addition to the team after deciding to take Dolphin public in the summer of 2016 And who arranged for that first speaking engagement at LD Micro, I should add. To John Shaw, Jason Sardo and Keith Goodman of Maxim, on the line who helped us achieve the uplifting to NASDAQ and have been with us every step of the way since. To Josh Scheinfeld and all of my friends at Lincoln Park, on the line to Tim Johnson at Bard to Marvin Schenken, GoTainz to our directors, in place, especially the original independent directors of Mike Espenson, Nick Stannum and Nelson Thamadis, who have seen the entire journey to Mirtan Negraney, our CFO, who has also been with us since before we were public and to all of our CEOs and former private company owners, Amanda, Lois, Charlie, Dave, Marilyn, Ali and Dean, who each share the belief on the call today that we are stronger together than any of us would be alone. To their senior management teams who care so much about the work they do on behalf of our clients And to all of the over 160 Dolphins working with us today, I want to talk to them and all the others like them, those who believed and continue to believe in what we are building here at Dolphin. And so in speaking to all of you, From a financial perspective, we have reached several significant milestones this quarter. Looking at the P and L, We have set a new record with $8,600,000 in revenues. Please note that this follows Q1, which set a then record of $7,200,000 in revenues. That is 20% sequential growth from the previous record holding quarter. And as you might expect, in the past. It is significant growth from last year's Q2 revenues of $5,200,000 66 percent growth to be exact. Next, looking at our operating income. This is another huge milestone. Since we uplisted to NASDAQ in December of 2017, it's positive for the first time even when including the noncash expense of depreciation in the amortization. Yes, positive operating income from a microcap entertainment company, even including the D and A expense from our acquisitions. From a P and L perspective, that is how we measure ourselves, and so this is a big moment for our company. Now sure, it's fun to report those numbers in the P and L, but for my money, the real story is the balance sheet. As we took on debt to assemble the supergroup, many saw this as our biggest weakness as our Achilles heel. At first, they doubted we could add other private companies into our group. When that started happening with the door only 6 months after we joined NASDAQ, They then switched the story and said we wouldn't make it to the point where we could pay off those debts. Actually, they didn't just say it. They proclaimed it. Everyone is entitled to their opinion, of course, and we respect that. But many of those opinions were stated as conclusions, as facts. Well, let's recap where we are then, shall we? In a little more than 3 years since our uplifting, to pull our version of LeBron James maybe, We have acquired not 1, not 2, not 3, not 4, but 5 additional companies to join 42 West. I guess other market leading companies and did want to join and create a supergroup after all. Who knew? And even doing all of that, from a peak working capital deficit of just under $16,000,000 1.5 short years ago. And even after bringing in 6 companies, We are now reporting the 1st working capital surplus in Dolphin history at $1,250,000 And since we're a cash positive microcap company, cough, cough, we expect this surplus will only continue to grow. Why is that so important to us? Why is the balance sheet so great? Because that working capital surplus will give us strength on our balance sheet for the next set of acquisitions and 2.0 investments. For acquisitions on the same terms of any of the 6 we've already done, for example, We would be able to pay the cash component for any of them from cash currently on our balance sheet. On the call. Obviously, we had not been in this position previously, so this is another huge milestone for us. Oh, and speaking of cash, We now have $9,300,000 of unrestricted cash, which is more than all remaining debt. Yes. All debt, including long term debt and including the remaining $2,000,000 in PPP loans, which we expect to be fully forgiven and which, of course, will only improve our working capital surplus. And last but not least, remember all those puts from any of the acquisitions dating back to 2017 totaling $11,000,000 Yes, those have been paid in full, thank you very much, completely off our balance sheet, nonetheless, not a dollar, nada, zippo. So our balance sheet, What was stated to be a weakness by those who couldn't see beyond it to what we were building. Yet, our balance sheet today, 1.5 years later, on the line. Can only be fairly described as possibly our biggest strength when compared to our microcap peers. And let me tell you, All right. Now we can stop giving James a heart attack and I'll go back to his script instead of mine. Let me give you some updates on our supergroup, the companies that are making those great numbers happen. During the Q2, 42 West was involved in various capacities with 13 films that earned a total of 32 Academy Award nominations and won 6 Oscars. This past Friday, as movies are slowly coming back to theaters. 42 West handled Respect, MGM's biographical drama film based on the life of Aretha Franklin. In the past. And looking ahead, upcoming promotional campaigns include some doozies, including Universal Pictures' film adaptation of 6 time Tony Award winning musical Dear Evan Hansen coming in September MGM's highly anticipated latest installment in the James Bond franchise in October as well as Paramount's Top Gun II starring our very own client, Tom Cruise, coming in November. So we've got major releases coming out one after the other through the fall. Turning to music, Surefire Media had a terrific second quarter, really, really great. Let's spend a little extra time on SureFire because Marilyn and the team are truly firing on all cylinders. I'll start with a special shout out to Shortfire Media clients Carole King and Todd Rundgren, who were inducted into the Rock and Roll Hall of Fame. Awesome. And although the return of a full Turing calendar is very much a moving target these days, SureFire worked with day 1 client in the past several years. Bruce Springsteen for his return to Broadway with a summer run at the St. James Theatre as well as longtime clients Hall and Oates and the Dave Matthews Band to promote live performances. But it's not just the artists. Surefire represents many businesses from all facets of the music industry, in the past, including 1 of, the digital company from Quincy Jones and Light, the ticket reselling platform, among many others. Finally, it should be pointed out that SureFire's work with musicians as authors and influencers has attracted a lot of attention and allowed for the growth of a very nice roster of non musician clients, on the line. Shifting to consumer and hospitality, the door welcomed iconic ice cream brand Haagen Dazs and beloved European baby food brand Haagen Dazs and led campaigns for the Dominick Hotel, Shepherd's Inn's Ocean Bourbon and Virgin Hotels in New Orleans. Also, Charlie and Lois Hadidore have taken a leadership position for us in these early months of the NFT business, guiding our launches in developing processes to onboard more large scale campaigns, which we'll highlight soon, but I wanted to take a moment to thank them for all of their hard work in this space. As for video production, Viewpoint, excuse me, again, also had an exceptional quarter, producing a wide range of videos, everything from traditional network and entertainment clients, CNN, National Geographic, Viacom and HBO Max to the rapidly growing consumer product and brand video work done for clients including PayPal, Biogen and AAA. On a personal level, this is a company that cares deeply about charitable opportunities and making a positive impact in the world. So I'd like to highlight Viewpoint's work with The Door to develop strategy and digital content for Leary Firefighters Foundation's International Firefighters today broadcast event, which recognizes firefighters and launched the foundation's virtual training video series with the largest fire training exercise in New York in Citi. And finally, moving to influencer marketing. BSocial was another company that had a fantastic quarter, really executing across both the brand campaign side and the influencer talent management sides of the business. This is what can happen when you've got a young, exciting market leader in such a growing market. And I honestly think some may be sleeping on this aspect of our company. It was on this earnings call last year that I tried my best to express our great enthusiasm for adding BSocial to our supergroup, explaining that influencer marketing and PR are the twin pillars of earned media with influencer campaigns representing tremendous growth in our industry. While eMarketer and Business Insider recently inaugurated their forecast for this industry with an expectation of 33.6 percent year over year growth to $3,690,000,000 in influencer marketing spend in the U. S. In 2021, which is $1,000,000,000 more than 2020. Furthermore, their forecast for both 2022 and 2023 also showed double digit growth, with total influencer marketing spend nearing $5,000,000,000 in the U. S. In 2023. We very much wanted to be in this space, and we have a gem of a company with BSocial. Their skill set is an advantage for our supergroup, and we'll be sure to leverage it to the fullest extent possible with our 2.0 initiatives. Speaking of which, let's talk about Dolphin 2.0. As a recap for anyone new on the call or to the Dolphin story, we define the work of our supergroup under Dolphin 1.0 as the very best at marketing pop culture, and we define what we call Dolphin 2.0 as using pop culture to market, specifically marketing assets that we own. Simply put, we are looking to own assets for which our marketing companies have a particular expertise and therefore, which will give us the best chances for success. We want to own what we know we can market better than anybody else. So what would those categories be? There are 3: entertainment content, live events and consumer products. And we also talked about a 4th category wherein we take equity stakes in other people's companies that have entertainment content, live events or consumer products. Those then are the buckets or categories we talk about when we talk about in Falcon 2.0. We used the 1st 3 years of our public company's existence to build scale and reach across all of pop culture by assembling our supergroup of marketing companies that we think are the very best at what they do in marketing film, television, music, culinary, in hospitality, video games, esports, consumer products, etcetera. I think after the one point of summary I just gave, it would be very difficult that we don't have for anyone to say that we don't have the best in class subsidiaries across all of those verticals. The rest of our lifetimes will now also include developing, producing and purchasing assets that we will own, giving us greater upside and success with these projects. We previously announced our expectation that we will seek to have 2 initiatives from each of the 4 categories per year to guide to a cadence we feel we can achieve. The only exception to this pace will be that we will not start our live events investments until 2022 for obvious reasons. As pretty much everyone on this call knows, we have previously announced our entrance into the NFT business, which was the first of our 2 consumer products announcements expected for this year. I can now also say that we've identified our First 2.0 Content initiative and our First 2.0 Equity Stake Initiative. And while we had hoped to be able to speak about both of those initiatives on this earnings call, on the timing of our partners dictates that we will probably need to wait until later in this quarter to be able to do so. Those initiatives will give us the first one in each in the 3 buckets for this year: content, consumer products and equity, and we are hard at work in selecting the second one in each of those 3 buckets for 2021. And speaking of the NFT business, many of you saw the partnership with FTX we announced 2 weeks ago today. FTX's platform and technical skills with the blockchain were the final pieces in the puzzle we felt we needed to have to launch large scale collectible businesses with major partners. I don't think there's anyone on this call that hasn't heard of FTX, but just in case, they are a leading cryptocurrency exchange with over 1,000,000 users and over $10,000,000,000 of average trading volume per day. Last month, they announced the largest raise in crypto exchange history, a $900,000,000 Series B round valuing in the company at $18,000,000,000 And to expand their visibility in the U. S, FTX has sought sponsorship opportunities in the sports and esports industries, which dovetail nicely with our NFT ambitions also in those industries. Some of FTX's sponsorship highlights include their 19 year naming rate deal for FTX Arena, home of my beloved Miami Heat Their 210,000,000 10 year sponsorship of TSM, labeled the most valuable team in esports by Forbes, the largest sponsorship deal in esports history and their groundbreaking deal to become the official cryptocurrency exchange brand of Major League Baseball, for such agreement with 1 of the major sports leagues in the United States. So in summary, we feel our goals and interests in the NFT space are aligned. Now Dolphin will develop and execute the creative branding, production and marketing of these programs alongside FTX, together, we will develop and program global NFT marketplaces targeting all of Dolphin's verticals, in the sports, film, television, music, gaming, esports, culinary, lifestyle and charity industries. We see the trading of NFTs as much more than just a list of digital products. We view our marketplace experiences as the future of fandom for internationally recognized brands and franchises in sports and entertainment. On the call. To achieve this vision, we need a seamless user experience because buying NFTs today, it's the opposite of that. To put it nicely, to buy NFTs today on the Ethereum blockchain is clunky. We wanted to be able to have the wallet and the product all in one place. We We wanted to be able to allow the consumer to pay with crypto, credit card or traditional currency. We wanted to have the product available on wholly owned and programmed online destinations. We wanted to have the same product available for purchase directly in app, and we also wanted to have actual customer support when necessary, all of which are enormous differentiating factors that FTX either provides now or can provide as we build larger and larger placed, which we intend to do. To put it simply, golf and many, many others were waiting for the ability to sell out of teas using credit cards in place for the elimination of gas fees that prohibit competitively pricing collectibles. There's simply no business rationale for selling products at $10 or $20 when it costs you $100 in gas fees to upload these products for sale and by the way, when it would cost the consumer another $100 to download the product after buying it. Those gas fees are why the NFT markets, primarily up until now, have been dominated by speculative assets like ARP because they can be priced at $1,000 or more, where even in gas fees becomes just a fraction of the cost. Now with FTX and the ability to take credit cards and the elimination of gas fees, We think for ourselves and honestly for the major studios and record labels that have predominantly sat on the sidelines as well, waiting like we have been. When you can sell digital products for any price point, like $25 or less if you want to, then you can create a true market, a true cross industry ecosystem in collectibles. We like the state of the industry and we like our position and experience within it, given that our PR firms have marketed collectibles for virtually every major studios' consumer products division as well as industry leaders like Funko and Mattel. We know how to market collectibles and now we can make our own and price them competitively. Let's see what happens over the next few months. We're certainly very excited for the possibilities. And to remind everyone, NFTs only represent 1 of the Dolphin 2.0 initiatives we expect to announce this year. We believe each of these 2.0 initiatives, in the past, including NFTs, have the potential to be a major catalyst for our company. Dolphin 2.0, after having identified the first in the Q1 of 2019. And after identifying the first initiative in equity stakes is gathering momentum and we can't wait to share more. Oh, and did I mention that we have reported positive operating income on record revenues? Yes, I did. Okay, that's good. And how about the fact that we have a working capital surplus with more cash on the books than all remaining debt, Including both long term and the PPP loans, which we expect to be forgiven. Oh, I already said that too? Okay, great. You see, I just want to make sure I didn't forget to mention that we are a profitable entertainment microcap company with a working capital surplus and more cash on our books and total debt on the line by saying the most sincere thank you to everyone who had faith in us along our journey. We are far from reaching our fullest potential and we know that, but it's also important to celebrate successfully reaching milestones along the way. So with that said, I'll now turn it over to Mirza. Thank you, Bill, and good afternoon, everyone. On the call. I will now discuss results for the quarter ended June 30, 2021. Revenue for the quarter ended June 30, 2021 was approximately $8,600,000 compared to approximately $5,200,000 in the quarter ended June 30, 2020. Overall operating expenses for the Q2 of 2021 were approximately $8,600,000 compared to approximately $5,400,000 in the Q2 of 2020. Operating expenses are composed of direct costs, on selling, general and administrative costs depreciation and amortization legal and professional fees and payroll costs. Direct costs for the Q2 of 2021 were $833,511 compared to $656,849 in the same period of the prior year. On the line. Selling, general and administrative expenses for the Q2 of 2021 were approximately $1,200,000 compared to $978,527 in the Q2 of 2020. Legal and professional fees were 457 $1,998 in the Q2 of 2021 compared to $362,008.53 in the Q2 of 2020. Payroll costs were approximately $5,600,000 in the Q2 of 2021 as compared to approximately $2,900,000 in the Q2 of 2020. On the line. Operating income for the quarter ended June 30, 2021 of $56,293 included non cash items from depreciation and amortization of $478,270 as compared to an operating loss on a quarterly basis of $179,038 which included non cash items from depreciation and amortization of 496 $1,461 for the same period in the prior year. Net income for the quarter ended June 30, 2021, from a $1,000,000 gain on extinguishment of debt and positive changes in the fair value of derivative liabilities, warrants and contingent consideration up $498,974 partially offset by depreciation and amortization at $478,270 This compares to a net loss of approximately $2,900,000 on the call, which included non cash items from depreciation and amortization of $496,461 a negative change in fair value of derivative liabilities, warrants, put rights and contingent consideration items in the amount of $1,700,000 an approximately $900,000 from the beneficial conversion feature of certain convertible instruments for the 3 months ended June 30, in 2020. For the 3 months ended June 30, 2021, we have basic in the quarter. We expect earnings per share of $0.17 per share based on 7,000,000 664,000 weighted average shares outstanding and diluted earnings per share of $0.13 per share based on 7,913,396 weighted average shares outstanding. For the 3 months ended June 30, 2020, we had basic and diluted loss per share of $0.62 per share based on 4,719,241 weighted average shares outstanding. On the call. Cash and cash equivalents were $9,900,000 as of June 30, 2021 compared to $8,600,000 as of December 31, 2020, including restricted cash of approximately $700,000 in each period. On the call. That concludes my financial remarks. I will now ask the operator to open the phone line for Q and A. Operator, can you please poll for questions? We will go first to Allen Klee at Maxim Group. Your line is open, sir. Please go ahead. A couple of things on the financials to start. The sequential increase in revenue from the Q1, Where did that come from and any thoughts on the sustainability of it? Thank you. Sure. And thank you, Alan. Yes, it's a nice call to be on. Well, I mean, we 1st, on the sustainability, we're excited about the fact that our revenues grew As they did without movies in theaters and without the restaurants business and without the live touring into a large degree as we talked about on our last quarter. So really, I want to give credit obviously to the subs because this is where having market leaders in their respective fields, They're growing even without certain recovery catalysts. And I think it was a little Surprising to many that the growth we did experience from the Q1. I think with Shoot 3 and through the end of this year, I am feeling that We certainly don't see anything that there was no one time revenue or event that occurred or something that would It was just organic growth, and we anticipate we don't see any reason why it can't continue. And I am not saying though that I think certain of those recovery categories will come back this year. I'm The movies are, as of right now, at least, as I stated in the prepared remarks, I don't think we are confident. I do not think we are confident in the music business right now. We're hopeful. And the restaurants we're also Waiting and seeing. So obviously, that only bodes well for 2022 because I don't think any of us think it will go beyond that. So that's It's just organic growth across each of the subs. Thank you. I just have a few more Financial related questions. If I were to calculate a gross margin, if I took your direct costs and payroll And imagine that as cost of goods sold and came up with a gross margin, that number also improved sequentially. So the profitability of the gross profits, and I was wondering if you could maybe point to what was behind that and Thoughts on the potential for that to improve? Well, to a large degree, it's that we've invested to keep our very best people during a pandemic, right? And in doing so, I'm trying to look beyond the pandemic and when you've got superstars and we think we've got a whole host of them. We wanted to keep them even if they were working at 70%, 80%, 90% capacity and you're starting to see that. I mean look at the margin growth to your point Alan, quite simply the same amount people were able to handle a little bit more work, and there it is. And we'd rather invest in the people we have and at full salary and etcetera, etcetera, then some of our competitors have been laying off people or whatnot. So It worked out very well for us this quarter and we think going forward. Right. I also in the last three quarters, your SG and A has declined sequentially. Could you explain what's going on there? That one I don't know at the top of my head, brother. That's fine. I can move on. So for Dolphin 2.0 where you're owning an asset, Big picture, not specific numbers. Do you think that the margins of the businesses that in general when you own it compared to where you're Doing the PR marketing that how do you think the margins would be for the 2.0 businesses relative to your legacy other businesses? Yes. I mean, in one sentence, the thought process is, of course, that When you can own the asset, you make a better margin and gross dollars too, I might add, than servicing the asset. So I'm excited for the margins we're showing now. Thank you for pointing that out, Alan. That was a This is Kate, a question you asked previously. But when we go into 2.0 with successful assets, there's this you could service all day long. You'll never get to the margin ever that you could do by servicing assets you own, Obviously. So speaking as someone who's produced successful television series in the past in digital series and it just doesn't compare on a dollar for dollar investment basis. So as we get as our company evolves and includes more and more and more 2.0 initiatives and where we'll be in a quarter, where we'll be 3 years from now, out like we I took us on a trip down memory lane in my prepared remarks to and thank those who were with us since 3 years ago on the line when we laid out the strategy of 3 years and we'll be with Supergroup so we could get to this day. I think 3 years after starting 2.0, The margin profile will be vastly, hopefully, even stronger than it is today because we'll have a much We'll have a much bigger mix of 2.0 to go with our 1.0 revenue. That's great. And on on a minute. If I could add, our CEOs not only know that, that's why they joined Dolphin, right? The whole point of doing Dolphin, The whole point from and it seems timely to reminisce back to the roadshow that, as I mentioned, at LD Micro as Josh Scheinfeld and Tim Bard were listening Tim Chunks, I'm sorry, were listening into. Then the whole vision was to get to this point so that we could own some of the assets we were marketing. And that's why each of those private company owners joined the group because they know the margins better. They know what can happen if you have a successful piece of content or live event or consumer products. So I think I mentioned it on the 10 ks call this year, with 2021 represent for all of us what the and it is the starting line. And that's why we're so excited. And it's great to be at the starting line With where we are financially, obviously. Sorry, Alan, I know you had another question. No, no, that's fine. Thank you. For NFTs, it seems like the FTX partnership is pretty meaningful and potentially Game changing. Could you comment on where you think that can bring this business and kind of what we can look forward to seeing in 2021? Yes, sure. And Our friends at FTX probably don't need us to share They're selling points, if you will, with them. But obviously, they're a great a well recognized company and doing it very quickly in just a couple of years of existence. But what they represent for us As we were out there looking and surveying the landscape of NFTs, right, and where the business was going to go, right? I think we, by that, I mean people that and have sold or marketed collectibles business, not an art business, a collectibles business. Previously in the physical world, We needed to create price points that were under $50 a product, and we needed to create price points in the $10 to $25 range, and it just wasn't possible Until you could eliminate the gas fees. You needed a different blockchain than or a workaround to the current Ethereum blockchain, where MTS are primarily sold. So that's point number 1. And secondly, to reach all consumers and not just 1% of consumers, you needed to not be able to have the consumer pay with something other than crypto. So when we were looking for those two things, FTX only fit those two bills and allowed us to do both of those, But they're in exchange and they're both the U. S. Components FTX and international one too. So as we have aspirations to do global NFC marketplaces, right, in those industries and music. I mean, there's nothing more global than music, right? Film, television, other industries and verticals that are global by nature, right, Then to be able to accept payment in not just credit card, obviously, it eliminates much of it, but And in crypto, but in fiat currency, too. And with an exchange that's licensed and available globally. And that is the technical partner in the blockchain partner, we want it for what our aspirations are in the collectibles business. When you think about the promise of digital delivery, right? What's the biggest disruptor in that in our industry in our lifetime? Netflix, right? Well, what did Netflix have that traditional linear Cable channels didn't. They weren't bound by national boundaries. They're a global service. It's digital delivery on a global scale. Collectibles can be transformed that same way with digital delivery. If you have a partner, it can be global. And a reason to highlight those 2 or 3 sponsorship deals FTX did, and I'll state the obvious here, but I think it's implied. You can't just drop a check and name a major sports arena in this country, right? They named an NBA franchise as Arena and they're the official partner of Major League Baseball. Well, to get either one of those deals, you're vetted 6 ways to Sunday, right? This is an exchange that in the U. S. Follows the KYC compliance know your customer, They follow AML, anti money laundering laws. They have to be endorsed and accepted by 2 of the 4 major sports leagues and the only cryptocurrency exchange by any. So we can't Feel more comfortable with our choice of partner and their technological expertise is exactly what we wanted the market to seek as we got closer to this fall as we have aspirations again for global collectibles marketplaces. And so we're excited about the partnership. We've enjoyed our time with them So far and there's a lot more to come. It seems like what FDX One of the other opportunities and I think you might have you did touch on this is, but the NFT market could potentially be transforming From more of high end art markets, more collectibles, lower end. And so we may not even know if we're looking at What's happened this year with high end, what the real opportunity is as this market is being created For a different type of product, what do you think about that? Yes. I think I don't think we'll even need a 3 year horizon. I'd be surprised at 12 months from now. Whatever we're calling NFTs And maybe a branding or marketing campaign will change that, right? Whatever that is 12 months from now Will be a market that's bifurcated. There still will probably be an art or speculative market in the same way. Aspect to trading on the blockchain, I don't think it will go away. It's not something we have any particular interest in or expertise in. But I think imagine a world in which the major studios are launching their own collectibles, from Disney to Paramount to Universal to Warner Brothers to Sony to the major record labels, Sony Music, Warner Music, Universal Music, That's a lot of marketing. That's a lot of firepower. That's a lot of pop culture recognition across the general consumer population. I mean, it will be almost unavoidable, that products are being offered. And I think if you have custom interfaces, which we're getting to, and if you have the ability to pay with a credit card, then purchasing an NFT And now it's going to be indistinguishable from purchasing a mug on eBay or A product from Amazon, right? You're going to go to a custom interface website and you're going to purchase something. So I think if that's all grouped under the umbrella of what an NFT business is, great. If it's something, if it's just seen as just more it was just seen as what it will be, selling consumer products and tickets to experiences and unlocking value for Collectors or value for people buying these digital products, in real world benefits too, Then it's going to look vastly different and it will be it has the potential to boom That's why we're excited to be in it. I mean, the dollar amounts in the NFT space have been reported widely up till now. But If someone really wants to think about it, how many people, gross number of people in the U. S. Have bought an NFT today? I do not believe it would have been I don't think that number would reach 1,000,000 people. 12 months from now, we might have 10, 25,000,000, 50,000,000 people will have bought what we call an NFT, which is a collectible that just happened to be delivered on the blockchain. So it's an exponential growth of the consumer base. And that's what we see coming and why we want to play in that space. Last question. How do you feel about the environment for Producing an independent field? Better. I do. I don't want to get ahead of my keys on what any of our content initiatives that we may know are coming. But I would say that I do feel better, Alan. The industry is coming back. Production insurance, while not solved completely, is getting into a place where I feel That we feel there will be more independent production starting even as early as Q4 this year, certainly Q1 of next year. And without having to take the very expensive burden of risking it on a COVID outbreak onset. So I do feel good about production, and I'd be surprised if we aren't able to take advantage of opportunities in the film entertainment space in the coming months. That's great. Congratulations. Thank you. Thank you, Al. On the line. And with no other questions holding, I'll turn the conference back to Mr. Dowd for any additional or closing comments. Well, thank you. I was looking forward to the second question, but Alan, as usual, is very thorough. So probably took a lot of people's questions And thank you for those. And I'm excited for what's to come. I think by the time we speak again in this format in 13 weeks in the middle of November. I imagine we'll have quite a few hopeful additional topics to talk about and what we are free to talk about today. And maybe that's just all part of the plan. It allows today to be a celebration of those 3 milestones we hit. It certainly Feels great, as I think you probably sensed on my prepared remarks, record revenue, congratulations to each of the companies within Dolphin to report positive operating income even after the depreciation and amortization, which is higher for our company than others because as we've been an acquisition story up till now. It's really a fabulous milestone since listing on NASDAQ. And of course, our working capital surplus. We've got a great balance sheet, it's only going to improve. And I'm very, very thankful for those who believed in us from day 1 and who we picked up along the way. And this type of validation, I'm sure, is very comforting for them. So thank you, everybody, that's been listening, and I appreciate the time and we look forward to speaking again in the next quarter and see what we can talk about. Have a great day. Ladies and gentlemen, that will conclude today's conference. We thank you for your participation. You may disconnect at this time and have a great day.