Dolphin Entertainment, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

**NOTE 1 –GENERAL **

Dolphin Entertainment, Inc., a Florida corporation (the “Company,” “Dolphin,” “we,” “us” or “our”), is a leading independent entertainment marketing and production company. Through its subsidiaries 42West LLC (“42West”), The Door Marketing Group, LLC (“The Door”), Shore Fire Media, Ltd (“Shore Fire”), The Digital Dept., LLC (“The Digital Dept.”), Special Projects Media, LLC (“Special Projects”), Always Alpha Sports Management, LLC (“Always Alpha”) and Elle Communications, LLC (“Elle”), the Company provides expert strategic marketing and publicity services to many of the top brands, both individual and corporate, in the motion picture, television, music, gaming, culinary, hospitality lifestyle and charitable industries.

42West (Film and Television, Gaming), Shore Fire (Music), The Door (Culinary, Hospitality, Lifestyle) and Elle (Impact, Philanthropy, Non-Profit) are each recognized global public relations (“PR”) and marketing leaders for the industries they serve. The Digital Dept., and Always Alpha, provide influencer marketing capabilities through divisions dedicated to influencer talent management, brand campaign strategy and execution, and influencer event ideation and production. Always Alpha is a talent management firm primarily focused on representing female athletes, broadcasters and coaches. The Digital Dept. is a talent management firm primarily focused on social media influencers in beauty, fashion, lifestyle and dermatology. Special Projects is the entertainment industry’s leading celebrity booking firm, specializing in uniting brands and events with celebrities and influencers across the entertainment, media, fashion, consumer product and tech industries. Dolphin’s legacy content production business, founded by our Emmy-nominated Chief Executive Officer, Bill O’Dowd, has produced multiple feature films and award-winning digital series, primarily aimed at family and young adult markets.

On July 4, 2025, the U.S. H.R.1, an act to provide for reconciliation pursuant to title II of H. Con. Res. 14. (the “OBBBA”) was enacted. The OBBBA introduces multiple tax law and other legislative changes, including modifications to income tax provisions such as domestic research and development expenses, capital expenditures, and U.S. taxation of international earnings; the repeal or acceleration of the sunset of certain tax credits under the 2022 Inflation Reduction Act and elimination of certain penalties for violations of certain regulatory credit programs. We have recognized the effects of the OBBBA provisions in our financial results to the extent they are applicable to the three and nine months ended September 30, 2025. We will continue to evaluate the impact of these provisions on our future consolidated financial statements.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Dolphin, and all of its wholly owned subsidiaries, comprising Dolphin Films, Inc. (“Dolphin Films”), Dolphin SB Productions LLC, Dolphin Max Steel Holdings, LLC, Dolphin JB Believe Financing, LLC, Dolphin JOAT Productions, LLC, Always Alpha, 42West, The Door, Viewpoint Computer Animation, Incorporated (“Viewpoint”), Shore Fire, The Digital Dept. and Special Projects. During the second quarter of 2024, the Company ceased the operations of Viewpoint. The Company applies the equity method of accounting for its investments in entities for which it does not have a controlling financial interest, but over which it has the ability to exert significant influence.

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of its financial position as of September 30, 2025, and its results of operations and cash flows for the nine months ended September 30, 2025 and 2024. All significant inter-company balances and transactions have been eliminated from the condensed consolidated financial statements. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2025. The condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read together with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates made by management in the preparation of the financial statements relate to the estimates in the fair value of acquisitions, estimates in assumptions used to calculate the fair value of certain liabilities and impairment assessments for investment in capitalized production costs, goodwill and long-lived assets. Actual results could differ materially from such estimates.

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

Recent Accounting Pronouncements

In December 2023, the Financial Statement Accounting Board (the “FASB”) issued Accounting Standard Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. The new income tax disclosures are effective for the current fiscal year and we will implement the new disclosure updates within the Company's consolidated financial statements for the fiscal year ending December 31, 2025. Management is in the process of reviewing the extent and impact of these new disclosures using a prospective transition method.

Accounting Guidance Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires the disaggregated disclosure of specific expense categories, including employee compensation, depreciation, and amortization, within relevant income statement captions. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of ASU 2024-03 can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. ASU 2024-03 will likely result in the required additional disclosures being included in our consolidated financial statements once adopted. We are currently evaluating the provisions of ASU 2024-03.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this update provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets. This update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.

NOTE 2 –REVENUE

Disaggregation of Revenue

The Company’s principal geographic markets are within the U.S. The following is a description of the principal activities, by reportable segment, from which we generate revenue. For more detailed information about reportable segments, see Note 11.

Entertainment Publicity and Marketing

The Entertainment Publicity and Marketing (“EPM”) segment generates revenue from diversified marketing services, including public relations, entertainment and hospitality content marketing, strategic marketing consulting and content production of marketing materials. Within the EPM segment, we typically identify one performance obligation, the delivery of professional publicity services, in which we typically act as the principal. The Company renders services to clients for a fixed monthly fee. The services provided by the Company are considered a single performance obligation that is simultaneously consumed by clients as they are being rendered by the Company. Because the Company’s agreements with its clients provide for monthly services at a fixed fee, the Company recognizes revenue as the monthly services are performed. Direct costs are reimbursed by clients and are billed as pass-through revenue with no mark-up.

We also enter into management agreements with a roster of social media influencers, athletes, sports broadcasters and coaches and we are paid a percentage of the revenue earned by them. Due to the short-term nature of these contracts, in which we typically act as the agent, the performance obligation is typically completed and revenue is recognized net at a point in time, typically the date of publication.

Content Production

The Content Production (“CPD”) segment generates revenue from the production of original motion pictures and other digital content production. In the CPD segment, we typically identify performance obligations depending on the type of service, for which we generally act as the principal. Revenue from motion pictures is recognized upon transfer of control of the licensing rights of the motion picture to the customer. For minimum guarantee licensing arrangements, the amount related to each performance obligation is recognized when the content is delivered, and the window for exploitation rights in that territory has begun, which is the point in time at which the customer is able to begin to use and benefit from the content. For sales or usage-based royalty income, revenue is recognized starting at the exhibition date and is based on the Company’s participation in the box office receipts of the theatrical exhibitor and the performance of the motion picture.

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

In June 2022, the Company entered into an agreement with IMAX Corporation (“IMAX”) to co-produce and co-finance a documentary motion picture on the flight demonstration squadron of the United States Navy called The Blue Angels. On April 25, 2023, IMAX entered into an acquisition agreement with Amazon Content Services, LLC (the “Amazon Agreement”) for the distribution rights of The Blue Angels. During the nine months ended September 30, 2024, we recorded net revenues of $3,421,141 from the Amazon Agreement upon delivery of the film to Amazon Content Services LLC, our single performance obligation. Under this arrangement, we acted in the capacity of an agent. During the nine months ended September 30, 2025, the Company recognized $92,033 of revenue in its CPD segment related to sales of its motion picture, Believe, released in 2013.

The revenues recorded by the EPM and CPD segments are detailed below:

Contract Balances

The opening and closing balances of our contract asset and liability balances from contracts with customers as of September 30, 2025 and December 31, 2024 were as follows:

Contract assets are recorded when revenue is earned but not yet billed from customers for public relations, which are included in other current assets in the condensed consolidated balance sheets as of September 30, 2025. The contract assets are short term and are expected to be billed at the end of fiscal year, December 31, 2025.

Contract liabilities are recorded when the Company receives advance payments from customers for public relations projects. Advance payments received are generally for short duration and are recognized once the performance obligation of the contract is met and are recognized as revenue once the work is performed or the projects are delivered to the customer.

Revenues for the three and nine months ended September 30, 2025 and 2024 include the following:

The Company’s unsatisfied performance obligations are for contracts that have an original expected duration of one year or less and, as such, the Company is not required to disclose the remaining performance obligation.

** NOTE 3 —GOODWILL AND INTANGIBLE ASSETS**

Goodwill

As of September 30, 2025, the Company had a balance of $21,507,944 of goodwill on its condensed consolidated balance sheet resulting from its acquisitions of 42West, The Door, Special Projects, Shore Fire and Elle. All the Company’s goodwill is related to the entertainment, publicity and marketing segment.

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

The Company evaluates goodwill in the fourth quarter or more frequently if management believes indicators of impairment exist. Such indicators could include but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, (3) significant decline in market capitalization or (4) an adverse action or assessment by a regulator. There were no triggering events noted during the three and nine months ended September 30, 2025, that would require the Company to reassess goodwill for impairment outside its annual impairment test. During the three months ended September 30, 2024, the Company’s stock price declined and this, in combination with recurring net losses, resulted in the Company’s market capitalization being than the Company’s book value. The Company considered this to be a triggering event, and therefore performed a quantitative analysis of the fair value of goodwill as of August 31, 2024. As a result of this quantitative analysis, during the third quarter of 2024, the Company recorded an impairment of goodwill amounting to $6,480,992, which is included in the condensed consolidated statement of operations for the three and nine months ended September 30, 2024. During the nine months ended September 30, 2024, the Company determined to close the Viewpoint subsidiary, and therefore the Company impaired goodwill for $190,565, which is the balance of goodwill attributable to Viewpoint as of September 30, 2024 immediately prior to the decision to shut down. This impairment is included in the condensed consolidated statement of operations for the three and nine months ended September 30, 2024.

Intangible Assets

Finite-lived intangible assets consisted of the following as of September 30, 2025 and December 31, 2024:

Amortization expense associated with the Company’s intangible assets was $574,242 and $619,472 for the three months ended September 30, 2025 and 2024, respectively, and $1,722,726 and $1,681,166 for the nine months ended September 30, 2025 and 2024, respectively.

Amortization expense related to intangible assets for the remainder of 2025 and thereafter is as follows:

NOTE 4 —OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following:

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

** **During the nine months ended September 30, 2025, the Company entered into an agreement with Andrea Oliveri and Nicole Vecchiarelli, (“Special Projects Sellers), to pay $416,171 of additional consideration related to the working capital adjustment. Since the agreement was made outside of the measurement period of one year from the acquisition date of October 1, 2023, the payment due to the Special Projects Sellers was recorded as acquisition costs in the condensed consolidated statement of operations for the nine months ended September 30, 2025. The additional consideration related to the working capital adjustment is being paid in installments and as of September 30, 2025 there was a balance of $138,723 recorded in other current liabilities on the Company’s condensed consolidated balance sheet.

NOTE 5 —DEBT

Total debt of the Company was as follows as of September 30, 2025 and December 31, 2024:

The table below details the maturity dates of the principal amounts for the Company’s debt as of September 30, 2025:

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

Convertible Notes Payable

During the nine months ended September 30, 2025, the Company issued twenty-three convertible notes payable and received proceeds of $3,250,000. As of September 30, 2025, the Company had thirty-one convertible notes payable outstanding. The convertible notes payable bear interest at a rate of 10% per annum, with maturity dates ranging between the first anniversary and the sixth anniversary of their respective issuances.

In two tranches, on July 7, 2025 and July 23, 2025, a holder of a convertible note payable that had been issued in 2022 with a principal balance of $500,000 converted the entirety of the convertible note payable into an aggregate of 463,861 shares of the Company’s common stock. On July 23, 2025, another holder of a convertible note payable issued on January 16, 2025 with a principal balance of $100,000 converted the convertible note payable into 91,744 shares of the Company’s common stock.

The balance of each convertible notes payable and any accrued interest may be converted at the noteholder’s option at any time at the following conversion prices:

As of September 30, 2025 and December 31, 2024, the principal balance of the convertible notes payable of $7,250,000 and $5,100,000, respectively, was recorded in noncurrent liabilities under the caption “Convertible notes payable” and $500,000 was recorded in current liabilities under the same caption on the Company’s condensed consolidated balance sheets.

On October 30, 2025, the Company issued a convertible promissory note and received proceeds of $100,000. The convertible promissory note matures October 30, 2028, bears interest at a rate of 10% per annum and is convertible at $1.67 per share of common stock.

The Company recorded interest expense related to these convertible notes payable of $179,028 and $127,500 during the three months ended September 30, 2025 and 2024, respectively, and $480,279 and $382,750, respectively, during the nine months ended September 30, 2025 and 2024. In addition, the Company made cash interest payments amounting to $457,612 and $382,750, respectively, during the nine months ended September 30, 2025 and 2024, related to the convertible notes payable.

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

Convertible Note Payable at Fair Value

The Company had one convertible promissory note outstanding with a principal amount of $500,000 as of September 30, 2025, for which it elected the fair value option (the “March 4 th Note”). As such, the estimated fair value of the note was recorded on its issue date. At each balance sheet date, the Company records the fair value of the March 4 th Note with any changes in the fair value recorded in the condensed consolidated statements of operations.

The Company had a balance of $300,000 and $320,000 in noncurrent liabilities as of September 30, 2025 and December 31, 2024, respectively, on its condensed consolidated balance sheets related to the March 4 th Note. See Note 7 – Fair Value Measurements for further discussion on the valuation of the convertible promissory note payable.

The Company recorded a loss in fair value of $50,000 and $10,000 for the three months ended September 30, 2025 and 2024, respectively and a gain of $20,000 and $55,000 for the nine months ended September 30, 2025 and 2024, respectively, on its condensed consolidated statements of operations related to the March 4 th Note.

The March 4 th Note bears interest at a rate of 8% per annum. The Company recorded interest expense related to the March 4 th Note of $9,863 for each of the three months ended September 30, 2025 and 2024, and $29,589 for each of the nine months ended September 30, 2025 and 2024. In addition, the Company made cash interest payments amounting to $29,589 for each of the nine months ended September 30, 2025 and 2024, related to the March 4 th Note.

Nonconvertible Promissory Notes

During the nine months ended September 30, 2025, the Company issued three unsecured nonconvertible promissory notes and received proceeds of $800,000. As of September 30, 2025, the Company had outstanding eight unsecured nonconvertible promissory notes in the aggregate amount of $4,680,000, which bear interest at a rate of 10% per annum and mature between November 2025 and August 2030.

As of September 30, 2025 and December 31, 2024, the Company had a balance of $350,000 and $750,000, respectively, recorded as current liabilities and $4,330,000 and $3,130,000, respectively, in noncurrent liabilities on its condensed consolidated balance sheets related to these unsecured nonconvertible promissory notes.

The Company recorded interest expense related to these nonconvertible promissory notes of $112,625 and $97,000 for the three months ended September 30, 2025 and 2024, respectively, and $316,375 and $291,000 for the nine months ended September 30, 2025 and 2024, respectively. The Company made interest payments of $309,917 and $291,000 during the nine months ended September 30, 2025 and 2024, respectively, related to the nonconvertible promissory notes.

On October 13, 2025, the Company issued a nonconvertible promissory note and received proceeds of $200,000. The nonconvertible promissory note bears interest at 10% per annum and matures on October 13, 2030.

Nonconvertible Unsecured Promissory Note - Socialyte Promissory Note

In connection with the purchase agreement for the acquisition of Socialyte (“Socialyte Purchase Agreement”), the Company entered into a promissory note with the seller of Socialyte (“the Socialyte Promissory Note”) amounting to $3,000,000. The Socialyte Promissory Note matured on September 30, 2023 and was payable in two payments: $1,500,000 on June 30, 2023 and $1,500,000 on September 30, 2023. The Socialyte Promissory Note carries an interest of 4% per annum, which accrues monthly, and all accrued interest was to be due and payable on September 30, 2023.

The Socialyte Purchase Agreement allows the Company to offset a working capital deficit against the Socialyte Promissory Note. As such, the Company deferred these installment payments until the final post-closing working capital adjustment is agreed upon with the seller of Socialyte. The Company has filed a lawsuit against the seller of Socialyte and certain of its principals related to the Socialyte Purchase Agreement. See Note 14.

The Company recorded interest expense related to this Socialyte Promissory Note of $30,000 for the three months ended September 30, 2025 and 2024, and $90,000 for the nine months ended September 30, 2025 and 2024. No interest payments were made during the nine months ended September 30, 2025 and 2024, related to the Socialyte Promissory Note.

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

BankUnited Term Loans

On September 29, 2023, the Company entered into a loan agreement with BankUnited (“BankUnited Loan Agreement”) in which an existing term loan with BankProv was repaid (the “Refinancing Transaction”). The BankUnited Loan Agreement includes: (i) $5,800,000 secured term loan (“First BKU Term Loan”), (ii) and $750,000 of a secured revolving line of credit (“BKU Line of Credit”) and (iii) $400,000 Commercial Card (“BKU Commercial Card”) (collectively, the “BankUnited Credit Facility”). The First BKU Term Loan carries a 1.0% origination fee and matures in September 2028, the BKU Line of Credit carries an initial origination fee of 0.5% and a 0.25% fee on each annual anniversary and matures in September 2026; the BKU Commercial Card does not have any initial or annual fee and matures in September 2026. The First BKU Term Loan has a declining prepayment penalty equal to 5% in year one, 4% in year two, 3% in year three, 2% in year four and 1% in year five of the outstanding balance. The BKU Line of Credit and BKU Commercial Card can be repaid without any prepayment penalty.

On December 6, 2024, the Company entered into a second Bank United Loan Agreement (“Second BKU Term Loan”) for $2.0 million to finance the acquisition of Elle. The Second BKU Term Loan carries a 1.0% origination fee and matures in December 2027. Similar to the First BKU Term Loan, the Second BKU Term Loan has a declining prepayment penalty equal to 3% in year one, 2% in year two and 1% in year three of the outstanding balance. (The First BKU Term Loan, Second BKU Term Loan, BKU Line of Credit and BKU Commercial Card are collectively referred to as the “Bank United Credit Facility”).

Interest accrues at 8.10% fixed rate per annum on the First BKU Term Loan and 7.10% fixed rate per annum on the Second BKU Term Loan. Principal and interest are payable on a monthly basis based on a 5-year amortization for the First BKU Term Loan and 3-year amortization for the Second BKU Term Loan. Interest on the BKU Line of credit is payable on a monthly basis, with all principal due at maturity. The BKU Commercial Card payment is due in full at the end of each bi-weekly billing cycle. During the nine months ended September 30, 2025 and the year ended December 31, 2024, the Company did not use the BKU Commercial Card. During each of the three months ended September 30, 2025 and 2024, the Company made payments in the amount of $354,621, inclusive of $81,596 and $103,279, respectively, of interest related to the First BKU Term Loan. During each of the nine months ended September 30, 2025 and 2024, the Company made payments in the amount of $1,063,862, inclusive of $259,515 and $324,015, respectively, of interest related to the First BKU Term Loan. During the three and nine months ended September 30, 2025, the Company made payments in amount of $185,995 and $557,986, respectively, inclusive of $30,115 and $98,052, respectively, of interest related to the Second BKU Term Loan. During the three and nine months ended September 30, 2024, there wereno payments made in connection with the Second BKU Term Loan.

Interest on the BKU Line of Credit is variable based on the Lender’s Prime Rate. During the three months ended September 30, 2025 and 2024, the Company recorded interest expense and made payments of $5,000 and $9,161, respectively, and $20,217 and $26,444 for the nine months ended September 30, 2025 and 2024, respectively, related to the BKU Line of Credit.

As of September 30, 2025, the Company had a balance of $1,778,083 classified as current liabilities and $3,446,960 classified as noncurrent liabilities, net of $75,724 of debt issuance costs, in its condensed consolidated balance sheet related to the First BKU Term Loan and the Second BKU Term Loan. During the nine months ended September 30, 2025, the Company repaid $400,000 of the BKU Line of Credit for a period of 30-days in compliance with the covenants of the BKU Line of Credit. Once the 30-day period was done, on July 11, 2025, the Company drew $400,000 on the BKU Line of Credit. As of September 30, 2025 and December 31, 2024, the Company had a balance of $400,000, of principal outstanding under the BKU Line of Credit.

Amortization of debt origination costs under the Bank United Credit Facility is included as a component of interest expense in the condensed consolidated statements of operations and amounted to approximately $7,012 and $4,206 for the three months ended September 30, 2025 and 2024, respectively, and $21,035 and $12,617 for the nine months ended September 30, 2025 and 2024, respectively.

The BankUnited Credit Facility contains financial covenants tested semi-annually, starting on June 30, 2024, on a trailing twelve-month basis that require the Company to maintain a minimum debt service coverage ratio of 1.25:1.00 and a maximum funded debt/EBITDA ratio of 3.00:1.00. In addition, the BankUnited Credit Facility contains a liquidity covenant that requires the Company to hold a cash balance at BankUnited with a daily minimum deposit balance of $2,000,000. As of September 30, 2025, the Company believes that it is in compliance with all of the debt covenants.

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

NOTE 6 —LOANS FROM RELATED PARTY

Dolphin Entertainment, LLC Notes

On June 1, 2021, the Company exchanged a promissory note that had been issued on October 1, 2016, for a nonconvertible promissory note with a principal balance of $1,107,873 that matures on December 31, 2026 and bears interest at a rate of 10% per annum. The nonconvertible promissory note was issued to Dolphin Entertainment, LLC (“DE LLC”), an entity wholly owned by the Company’s Chief Executive Officer, William O’Dowd (the “CEO”). On April 29, 2024 and June 10, 2024, the Company issued two nonconvertible promissory notes to DE LLC in the amounts of $1,000,000 and $135,000, respectively, which mature on April 29, 2029 and June 10, 2029, respectively, (collectively, “the DE LLC Notes”). The DE LLC Notes each bear interest at a rate of 10% per annum.

On May 12, 2025, the Company entered into an exchange agreement (the “Exchange Agreement”) with DE LLC pursuant to which the Company and DE LLC agreed to exchange the three nonconvertible promissory notes in the aggregate principal amount of $2,242,873 currently held by DE LLC for three convertible promissory notes (the “DE New Notes”) in the same principal amounts. As consideration for the exchange, the Company and DE LLC agreed to extend the maturity date on each of the notes by six months. One note, with a principal balance of $1,107,873 now matures on June 30, 2027, one note with a principal balance of $1,000,000 now matures on October 29, 2029 and one note with a principal balance of $135,000, now matures on December 10, 2029. The DE New Notes continue to bear interest at a rate of 10% per annum. DE LLC may convert the principal balance of the DE New Notes and any accrued interest thereon at any time before the maturity date of the DE New Notes into common stock of the Company at a conversion price of $1.00 per share. The Company accounted for this exchange as an extinguishment of debt and recorded the difference between the carrying value of DE LLC Notes and the fair value of the DE New Notes of $835,324 as a loss from extinguishment of debt in its condensed consolidated statement of operations for the nine months ended September 30, 2025. During the three months ended September 30, 2025, the Company recorded $15,374 of debt premium amortization in interest expense.

As of September 30, 2025 the Company had an aggregate principal balance of $3,062,823 related to the DE New Notes under the caption convertible notes payable – related party in its condensed consolidated balance sheet. As of December 31, 2024, the Company had an aggregate balance of $2,242,873 related to DE LLC Notes under the caption loans from related party in its condensed consolidated balance sheet. For the nine months ended September 30, 2025, the Company did not repay any principal balance or make interest payments on the DE LLC Notes. During the nine months ended September 30, 2024, the Company made cash interest payments in the amount of $200,000 related to the DE LLC Notes.

The Company recorded interest expense of $56,533 and $56,597 for the three months ended September 30, 2025 and 2024, respectively, and $167,755 and $129,812 for the nine months ended September 30, 2025 and 2024, respectively, related to the DE New Notes. As of September 30, 2025 and December 31, 2024, the Company had a balance in accrued interest – related parties of $431,522 and $263,767, respectively, on its condensed consolidated balance sheets related to the DE LLC Notes.

Mock Notes

During 2024, the Company issued three nonconvertible promissory notes to Mr. Donald Scott Mock, brother of Mr. O’Dowd in the amount of $900,000, $75,000, and $8,112 respectively, and received proceeds of $983,112 (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.

As of September 30, 2025 and December 31, 2024, the Company had a principal balance of $983,112 related to the Mock Notes under the caption loans from related party in its condensed consolidated balance sheets. For the nine months ended September 30, 2025 and 2024, the Company did not repay any principal balance or make interest payments on the Mock Notes.

The Company recorded interest expense of $24,578 and $24,375 for the three months ended September 30, 2025 and 2024, respectively, and $73,733 and $66,041 for the nine months ended September 30, 2025 and 2024, respectively, related to the Mock Notes. As of September 30, 2025 and December 31, 2024, the Company had a balance in accrued interest – related parties of $164,150 and $90,417, respectively, on its condensed consolidated balance sheets related to the Mock Notes.

NOTE 7 —FAIR VALUE MEASUREMENTS

The Company’s non-financial assets measured at fair value on a nonrecurring basis include intangible assets. The determination of our intangible fair values includes several assumptions and inputs (Level 3) that are subject to various risks and uncertainties. Management believes it has made reasonable estimates and judgments concerning these risks and uncertainties. All other financial assets and liabilities are carried at amortized cost.

The Company’s cash balances are representative of their fair values, as these balances are comprised of deposits available on demand. The carrying amounts of accounts receivable, notes receivable, prepaid and other current assets, accounts payable and other non-current liabilities approximate their fair values because of the short turnover of these instruments.

Financial Disclosures about Fair Value of Financial Instruments

The tables below set forth information related to the Company’s consolidated financial instruments:

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

Convertible notes payable

As of September 30, 2025, the Company has thirty-one outstanding convertible notes payable with an aggregate principal amount of $7,750,000 and three outstanding convertible notes payable with a related party amounting to $3,062,823. See Note 5 for further information on the terms of these convertible notes and Note 6 for further information on terms of convertible notes with a related party.

The estimated fair value of the convertible notes was computed using a Monte Carlo Simulation, using the following assumptions:** **

On May 12, 2025, the Company exchanged three promissory notes held by its CEO for three convertible notes payable. See Note 6 for additional information on the transaction. As of May 12, 2025, the estimated fair value of the convertible notes with our CEO was computed using a Monte Carlo Simulation, using the following assumptions:

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

Fair Value Option (“FVO”) Election – Convertible note payable and freestanding warrants

Convertible note payable, at fair value

As of September 30, 2025, the Company had the March 4 th Note outstanding with a face value of $500,000, which is accounted for under the ASC 825-10-15-4 FVO election. Under the FVO election, the financial instrument is initially measured at its issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The estimated fair value adjustment is presented as a single line item within other (expenses) income in the accompanying condensed consolidated statements of operations under the caption “Change in fair value of convertible note.”

The March 4 th Note is measured at fair value and categorized within Level 3 of the fair value hierarchy. The following is a reconciliation of the fair values from December 31, 2024 to September 30, 2025:

The estimated fair value of the March 4 th Note as of September 30, 2025 and December 31, 2024, was computed using a Black-Scholes simulation of the present value of its cash flows using a synthetic credit rating analysis and a required rate of return, using the following assumptions:

Warrant

In connection with the March 4th Note, the Company issued the Series I Warrant, which was exercisable for 10,000 shares at a purchase price of $7.82 per share. The Series I Warrant was measured at fair value and categorized within Level 3 of the fair value hierarchy. The Series I Warrant expired on September 4, 2025. The fair value of the Series I Warrant was nominal as of December 31, 2024.

NOTE 8 —STOCKHOLDERS’ EQUITY

2025 Lincoln Park Transaction

On August 12, 2025, the Company entered into a purchase agreement (the “2025 LP Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park” or “Investor”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, the Company may sell to Lincoln Park up to $15,000,000 of shares (the “Purchase Shares”) of its common stock, par value $0.015 per share (the “Common Stock”) over the thirty-six (36) month term of the 2025 LP Purchase Agreement. Concurrently with entering into the 2025 LP Purchase Agreement, the Company also entered into a registration rights agreement with Lincoln Park, pursuant to which it agreed to provide Lincoln Park with certain registration rights related to the shares issued under the 2025 LP Purchase Agreement (the “2025 LP Registration Rights Agreement”).

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

Beginning one business day following the Commencement Date (as defined below) and thereafter, the Company may direct Lincoln Park, on any business day selected by the Company (the “Purchase Date”) to purchase up to 20,000 shares of Common Stock if the closing sale price is not below $0.10 (each, a “Regular Purchase”); provided that the share amount under a Regular Purchase may be increased to up to 25,000 shares, up to 50,000 shares, up to 75,000 or up to 100,000 shares if the closing sale price of the Common Stock is not below $1.50, $1.75, $2.00 or $2.50, respectively, on the business day on which we initiate the Regular Purchase. However, Lincoln Park’s maximum commitment in any single Regular Purchase may not exceed $500,000. Each Regular Purchase is subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction as provided in the 2025 LP Purchase Agreement. The purchase price for Regular Purchases (the “Purchase Price”) shall be equal to 97% of the lesser of: (i) the lowest sale price of the Common Stock during the Purchase Date, or (ii) the average of the three (3) lowest closing sale prices of the Common Stock during the ten (10) business days prior to the Purchase Date. The Company shall have the right to submit a Regular Purchase notice to the Investor as often as every business day. A Regular Purchase notice is delivered to the Investor after the market has closed (i.e. after 4:00 P.M. Eastern Time) so that the Purchase Price is always fixed and known at the time the Company elects to sell shares to Lincoln Park.

In addition to Regular Purchases and provided that the Company has directed a Regular Purchase in full, the Company in its sole discretion may require Lincoln Park on each Purchase Date to purchase on the following business day (“Accelerated Purchase Date”) up to the lesser of (i) three (3) times the number of shares purchased pursuant to such Regular Purchase or (ii) 30% of the trading volume on the Accelerated Purchase Date (the “Accelerated Purchase”) at a purchase price equal to 97% of the lessor of: (i) the closing sale price on the Accelerated Purchase Date, or (ii) the Accelerated Purchase Date’s volume weighted average price (the “Accelerated Purchase Price”). The Company shall have the right in its sole discretion to set a minimum price threshold for each Accelerated Purchase in the notice provided with respect to such Accelerated Purchase and the Company may direct multiple Accelerated Purchases in a day provided that delivery of shares has been completed with respect to any prior Regular and Accelerated Purchases that Lincoln Park has purchased.

The Company may also direct Lincoln Park, on any business day on which an Accelerated Purchase has been completed and all of the shares to be purchased thereunder have been properly delivered to Lincoln Park in accordance with the 2025 LP Purchase Agreement, to make additional purchases upon the same terms as an Accelerated Purchase, (an “Additional Accelerated Purchase”).

The purchase price of Regular Purchases, Accelerated Purchases and Additional Accelerated Purchases and the minimum closing sale price for a Regular Purchase will be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during the business days used to compute the purchase price. The aggregate number of shares that the Company can sell to Lincoln Park under the 2025 LP Purchase Agreement may in no case exceed 2,346,371 shares (subject to adjustment as described above) of the Common Stock (which is equal to approximately 19.99% of the shares of the Common Stock outstanding immediately prior to the execution of the 2025 LP Purchase Agreement) (the “Exchange Cap”), unless (i) shareholder approval is obtained to issue shares above the Exchange Cap, in which the Exchange Cap will no longer apply, or (ii) the average price of all applicable sales of Common Stock to Lincoln Park under the 2025 LP Purchase Agreement equals or exceeds $1.12 per share (subject to adjustment as described above) (which represents the lower of (A) the official closing price of the Common Stock on Nasdaq immediately preceding the signing of the 2025 LP Purchase Agreement and (B) the average official closing price of the Common Stock on Nasdaq for the five consecutive trading days ending on the trading day immediately preceding the date of the 2025 LP Purchase Agreement); provided that at no time may Lincoln Park (together with its affiliates) beneficially own more than 4.99% of the Company’s issued and outstanding Common Stock.

On August 13, 2025 we issued 244,698 shares of Common Stock to Lincoln Park as an initial fee for its commitment to Purchase Shares of our Common Stock under the 2025 LP Purchase Agreement (the “Initial Commitment Shares”). The Company may issue up to 122,349 additional shares of Common Stock pro-rata in connection with the sale of Purchase Shares (the “Additional Commitment Shares, and together with the Initial Commitment Shares, the “Commitment Shares”). In connection with the 2025 LP Purchase Agreement, the Company incurred and capitalized $281,403 of equity issuance costs recorded in other current assets on the Company’s condensed consolidated balance sheet.

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

The 2025 LP Purchase Agreement contains customary representations, warranties, covenants, closing conditions, indemnification and termination provisions. Sales under the 2025 LP Purchase Agreement may commence only after certain conditions have been satisfied (the date on which all requisite conditions have been satisfied, the “Commencement Date”), which conditions include the filing of the Registration Statement (as defined below) covering the shares of Common Stock issued or sold by the Company to Lincoln Park under the 2025 LP Purchase Agreement.

The 2025 LP Purchase Agreement may be terminated by the Company at any time after the Commencement Date, at its sole discretion, without any cost or penalty, by giving one business day notice to Lincoln Park to terminate the 2025 LP Purchase Agreement. Lincoln Park has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Common Stock. Although the Company has agreed to reimburse Lincoln Park for a limited portion of the fees it incurred in connection with the 2025 LP Purchase Agreement, the Company did not pay any additional amounts to reimburse or otherwise compensate Lincoln Park in connection with the transaction, other than the issuance of the Commitment Shares.

There are no limitations on the use of proceeds, financial or business covenants, restrictions on future financings (other than restrictions on the Company’s ability to enter into a similar type of agreement involving a “variable rate transaction,” as such term is defined the 2025 LP Purchase Agreement, excluding an “at-the-market transaction,” through the 36-month anniversary of the date of the 2025 LP Purchase Agreement), rights of first refusal, participation rights, penalties or liquidated damages in the 2025 LP Purchase Agreement. The Company may deliver purchase notices under the 2025 LP Purchase Agreement, subject to market conditions, and in light of its capital needs, from time to time and under the limitations contained in the 2025 LP Purchase Agreement. Any proceeds that the Company receives under the 2025 LP Purchase Agreement are expected to be used for working capital and general corporate purposes.

On October 3, 2025 the Company filed a new Registration Statement on Form S-1 (the “Registration Statement” with the Securities Exchange Commission (the “SEC”) covering the resale of Common Stock in accordance with the terms of the 2025 LP Registration Rights Agreement.

2022 Lincoln Park Transaction

On August 10, 2022, the Company entered into a purchase agreement (the “LP 2022 Purchase Agreement”) and a registration rights agreement (the “LP 2022 Registration Rights Agreement”) with Lincoln Park, pursuant to which the Company could sell and issue to Lincoln Park, and Lincoln Park was obligated to purchase, up to $25,000,000 in value of its shares of the Company’s common stock from time to time over a 36-month period.

During the three and nine months ended September 30, 2025, and the three months ended September 30, 2024, the Company did not sell shares of common stock under the LP 2022 Purchase Agreement. During the nine months ended September 30, 2024, the Company sold 475,000 shares of its common stock at prices ranging between $2.14 and $3.06 and received proceeds of $1,185,300. The LP 2022 Purchase Agreement expired on September 20, 2025.

Series C Convertible Preferred Stock

On November 6, 2024, the Company received a letter (the “Letter”) from the Listing Qualifications staff (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the Staff has determined that the Company violated Nasdaq’s voting rights rule set forth in Listing Rule 5640 (the “Voting Rights Rule”) due to the Company’s filing of shareholder-approved amendments to the Company’s articles of incorporation modifying the terms of the Company’s Series C Convertible Preferred Stock (the “Series C”) to increase the number of votes per share of common stock the Series C is convertible into (i) from three votes per share to five votes per share, filed on September 29, 2022 (the “2022 Amendment”) and (ii) from five votes per share to ten votes per share, filed on September 25, 2024 (the “2024 Amendment” and, together with the 2022 Amendment, the “Amendments”).

As agreed with the Nasdaq, on January 21, 2025, the Company held a special shareholder meeting and the shareholders approved the adoption of the Articles of Amendment that would modify the terms of the Series C to decrease the number of votes per share of common stock the Series C is convertible into from ten votes per share to three votes per share. On January 24, 2025, the Company filed those Articles of Amendment to its Amended and Restated Articles of Incorporation with the Secretary of State of the State of Florida.

Special Projects Working Capital Adjustment

On May 14, 2024, the Company entered into an agreement with the Special Projects Sellers to amend the purchase agreement to revise the working capital mechanism to provide that the working capital surplus, as defined in the purchase agreement, plus a ten percent premium be paid to the Special Projects Sellers by issuing 357,289 shares of its common stock on May 15, 2024. The adjustment resulted in an increase in the amount of $181,688, to the purchase price and an increase to goodwill.

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

NOTE 9—LOSS PER SHARE

The following table sets forth the computation of basic and diluted loss per share:

Basic (loss) earnings per share is computed by dividing income or loss attributable to the shareholders of common stock (the numerator) by the weighted-average number of shares of common stock outstanding (the denominator) for the period. Diluted (loss) earnings per share assume that any dilutive equity instruments, such as convertible notes payable and warrants were exercised and outstanding common stock adjusted accordingly, if their effect is dilutive.

The Company’s convertible note payable at fair value, the warrant and the Series C preferred stock have clauses that entitle the holder to participate if dividends are declared to the common stockholders as if the instruments had been converted into shares of common stock. As such, the Company uses the two-class method to compute earnings per share and attribute a portion of the Company’s net income to these participating securities. These securities do not contractually participate in losses. For the three and nine ended September 30, 2025 and 2024, the Company had a net loss and as such the two-class method is not presented.

For the three and nine months ended September 30, 2025, potentially dilutive instruments including 6,136,092 shares and 5,509,016 shares, respectively, of common stock issuable upon conversion of convertible notes outstanding were not included in the diluted loss per share as inclusion was considered to be antidilutive.

For the three and nine months ended September 30, 2024, potentially dilutive instruments including 3,427,514 shares and 2,376,531 shares, respectively, of common stock upon conversion of convertible notes outstanding and 10,000 shares of common stock issuable upon exercise of the Series I Warrant were not included in the diluted loss per share as inclusion was considered to be antidilutive.

NOTE 10 —RELATED PARTY TRANSACTIONS

As part of the employment agreement with its CEO, the Company provided a $1,000,000 signing bonus in 2012, which has not been paid and is recorded in accrued compensation on the condensed consolidated balance sheets, along with unpaid base salary of $1,625,000 in aggregate attributable for the period from 2012 through 2018. Any unpaid and accrued compensation due to the CEO under his employment agreement will accrue interest on the principal amount at a rate of 10% per annum from the date of his employment agreement until it is paid. Even though the employment agreement expired and has not been renewed, the Company has an obligation under the agreement to continue to accrue interest on the unpaid balance.

As of September 30, 2025 and December 31, 2024, the Company had accrued $2,625,000 of compensation as accrued compensation and has balances of $1,500,141 and $1,503,805, respectively, in accrued interest in current liabilities on its condensed consolidated balance sheets, related to the CEO’s employment agreement. Amounts owed under this arrangement are payable on demand. During the three and nine months ended September 30, 2025, the Company made cash interest payments in the amount of $200,000 related to the accrued compensation. The Company didnot make cash interest payments during the three and nine months ended September 30, 2024.

The Company recorded interest expense related to the accrued compensation in the condensed consolidated statements of operations amounting to $66,164 for the three months ended September 30, 2025 and 2024, and $196,336 and $197,055 for the nine months ended September 30, 2025 and 2024, respectively. During the nine months ended September 30, 2025 and 2024, the Company did not make cash interest payments in connection with the accrued compensation to the CEO.

On May 13, 2025, the Company entered into a one year consulting agreement (the “Consulting Agreement”) with Hilarie Bass, a director, with an effective date of January 1, 2025, pursuant to which Ms. Bass will provide commercial litigation advice and litigation consulting services to the Company. As compensation for these services the Company will pay Ms. Bass $100,000 payable in four quarterly installments of $25,000 each. The initial $25,000 payment was made on May 15, 2025, and a second $25,000 payment was made on July 10, 2025.

The Company entered into three DE New Notes with an entity wholly owned by its CEO and into three Mock Notes with its CEO’s brother. See Note 6 for further discussion.

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

NOTE 11 —SEGMENT INFORMATION

The Company operates in two reportable segments, Entertainment Publicity and Marketing Segment (“EPM”) and Content Production Segment (“CPD”).

The Company’s chief operating decision maker (“CODM”) is its CEO. The profitability measure employed by our CODM for allocating resources to operating segments and assessing operating segment performance is adjusted operating income (loss) which is the Loss from operations on the Company’s consolidated statements of operations adjusted for depreciation and amortization, impairment of goodwill, acquisition costs, change in fair value of contingent consideration, stock compensation, bad debt and write-off of notes receivable. All segments follow the same accounting policies as those described in Note 2 in the Form 10-K.

The following tables present revenue and significant expenses by segment that are regularly provided to the CODM. Other segment items that the CODM does not consider in assessing segment performance are presented to reconcile to adjusted (loss) income from operations.

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

The CODM does not review assets on a segment basis. In connection with the acquisitions of its wholly owned subsidiaries, as of September 30, 2025 the Company had assigned $8,466,300 of intangible assets, net of accumulated amortization of $14,944,670, and goodwill of $21,507,944, net of impairments, to the EPM segment.

During the three and nine months ended September 30, 2025 and 2024, there were no triggering events noted that would require the Company to reassess goodwill impairment outside of its regular annual impairment test.

NOTE 12 —LEASES

The Company and its subsidiaries are party to various office leases with terms expiring at different dates through February 2032. The amortizable life of the right-of-use asset is limited by the expected lease term. Although certain leases include options to extend, the Company did not include these in the right-of-use asset or lease liability calculations because it is not reasonably certain that the options will be executed.

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

The tables below show the lease income and expenses recorded in the condensed consolidated statements of operations incurred during the three and nine months ended September 30, 2025 and 2024 for operating and financing leases, respectively.

Lease Payments

For the nine months ended September 30, 2025 and 2024, the Company made payments in cash related to its operating leases in the amounts of $1,643,296 and $2,001,959, respectively.

Future minimum lease payments for leases for the remainder of 2025 and thereafter, were as follows:

As of September 30, 2025, the Company’s weighted average remaining lease term on its operating and finance leases is 3.83 years and 1.78 years, respectively, and the Company’s weighted average discount rate is 8.84% and 7.78% related to its operating and finance leases, respectively.

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

NOTE 13 —COLLABORATIVE ARRANGEMENT

IMAX Co-Production Agreement

On June 24, 2022, the Company entered into an agreement with IMAX to co-produce and co-finance a documentary motion picture on the flight demonstration squadron of the United States Navy, called The Blue Angels (“Blue Angels Agreement”). IMAX and Dolphin each agreed to fund 50% of the production budget and the Company paid $2,250,000 in connection with this agreement.

On April 25, 2023, IMAX entered into the Amazon Agreement for the distribution rights of The Blue Angels. The Amazon Agreement was determined to be entity-customer relationship, and the revenue recognized from the agreement was recorded separately as revenue from a customer. The Blue Angels documentary motion picture was released in theatres on May 17, 2024 and began streaming on Amazon Prime Video on May 23, 2024.

During the nine months ended September 30, 2024, the Company recorded net revenues of $3,421,141 from the Amazon Agreement. On February 22, 2024, the Company received $777,905 from the Amazon Agreement upon delivery of the film by IMAX to Amazon Content Services LLC, the Company’s single performance obligation under the Amazon Agreement. On July 9, 2024, the Company received a second installment from IMAX in the amount of $2,556,452.

NOTE 14—COMMITMENTS AND CONTINGENCIES

Litigation

On June 21, 2024, the Company filed a complaint in Los Angeles County Superior Court against NSL Ventures (“NSL”) the Socialyte seller, and its principals alleging that the defendants breached the Socialyte Purchase Agreement and committed acts of fraud and negligence in connection with that transaction, and that the Company is entitled to monetary damages caused by those acts. On September 16, 2024, Defendants answered the Complaint with a general denial and affirmative defenses. On September 16, 2024, defendant NSL also filed a Cross-complaint against the Company and Social Midco, LLC, alleging a single cause of action for breach of contract. The Company and Social Midco answered the Cross-complaint on October 1, 2024. Trial has been scheduled by the Court for February 2026. Due to the early stage of the litigation, an estimate of any possible loss or range of loss cannot be made at this time.

The Company may be subject to legal proceedings, claims, and liabilities that arise in the ordinary course of business. In the opinion of management and based upon the advice of its outside counsels, the liability, if any, from any pending litigation is not expected to have a material effect in the Company’s financial position, results of operations and cash flows.