Greetings, ladies and gentlemen, and welcome to the Dolphin Entertainment First Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, James Carbonara.

Sir, the floor is yours..

Thank you. And once again, welcome to Dolphin’s first 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 Section 27A of the Securities Act of 1933 and 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.

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..

Maverick to the largest domestic Memorial Day opening in history grossing $160.5 million. The film has performed remarkably well this summer and has now passed $1.2 billion at the worldwide box office.

For its part, The Door has also had a strong start to the year, already having landed the fast-growing plant-based quick service restaurant PLNT Burger in late 2021, a venture between longtime Door clients, Spike Mendelsohn and entrepreneur Seth Goldman of Honest Tea fame.

The Door was brought on to launch Chef Spike and Goldman’s newest venture, Eat the Change, a plant-based snack company. You might have seen the recent announcement by Goldman that he will bring Honest Tea back into the fold to Eat the Change after discontinuation with Coca-Cola.

With both of these brands, PLNT Burger and Eat the Change under The Door’s watch, The Door is a major player in the movement of planet-friendly eating. Kudos to The Door and 42West, proving yet again why they are perennially on Observer’s Most Powerful PR Companies list. That concludes my update on Dolphin 1.0 and is the perfect segue to Dolphin 2.0.

Because with Dolphin 2.0, we want Dolphin and its shareholders to have some equity in projects and participate in the upside that our best-in-class marketing companies routinely facilitate for our clients.

That’s why in December 2021, we took an equity ownership stake in a ready-to-drink beverage company called Crafthouse Cocktails; and why this past May, we announced a multiyear agreement with IMAX. That’s the thesis behind Dolphin 2.0 and taking ownership stakes in assets that we know how to market.

We just gave concrete examples that we know how to market ready-to-drink beverages and feature films. Now, we have ownership stakes in both areas. As a reminder, for anyone new on the call or to the Dolphin story, we define the work of our Super Group 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 assets that we own.

In terms of a business model, I’ll remind you that broadly speaking, there are two types of Dolphin 2.0 initiatives, ones where we develop assets in the categories of content, consumer products or live events and ones where we receive ownership stakes in other people’s companies that have assets in those categories.

Let’s talk about that second type of Dolphin 2.0 investment first, when we take ownership stakes in other people’s companies. I’ll start with Crafthouse Cocktails, the pioneering brand of ready-to-drink all-natural classic cocktails. They have an award-winning product line and they wanted the Super Group led by The Door to help market their product.

They pay us a cash fee every month to do just that, and we have also received an ownership stake in the Company in return for the added value of the services and relationships extended by the entire super Group.

With respect to these types of Dolphin 2.0 initiatives, we typically look to receive somewhere between 5% and 10% of the equity in the respective company in addition to the monthly cash fee.

With respect to the other types of Dolphin 2.0 initiatives, wherein we develop assets that we are excited to market, we do not receive a monthly cash fee since we would often simply be paying it to ourselves, but correspondingly, we take a larger ownership position in the product or venture.

Examples of these types of Dolphin 2.0 investments would be Midnight Theatre and the NFT marketplace we have built.

Let’s start with Midnight Theatre, a contemporary variety theater and restaurant that will be a true anchor for Manhattan West, the $4.5 billion development from Brookfield that’s between 31st and 33rd and between 9th and 10th Avenues in Manhattan.

Inside Midnight Theatre, there is Hidden Leaf, which we just opened a couple of weeks ago, the newest restaurant concept from our partner, Brooklyn restaurateur, Josh Cohen. Many of you know Josh’s other restaurants, including Lilia’s, one of the hardest to get into restaurants in America.

And as an aside, a favorite date night spot of multiple celebrities, some of which we represent as well as Shane Montana. [Ph] So, Hidden Leaf is a drop-dead gorgeous stand-alone restaurant within Midnight Theatre, and you would think it was straight out of The Great Gatsby. It is stunning with beautiful and timeless art deco design.

The restaurant features a Pan-Asian menu created by Executive Chef Chai Trivedi, previously from Tamarind and Buddakan for those foodies out there. I personally have too many favorites to name off the menu, but the dim sum and the small plats are out of this world.

And also, Josh has recruited internationally renowned bartender Iain Griffiths, co-founder of the wildly acclaimed and influential London bars Dandelyan and White Lyan, who is making his first permanent foray into the New York City drink scene with the opening of Hidden Leaf’s bar and a street-level companion, a high-energy aperitivo bar Midnight Cafe.

By the way, if you’re not familiar with those London bars, both of them have been ranked by many publications as one of the best bars in the world.

As you can see, these are world-class talent in the food and beverage space to pair with what we believe will be a world-class venue in Midnight Theatre, which we expect to be open for preview shows in August and with a grand opening in September.

Dolphin is the largest single owner within Midnight Theatre, and we manage all aspects of publicity and marketing for the venue, both the restaurant and the theater as well as facilitate talent and commercial relationships within the entertainment and culinary industries.

As we’ve mentioned before, we’re hopeful that Midnight Theatre creates a relatively straightforward or predictable range of modeling because even though it has two components, a restaurant and a theater, as many of the variables already defined for the model. There are 100 seats in the restaurant, and there will be 160 seats in the theater.

So, anyone can model out an average ticket price and the number of turns in the restaurant and do the same in the theater within an assumption of a number of shows per week. This will quickly get you to a revenue model. And of course, we will look to operate the venue at a reasonable profit margin standard in the industry.

You can quickly see how this opportunity can become very exciting for a company at this stage of Dolphin in 2022. We invested $1 million into the venture for a stake of approximately 12.5%. We also invested in options for up to another 20 -- approximately 25%.

As you can tell, we’re very excited for Midnight Theatre and success, of course, we will look to add locations around the country and around the world. Now, I’ll turn to NFTs.

In the first quarter of 2022, Dolphin Entertainment launched our Web3 marketing, consulting and communications agency, We Come In Peace after attracting over 2 dozen NFT and metaverse clients within the past year. We didn’t need to acquire an agency in the space. We already had the clients to launch the leading agency.

In the first quarter, We Come In Peace partnered with celebrity chefs and restaurateurs, Tom Colicchio and Spike Mendelsohn to develop Chfty, a collection of NFTs that provide owners with access to a culinary community led by the founders with virtual and in-person cooking events. The collection went on sale in March and quickly sold out.

We Come In Peace’s partnership with Chfty will continue with the creation of a larger Web3 culinary ecosystem aimed at helping chefs, foodies and brands integrate into Web3.

We Come In Peace has quickly developed a full slate of metaverse-related clients and NFT projects, including ones with supermodel Bella Hadid and music industry mogul, Troy Carter.

Our summer slate includes drops of more than half a dozen NFT collections and we look forward to updating you on our progress when we speak again in a few weeks for our Q2 earnings call. Lastly, our most recent Dolphin 2.0 initiative is the announcement I referenced earlier.

Dolphin entertainment has struck a multiyear coproduction and distribution agreement with IMAX for a slate of documentary features. The first project we have greenlit is Blue Angels developed and coproduced with the renowned producer J.J. Abrams and its Bad Robot Productions, along with Zipper Bros Films.

Blue Angels follows the newest class of the storied Navy and Marine Corps flight squadron through intense training into their first season of heart-stopping aerial artistry, while also sharing the emotional stories of the veterans on the team, who this year will take their final flights.

It will mark the first time the iconic blue and yellow F/A-18 Super Hornets will be featured in IMAX.

The film is being shot with state-of-the-art IMAX cameras and will provide a truly unique view of these incredible pilots, as for the first time ever, audiences will be able to go inside the formation, inside the cockpit and inside the helmet for visceral adrenaline rush ride of a lifetime.

Blue Angels is currently in production and is expected to hit IMAX theaters in the second half of 2023. IMAX is simply best-in-class when it comes to the moviegoing experience and certain stories like the Blue Angels can only be enjoyed to their fullest potential to have seen in the IMAX experience.

We are tremendously excited by this partnership with the IMAX team as we work together to build a slate of unforgettable documentaries that need to be seen on the big screen. So, there we are, for now, in the summer of 2022.

In summary, we’re extremely pleased with these first five Dolphin 2.0 initiatives, and hopefully, today’s conversation provided some additional detail. I would also like to reiterate that these 2.0 investments are on top of a growing 1.0 business.

And most importantly for today, we are very proud of our balance sheet and expect it to be a differentiating factor for us in the quarters and years to come. All of this was our thesis when we uplisted to NASDAQ in December of 2017 and began assembling the Super Group. It’s fun to be where we are now. But as we said before, we’re only getting started.

The best is still way, way, way ahead of us. Thank you for joining us on this ride and to walk through the financials, and I’ll now turn it over to Mirta Negrini, our Chief Financial Officer..

Thank you, Bill, and good afternoon, everyone. I will now discuss results for the quarter ended March 31, 2022. Revenues for the quarter were approximately $9.2 million as compared to $7.2 million for the quarter ended March 31, 2021.

Overall operating expenses for the quarter ended March 31, 2022, were approximately $10.1 million compared to approximately $8.7 million in the same period of prior year.

Operating expenses are composed of direct costs, payroll and benefits, selling, general and administrative costs, changes in the fair value of contingent consideration, depreciation and amortization, and legal and professional fees.

Direct costs for the quarter ended March 31, 2022, were approximately $1.1 million compared to $829,000 in the same period in the prior year. The increase is primarily a result of expenses incurred in our NFT business.

Payroll and benefit costs for the quarter ended March 31, 2022, were approximately $7 compared to $5.2 million in the same period in the prior year. The increase was primarily due to additional headcount in 2022 to support the growth of our business.

Selling, general and administrative expenses for the quarter ended March 31, 2022, were approximately $1.5 million, unchanged from the same period in the prior year. Legal and professional fees were approximately $938,000 for the quarter ended March 31, 2022, compared to $344,000 for the quarter ended March 31, 2021.

The increase was primarily due to approximately $400,000 of onetime nonrecurring legal and professional fees related to the Q3 2021 restatement, fee overrun of 2021 audit fees and certain Dolphin 2.0 initiatives.

Operating loss for the quarter ended March 31, 2022 of $963,709 includes noncash items from depreciation and amortization of $407,238 and a gain -- and the change of the fair value of contingent consideration of $763,900 compared to an operating loss of $1.6 million for the quarter ended March 31, 2021, which included noncash items from depreciation and amortization of $482,712 and a loss in the change of the fair value of contingent consideration of $365,000.

Net loss for the quarter ended March 31, 2022, was $792,481, which included noncash items from depreciation and amortization of $407,238 and $763,900 of gain in the change of the fair value of contingent consideration and $347,858 from changes in the fair value of a convertible promissory note and warrants as compared to a net loss of $5.3 million for the quarter ended March 31, 2021, which included $4.4 million in noncash items stemming from depreciation and amortization of $482,712 and negative changes in the fair value of derivative liabilities, convertible notes payable warrants, put rights and contingent consideration of $3.9 million in the aggregate.

For the quarter ended March 31, 2022, $0.09 basic loss per share is based on 8,713,700 weighted average shares and $0.13 fully diluted loss per share is based on 8,846,567 weighted average shares compared to a basic and diluted loss per share of $0.73, both based on 7,267,297 weighted average shares for the quarter ended March 31, 2021.

Cash and cash equivalents as of March 31, 2022, were $9.6 million compared to $7.7 million as of March 31, 2021. 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?.

Absolutely. Thank you. [Operator Instructions] And the first question is coming from Allen Klee with Maxim Group..

The first question is, can you give us a sense of how much of the revenue in your -- that’s all in one segment is related to doing PR and marketing for 2.0 type projects?.

Sure. I don’t know that in Q1 of this year, we -- very little, it would have been less than $100,000, Allen. That’s all ramping up this summer. So, the growth we had year-over-year between 7.2% and 9.2% was all organic cross-selling between the companies.

And it really in our view, it gives a -- it validates the thesis we had in 2017 because we didn’t have any acquisitions, right? So, it’s just the same company is getting better at cross-selling and more companies to cross-sell with.

So, that’s what led to the sequential quarterly -- quarter-over-quarter growth in 2021, and you can see the year-over-year growth now, now that we’ve had 15 straight months without an acquisition..

Thank you. I thought I heard you say something about around 400 -- I understood that there’s around $400,000 of onetime mostly auditing accounting-related expenses. But I thought I also heard you say something like maybe $400,000 onetime NFT-related expenses.

Did I hear that right? And if so, why is that -- why should that be considered onetime also? Could you explain that?.

Sure. Yes. We built a marketplace that would allow us to sell NFTs directly to the consumer and use it from either our own collections or collections that we will partner with clients on, that marketplace was finished in Q1. So obviously, we expensed the entire amount of a little over -- or about $440,000. They didn’t capitalize it.

So it’s a hit to P&L in Q1, but that we don’t expect to see again in future quarters..

Okay. Great. So that’s….

We had a number that wasn’t dissimilar, I don’t remember the exact number, but in Q4 of last year as well, because we started building at the very end of Q3 last year, I think and it carried Q4 and Q1..

That’s very helpful. Thank you.

Could you give an update on any -- for any of the -- so the NFTs that have launched kind of how they’ve done?.

Sure. Yes. Our big slate starts now in the next couple of weeks. So, it’s been smaller launches in getting to this point.

But we highlighted one, Chfty, that the team at The Door brought in since they obviously have a tremendous business with celebrity chefs and this one was developed with celebrity chefs in mind and as a culinary fan club, if you will, with live virtual cook-alongs as one of the primary benefits.

And it was a smaller mint, maybe total mint size was little over $0.5 million, but it did sell out within a matter of a couple of days, and The Door received the commission for that. So - and we’ve been using late Q1 and Q2 to stress test, if you will, I think, a couple of different marketing techniques, bolster the teams that we need.

NFTs market differently than other products. You need to be able to manage almost 24/7 community on Discord and Twitter. So there are different social media management capabilities you need to have to do this well. And along, we think it will give us an advantage to have the ability to sell direct along with other marketplaces.

We’re not trying to be exclusive. But -- so we’ll see if that thesis proves true when we start launching bigger collections here this summer. The Bella Hadid one will be a bigger collection, Creature Chronicles with Anthony will be a bigger collection. Those are collections that have seven-figure total sales. So, we’re trying to do it right.

And we also want to offer benefits that extend beyond the NFT itself because we think that’s what makes our collections different that they have a utility beyond the pretty picture. So, we’ll see if we’re right..

Got it.

How do you -- when do you think you’ll see then revenues from 2.0? Will this be in the third -- will any be in the second quarter, or will it really be in the third quarter?.

I think it starts in third quarter. We won’t have those expenses I mentioned that we had in Q1 and Q2, but we’ll have revenue now in Q3 because the restaurant in Midnight Theatre is open, but that venue really kicks in when we open the theater, but that’s happening, here in Q3.

So, the first full quarter of it being open 5 to 7 days a week, both theater and restaurant being Q4, but it will have already started in September. And then NFTs, as I mentioned, we’ll have the first larger -- first of the larger collections going quite possible even before and expected to go before we talk again for Q2.

So I would say now in Q3, we’ll have 2.0 revenue..

Okay, great.

And then, what are the -- when you had the extra cost for the NFTs for building the marketplace, where did that show up and which segment of costs?.

It’s in direct costs..

That answers a lot. Okay. Because I was wondering what affected gross margin. So, I’m guessing that that had the impact..

Yes. $440,000 of direct costs in Q1, no revenue. So now, we’ll start recouping in Q3..

Great.

When does the last contingent earn-out -- when does that get finished?.

Yes, it’s Be Social, and it’s finished here at December 31st. So, we’ll -- they’ll hit it. And it’s up to $800,000 a mix of cash and stock. And once that’s paid next spring, all six companies will be fully paid for..

Okay, great.

So, in terms of outlook for the year, I think I heard you say you would expect adjusted EBITDA to be higher in ‘22 versus ‘21? Is there any other commentary that you can provide of from what you can tell at this point for ‘22?.

No, I feel good about the revenue target of over $40 million, which will be nice continued growth. I think we’ll grow year-over-year, quarter-over-quarter, again, and that’s nice. Q2, of course, we feel very good about, excited to share those results in four weeks. Q3 is off to a good start. So, we feel good about those two.

And then, this should be the last -- well, this is the first year of partial revenues from Dolphin 2.0 and the last year of only partial revenues, if that makes sense. Because by 2023, we’ll have a full year of Midnight Theatre operating, we’ll have the NFT business dropping on a schedule.

We anticipate and we’ll have the content business, the IMAX announcement, which is really a Q2 event, but since we’re speaking here today on July 18th, I talked about it a little bit. That’s a return to the roots of what I did for 20 years, prior to taking Dolphin public. And that film will release in 2023, so.

And if I could, we feel very blessed that we have a Blue Angels documentary in production after this summer of Top Gun. I’d love to tell you that that was all part of the master plan.

But I mean, we certainly knew we had the documentary and that Top Gun was coming out, of course, but the success of Top Gun has just been a pleasant surprise for all involved. So, in 2023, obviously, we’ll have those three major 2.0 initiatives where we take larger ownership stakes in all three, all generating revenue and on all cylinders..

Got it. Just going back to the NFT business, we know that trading volumes has dropped a lot, like if we look at open seas and stuff.

Does that change your view at all of kind of the outlook for the segment?.

I think what it does is it sharpens our focus on what we think we’ve always been excited to try, which are NFT -- people that -- and yourself, Allen, included, that have heard us talk about NFTs for a year, and as we were building this, it really comes down to allowing NFTs to the consumer of an NFT to use it for something other than just the NFT.

And our access to events, benefits, virtual conversations, whether it be with celebrities or masters of what they do, tickets, really sets -- it gives us a competitive advantage and separates what we’re calling an NFT from traditional profile picture NFT collections, right? Good or bad, right? And so, it’s a little bit -- we’re certainly aware of the drops in May and June of NFTs, but we haven’t seen the marketing and the effort put behind using NFTs as tickets yet and a gateway, a key to joining a fan club or whatever we want to call this.

And maybe we need to help the industry rebrand our type of NFTs away from the other type of NFTs, right? Maybe give it a different name and see what happens.

But what sports teams are going to do where they sell tickets as only NFTs because it’s just easier to track it, easier to get into a community, whether you start seeing some of those private clubs and restaurants that the members buy in NFT and they get access to the club and they can transfer among themselves.

Those are what I mean by real-world benefits, right? You want to go see a basketball game, you have an NBA game or you want to go to the next version of the SoHo House, buying it at whatever you want to call it, an NFT or a blockchain ticket, that’s we’re interested in, in building communities like that around the areas where we already market extensively.

And so, we’re excited to try that starting this summer and have a couple more of those coming this fall, and that’s very exciting for us. And in some cases, if I could, once we feel like we’ve got what we want from a marketing expertise down, then we will be a partner.

Some of them we’ll develop from whole cloth, it’s very similar to a Hollywood development, right? We may find a book or screen play in my old job, if you will, and start from scratch. But other times, you can partner with somebody that’s got a great script or has an existing project.

And I think with NFTs, that will be something we’re excited to try to. There’ll be certain communities that already exist in the real world that we can offer benefits to or events, virtual and live that could be an entity for that community.

And that’s something that we’ve been thinking about extensively and what we’re excited to try and build towards in Q3 and Q4..

Thank you. I have an accounting math question, just tell me if my -- if I’m doing something wrong or not. But if I take your operating income plus D&A, I guess, like EBITDA, like a loss of $556,000 or $557,000.

But then if I added back the change in the fair value of the contingent earn-out viewing that more as acquisition cost related and the onetime cost related to the legal, I think I get to over $600,000 and that -- positive. And then that excludes the $400,000 of extra spending to build the marketplace.

Am I doing the -- does that math sound right?.

No. I think the contingent consideration would flip the other way. But I do think that to your point -- the EBITDA loss, if you went through those four steps would shrink dramatically. And then, we feel very confident in significant EBITDA growth for the year over last year. So, yes..

When you say growth, you imply positive EBITDA?.

Yes, positive EBITDA, higher than last year’s positive EBITDA..

Great, great. And maybe just in terms of kind of The Door, like -- it seems like -- I’ve been hearing a bunch of things about the strength and like hotels have been seeing. I’m assuming that that business has been improving a lot..

Yes. We have some of returning revenues and returning businesses. The Door’s restaurant business is starting to come back to life. It will continue to grow in future quarters. I don’t know that it really showed itself in Q1, but it’s showing itself in Q2 and Q3. And then, of course, the movie business.

Well, we’re very lucky to have our 2 Toms., one in Top Gun and one in Elvis, but that’s coming back. And 42West continues to roll along with those great -- we released how many Emmy nominations are working on. It’s a staggering number.

So, the second half of the year is always stronger for most of our companies for a variety of reasons, influencer marketing stronger around back-to-school and certainly around holiday. 42West has such a strong push with the Emmys in the third quarter into the award season of mostly fourth quarter and independent film season.

Historically, our company is just -- I wouldn’t say we’re seasonal, but it grows throughout the year as it did last year, right? And we expect the same thing this year. So, when you can add a healthy restaurant business and a healthy movies and theaters business to it, then we’re excited about what should happen in the second half of this year..

Good.

It sounds like there should be momentum each quarter, just the way to think about it, right?.

I think so. And what we’re obviously -- we’re taking our swings in 2.0, and that will supercharge things with that revenue that comes in, in success. So, we’re being very patient with the NFT business as we’re trying to time it and do it right with bigger collections.

And hopefully, Midnight Theatre opening in September, that will be a difference maker in the fourth quarter, we hope too..

Great. Okay. Well, that’s it for my questions. Thank you so much. Congratulations..

Thanks, Allen..

[Operator Instructions] The next question is coming from Brad Stevenson with Breakout Investors..

Hey, Bill..

Hey, Brad..

Hey. Questions for you. I thought I remembered Flower Girls was going to have a second drop.

And for some reason, I thought I had it in -- I heard you talk about it in maybe one of your calls as maybe a targeted June for that? Is there any update on that?.

Yes. I don’t remember about a drop. But I do remember, we were thinking we have a Flower Girls announcement in June. We did a Flower Girls event June 21st at NFT NYC, the big NFT convention in Manhattan, had a nice event at the Crosby Hotel that night.

And that would have been the night that we would have made an announcement with Flower Girls, with the whole Flower Girls creative team there. For different reasons, I’m not at liberty to say now, we postponed that announcement. But we’re very bullish on Flower Girls and are working on a program with Flower Girls through the rest of this year.

But I think it was a good time at that conference. There were a lot of people that felt good about the industry, but I don’t know if May and June was the right time to take successful brand and put something else out there in the NFT space..

Okay.

And then Creature Chronicles, I think you said 3 or 4 weeks, maybe on that one?.

Yes. Yes. I think we feel good about that. We started the Twitter community and are happy with the progress there. And hopefully, in the next week or two, we’ll be opening up the Discord community, and then it usually goes in as these things are all right, goes for sale within a couple of weeks of that happening.

So, that’s kind of the ballpark timing as you try and gauge, surf the wave the right way, right? Different type of marketing..

Okay. And then, talking about your quarter two report, you said you could actually talk about that in a few weeks. I think the deadline on that is August 15th.

Do you have any reason to believe you’ll miss that deadline at this point?.

No, I feel very good about having Q1 out now because as we switched to Grant Thornton, worked on a plan with them to get us current with Q2 and part of that plan was putting out Q1 today. So, feel good about that and expect to release Q2 on time..

Okay.

Midnight Theatre, I don’t think you’ve talked about the timing of when you would actually execute on your additional 25% option? Can you share that, like when the timing of that might be?.

It will be after it opens. So, we get the visibility of being able to market the opening well, we expect and to see it off to a good start. And with the tracking we’ve had to date, I think we feel good that we’d want to exercise those options.

And -- but we don’t have to make that decision until it’s already open and the theaters open and the first several even couple of months of results are in, and then we can make an informed decision. But we’re very bullish on it at the moment..

Okay. Do you -- I know this is probably asking for guidance, you may not be able to give it.

But can you kind of thinking forward when do you think you would be able to sort of fund future cash -- 2.0 initiatives through cash -- positive cash flow from operations? Are you thinking that’s going to be this year? Will we be into next year before we get there?.

And what was the first part of that question, Brad, sorry? You broke up a little..

When do you think you’d be able to begin funding additional 2.0 investments through cash flow from your operations?.

I think we could probably do that some point during next year. Obviously, it depends on the size of the investment. But if it’s a smaller, it’s possible to do that even sooner.

But we always talked about in our mind getting to EBITDA positive, which we did in multiple quarters last year, and then, within 3 or 4 years of uplisting on NASDAQ, build the Super Group get to that point. And there’ll be this gray area of 2 to 3 years as we build the first 2.0 investments while our companies continue to grow.

That depending on which investment do we use additional capital or can we get to a point where we’re funding it out of cash flow, the idea for us by ‘24 or so in our multiple year plan was to get to a point where we’re spinning off enough cash to where almost any investment would it need anywhere near that much so that we could fund it out of ourselves.

And that’s -- then we think we’ve got the flywheel, right, where our 1.0 business is growing, able to have enough capital to keep buying skill sets or that we may want in future years out of free cash flow and our 2.0 investments. We have enough cash flow to make additional investments just from our 1.0 profits.

But of course, some of these 2.0 initiatives are going to get into a regular schedule spinning off cash too. And they’ll just add to that flywheel, right? So, we’re in that gray area now where we don’t need to raise capital to cover ourselves.

But certain 2.0 investments may require capital for the next few quarters, but we’re getting closer and closer..

I have two more. One, live events. I don’t think you mentioned anything about when we might expect a 2.0 live event [Technical Difficulty].

Yes, live events, well, thank you because I don’t know -- thank you for bringing that up because I don’t know if I did a good job explaining that with 2.0. We already have an example of having an investment in a company, right, Crafthouse.

We have an example of a venue, although I don’t know which category I put it in, but content would -- well, consumer products started with the NFT business. Content started with IMAX. So the last leg of 2.0 that we don’t -- we haven’t started yet, it’s live events, and thank you for that question, now that we made the content announcement in May.

So, we are actively discussing the live events because we think the world is -- we’re ready to go into that business and look for the partner -- partners that we could do that well with, we think. We’re seeing it across our businesses, Brad. Our music PR firm, Shore Fire, I can’t count the number of artists that are back out on the road.

That wasn’t true a year ago. It wasn’t true six months ago. I made -- I alluded to the Springsteen tour announcement, but I mean, multiply that by dozens of clients. So, the world seems ready for live events. They’re selling out. And obviously, that’s a big advantage.

But we think we have a big advantage in that area, too, both from promoting and marketing them every day to having access to the people that would headline such events in whatever field, music, culinary, others, right? So, yes, I think we hope to be able to share our strategy for live events by the end of the year.

And it would be a dream if 2023 has live of events in it as well, so that all legs of our 2.0 tool are generating revenue in fiscal year 2023. That would be great. We’re working towards that, and we’re hopeful..

Okay. At this time, I’d like to turn the floor back to Bill O’Dowd for any closing remarks..

Sure. Well, thank you for those questions from both, Brad and Allen. Thank you for those listening to the call. We are excited to be here reporting today. We’ll be very excited to report Q2 as well and get back on a timely schedule.

But, we’re closer and closer each month and quarter towards the dream, right? And we have the companies we wanted to start with the Super Group has been built, as you heard earlier today, the Super Group’s -- the vast majority of the Super Group’s been paid. And our balance sheet is in far different situation than it was just one or two years ago.

So -- and we’re getting closer to the point where we have 2.0. We’ve made the investments. We just need those investments to hit the market, right, which we expect starting now in the second half of this year, starting this quarter, quite frankly.

And then, 2023 will be the first year that we have both 1.0 and 2.0 generating revenue for us at scale, multiple 2.0 investments. And by 2024, then that would be a nice target to say, are we generating enough free cash flow to where we just are funding our own future investments, whether it be acquisitions or 2.0 investments.

So, the team’s done -- worked very hard, very proud of getting that restaurant. I mean, if you’re ever in Manhattan, come check out Midnight Theatre. As I said, it’s gorgeous, and it’s just -- it’s going to be a special place. So, we’re excited for that investment, of course.

So, thank you all for -- who our long-time listeners and for giving us the credit to get to this point. And I’ll look forward to giving an update in what’s going to be a very short period of time in just a few weeks. So, I hope everybody has a great rest of your day, and happy Monday, everybody..

Thank you, ladies and gentlemen. This does conclude today’s conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation..