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 LLC (“Special Projects”), 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 and lifestyle 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. provides influencer marketing capabilities through divisions dedicated to influencer talent management, brand campaign strategy and execution, and influencer event ideation and production. 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.

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, 42West, The Door, Shore Fire, The Digital Dept., Special Projects and Elle. The accounts of Always Alpha Sports Management, LLC (“Always Alpha”) are also included as of and for the three and six months ended June 30, 2025. Always Alpha was subsequently sold on November 14, 2025. All significant intercompany balances and transactions have been eliminated in consolidation. 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 June 30, 2026, and its results of operations and cash flows for the three and six months ended June 30, 2026 and 2025. All significant inter-company balances and transactions have been eliminated from the condensed consolidated financial statements. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026. The condensed consolidated balance sheet as of December 31, 2025 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, 2025.

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

Recent Accounting Pronouncements

Accounting Pronouncements Adopted in 2026

In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides a practical expedient that permits 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 accounts receivable and current contract assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years, with early adoption permitted. The amendments in ASU 2025-05 should be applied prospectively. The Company adopted this ASU prospectively in the first quarter of 2026, and its adoption did not have a material effect on the Company’s condensed consolidated financial statements.

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.

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 10.

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. The Company recognizes revenue as the monthly services are performed. Direct costs reimbursed by clients are billed as pass-through revenue with no mark-up.

We also enter into management agreements with a roster of social media influencers, athletes and sports broadcasters 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

During the six months ended June 30, 2026, the Company entered into an agreement with YB Aircraft Productions Inc. (“YB”) to acquire the licensing rights to distribute the Youngblood movie worldwide, with the exception of Canada, and agreed to pay YB a guaranteed, non-refundable advance of $700,000, payable in two equal installments of $350,000 each, on August 31, 2026 and February 28, 2027. The $700,000 advance to YB was recorded in direct costs in our condensed consolidated statement of operations for the six months ended June 30, 2026. The Company also entered into a distribution agreement with Well Go USA, Inc. (“Well Go”) to distribute the film across all media in the United States. The agreement provides for a $450,000 guaranteed, non-refundable advance against the revenues from the distribution of Youngblood upon delivery of the film to Well Go. The film was released in theaters on March 6, 2026 and the Company recorded revenues of $450,000 and received cash in the amount of $450,000 from the minimum guaranteed advance for the six months ended June 30, 2026.

During the six months ended June 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 balances of our contract asset and liability balances from contracts with customers as of June 30, 2026 and December 31, 2025 were as follows:

Contract assets are comprised of services provided for which consideration has not been received and are transferred to accounts receivable when the right to payment becomes unconditional. Contract assets are presented within other current assets in the condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025.

Contract liabilities are recorded when the Company receives advance payments from customers for public relations projects or as deposits for promotional or brand-supported video projects. Once the work is performed or the projects are delivered to the customer, the contract liabilities are deemed earned and recorded as revenue. Advance payments received are generally for a short duration and are recognized once the performance obligation of the contract is met.

Revenues for the three and six months ended June 30, 2026 and 2025 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.

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

NOTE 3 —GOODWILL AND INTANGIBLE ASSETS

Goodwill

As of June 30, 2026, 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.

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 six months ended June 30, 2026 and 2025, that would require the Company to reassess goodwill for impairment outside its annual impairment test.

Intangible Assets

Finite-lived intangible assets consisted of the following as of June 30, 2026 and December 31, 2025:

Amortization expense associated with the Company’s intangible assets was $522,876 and $574,242 for the three months ended June 30, 2026 and 2025, and $1,045,752 and $1,148,485 for the six months ended June 30, 2026 and 2025.

Amortization expense related to intangible assets for the next five years is as follows:

As of June 30, 2026, the Company’s weighted average amortization period on its customer lists and tradenames is 7.56 years and 2.96 years, respectively.

NOTE 4 —OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following:

During the six months ended June 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 six months ended June 30, 2025. The additional consideration related to the working capital adjustment was paid in installments during the year ended December 31, 2025 and there was no balance outstanding related to this arrangement as of June 30, 2026 and December 31, 2025.

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

NOTE 5 —DEBT

Total debt of the Company was as follows as of June 30, 2026 and December 31, 2025:

The table below details the maturity dates of the principal amounts for the Company’s debt as of June 30, 2026:

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

Convertible Notes Payable

As of June 30, 2026, the Company had thirty-one convertible notes payable outstanding. The convertible notes payable bear interest at a rate of 10% per annum, with initial maturity dates ranging between the second anniversary and the sixth anniversary of their respective issuances.

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 June 30, 2026, the principal balance of $1,200,000 and $6,550,000 related to the convertible notes payable was recorded in current and noncurrent liabilities, respectively, on the Company’s condensed consolidated balance sheet under the caption convertible notes payable. As of December 31, 2025, the principal balance of $1,250,000 and $6,460,000 related to the convertible notes payable was recorded in current and noncurrent liabilities, respectively, on the Company’s condensed consolidated balance sheet under the caption convertible notes payable.

During the six months ended June 30, 2026, four holders of five convertible notes payable with an aggregate principal balance of $810,000 converted the full principal amount of each of the convertible promissory notes payable into an aggregate of 795,839 shares of the Company’s common stock, pursuant to the provisions of their respective convertible notes payable. During the six months ended June 30, 2026, the Company entered into five subscription agreements (the “Subscription Agreements”) with five investors for five convertible promissory notes (each a “Note”) in the aggregate principal amount of $850,000 and received cash proceeds of $850,000. The Notes bear interest at 10% per annum and each Note matures on either the fourth or fifth anniversary of their respective issuance dates. The noteholders may convert all or part of the principal balance of the Notes and any accrued interest thereon at any time before the maturity date into shares of the Company’s common stock at a purchase price ranging between $1.12 and $1.60 per share. On August 11, 2026, the Company entered into a Subscription Agreement with an investor and received cash proceeds of $100,000. The Note bears interest at 10% per annum, matures on August 11, 2030 and the principal and any accrued interest may be converted by the noteholder at a conversion price of $1.09 anytime before the Notes maturity date.

The Company recorded interest expense related to these convertible notes payable of $188,333 and $165,251 during the three months ended June 30, 2026 and 2025, respectively, and $379,469 and $301,251, respectively, during the six months ended June 30, 2026 and 2025. In addition, the Company made cash interest payments amounting to $379,248 and $286,212, respectively, during the six months ended June 30, 2026 and 2025, related to the convertible notes payable.

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

Convertible Note Payable at Fair Value

The Company has one convertible note payable outstanding with a principal amount of $500,000 as of June 30, 2026, for which it elected the fair value option. 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 convertible note payable with any changes in the fair value recorded in the condensed consolidated statements of operations.

The Company had a balance of $250,000 and $270,000 in noncurrent liabilities as of June 30, 2026 and December 31, 2025, respectively, on its condensed consolidated balance sheets related to the convertible note payable measured at fair value. See Note 7 – Fair Value Measurements for further discussion on the valuation of this convertible note payable.

The Company recorded a gain in fair value of $10,000 and $50,000 for the three months ended June 30, 2026 and 2025, respectively, and a gain of $20,000 and $70,000 for the six months ended June 30, 2026 and 2025 on its condensed consolidated statements of operations related to this convertible note payable at fair value.

The convertible note payable at fair value bears interest at a rate of 8% per annum. The Company recorded interest expense related to this convertible note payable at fair value of $9,863 for each of the three months ended June 30, 2026 and 2025 and $19,726 for each of the six months ended June 30, 2026 and 2025. In addition, the Company made cash interest payments amounting to $19,726 for both the six months ended June 30, 2026 and 2025, related to the convertible note payable at fair value.

Nonconvertible Promissory Notes

As of June 30, 2026, the Company had eleven outstanding unsecured nonconvertible promissory notes in the aggregate amount of $5,080,000, which bear interest at a rate of 10% per annum and mature between November 2026 and October 2030.

As of June 30, 2026 and December 31, 2025, the Company had a balance of $900,000 and $500,000, respectively, recorded as current liabilities and $4,180,000 and $4,580,000, 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 $127,000 and $104,667 for the three months ended June 30, 2026 and 2025, respectively, and $254,000 and $203,750 for the six months ended June 30, 2026 and 2025, respectively. The Company made interest payments of $252,778 and $200,250 during the six months ended June 30, 2026 and 2025, respectively, related to the nonconvertible promissory notes.

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 sellers 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 12.

The Company recorded interest expense related to this Socialyte Promissory Note of $30,000 for the three months ended June 30, 2026 and 2025, and $60,000 for the six months ended June 30, 2026 and 2025. No interest payments were made during the three or six months ended June 30, 2026 and 2025, related to the Socialyte Promissory Note.

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

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”). 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 six months ended June 30, 2026 and the year ended December 31, 2025, the Company did not use the BKU Commercial Card. During each of the three months ended June 30, 2026 and 2025, the Company made payments in the amount of $354,621, inclusive of $64,145 and $87,197, respectively, of interest related to the First BKU Term Loan. During each of the six months ended June 30, 2026 and 2025, the Company made payments in the amount of $709,241, inclusive of $132,770 and $177,919, respectively, of interest related to the First BKU Term Loan. During each of the three months ended June 30, 2026 and 2025, the Company made payments in the amount of $185,995, inclusive of $21,332 and $23,187, respectively, of interest related to the Second BKU Term Loan. During each of the six months ended June 30, 2026 and 2025, the Company made payments in amount of $371,991, inclusive of $45,158 and $67,937, respectively, of interest related to 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 June 30, 2026 and 2025, the Company recorded interest expense and made payments of $6,900 and $7,667, respectively, and $13,678 and $15,217 for the six months ended June 30, 2026 and 2025, respectively, related to the BKU Line of Credit.

As of June 30, 2026, the Company had a balance of $1,890,056 classified as current liabilities and $2,016,967 classified as noncurrent liabilities, net of $51,881 of debt issuance costs, in its condensed consolidated balance sheet related to the First BKU Term Loan and the Second BKU Term Loan. As of December 31, 2025, the Company had a balance of $1,813,760 classified as current liabilities and $2,976,930 classified as noncurrent liabilities, net of $71,518 of debt issuance costs, in our condensed consolidated balance sheet related to the First BKU Term Loan and the Second BKU Term Loan. As of June 30, 2026 and December 31, 2025, 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 for the three months ended June 30, 2026 and 2025, and $19,636 and $14,024 for the six months ended June 30, 2026 and 2025, respectively.

The Bank United 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 June 30, 2026, the Company is in compliance with the debt covenants.

FVP Loan

On May 7, 2026, two of the Company’s wholly-owned subsidiaries, Shore Fire and The Door (collectively, the “Borrowers”), executed a loan agreement with certain Lenders and FVP Servicing, LLC (“FVP”), as agent for the Lenders providing for (i) a term loan in the amount of $2,000,000, (ii) a delayed draw term loan in the amount of $2,000,000 that, subject to certain conditions, will become available on November 7, 2026 and (ii) a second delayed draw term loan in the amount of $1,000,000 that, subject to certain conditions, will become available on May 7, 2027 (the “Loans”). The Loans bear and will bear interest at 12% per annum from the date they are made and will have a maturity date of May 7, 2029. The Company executed a guaranty in favor of FVP in connection with the loan agreement. In addition, the Borrowers entered into a security agreement pursuant to which they granted FVP and the Lenders a security interest in substantially all of their assets as collateral for the loan obligations and the Company entered into a pledge and security agreement granting FVP and the Lenders a security interest in the equity of the Borrowers. Proceeds from the Loans will be for general working capital purposes.

During the three and six months ended June 30, 2026, the Company drew $2,000,000 under the FVP loan facility (the “FVP Loan”), and incurred debt issuance, loan origination fees and debt service reserve of $813,472 recorded as net of the term loans, noncurrent portion on the condensed consolidated balance sheet. As of June 30, 2026, the Company had an aggregate principal balance of $1,229,021 related to the FVP Loan, net of debt issuance costs, loan origination fees and debt service reserve. For the three and six months ended June 30, 2026, the Company amortized as interest expense on its consolidated statement of operations, debt origination costs, loan origination fees and interest in the amount of $42,493 against the amounts retained on the date of the FVP Loan.

The FVP loans facility contains financial covenants tested annually, starting on December 31, 2026, on a trailing twelve-month basis that require the Company to maintain a maximum funded debt/EBITDA ratio of 3.00:1.00. In addition, FVP credit facility contains a liquidity covenant that requires the Company to hold an unrestricted cash balance with daily minimum deposit balance of $500,000. As of June 30, 2026, the Company is in compliance with the debt covenant.

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

NOTE 6 —LOANS FROM RELATED PARTY

On June 1, 2021, the Company issued Dolphin Entertainment LLC (“DE LLC”), an entity wholly owned by the Company’s CEO, Bill O’Dowd, a nonconvertible promissory note with a principal balance of $1,107,873 which was to mature on December 31, 2026. 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 were to mature on April 29, 2029 and June 10, 2029, respectively, (collectively, “the DE LLC Notes”). The DE LLC Notes each bore 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 DE LLC 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 dates 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 the Company’s common stock 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 the DE LLC Notes and the fair value of the DE New Notes of approximately $0.8 million as a loss from extinguishment of debt in our condensed consolidated statements of operations for the three and six months ended June 30, 2025.

As of June 30, 2026 and December 31, 2025, the Company had an aggregate principal balance of $2,774,965 and $2,904,357, respectively, related to the DE New Notes under the caption, convertible notes payable – related party, in the Company’s condensed consolidated balance sheets. During the six months ended June 30, 2026 and 2025, the Company did not repay any principal balance or make interest payments on the DE LLC Notes or DE New Notes.

The Company recorded interest expense of $55,918 for the three months ended June 30, 2026 and 2025 and $111,222 and $99,938 for the six months ended June 30, 2026 and 2025. related to the DE LLC Notes and the DE New Notes. As of June 30, 2026 and December 31, 2025 we had a balance in accrued interest – related party of $599,276 and $488,054, respectively, on the Company’s 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, the 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 January 16, 2029, May 28, 2029 and December 30, 2029, respectively.

As of both June 30, 2026 and December 31, 2025, we had a principal balance of $983,112 related to the Mock Notes under the caption loans from related party, in the Company’s condensed consolidated balance sheets. For the six months ended June 30, 2026 and 2025, the Company did not repay any principal balance on the Mock Notes. During the six months ended June 30, 2026 the Company made interest payments of $49,156. No interest payments related to the Mock Notes were made during the six months ended June 30, 2025. During the three and six months ended June 30, 2026 and 2025, the Company recorded interest expense of $24,578 and $49,156, respectively, related to the Mock Notes. As of June 30, 2026 and December 31, 2025, we had a balance in accrued interest – related party of $188,728 on our 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 goodwill and 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.

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

Financial Disclosures about Fair Value of Financial Instruments

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

Convertible notes payable

As of June 30, 2026, 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 $2,774,965. 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.

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

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

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

Convertible note payable, at fair value

As of June 30, 2026, the Company had one outstanding convertible note payable with a face value of $500,000 (the “March 4 th Note”), 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, 2025 to June 30, 2026:

The estimated fair value of the March 4 th Note as of June 30, 2026 and December 31, 2025, 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:

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

NOTE 8—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 six months ended June 30, 2026 and 2025, the Company had a net loss and as such the two-class method is not presented.

For the three and six months ended June 30, 2026, potentially dilutive instruments including 5,999,877 shares and 5,843,342 shares 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 six months ended June 30, 2025, potentially dilutive instruments including 6,257,833 shares and 5,747,879 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 9 —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 June 30, 2026 and December 31, 2025, the Company had accrued $2,625,000 of compensation as accrued compensation and has balances of $1,496,476 and $1,366,305, respectively, in accrued interest – related party 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.

The Company recorded interest expense related to the accrued compensation in the condensed consolidated statements of operations amounting to $65,445 for the three months ended June 30, 2026 and 2025, and $130,171 for the six months ended June 30, 2026 and 2025. During the six months ended June 30, 2026 and 2025, the Company didnot make cash compensation or interest payments in connection with the accrued compensation to the CEO.

On May 13, 2025, the Company entered into a one-year 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. On April 29, 2026, the Company and Ms. Bass agreed to extend this agreement pursuant to its terms for a one-year period and it will renew automatically annually, unless one of the parties provides written notice of non-renewal prior to the end of the then-current period. The Company made payments in the amount of $25,000 during the three months ended June 30, 2026 and 2025, and $25,000 and $50,000 during the six months ended June 30, 2026 and 2025, respectively, related to this consulting agreement with Ms. Bass.

The Company entered into several DE LLC 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

NOTE 10 —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 condensed 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. The CODM uses this information when evaluating potential share repurchase opportunities, assessing acquisition targets and pursuing content creation and distribution partnerships.

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 from operations.

(1) Excludes bad debt expense

(1) Excludes bad debt expense

The CODM does not review assets on a segment basis. In connection with the acquisitions of its wholly owned subsidiaries, as of June 30, 2026 the Company had assigned $6,852,855 of intangible assets, net of accumulated amortization of $16,558,115, and goodwill of $21,507,944, net of impairments, to the EPM segment.

During the three and six months ended June 30, 2026 and 2025, there were no triggering events noted that would require the Company to reassess goodwill impairment outside of its regular annual impairment test.

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

NOTE 11 —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.

The tables below show the lease income and expenses recorded in the condensed consolidated statements of operations incurred during the three and six months ended June 30, 2026 and 2025 for operating and financing leases, respectively.

Lease Payments

For the six months ended June 30, 2026 and 2025, the Company made payments in cash related to its operating leases in the amounts of $1,463,927 and $1,129,444, respectively.

Future minimum lease payments for leases for the remainder of 2026 and thereafter, were as follows:

As of June 30, 2026, the Company’s weighted average remaining lease term on its operating and finance leases is 3.8 years and 1.92 years, respectively, and the Company’s weighted average discount rate is 8.78% and 7.49% related to its operating and finance leases, respectively.

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

NOTE 12—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. Also 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. As the case has progressed, the court appointed an independent accountant to adjudicate certain accounting issues relevant to the case. That independent accountant’s work is ongoing. In April 2026, the Court rejected Defendants’ attempt to dismiss the Company’s claims. Trial in the matter is scheduled for April 2027. Due to the stage of the proceedings 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.