Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The objectives of our Management's Discussion and Analysis of Financial Condition and Results of Operations are to provide users of our consolidated financial statements with a narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results. This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Consolidated Financial Statements and related Notes included elsewhere in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in other sections of this Annual Report on Form 10-K. See "Special Note Regarding Forward-Looking Statements" for additional factors relating to such statements and see "Risk Factors" included in Item 1A of this Annual Report on Form 10-K. Our past operating results are not necessarily indicative of operating results in any future periods.

Overview

We are a leading independent entertainment marketing and production company. We were first incorporated in the State of Nevada on March 7, 1995 and domesticated in the State of Florida on December 4, 2014. Our common stock trades on The Nasdaq Capital Market under the symbol "DLPN."

Through our subsidiaries, 42West LLC ("42West"), The Door Marketing Group LLC ("The Door"), Shore Fire Media, Ltd ("Shore Fire"), Elle Communications, LLC ("Elle"), The Digital Dept, LLC ("The Digital Dept.") and Special Projects Media, LLC ("Special Projects") we provide 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 and marketing leaders for the industries they serve. As a group, they were recognized as the #1 PR firm in the country in the prestigious Observer rankings in 2025. 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. Dolphin's legacy content production business, Dolphin Films, 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.

We have established an acquisition strategy based on identifying and acquiring companies that complement our existing entertainment publicity and marketing services and content production businesses. We believe that complementary businesses can create synergistic opportunities and bolster profits and cash flow. While we may acquire additional companies in the future, we are not in active negotiations with any such companies, and there is no assurance that we will be successful in acquiring any additional companies, whether in 2026 or at all.

We have also established an investment strategy, "Ventures" or "Dolphin 2.0," based upon identifying opportunities to develop internally owned assets, or acquire ownership stakes in others' assets, in the categories of entertainment content, live events and consumer products. We believe these categories represent the types of assets wherein our expertise and relationships in entertainment marketing most influences the likelihood of success. We are in various stages of internal development and outside conversations on a wide range of opportunities within these Ventures. We intend to enter into Venture investments during 2026, but there is no assurance that we will be successful in doing so, whether in 2026 or at all.

Sale of Always Alpha Sports Management LLC

On November 14, 2025 (the AA Closing Date"), we sold all of the membership interests in Always Alpha Sports Management LLC ("Always Alpha") to Always Alpha Holdings, LLC ("AA Holdings"), a Delaware limited liability company. As consideration for the sale we received on the AA Closing Date $243,417 in cash and three secured promissory notes each in the principal amount of $150,000 each with stated maturity dates of February, May and August 2026. On February 13, 2026, we received $150,000 as payment for the first promissory note. We also received 150,000 Class A common units of AA Holdings. As a result of the sale of Always Alpha, we recorded a gain on the sale of Always Alpha of $756,574 in our consolidated statement of operations.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators of the financial condition and operating performance of our business are revenues, direct costs, payroll and benefits, selling, general and administrative expenses, legal and professional expenses, other income/expense and net income. Other income/expense consists mainly of interest expense, interest income and non-cash changes in fair value of liabilities,

We operate in two reportable segments: our entertainment publicity and marketing segment and our content production segment. The entertainment publicity and marketing segment is composed of 42West, The Door, Shore Fire, Elle, The Digital Dept. and Special Projects and provides clients with diversified services, including public relations, entertainment content marketing, strategic communications, influencer marketing, celebrity booking and live event production. The content production segment is composed of Dolphin Films and Dolphin Digital Studios, which produce and distribute feature films and digital content.

Entertainment Publicity and Marketing ("EPM")

Our revenue is directly impacted by the retention and spending levels of existing clients and by our ability to win new clients. We believe that we have a stable client base, and we have continued to grow organically through referrals and by actively soliciting new business. We earn revenues primarily from the following sources: (i) celebrity talent services; (ii) content marketing services under multiyear master service agreements in exchange for fixed project-based fees; (iii) individual engagements for entertainment content marketing services for durations of generally between three and six months; (iv) strategic communications services; (v) engagements for marketing of special events such as food and wine festivals; (vi) engagement for marketing of brands; (vii) arranging strategic marketing agreements between brands and social media influencers or celebrities and (viii) curating and booking celebrities for live events. For these revenue streams, we collect fees through either fixed fee monthly retainer agreements, fees based on a percentage of contracts or project-based fees.

We earn entertainment publicity and marketing revenues primarily through the following:

·

Talent- We earn fees from creating and implementing strategic communication campaigns for performers and entertainers, including Oscar, Tony and Emmy winning film, theater and television stars, directors, producers, celebrity chefs and Grammy winning recording artists. Our services in this area include ongoing strategic counsel, media relations, studio and/or network liaison work, and event and tour support. We believe that the proliferation of content, both traditional and on social media, will lead to an increasing number of individuals seeking such services, which will drive growth and revenue in our Talent departments for several years to come.

·

Entertainment Marketing and Brand Strategy- We earn fees from providing marketing direction, public relations counsel and media strategy for entertainment content (including theatrical films, television programs, DVD and VOD releases, and online series) from virtually all the major studios and streaming services, as well as content producers ranging from individual filmmakers and creative artists to production companies, film financiers, DVD distributors, and other entities. In addition, we provide entertainment marketing services in connection with film festivals, food and wine festivals, awards campaigns, event publicity and red-carpet management. As part of our services, we offer marketing and publicity services tailored to reach diverse audiences. We also provide marketing direction targeted to the ideal consumer through a creative public relations and creative brand strategy for hotel and restaurant groups.

·

Strategic Communications- We earn fees by advising companies looking to create, raise or reposition their public profiles, primarily in the entertainment industry. We also help studios and filmmakers deal with controversial movies, as well as high-profile individuals, address sensitive situations. We believe that growth in the Strategic Communications division will be driven by increasing demand for these varied services by traditional and non-traditional media clients who are expanding their activities in the content production, branding, and consumer products PR sectors.

	·	Digital Media Influencer Marketing Campaigns- We arrange strategic marketing agreements between brands and social media influencers, for both organic and paid campaigns. We also offer services for social media activations at events. Our services extend beyond our own captive influencer network, and we manage custom campaigns targeting specific demographics and locations, from ideation to delivery of results reports. We expect that our relationship with social media influencers will provide us the ability to offer these services to our existing clients in the entertainment and consumer products industries and will be accretive to our revenue.
	·	Celebrity Booking and Live Event Programming- We arrange for brands and events to book celebrity and influencer talent. Our services include the creation of the strategy to elevate the brand or event through celebrity and/or influencer inclusion, to the booking of celebrities and influencers for commercial endorsements or appearances, to the curation of event lists and securing attendance, to the coordination and production of live events. We believe the expansion of brands seeking celebrity and/or influencer endorsements, as well as celebrity and/or influencers to attend brand-sponsored live events, will drive growth and revenue for the next several years.

Content Production ("CPD")

Project Development and Related Services

We have a team that dedicates a portion of its time to identifying scripts, story treatments and novels for acquisition, development and production. The scripts can be for either digital, television or motion picture productions. We have acquired the rights to certain scripts that we intend to produce and release in the future, subject to obtaining financing. We have not yet determined if these projects would be produced for digital, television or theatrical distribution.

We have completed development of several feature films, which means that we have completed the script and can begin pre-production once financing is obtained. We are planning to fund these projects through third-party financing arrangements, domestic distribution advances, pre-sales, and location-based tax credits, and if necessary, sales of our common stock, securities convertible into our common stock, debt securities or a combination of such financing alternatives; however, there is no assurance that we will be able to obtain the financing necessary to produce any of these feature films.

In June 2022, we 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. IMAX and Dolphin each agreed to fund 50% of the production budget which was estimated at approximately $4 million. We paid $2,250,000 related to productions costs of The Blue Angels in connection with this agreement. 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. We derived $3.4 million from the Amazon Agreement. 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. We continue to earn revenue from a version of Blue Angels adapted for IMAX theatres in museums nationwide. During 2025, we recorded revenue of $0.2 million related to these museum theatres, and we estimate that we will derive an additional $0.7 million from sales at IMAX theatres in museums nationwide.

In February 2025, Dolphin Films partnered with Aircraft Productions of Toronto, Canada to produce a re-boot of the popular 1986 MGM hockey movie "Youngblood." In December 2025, we entered into a distribution agreement with Well Go USA, Inc. ("Well Go") to distribute the film across all media in the United States. The film was released in theaters on March 6, 2026.

Revenues

For the years ended December 31, 2025 and 2024, we derived substantially all of our revenues from our entertainment publicity and marketing segment. The entertainment publicity and marketing segment includes revenues from Elle from July 1, 2024 through December 31, 2025. It also includes revenue from Always Alpha from July 1, 2024 to November 14, 2025. We determined to sell Always Alpha and the transaction was closed on November 14, 2025.

For the years ended December 31, 2025 and 2024, our content production segment derived revenues from The Blue Angels documentary. During the year ended December 31, 2024, we also generated revenue in our content production segment from the distribution of Believe, a motion picture released in 2013.

The table below sets forth the percentage of total revenue derived from our segments for the years ended December 31, 2025 and 2024:

		December 31,
		2025				2024
Revenues:
Entertainment publicity and marketing			99.5	%			93.4	%
Content production			0.5	%			6.6	%
Total revenue			100	%			100	%

Expenses

Our expenses consist primarily of:

(1)

Direct costs - includes the amortization of film production costs related to The Blue Angels, using the individual film-forecast-computation method which amortizes film production costs in the same ratio as the current period actual revenue bears to estimated remaining unrecognized ultimate revenue. Direct costs also include certain costs of services, as well as certain production costs, related to our entertainment publicity and marketing business.

(2)

Payroll and benefits expenses - includes wages, stock-based compensation, payroll taxes and employee benefits.

(3)

Selling, general and administrative expenses - includes all overhead costs except for payroll, depreciation and amortization and legal and professional fees that are reported as separate expense items.

(4)

Acquisition costs - includes agreed upon payments related to the acquisitions of Special Projects that were made during the year ended December 31, 2025. For the year ended December 31, 2024, it includes legal, consulting and audit fees related to our acquisition of Elle.

(5)

Impairment of goodwill - includes an impairment charge related to ceasing operations in Viewpoint Computer Animation, Inc. ("Viewpoint") and triggering events identified during the year ended December 31, 2024.

(6)

Write-off of notes receivable - includes the write-off of the notes receivable from Midnight Theatre during the year ended December 31, 2024. Refer to Note 8 to the consolidated financial statement elsewhere on this Annual Report on Form 10-K for additional information.

(7)

Change in fair value of contingent consideration - includes changes in the fair value of the contingent earn-out payment obligations for the acquisition of Elle during the year ended December 31, 2024. The fair value of the related contingent consideration is measured at every balance sheet date and any changes recorded on our consolidated statements of operations. There was no remaining contingent consideration outstanding as of December 31, 2025.

(8)

Gain on the sale of Always Alpha - includes the gain recognized on the sale of Always Alpha on November 14, 2025. Refer to Note 4 to the consolidated financial statements elsewhere on this Annual Report on Form 10-K for additional information.

(9)

Depreciation and amortization - includes the depreciation of our property and equipment and amortization of intangible assets and leasehold improvements.

(10)

Legal and professional fees - includes fees paid to our attorneys, fees for investor relations consultants, audit and accounting fees and fees for general business consultants.

Other Income and Expenses

For the years ended December 31, 2025 and 2024, other income and expenses consisted primarily of: (1) changes in the fair values of convertible notes and warrants and (2) interest expense, net of nominal interest income. For the year ended December 31, 2025, we also recorded a loss on extinguishment of debt when we exchanged the promissory notes held by our CEO for convertible promissory notes. Refer to Note 14 to the consolidated financial statements elsewhere on this Annual Report on Form 10-K for additional information.

RESULTS OF OPERATIONS

Year ended December 31, 2025 as compared to year ended December 31, 2024

Revenues

For the years ended December 31, 2025 and 2024, our revenues were as follows:

		December 31,
		2025				2024
Revenues:
Entertainment publicity and marketing		$	56,413,682			$	48,263,843
Content production			285,707				3,412,141
Total revenue		$	56,699,389			$	51,684,984

Revenues from entertainment publicity and marketing increased by approximately $8.1 million, or 16.9%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024.

The increase for the year ended December 31, 2025 is primarily driven by increases across substantially all subsidiaries and inclusion of $1.8 million of Elle revenue and $0.3 million of Always Alpha revenue that were not present for the full year in 2024. This increase was offset by $0.6 million of revenue from Viewpoint that was closed in June of 2024. The remaining increase in revenue is attributed to organic growth across substantially all of our subsidiaries.

Revenues from content production decreased by approximately $3.1 million during the year ended December 31, 2025, compared to the same period in the prior year, in connection with revenue generated from The Blue Angels documentary film, which was released in 2024.

Expenses

For the years ended December 31, 2025 and 2024, our operating expenses were as follows:

		December 31,
		2025				2024
Expenses:
Direct costs		$	2,269,874			$	3,266,461
Payroll and benefits			41,916,885				38,123,040
Selling, general and administrative			7,813,177				7,795,610
Acquisition costs			416,171				164,044
Impairment of goodwill			-				6,671,557
Write-off of notes receivables			-				1,270,000
Change in fair value of contingent consideration			-				50,000
Gain on the sale of Always Alpha Sports Management LLC			(756,574	)			-
Depreciation and amortization			2,354,585				2,382,361
Legal and professional			2,724,329				2,447,083
Total expenses		$	56,738,447			$	62,170,156

Direct costs decreased by approximately $1.0 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The decrease in direct costs for the year ended December 31, 2025 is directly attributable to $1.7 million more of capitalized production costs amortized for the production of The Blue Angels during the year ended December 31, 2024 as compared to the year ended December 31, 2025. Production costs are amortized using the individual film forecast method, based on current period revenues to management's estimated remaining total gross revenue to be earned. The decrease was offset by an increase in direct costs of approximately $0.5 million for The Digital Dept. events and impairment of capitalized production costs for projects we no longer intend to produce in the amount of approximately $0.1 million.

Payroll and benefits expenses increased by approximately $3.8 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to the inclusion of additional payroll expenses for Elle and Always Alpha of $1.3 million and $0.7 million, respectively, over the payroll expense for these entities for the year ended December 31, 2024. This was offset by the removal of the Viewpoint payroll in the amount of $0.7 million present in 2024. The net increase of $2.2 million is related to additional headcount and commission to support the increase in revenue.

Selling, general and administrative expenses increased nominally for the year ended December 31, 2025 as compared to the year ended December 31, 2024.

Acquisition costs for the year ended December 31, 2025 were approximately $0.4 million, related to an agreed upon payment to the sellers of Special Projects for a working capital adjustment. Acquisition costs for the year ended December 31, 2024 were $0.2 million for legal, consulting and audit fees related to our acquisition of Elle on July 15, 2024.

There was no impairment of goodwill for the year ended December 31, 2025 compared to $6.7 million for the year ended December 31, 2024.

There was no write-off of notes receivable for the year ended December 31, 2025 compared to $1.3 million for the year ended December 31, 2024.

There was no change in fair value of contingent consideration for the year ended December 31, 2025 compared to $50,000 for the year ended December 31, 2024 because the contingent consideration for Elle was determined and fixed as of December 31, 2024 and paid in April of 2025. There was no remaining contingent consideration as of December 31, 2025.

On November 14, 2025, we sold the majority of our ownership stake in Always Alpha and recorded a gain on the sale of $0.8 million.

Depreciation and amortization expenses decreased nominally for the year ended December 31, 2025 as compared to the year ended December 31, 2024.

Legal and professional expenses increased by $0.3 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024 primarily due to the litigation with NSL Ventures. Refer to Note 25 to the consolidated financial statements elsewhere on this Annual Report on Form 10-K for additional information.

Other Expenses

		December 31,
		2025				2024
Other (expense) and income:
Change in fair value of convertible note		$	50,000			$	35,000
Change in fair value of warrants			-				5,000
Loss on extinguishment of debt			(835,324	)			-
Interest expense, net			(2,195,024	)			(2,070,199	)
Total		$	(2,980,348	)		$	(2,030,199	)

Change in fair value of Convertible Note at Fair Value - We elected the fair value option for a convertible note issued in 2020. The fair value of the convertible note is re-measured at every balance sheet date and any changes are recorded on our consolidated statements of operations. For the years ended December 31, 2025 and 2024, we recorded gains in the change in fair value of the convertible note issued in 2020 in the amounts of $50.0 thousand and $35.0 thousand, respectively. None of the decreases in the value of the convertible note was attributable to instrument specific credit risk.

Change in fair value of warrants - The warrant issued with the convertible note payable at fair value issued in 2020 was initially measured at fair value at the time of issuance and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date, with changes in estimated fair value of the warrant liability recognized as other income or expense. The warrant expired on September 4, 2025. The change in fair value of the 2020 warrant that was not exercised decreased minimally for the year ended December 31, 2024. For the year ended December 31, 2025, there was no change in fair value.

Loss on extinguishment of debt - On May 12, 2025, we exchanged three nonconvertible promissory notes held by Dolphin Entertainment LLC, ("DE LLC") an entity wholly owned by our Chief Executive Officer ("CEO"), Bill O'Dowd, for three convertible promissory notes. We determined that the transaction should be accounted for as an extinguishment of debt and recorded a loss on the extinguishment of debt of $0.8 million for the year ended December 31, 2025, for the difference between the carrying value of the nonconvertible notes payable and the fair value of the convertible notes payable on May 12, 2025.

Interest expense - Interest expense increased by $0.1 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The increase is primarily due to twenty-five convertible promissory notes, six nonconvertible promissory notes issued during the year ended December 31, 2025 and a full year of interest on the Second BKU Term Loan. The increase is offset by the amortization of $0.2 million related to the premium recognized on the extinguishment of debt upon the exchange of promissory notes for convertible promissory notes with our CEO. Refer to Note 14 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.

Income Tax Expense

We had an income tax expense of $69.4 thousand for the year ended December 31, 2025, compared to an expense of $87.9 thousand for the year ended December 31, 2024. The income tax expense for years ended December 31, 2025 and 2024 reflect the accrual of a valuation allowance in connection with the limitations of our indefinite lived tax assets to offset our indefinite lived tax liabilities. To the extent the tax assets are unable to offset the tax liabilities, we have recorded a deferred expense for the tax liability (a "naked credit").

As of December 31, 2025, we have approximately $60.7 million of pre-tax net operating loss carryforwards for U.S. federal income tax purposes that begin to expire in 2028; federal net operating losses generated after December 31, 2017 have an indefinite life and do not expire. Additionally, we have state net operating loss carryforwards amounting to $66.5 million that begin to expire in 2029. A portion of the carryforwards may expire before being applied to reduce future income tax liabilities.

In assessing the ability to realize the deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax asset is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible. We believe it is more likely than not that the deferred tax asset will not be realized, and we have accordingly recorded a full valuation allowance as of both December 31, 2025 and 2024.

Net Loss

Net loss was approximately $3.1 million or $0.27 per share based on 11,558,485 weighted average shares outstanding for basic and fully diluted loss per share for the year ended December 31, 2025.

Net loss was approximately $12.6 million or $1.22 per share based on 10,306,904 weighted average shares outstanding for basic and fully diluted loss per share for the year ended December 2024.

Net loss for the years ended December 31, 2025 and 2024, respectively, were related to the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

		Year Ended December 31,
		2025				2024
Statement of Cash Flows Data:
Net cash used in operating activities		$	(2,027,597	)		$	(157,851	)
Net cash provided by (used in) investing activities			233,075				(2,458,289	)
Net cash provided by financing activities			2,347,265				4,184,295
Net increase in cash and cash equivalents and restricted cash			552,743				1,568,155
Cash and cash equivalents and restricted cash, beginning of period			9,128,846				7,560,691
Cash and cash equivalents and restricted cash, end of period		$	9,681,589			$	9,128,846

Operating Activities

Net cash used in operating activities was approximately $2.0 million for the year ended December 31, 2025, a change of $1.9 million from the year ended December 31, 2024. The increase in cash flows used in operating activities was primarily due to an increase of $1.3 million used in working capital, along with a decreased net income, after taking into account non-cash items such as depreciation and amortization, bad debt expense, share-based compensation, impairment of capitalized production costs, gain on sale of Always Alpha, net loss on extinguishment of debt, impairment of goodwill and other non-cash losses.

Investing Activities

Cash flows provided by investing activities for the year ended December 31, 2025 were $0.2 million and were primarily due to the cash received from the sale of Always Alpha. Cash flows used in investing activities for year ended December 31, 2024 mainly related to the net issuance of $1.3 million of notes receivable to Midnight Theatre, and $1.2 million payment related to the acquisition of Elle, net of cash acquired.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025 was $2.3 million and mainly related to:

Inflows:

	·	$3.4 million proceeds from convertible notes payable; and
	·	$1.2 million proceeds from the nonconvertible notes payable;

Outflows:

	·	$0.5 million payment of contingent consideration related to the acquisition of Elle;
	·	$1.7 million repayment of the first and second Bank United term loans; and
	·	$0.1 million repayment of finance leases.

Net cash provided by financing activities for the year ended December 31, 2024 was $4.2 million and mainly related to:

Inflows:

	·	$2.1 million proceeds from related party loans;
	·	$2.0 million proceeds from the second term loan from Bank United; and
	·	$1.2 million proceeds from and the Lincoln Park facility;

Outflows:

	·	$1.0 million of repayment of the first term loan; and
	·	$0.1 million repayment of finance leases.

Debt and Financing Arrangements

Total debt amounted to $24.5 million as of December 31, 2025 compared to $22.4 million as of December 31, 2024, an increase of $2.1 million. The increase relates primarily to $3.8 million increase in convertible and nonconvertible promissory notes, offset by the repayment of the term loan. Our debt obligations in the next twelve months from December 31, 2025 increased to $6.6 million from $5.8 million, mainly due to an increase in the current portion of the Bank United Credit Facility (defined below in "BankUnited Loan Agreements - Refinancing Transaction") in the amount of $0.1 million as compared to the current portion of the Bank United Credit Facility in the prior year and a net increase in the current portion of convertible and nonconvertible notes payable in the amount of $1.0 million as compared to the prior year. We expect our current cash position, cash expected to be generated from our operations and other availability of funds, as detailed below, to be sufficient to meet our debt requirements.

2025 Lincoln Park Transaction

On August 12, 2025, we 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, we may sell to Lincoln Park up to $15,000,000 of shares (the "Purchase Shares") of our common stock, par value $0.015 per share over the thirty-six (36) month term of the 2025 LP Purchase Agreement. Concurrently with entering into the 2025 LP Purchase Agreement, we also entered into a registration rights agreement with Lincoln Park, pursuant to which we 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").

Beginning one business day following the Commencement Date (as defined below) and thereafter, we may direct Lincoln Park, on any business day selected by us (the "Purchase Date") to purchase up to 20,000 shares of our 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 our 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 our common stock during the Purchase Date, or (ii) the average of the three (3) lowest closing sale prices of our common stock during the ten (10) business days prior to the Purchase Date. We 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 we elect to sell shares to Lincoln Park.

In addition to Regular Purchases and provided that we have directed a Regular Purchase in full, we, in our 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 the lesser of 97% 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"). We shall have the right, in our sole discretion, to set a minimum price threshold for each Accelerated Purchase in the notice provided with respect to such Accelerated Purchase and we 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.

We 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 we 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 our common stock (which is equal to approximately 19.99% of the shares of our 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 our 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 our common stock on Nasdaq immediately preceding the signing of the 2025 LP Purchase Agreement and (B) the average official closing price of our 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 our issued and outstanding common stock.

Under applicable rules of the NASDAQ Capital Market, we could not issue or sell more than 19.99% of the shares of our common stock outstanding immediately prior to the execution of the LP 2025 Purchase Agreement to Lincoln Park under the LP 2025 Purchase Agreement without shareholder approval. At a meeting held on November 10, 2025, our shareholders approved the issuance of up to $15 million of shares of our common stock pursuant to the LP 2025 Purchase Agreement.

On August 13, 2025, we issued 244,698 shares of our 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"). We may issue up to 122,349 additional shares of our 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, we incurred and capitalized $281,403 of equity issuance costs recorded in other current assets on our consolidated balance sheet.

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 our common stock issued or sold by us to Lincoln Park under the 2025 LP Purchase Agreement.

The 2025 LP Purchase Agreement may be terminated by us at any time after the Commencement Date, at our 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 our common stock. Although we have agreed to reimburse Lincoln Park for a limited portion of the fees it incurred in connection with the 2025 LP Purchase Agreement, we 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 our 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. We may deliver purchase notices under the 2025 LP Purchase Agreement, subject to market conditions, and in light of our capital needs, from time to time and under the limitations contained in the 2025 LP Purchase Agreement. Any proceeds that we receive under the 2025 LP Purchase Agreement are expected to be used for working capital and general corporate purposes.

On October 3, 2025, we filed a new registration statement on Form S-1 (the "Registration Statement" with the Securities Exchange Commission (the "SEC") covering the resale of our common stock in accordance with the terms of the 2025 LP Registration Rights Agreement. The registration statement became effective on December 1, 2025. As of the date of this report, we have not sold any shares to Lincoln Park under the 2025 LP Purchase Agreement.

2022 Lincoln Park Transaction

On August 10, 2022, we entered into a purchase agreement (the "LP 2022 Purchase Agreement") and a registration rights agreement (the "LP 2022 Registration Rights Agreement") with Lincoln Park Capital Fund, LLC ("Lincoln Park"), pursuant to which we could sell and issue to Lincoln Park, and Lincoln Park was obligated to purchase, up to $25,000,000 in value of our common stock from time to time over a 36-month period. Pursuant to the terms of the LP 2022 Registration Rights Agreement, the issuance of shares pursuant to the LP 2022 Purchase Agreement have been registered pursuant to our effective registration statement on Form S-1, and the related prospectus dated September 15, 2022.

During the year ended December 31, 2025, we did not sell shares under the LP 2022 Purchase Agreement. During the year ended December 31, 2024, we sold 475,000 shares of common stock at prices ranging between $2.14 and $3.06 pursuant to the LP 2022 Purchase Agreement and received proceeds of $1.2 million. The LP 2022 Purchase Agreement expired in September 2025.

We evaluated the LP 2025 Purchase Agreement and the LP 2022 Purchase Agreement, considering the guidance in ASC 815-40, "Derivatives and Hedging - Contracts on an Entity's Own Equity" ("ASC 815-40"), because each includes the right to require Lincoln Park to purchase shares of common stock in the future ("put right"). We concluded that they are equity-linked contracts that do not qualify for equity classification, and therefore require fair value accounting. We analyzed the terms of the freestanding put right in both agreements and concluded that it has insignificant value at the inception of each agreement and as of December 31, 2025 and 2024.

Convertible Notes Payable

As of December 31, 2025, we 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.

During the year ended December 31, 2025, four holders of convertible notes payable converted four convertible notes payable with an aggregate principal balance of $840,000 into 794,615 shares of our common stock. During the year ended December 31, 2024, no convertible note holders converted their convertible notes payable. We did not repay the principal balance of any of the convertible notes payable during the years ended December 31, 2025 and 2024.

On January 26, 2026, March 9, 2026 and March 18, 2026, three holders of three convertible notes payable with an aggregate principal balance of $310,000 converted the full principal amount of each of the convertible promissory notes payable into an aggregate of 291,672 shares of common stock, pursuant to the provisions of their respective convertible notes payable. On January 8, 2026, we issued a convertible note payable in the amount of $50,000 and received proceeds of $50,000. The note bears interest at a rate of 10% per annum, may be converted at a price of $1.60 per share and matures on the fourth anniversary of its issuance date.

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:

Aggregate Convertible Notes balance				Conversion Price		Floor/Conversion Price
$	2,700,000			90-day average closing market price of our common stock		$	5.00
	900,000			90-day average closing market price of our common stock		$	4.00
	100,000			30-day average closing market price of our common stock		$	1.01
	325,000			Fixed conversion price		$	1.11
	100,000			Fixed conversion price		$	1.02
	50,000			Fixed conversion price		$	1.01
	1,750,000			Fixed conversion price		$	1.07
	125,000			Fixed conversion price		$	1.03
	110,000			Fixed conversion price		$	1.12
	600,000			Fixed conversion price		$	1.00
	100,000			Fixed conversion price		$	1.16
	200,000			Fixed conversion price		$	1.04
	350,000			Fixed conversion price		$	1.28
	100,000			Fixed conversion price		$	1.32
	100,000			Fixed conversion price		$	1.67
	100,000			Fixed conversion price		$	1.25
$	7,710,000

As of December 31, 2025, the principal balances of $1.2 million and $6.5 million related to the convertible notes payable in current and noncurrent liabilities, respectively, were recorded on our consolidated balance sheet under the caption convertible notes payable. As of December 31, 2024, the total principal balance of $5.1 million related to the convertible notes payable was recorded in noncurrent liabilities on our consolidated balance sheet under the caption convertible notes payable.

We recorded interest expense related to these convertible notes payable of $672,290 and $510,250 during the year ended December 31, 2025 and 2024, respectively. In addition, we made cash interest payments amounting to $650,540 and $510,250 during the year ended December 31, 2025 and 2024, respectively, related to the convertible notes payable.

It is our experience that convertible notes payable, including their accrued interest, are converted into shares of our common stock and not settled through payment of cash. Although we are unable to predict the noteholder's intentions, we do not expect any change from our past experience.

Convertible Note Payable at Fair Value

As of December 31, 2025, we have one convertible note payable outstanding with an aggregate principal amount of $0.5 million for which we elected the fair value option. As such, the estimated fair value of the convertible note payable was recorded on its issue date. At each balance sheet date, we record the fair value of the convertible note payable with any changes in the fair value recorded in the consolidated statements of operations. The convertible note payable at fair value may be converted at a price of $7.82 per share, matures on March 4, 2030 and as of December 31, 2025, we had a balance of $0.3 million in noncurrent liabilities related to this convertible promissory note measured at fair value.

We recorded interest expense related to this convertible note payable at fair value of $39,472 during the years ended December 31, 2025 and 2024. In addition, we made cash interest payments amounting to $39,472 during the years ended December 31, 2025 and 2024 related to this convertible note payable at fair value.

We recorded a gain in fair value of $50,000 and $35,000 for the years ended December 31, 2025 and 2024, respectively, on our consolidated statements of operations related to this convertible note payable at fair value.

Nonconvertible Promissory Notes

During the year ended December 31, 2025, we issued six unsecured nonconvertible promissory notes and received proceeds of $1.2 million. As of December 31, 2025, we had outstanding eleven unsecured nonconvertible promissory notes in the aggregate amount of $5.1 million which bear interest at a rate of 10% per annum and mature between November 2025 and October 2030.

As of December 31, 2025 and 2024, we had a balance of $0.5 million and $0.8 million, respectively, recorded as current liabilities and $4.6 million and $3.1 million, respectively, in noncurrent liabilities on our consolidated balance sheets related to these unsecured nonconvertible promissory notes.

We recorded interest expense related to these nonconvertible promissory notes of $439,541 and $388,000 for the years ended December 31, 2025 and 2024, respectively. We made interest payments of $429,264 and $388,000 during the years ended December 31, 2025 and 2024, respectively, related to the nonconvertible promissory notes.

Unsecured Nonconvertible Promissory Notes - Socialyte

As discussed in Note 13 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, as part of the acquisition of Socialyte, we entered into an unsecured promissory note amounting to $3.0 million ("Socialyte Promissory Note"). The Socialyte Promissory Note matured on September 30, 2023 and was payable in two payments: $1.5 million on June 30, 2023 and $1.5 million on September 30, 2023. The Socialyte purchase agreement allows us to offset a working capital deficit against the Socialyte Promissory Note. As such, on June 30, 2023, we deferred these installment payments until the final post-closing working capital adjustment is agreed upon with the seller of Socialyte. We filed a lawsuit against the seller of Socialyte and certain of its principals related to the Socialyte purchase agreement. Trial is currently scheduled for July of 2026.

As of December 31, 2025 and 2024, we have a balance of $3,000,000 in current liabilities under the caption notes payable, current portion in our consolidated balance sheets related to this note.

We recorded interest expense related to this Socialyte Promissory Note of $120,000 for the years ended December 31, 2025 and 2024. No interest payments were made during the year ended December 31, 2025 and 2024, related to the Socialyte Promissory Note.

Promissory Notes from Related Parties

Dolphin Entertainment, LLC Notes

We issued Dolphin Entertainment, LLC ("DE LLC"), an entity wholly owned by our CEO, Bill O'Dowd, a nonconvertible promissory note with a principal balance of $1,107,873 which matures on December 31, 2026. On April 29, 2024 and June 10, 2024, we issued two nonconvertible promissory notes to DE LLC in the amounts of $1,000,000 and $135,000, respectively, 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, we entered into an exchange agreement (the "Exchange Agreement") with DE LLC, pursuant to which, we 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, we 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 our common stock at a price of $1.00 per share. We 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 $0.8 million as a loss from extinguishment of debt in our consolidated statement of operations for the year ended December 31, 2025. During the year ended December 31, 2025, we amortized approximately $0.2 million of the difference between the carrying value of the DE LLC Notes and the fair value of the DE New Notes. The amortization was recorded in interest expense, net on our consolidated statement of operations for the year ended December 31, 2025.

As of December 31, 2025 we had an aggregate principal balance of $2,904,357 related to the DE New Notes under the caption convertible note payable - related party in our consolidated balance sheet. As of December 31, 2024, we had an aggregate balance of $2,242,873 related to DE LLC Notes under the caption loans from related party. During year ended December 31, 2025, we did not repay any principal balance or make interest payments on the DE LLC Notes or the DE New Notes. During the year ended December 31, 2024, we made cash interest payments in the amount of $200,000 related to the DE LLC Notes.

We recorded interest expense of $224,287 and $186,344, respectively, for the years ended December 31, 2025 and 2024 related to the DE LLC Notes and DE New Notes. As of December 31, 2025 and 2024, we had a balance in accrued interest - related parties of $488,054 and $263,767, respectively, on our consolidated balance sheets related to the DE LLC Notes and DE New Notes.

Mock Notes

During 2024, we 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 December 31, 2025 and December 31, 2024, we had a principal balance of $983,112 related to the Mock Notes under the caption loans from related party in our consolidated balance sheets. For the year ended December 31, 2025 and 2024, we did not repay any principal balance or make interest payments on the Mock Notes.

We recorded interest expense of $98,311 and $90,417 for the years ended December 31, 2025 and 2024, respectively, related to Mock Notes. As of December 31, 2025 and 2024, we had a balance in accrued interest - related parties of $188,728 and $90,417, respectively, on our consolidated balance sheets related to the Mock Notes.

BankUnited Loan Agreements - Refinancing Transaction

On September 29, 2023, we 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 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, we entered into a second loan agreement with Bank United ("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 years ended December 31, 2025 and 2024, we did not use the BKU Commercial Card. During both of the years ended December 31, 2025 and 2024, we made payments in the amount of $1,418,482, inclusive of $334,616 and $421,009 of interest related to the First BKU Term Loan, respectively. During the year ended December 31, 2025, we made payments of $743,981, inclusive of $125,007, of interest related to the Second BKU term Loan. No payments were made related to the Second BKU Term Loan during the year ended December 31, 2024.

Interest on the BKU Line of Credit is variable based on the Lender's Prime Rate. During the year ended December 31, 2025 and 2024, we recorded interest expense and made payments of $27,500 and $31,722, respectively, related to the BKU Line of Credit.

As of December 31, 2025, we 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 consolidated balance sheet related to the First BKU Term Loan and the Second BKU Term Loan. As of December 31, 2024, we had a balance of $1,686,018 classified as current liabilities and $4,782,271 classified as noncurrent liabilities, net of $96,759 of debt issuance costs, in our consolidated balance sheet related to the First BKU Term Loan and Second BKU Term Loan. As of December 31, 2025 and 2024, we had a balance of $400,000 of principal outstanding under the BKU Line of Credit.

Amortization of debt origination costs under the BKU Credit Facility is included as a component of interest expense in the consolidated statements of operations and amounted to approximately $25,241 and $16,823 for the years ended December 31, 2025 and 2024, respectively.

The BankUnited Credit Facility contains financial covenants tested semi-annually, on June 30th and December 31st, on a trailing twelve-month basis that require us 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 us to hold a cash balance at BankUnited with a daily minimum deposit balance of $2,000,000. As of December 31, 2025, we believe that we are in compliance with all of the debt covenants.

IMAX Agreement

As discussed in Note 24 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, on June 24, 2022, we entered into The Blue Angels Agreement with IMAX. Under the terms of this agreement, we paid a total of $2,250,000 related to the production costs of The Blue Angels and recorded this amount as capitalized production costs.

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. 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 years ended December 31, 2025 and 2024, we recorded revenues of $0.2 million and $3.4 million, respectively, from the Amazon Agreement.

Critical Accounting Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") requires management to make estimates and assumptions about future events that affect amounts reported in our consolidated financial statements and related notes, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. Management evaluates its accounting policies, estimates and judgments on an on-going basis. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions. Our significant accounting policies are discussed in Part II, Item 8, Financial Statements and Supplementary Data, Note 2, "Summary of Significant Accounting Policies."

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur, could materially impact the consolidated financial statements.

We consider the fair value estimates, including those related to acquisitions, valuations of goodwill, intangible assets, acquisition-related contingent consideration and convertible debt to be the most critical in the preparation of our consolidated financial statements as they are important to the portrayal of our financial condition and require significant or complex judgment and estimates on the part of management. Further details on each item are discussed below. See Note 15 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, for information pertaining to fair value adjustments.

Goodwill

Goodwill results from business combination acquisitions. Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible assets and other intangible assets acquired. As of December 31, 2025, in connection with the acquisitions of our subsidiaries, we have a balance of $21.5 million of goodwill on our consolidated balance sheets which management has assigned to the entertainment publicity and marketing segment. We account for goodwill in accordance with ASC 350, "Intangibles-Goodwill and Other" ("ASC 350"). Goodwill is not amortized; however, it is assessed for impairment at least annually, or more frequently if triggering events occur. Our annual assessment is performed in the fourth quarter.

For purposes of the annual assessment, management initially performs a qualitative assessment, which includes consideration of the economic, industry and market conditions in addition to our overall financial performance and the performance of these assets. If our qualitative assessment does not conclude that it is more likely than not that the estimated fair value of the reporting unit is greater than the carrying value, we perform a quantitative analysis. In a quantitative test, the fair value of a reporting unit is determined based on a discounted cash flow analysis. A discounted cash flow analysis requires us to make various assumptions, including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates are based on our long-term projections. Assumptions used in our impairment testing are consistent with our internal forecasts and operating plans. If the fair value of the reporting unit exceeds its carrying amount, there is no impairment. If not, we recognize an impairment equal to the difference between the carrying amount of the reporting unit and its fair value, not to exceed the carrying amount of goodwill.

As part of our annual goodwill impairment review, we performed a quantitative assessment that determined that the fair value was greater than the carrying value of the reporting units in the entertainment publicity and marketing segment. No impairment in goodwill was recorded for the year ended December 31, 2025.

During the third quarter of 2024, our stock price declined and this, in combination with recurring net losses, resulted in our market capitalization being less than our book value. In addition, we adjusted downward the revenue projections of certain subsidiaries. We considered these to be triggering events 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, we recorded an impairment of goodwill amounting to $6.5 million, which is included in the consolidated statement of operations for the year ended December 31, 2024. During the year ended December 31, 2024, we decided to close the Viewpoint subsidiary, and therefore we impaired goodwill for $0.2 million, which is the balance of goodwill attributable to Viewpoint immediately prior to the decision to shut down. This impairment is included in the consolidated statement of operations for the year ended December 31, 2024.

Intangible assets

In connection with the acquisitions of our subsidiaries, we acquired in aggregate an estimated $23.4 million of intangible assets with finite useful lives initially estimated to range from 2 to 13 years. The intangible assets consist primarily of customer relationships, trade names and non-compete agreements.

Intangible assets are initially recorded at fair value and are amortized using the straight-line method over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If a triggering event has occurred, an impairment analysis is required. The impairment test first requires a comparison of undiscounted future cash flows expected to be generated over the useful life of an asset to the carrying value of the asset. If the carrying value of the asset exceeds the undiscounted cash flows, the asset would not be deemed recoverable. Impairment would then be measured as the excess of the asset's carrying value over its fair value. See Note 5 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further discussion. Events or circumstances that might require impairment testing include the loss of a significant client or clients, the identification of other impaired assets within a reporting unit, loss of key personnel, the disposition of a significant portion of a reporting unit, significant decline in stock price or a significant adverse change in business climate or regulations.

During each of the years ended December 31, 2025 and 2024, we amortized $2.3 million related to our intangible assets that was recorded in our consolidated statement of operations under the caption depreciation and amortization.

Business Combinations and Contingent Consideration

The determination of the fair value of net assets acquired in a business combination and specifically the estimates of acquisition-related contingent consideration requires estimates and judgments of future cash flow expectations for the acquired business and the related identifiable tangible and intangible assets. Fair values of net assets acquired are calculated using expected cash flows and industry-standard valuation techniques. Fair values of earn-out liabilities are estimated using income approaches such as discounted cash flows or option pricing models.

Due to the time required to gather and analyze the necessary data for each acquisition, U.S. GAAP provides a "measurement period" of up to one year in which to finalize these fair value determinations. During the measurement period, preliminary fair value estimates may be revised if new information is obtained about the facts and circumstances existing as of the date of acquisition, or based on the final net assets and working capital of the acquired business, as prescribed in the applicable purchase agreement. Such adjustments may result in the recognition of, or an adjustment to the fair values of, acquisition-related assets and liabilities and/or consideration paid, and are referred to as "measurement period" adjustments. Measurement period adjustments are recorded to goodwill. Other revisions to fair value estimates for acquisitions are reflected as income or expense, as appropriate. See Note 4 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, for information pertaining to acquisition-related fair value adjustments.

Significant changes in the assumptions or estimates used in the underlying valuations, including the expected profitability or cash flows of an acquired business, could materially affect our operating results in the period such changes are recognized.

Convertible debt

The terms of our convertible debt agreements are evaluated to determine whether the convertible debt instruments contain both liability and equity components, in which case the instrument is a compound financial instrument. Convertible debt agreements are also evaluated to determine whether they contain embedded derivatives, in which case the instrument is a hybrid financial instrument. Judgement is required to determine the classification of such financial instruments based on the terms and conditions of the convertible debt agreements.

Estimation methods are used to determine the fair values of the liability and equity components of compound financial instruments and to determine the fair value of embedded derivatives included in hybrid financial instruments. Fair values of convertible debt are estimated using pricing models such as the Monte Carlo Simulation. Evaluating the reasonableness of these estimations and the assumptions and inputs used in the valuation methods requires a significant amount of judgement and is therefore subject to an inherent risk of error. See Note 12 and Note 15 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, for information pertaining to fair value adjustments.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.