10-K/A: Dolphin Entertainment Files Amended 10-K to Include Part III Information

Dolphin Entertainment files an amendment to its annual report on Form 10-K to include information required by Items 10 through 14 of Part III.

Summary

• Dolphin Entertainment, Inc. filed Amendment No. 1 to its Annual Report on Form 10-K for the year ended December 31, 2024.
• The amendment includes information required by Items 10 through 14 of Part III of Form 10-K, which were previously omitted from the original filing.
• The original Form 10-K was filed with the Securities and Exchange Commission on March 27, 2025.
• The amendment restates Part III, Items 10 through 14, and Part IV, Item 15 of the original Form 10-K in their entirety.
• New certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are included as exhibits to the amendment.
• The amendment does not modify or update any other information in the original Form 10-K or reflect events occurring after the original filing date.
• As of March 20, 2025, the number of outstanding shares of the registrant's common stock was 11,168,119.
• The aggregate market value of voting and non-voting common equity held by non-affiliates as of the last business day of the registrant's most recently completed second fiscal quarter was $12,869,919.
• Grant Thornton LLC served as the auditor, located in Fort Lauderdale, Florida.
• The audit fees for the year ended December 31, 2024, were $750,750, and audit-related fees were $110,288.
• The company had 941,699 shares of Common Stock available for future issuance under the 2017 Plan as of December 31, 2024.

Sentiment

Score: 6

Explanation: The sentiment is neutral. The document is a regulatory filing providing factual information. While there are some negative aspects related to related party transactions, the overall tone is objective and informational.

Positives

• The company has a Code of Ethics for Senior Financial Officers and a Code of Conduct for Directors, Officers and Employees.
• The Audit Committee is comprised of independent directors and includes an audit committee financial expert.
• The Compensation Committee establishes salaries, incentives, and other forms of compensation for executive officers and directors.
• The company has an insider trading policy to promote compliance with insider trading laws.
• The company has an equity incentive plan approved by security holders.

Negatives

• The company has significant related party transactions, including promissory notes and accrued compensation owed to the CEO and his brother.
• The company has a substantial amount of accrued and unpaid compensation to its CEO.
• The company recorded interest expense of $186,344 related to the DE LLC Notes during the year ended December 31, 2024.
• The company recorded interest expense of $263,219 related to an employment agreement with Mr. ODowd for the year ended December 31, 2024.
• The company did not repay any principal or interest amount owed to Mr. Mock during the year ended December 31, 2024.

Risks

• Related party transactions could present conflicts of interest.
• The company's ability to repay outstanding promissory notes and accrued compensation is uncertain.
• Failure to maintain effective internal controls over financial reporting could adversely affect the company's ability to accurately report its financial results.
• The company's reliance on key personnel, such as the CEO and CFO, could pose a risk if they were to leave the company.
• The company's business is subject to various risks and uncertainties, including competition, changing consumer preferences, and economic conditions.

Future Outlook

The document does not contain a specific future outlook, but it does reference ongoing related party transactions and the administration of the equity incentive plan.

Management Comments

• William ODowd, IV, Chief Executive Officer, certified the accuracy and completeness of the report.
• Mirta A Negrini, Chief Financial Officer, certified the accuracy and completeness of the report.

Industry Context

The document provides standard disclosures required for publicly traded companies, including information about corporate governance, executive compensation, and related party transactions. These disclosures are common in the entertainment industry and are used by investors to assess the company's management and financial health.

Comparison to Industry Standards

• Dolphin Entertainment's corporate governance structure, including the presence of an audit committee and a compensation committee, aligns with industry standards for publicly traded companies.
• The company's executive compensation program, which includes salary and bonus components, is typical for companies of its size and industry.
• The disclosure of related party transactions is a standard practice in SEC filings and allows investors to assess potential conflicts of interest.
• The audit fees paid to Grant Thornton LLP are comparable to those paid by other small-cap companies in the entertainment industry.
• Comparable companies in the entertainment industry, such as Lions Gate Entertainment and AMC Entertainment, also provide detailed disclosures about their corporate governance, executive compensation, and related party transactions in their SEC filings.

Related Party Transactions

• William ODowd, IV, our Chief Executive Officer and the Chairman of the Board, has related party transactions with Dolphin Entertainment, LLC (DE LLC), an entity owned by Mr. ODowd.
• On June 1, 2021, we exchanged a promissory note that had been issued to DE LLC on October 1, 2016, for a nonconvertible promissory note with a principal balance of $1,107,873 that matures on December 31, 2026.
• On April 29, 2024 and June 10, 2024, we issued two nonconvertible promissory notes to DE LLC in the amounts of $1,000,000 and $135,000, respectively and together with the June 1, 2021 nonconvertible promissory note (the DE LLC Notes).
• The DE LLC notes bear interest at a rate of 10% per annum.
• As of December 31, 2024 and 2023, we owed DE LLC $2,242,873 and $1,107,873, respectively, of principal and $263,767 and $277,423, respectively, of accrued interest on the DE LLC Notes.
• During the years ended December 31, 2024 and 2023, we recorded interest expense of $186,344 and $110,787, respectively, related to the DE LLC Notes.
• During the year ended December 31, 2024, we made a $200,000 cash payment for interest on the DE LLC Notes and did not repay any of the principal balance.
• On September 7, 2012, we entered into an employment agreement with Mr. ODowd, which was subsequently renewed for a period of two years, effective January 1, 2015.
• The agreement provided for an annual salary of $250,000 and a one-time bonus of $1,000,000.
• Unpaid compensation accrues interest at a rate of 10% per annum.
• As of each of December 31, 2024 and 2023, we had a balance of $2,625,000 of accrued compensation related to this agreement.
• As of December 31, 2024 and 2023, we had a balance of $1,503,805 and $1,440,586, respectively, of accrued interest related to this agreement.
• Donald Scott Mock is the brother of our Chief Executive Officer, Mr. ODowd.
• On January 16, 2024, May 28, 2024 and December 30, 2024, we issued three nonconvertible promissory notes to Mr. Mock in the amounts of $900,000, $75,000 and $8,112, respectively, and received proceeds of $983,112, (collectively, the Mock Notes).
• The Mock Notes bear interest at a rate of 10% per annum and mature on the fourth anniversary of their respective issuance dates.
• During the year ended December 31, 2024, we recorded interest of $90,417 related to the Mock Notes.
• As of December 31, 2024, we owed Mr. Mock $983,112 of the principal balance of the Mock Notes and $90,417 of accrued interest on the Mock Notes.

Stakeholder Impact

• Shareholders are impacted by the company's financial performance and corporate governance practices.
• Employees are impacted by the company's compensation policies and equity incentive plan.
• Customers are indirectly impacted by the company's ability to create and distribute entertainment content.
• Creditors are impacted by the company's ability to repay its debts, including promissory notes to related parties.

Next Steps

• The company will continue to administer its equity incentive plan.
• The company will continue to disclose related party transactions in its SEC filings.
• The company will hold its next annual meeting of shareholders.

Key Dates

Keywords

Dolphin Entertainment, Form 10-K, Amendment, Directors, Executive Compensation, Security Ownership, Related Party Transactions, Audit Fees, Corporate Governance, Financial Reporting