DLPN 10-K & 10-Q changes, risk factors and insider trading

We have a history of net losses and may be unable to generate sufficient revenue to achieve profitability in the future. For the fiscal years ended December 31, 20242025 and 2023,2024, our net loss was $12,603,225$3,088,768 and $24,396,725,$12,603,225, respectively. Our accumulated deficit was $146,214,429$149,303,197 and $133,611,204$146,214,429 at December 31, 20242025 and 2023,2024, respectively. Our ability to generate net profit in the future will depend on our ability to realize the financial benefits from the operations of 42West, The Door, Shore Fire, The Digital Dept., Special Projects, Elle and Always AlphaElle and the success of our Dolphin 2.0 initiatives, as no single project is likely to generate sufficient revenue to cover our operating expenses. If we are unable to generate net profit at some point, we will not be able to meet our debt service or working capital requirements. As a result, we may need to (i) issue additional equity, which could substantially dilute the value of your share holdings, (ii) sell a portion or all of our assets, including any project rights which might have otherwise generated revenue, or (iii) cease operations.

Our business could be adversely affected if we fail to retain the principal sellers, and/or other key employees of 42West, The Door, Shore Fire, The Digital Dept. Special Projects, Elle and Always AlphaElle and the clients they serve.

The success of our entertainment publicity and marketing business operated by 42West, The Door, Shore Fire, The Digital Dept., Special Projects, Elle and AlwaysElle, Alpha, our marketing subsidiaries, substantially depends on our ability to retain the services of certain key employees, including some of the former owners. If we lose the services of one or more of these individuals, our ability to successfully implement our business plan with respect to our entertainment publicity and marketing business and the value of our common stock could be materially adversely affected. Although we entered into employment agreements with each of the principal sellers, there can be no assurance that they will serve the terms of their respective employment agreements or choose to remain with us following the expiration of such terms. In addition, the employees of our marketing subsidiaries, and their skills and relationships with clients, are among our most valuable assets. An important aspect of the business’ competitiveness is its ability to retain such key employees. If our marketing subsidiaries fail to hire and retain a sufficient number of these key employees, it may have a material adverse effect on our overall business and results of operations.

If we are unable to adapt to changing client demands, social and cultural trends or emerging technologies,technologies (including artificial intelligence), we may not remain competitive and our business, revenues and operating results could suffer.

As is customary in the industry, our marketing subsidiaries’ agreements with their respective clients generally provide for termination by either party on relatively short notice, usually 30 to 90 days. Consequently, these clients may choose to reduce or terminate their relationships with us, on a relatively short time frame and for any reason. If a significant number of the marketing subsidiaries’ clients were to reduce the volume of business they conduct with us or terminate their relationships with us completely, this could have a material adverse effect upon our business and results of operations. A portion of our revenue is derived on a project-by-project basis. Clients may decide to use other creative branding and marketing companies for their projects which would have an adverse effect upon our business and results of operations.

From January 1, 20232024 to December 31, 2024,2025, the number of shares of our common stock issued and outstanding has increased from 6,170,3329,109,766 to 11,162,02612,221,432 shares. During this period, we issued approximately (i) 2.31.4 million aggregate shares of our common stock as consideration or earnout consideration for acquisitions; (ii) 1.10.7 million shares to Lincoln Park Capital Fund LLC (“Lincoln Park”) related to ourthe 2022 and 2025 purchase agreement agreements with them; (iii) 0.7 million shares through an offering pursuant to a Registration Statement on Form S-3; (iv) 0.20.8 million shares to certain holders of convertible notes that exercised their right to convert all or a portion of their convertible notes; and (viv) 0.30.2 million shares as stock compensation to certain employees.employees and consultants. As of December 31, 2024, 2025, we had outstanding convertible notes payable that as of the date of this report are still outstanding in the aggregate principal amount of $5.1$7.7 million, which are convertible using a 30-day trading average stock price, 90-day trading average stock price.price, a fixed stock price or stated floor price based on the terms of the respective convertible notes payable. We also have an outstanding convertible note payable with an aggregatea principal amount of $500,000, which is convertible at $7.82 per share. In addition, during 2025, our CEO exchanged notes payable share.with a principal balance of $2.2 million into convertible notes that may be converted at $1.00 per share and are still outstanding as of the date of this report. As a result of these past issuances and potential future issuances, your ownership interest in the Company has been, and may in the future be, substantially diluted.

The Series C Convertible Preferred Stock is held by Dolphin Entertainment LLC, an entity owned by Mr. O’Dowd. As of December 31, 2024,2025, Series C Preferred Stock is convertible into 2,369,470 shares of our common stock. A stock restriction agreement entered into with Mr. O’Dowd in 2020, as amended, prohibits the conversion of Series C Convertible Preferred Stock into common stock unless the majority of the independent directors of the Board vote to remove the restriction. The stock restriction agreement will be immediately terminated upon a change of control as defined in the agreement. As of December 31, 2024, the Series C Preferred Stock was entitled to 23,694,700 votes which is approximately 68% of our voting securities. On January 21, 2025, the Company’s shareholders approved an amendment to the terms of the Series C Convertible Convertible Preferred Stock included in our Articles of Incorporation to decrease the number of votes per share of common stock the Series C is convertible into from ten votes per share to three votes per share to comply with the Nasdaq voting rights rule (Rule 5640). As of January 21,December 31, 2025, the Series C Preferred Stock is entitled to 7,108,410 votes which was approximately 39%37% of the voting securities on that date. The holder of Series C Convertible Preferred Stock is entitled to vote together as a single class on all matters upon which common shareholders are entitled to vote. Your voting rights will be diluted as a result of these super voting rights.

On August 10,12, 2022,2025, the Company entered into a purchase agreement (the “LP 20222025 Purchase Agreement”) with Lincoln Park,Park Capital Fund LLC (“Lincoln Park”), pursuant to which Lincoln Park committed to purchase up to $25$15 million of our common stock. Concurrently with the execution of the LP 2022 2025 Purchase Agreement, we issued 57,313244,698 shares of common stock to Lincoln Park as a commitment fee. We may issue up to 122,349 additional shares of our common stock pro-rata, as a commitment fee, in connection with the sale of common stock to Lincoln Park.

The purchase shares sold pursuant to the LP 2025 Purchase Agreement may be sold by us to Lincoln Park at our discretion from time to time over a 36-month period. The purchase price price for shares that we may sell to Lincoln Park under the Purchase Agreement will fluctuate based on the price of our common stock. Depending Depending on market liquidity at the time, sales of such shares may cause the trading price of our common stock to fall.

We have the right to control the timing and amount of any sales of our shares to Lincoln Park in our sole discretion, subject to certain limits on the number of shares that can be sold on a given date. Sales of shares of our common stock, if any, to Lincoln Park will depend upon market conditions and other factors to be determined by us. Therefore, Lincoln Park may ultimately purchase all, some or none of the shares of our common stock that may be sold pursuant to the LP 2025 Purchase Agreement and, after it has acquired shares, Lincoln Park may sell all, some or none of those shares. Sales to Lincoln Park by us could result in substantial dilution to the interests of other holders of our common stock. Additionally, Additionally, the sale of a substantial number of shares of our common stock to Lincoln Park, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales, which could have a materially adverse effect on our business and operations.

Through our subsidiaries, 42West 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.”) formerly known as Socialyte LLC (“Socialyte”) and Be Social Relations LLC (“Be Social”) that merged effective January 1, 2024, Special Projects Media, LLC (“Special Projects”), Always Alpha Sports Management, LLC (“Always Alpha”) and Elle Communications, LLC (“Elle”) 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 earlier thisin year.2025. The Digital Dept. (formerly, Socialyte and Be Social) provides influencer marketing capabilities through divisions divisions dedicated to influencer talent management, brand campaign strategy and execution, and influencer event ideation and production. Always Alpha is a talent management firm primarily focused on representing female athletes, broadcasters and coaches. 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, 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.

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 segment is composed of 42West, The Door, Shore Fire, Elle, The Digital Dept.,Dept. and Special Projects, Elle and Always Alpha,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.

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 theThe Blue Angels. IMAX and Dolphin each agreed to fund 50% of the production budget which was estimated at approximately $4 million. On November 7, 2023, we agreed to pay and paid an additional $250,000, which represented 50% of the estimated additional production costs to complete the documentary. 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 estimatederived that we will derive approximately $3.75$3.4 million from thisthe agreement. On February 22, 2024, we received $777,905 from IMAX, as a first installment in connection with the Amazon Agreement and on July 9, 2024, we received the second installment from IMAX in the amount of $2,556,452.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,February 2025, Dolphin Films Films partnered with Aircraft Productions of Toronto, Canada to produce a re-boot of the popular 1986 MGM hockey movie “Youngblood.” TheIn December 2025, we entered into a distribution agreement with Well Go USA, Inc. (“Well Go”) to distribute the film isacross all expected to be completed and ready for deliverymedia in the secondUnited halfStates. ofThe 2025.film was released in theaters on March 6, 2026.

For the years ended December 31, 20242025 and 2023,2024, 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, 2024.2025. 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 wealso generated revenue in our content production segment related to The Blue Angels documentary motion picture. For the year ended December 31, 2023, our content production segment derived revenues from the domestic distribution of Believe, a featuremotion film that waspicture released in 2013.

For the years ended December 31, 20242025 and 2023,2024, other income and expenses consisted primarily of: (1) changes in the fair values of convertible notes and warrants; and (2) interest income;expense, andnet (3)of nominal interest expense.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.

The increase for the year ended December 31, 20242025 is primarily driven by increases across substantially all subsidiaries and inclusion of $4.5$1.8 million of SpecialElle Projects,revenue and $0.3 million of Always Alpha and Elle revenuesrevenue that were not present for the full year in 2023,2024. This increase was offset by the$0.6 decreasemillion of revenue from Viewpoint that was closed in revenuesJune of Viewpoint.2024. WeThe decided remaining increase in revenue is attributed to ceaseorganic thegrowth operationsacross substantially all of Viewpointour during the year ended December 31, 2024.subsidiaries.

Revenues from content production increaseddecreased by approximately $3.4$3.1 million during the year ended December 31, 2024,2025, compared to the same period in the prior year, in connection with revenue generated from The Blue Angels documentary film, which was released in theatres on May 17, 2024.

Direct costs increaseddecreased $2.3by approximately $1.0 million for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024. 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 theThe yearDigital Dept. ended Decemberevents 31,and 2024 is directly attributable to (i) $1.8 millionimpairment of capitalized production costs being amortized for theprojects productionwe ofno The Bluelonger Angelsintend andto (ii) the increase in subsidiaries’ revenues as compared with the same periodproduce in the prioramount year.of approximately $0.1 million.

Payroll and benefits expenses increased by approximately $3.1$3.8 million for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, primarily relateddue to anthe 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 $1.7$2.2 million foris arelated fullto yearadditional ofheadcount Specialand Projectscommission payrollto support the increase in 2023 compared to only three months in 2023, $1.2 million of Elle payroll for the period between July 15, 2024 and December 31, 2024, $0.6 million of payroll for Always Alpha for the period between June 1, 2024 and December 31, 2024, offset by a reduction in Viewpoint payroll of $0.5 million due to ceasing operations.revenue.

LegalSelling, general and professionaladministrative expenses feesincreased had an insignificant decrease of approximately $38 thousand, or 1.5%nominally for the year ended December 31, 20242025 as compared to the year ended December 31, 2023.2024.

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, 20242025 and 2023,2024, we recorded changesgains in the change in fair value of the convertible note issued in 2020 in the amount of a gainamounts of $35.0$50.0 thousand and a loss of $11.4$35.0 thousand, respectively. None of the decreasedecreases 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, 20242024. andFor 2023.the year ended December 31, 2025, there was no change in fair value.

Interest expense – Interest expense remainedincreased consistentby $0.1 million for the year ended December 31, 20242025 as compared to the year ended December 31, 2023.2024. Although,The weincrease obtainedis newprimarily relateddue partyto twenty-five convertible promissory notes, six nonconvertible promissory notes issued during the year ended December 31, 2025 and ana full year of interest on the Second BKU Term Loan. The increase in the term loan financing in 2024, the increase in debt wasis offset by one-time interestthe expenses incurred in 2023amortization of $79,286$0.2 million related to the premium recognized on the extinguishment of prepaymentdebt penaltyupon andthe $91,859 write-offexchange of unamortizedpromissory debtnotes issuancefor costsconvertible inpromissory connection notes with theour RefinancingCEO. Refer Transaction as defined into Note 1114 to ourthe consolidated financial statements included elsewhere in this Annual Report on the Form 10-K.10-K for additional information.

Net cash used in operating activities was approximately $0.2$2.0 million for the year ended December 31, 2024,2025, a change of $4.9$1.9 million from the year ended December 31, 2023.2024. The increase in cash flows fromused operationsin operating activities was primarily asdue ato resultan aincrease $11.9of $1.3 million of decreased net loss for the year and a decrease of $0.3 million net changeused in working capital, whichalong waswith a offsetdecreased bynet anincome, increaseafter oftaking $7.3into millionaccount 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.

InflowsOutflows:

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, 20242025 increased from the obligations as of December 31, 2023. The current portion of the debt increased to $5.4$6.6 million from $4.9$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 $0.6$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.

During the threesix months ended March 31,June 30, 2026, we 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 threesix months ended MarchJune 31,30, 2026. We also entered into a distribution agreement agreement with Well Go USA, Inc. (“Well Go”) to distribute the film across all media in the United States. The agreement provides for for a $450,000 guaranteed, non-refundable advance against the revenues from distribution of Youngblood upon delivery of the film to Well Go. Go. The film was released in theaters on March 6, 2026 and the Company recorded revenues and received cash of $450,000 from the minimum guaranteed advance for the threesix months ended MarchJune 31,30, 2026.

For the three and six months ended ended MarchJune 31,30, 2026 and 2025, we derived a majority of our revenues from our entertainment publicity and marketing segment. During the six three months ended MarchJune 31,30, 2026, we generated income in our content production segment related to Youngblood.

The table below sets forth the percentage of total revenue derived from our segments for the three and six months ended MarchJune 31,30, 2026 and 2025:

For the three and six months ended ended MarchJune 31,30, 2026 and 2025, other income and expenses consisted primarily of: (1) changes in fair value of convertible notes and (2) interest interest expense, net.

Three and six months ended MarchJune 31,30, 2026 as compared to three and six months ended March 31,June 30, 2025

For the three and six months ended MarchJune 31,30, 2026 and 2025 revenues were were as follows:

Revenues from entertainment publicity publicity and marketing increased by approximately $0.3$0.4 million and $0.6 million for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the same period in the prior year. The increase for the three and six months ended MarchJune 31,30, 2026, in revenue is attributed to organic growth across substantially allmany of our subsidiaries.

Revenues from content production increased by approximately $0.4 million during the threesix months ended MarchJune 31,30, 2026,2026 compared to the same period in the prior year. The increase increase was related to revenue from the distribution of Youngblood which was released in theaters on March 6, 2026. During the three six months ended June March 31,30, 2025, we recognized $0.1 million from the Believe film released in 2013.

For the three and six months ended MarchJune 31,30, 2026 and 2025, our expenses expenses were as follows:

Direct costs increased by approximately $0.4$0.3 million for the three months ended MarchJune 31,30, 2026 as compared to the same period in the prior year. The increase of direct costs is attributed to cost incurred of approximately $0.1 million for The Digital Dept. showrooms during the three months ended June March30, 31, 2025.2026. The remaining increase in direct costs forduring the three months ended MarchJune 31,30, 2026 is related to production costs. The increase in direct costs of approximately $0.7 million for the six months ended June 30, 2026 is primarily attributable to a minimum guaranteed payment of $0.7 million to YB for the practically worldwide (excluding Canada) distribution rights of Youngblood, which was released in theatres on March 6, 2026, offset by a decrease in production costs of events in our EPM segment of approximately $0.3 million.2026.

Payroll and benefits expenses expenses increased by approximately $0.4$1.0 million and $1.5 million for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the same periods in the threeprior months ended March 31, 2025,year, primarily due to $0.8$1.4 million and $2.2 million, respectively, increase in workforce andworkforce, employee cost of living pay increases.increases and certain retention bonuses for the three and six months ended June 30, 2026. This increase was offset by the exclusion of $0.4$0.3 million and $0.7 million of Always Alpha payroll and benefits.benefits, respectively, for the three and six months ended June 30, 2025. Always Alpha was sold in November 2025.

Selling, general and administrative expenses increaseddecreased by approximately $0.3$0.1 million, for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025. The increasedecrease is mainly due to $0.1 increasemillion decrease in bad debt expenseexpense. Selling, general and $0.1administrative expenses increased by $0.2 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 2026. The increase is primarily due to $0.2 million increase in duestravel and subscriptionsrent and computer expense.

Acquisition costs for the six three months ended MarchJune 31,30, 20252026 were $0.4 million, related to an agreed upon payment with the sellers of Special Projects related to the working capital adjustment. There waswere no acquisition costs recorded for the threesix months ended MarchJune 31,30, 2026.

Legal and professional fees increased increased by $0.3$0.2 million and $0.5 million for the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods of the prior year. The increase is primarily due to the litigation with the sellers of Socialyte. Refer to Note 12 to the condensed consolidated financial statements elsewhere on this Quarterly Report on Form 10-Q for additional information.

Change in fair value of convertible notes note – We elected the fair value option for one convertible note payable issued in 2020. The fair value of this convertible convertible note payable is remeasured at every balance sheet date and any changes are recorded on our condensed consolidated statements of operations. For the three months ended MarchJune 31,30, 2026 and 2025, we recorded a gain in the change in fair value of the convertible note payable issued in 2020 in the amount of $10.0 thousand and $20.0$50.0 thousand, respectively. For the six months ended June 30, 2026 and 2025, we recorded a gain in change of fair value of the convertible note payable issued in 2020 in the amount of $20.0 thousand and $70.0 thousand, respectively. None of the decrease in the value of the convertible note was attributable to instrument specific credit risk and as such, all the gain or loss in the change in fair value was recorded within net loss.

Interest expense, netincome– – Interest expense, netincome remained consistent for the three and six months ended MarchJune 31,30, 2026 and 2025.

We recorded an income tax expense expense of approximately $17.7 thousand and $35.3 thousand for the three and six months ended MarchJune 31,30, 2026, respectively, and approximately $21.5 thousand and $43.0 thousand for the three and six months ended MarchJune 31,30, 2025,2026, respectively, which reflects 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”).

Net loss was approximately $1.6 $2.7 million or $(0.220.12) per share based on 12,327,97412,848,706 weighted average shares outstanding for bothbasic loss and diluted loss per share per share for the three months ended June 30, 2026. Net loss was approximately $1.4 million or $(0.13) per share based on 11,168,572 weighted average shares outstanding for basic loss per share and $1.5 million or $(0.13) fully diluted loss per share,share based on 11,232,511 weighted average shares for the three months ended MarchJune 31,30, 2026. Net loss was approximately $2.3 million or $(0.21) per share based on 11,162,026 weighted average shares outstanding for both basic loss per share and fully diluted loss per share, for the three months ended March 31, 2025. The change in net loss for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025, is related to the factors discussed above.

Cash used in operating activities was $2.0$2.2 million for the threesix months ended MarchJune 31,30, 2026, a change of $0.3$2.0 million from cash used in operating activities of $1.7$0.2 million for threesix months ended MarchJune 31,30, 2025. The increase in cash used in operating activities was primarily a result of a $0.4$0.5 million increase in net loss for the period, $0.9 million decrease in non-cash items such as depreciation and amortization, bad debt expense, share-based compensation, loss on extinguishment of debt, amortization of capitalized production costs, and other non-cash losses, and the net change in working capital.

Cash flows used in investing activities for the threesix months ended MarchJune 31,30, 2026 and 2025 were inconsequential.

Cash flows usedprovided inby financing activities for the threesix months ended March 31,June 30, 2026 were $0.4$1.1 million, which mainly related to:

Cash flows provided by financing activities for the three six months ended March 31,June 30, 2025 were $0.6$0.7 million which mainly related to:

Total debt amounted to $24.8 $23.8 million as of MarchJune 31,30, 2026, compared to $24.5 million as of December 31, 2025, aan decreaseincrease of $0.7$0.3 million, primarily related to an increase toof $2.1 million in convertible and nonconvertible promissory notes, $2.0 million of the FVP Loan, offset by the conversion of threefive convertible notes and the repaymentrepayments of the term loan.loans.

Our debt obligations in the next twelve months from MarchJune 31,30, 2026 increased to $7.3$7.4 million from $7.0 million in December 31, 2025, mainly related 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 $40.0$76.3 thousand and a net increase in the current portion of convertible and nonconvertible notes payable in the amount of $0.3$0.4 million. 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.

For the three and six months ended March 31,June 30, 2026, we did not sell any shares of common stock to Lincoln Park under the 2025 LP Purchase Agreement.

During the threesix months ended March 31,June 30, 2026 and 2025 we issued onefive and sixfourteen convertible notes payable and received proceeds of $50,000$850,000 and $775,000,$1,900,000, respectively. As of MarchJune 31,30, 2026, wethe Company had twenty-ninethirty-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 notesnote payable and any accrued interest may be converted at the noteholder’s option at any time at the following conversion prices:

As of MarchJune 31,30, 2026 the principal principal balance of $1,550,000$1,200,000 and $5,900,000$6,550,000 related to the convertible notes payable was recorded in current and noncurrent liabilities, respectively, respectively, on its condensed consolidated balance sheet under the caption convertible notes payable. As of December 31, 2025 the principal balance balance of $1,250,000 and $6,460,000 related to the convertible notes payable was recorded in current and noncurrent liabilities, respectively, on its condensed consolidated balance sheet under the caption convertible notes payable.

We recorded interest expense related to these convertible notes payable of $191,136$188,333 and $136,000$165,251 during the three months ended MarchJune 31,30, 2026 and 2025, respectively.respectively, and $379,469 and $301,251, respectively, during the six months ended June 30, 2026 and 2025. In addition, we made cash interest payments amounting to $192,528$379,248 and $129,556,$286,212, respectively, during the threesix months ended MarchJune 31, 30, 2026 and 2025, related to the convertible notes payable.

We had one convertible promissory note outstanding with aggregate principal amount of $500,000 as of MarchJune 31,30, 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, we record the fair value of the convertible promissory note with any changes in the fair value recorded in the condensed consolidated statements of operations.

We had a balance of $260,000$250,000 and $270,000 in noncurrent liabilities as of MarchJune 31,30, 2026, and December 31, 2025, respectively, on our condensed consolidated balance sheets related to the convertible promissory note payable measured at fair value.

We recorded a gain in fair value value of $10,000 and $20,000$50,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and a gain of $20,000 and $70,000 for the six months ended June 30, 2026 and 2025, respectively, on our condensed consolidated statements of operations related to this convertible note promissory notepayable at fair value.

We recorded interest expense related to this convertible note payable at fair value of $9,863 for botheach of the three months ended MarchJune 31,30, 2026 and 2025 and $19,726 for each of the six months ended June 30, 2026 and 2025. In addition, we made cash interest payments amounting to $9,863$19,726 for both the three six months ended MarchJune 31,30, 2026 and 2025, related to the convertible note payable at fair value.

During the three months ended March 31, 2025, we issued a nonconvertible promissory note and received proceeds $250,000. We did not issue new nonconvertible promissory notes during the three months ended March 31, 2026. As of MarchJune 31,30, 2026, we 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 bothJune March 31,30, 2026 and December 31, 2025, we had a balance of $900,000, and $500,000, respectively, recorded as current liabilities and $4,580,000$4,180,000 and $4,580,000, respectively, in noncurrent liabilities on our condensed consolidated balance sheets related to these unsecured nonconvertible promissory notes.

We recorded interest expense related to these nonconvertible promissory notes of $127,000 and $99,083$104,667 for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $254,000 and $203,750 for the six months ended June 30, 2026 and 2025, respectively. We made interest payments of $125,778$252,778 and $97,000 for$200,250 during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, related to the nonconvertible promissory notes.

We recorded interest expense related to this Socialyte Promissory Note of $30,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively.and $60,000 for the six months ended June 30, 2026 and 2025. No interest payments were made during the threesix months ended MarchJune 31,30, 2026 and 2025, related to the Socialyte Promissory Note.

On May 12, 2025, we entered into into an exchange agreement (the “Exchange Agreement”) with DE LLC, pursuant to which, we and DE LLC agreed to exchange the three 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, we and DE LLC agreed to extend the maturity dates 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 conversion 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 condensed consolidated statement statement of operations for the yearsix months ended DecemberJune 31,30, 2025.

As of MarchJune 31,30, 2026 and December December 31, 2025, we had an aggregate principal balance of $2,839,556$2,774,965 and $2,904,357, respectively, related to the DE New Notes under the caption convertible notenotes payable – related party in our condensed consolidated balance sheets. During the threesix months ended March, 31,June 30, 2026 and 2025, we did not repay any principal balance or make interest payments on the DE LLC Notes or DE New Notes.

We recorded interest expense of $55,304$55,918 for botheach of the three months ended MarchJune 31,30, 2026 and 2025 and $111,222 and $99,938 for the six months ended June 30, 2026 and 2025, respectively, related to the DE LLC Notes and the DE New Notes. As of MarchJune 31,30, 2026 and December 31, 2025,2025 we had a balance in accrued interest – related parties of $543,358$599,276 and $488,054, respectively, on ourthe Company’s condensed consolidated balance sheets related to the DE LLC Notes.

As of both MarchJune 31,30, 2026 and 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 our our condensed consolidated balance sheets. For the three months ended MarchJune 31,30, 2026 and 2025, we did not repay any principal balance on the Mock Notes. During the threesix months ended MarchJune 31,30, 2026, we made interest payments in the amount of $24,578 related$49,156related to the Mock Notes. No interest payments were made during the threesix months ended MarchJune 31,30, 2025 related to the Mock Notes.

WeDuring the three and six months ended June 30, 2026 and 2025, we recorded interest expense of $24,578$24,578, forand both$49,156, respectively, related to the yearsMock Notes. During the six months ended DecemberJune 31,30, 20252026, andwe 2024made interest payments in the amount of $49,156 related to the Mock Notes. As of MarchJune 31,30, 2026 and December 31, 2025, we had a balance in accrued interest – related parties of $188,728 on our condensed consolidated balance sheets related to the Mock Notes.

On December 6, 2024, we entered entered into a second Bank United Loan Agreement (“Second BKU Term Loan”) for $2.0 million to finance the acquisition of Elle Communications, LLC.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 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 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 threesix months ended MarchJune 31,30, 2026 and the year ended December 31, 2025, we did not useduse the BKU Commercial Card. During each of the three months ended MarchJune 31,30, 2026 and 2025, we made payments in the amount of $354,621, inclusive of $68,625 $64,145 and $90,722$87,197, respectively, of interest related to the First BKU Term Loan, respectively.Loan. During each of the threesix months ended March 31,June 30, 2026 and 2025, we 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, we made payments in the amount of $185,995, inclusive of $23,827$21,332 and $32,187,$23,187, respectively, of interest related to the Second BKU Term Loan. During each of the six months ended June 30, 2026 and 2025, we 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 MarchJune 31,30, 2026 and 2025, the Companywe recorded interest expense and made payments of $6,778$6,900 and $7,550,$7,667, respectively, an $13,678 and $15,217 for the six month ended June 30, 2026 and 2025, respectively, related to the BKU Line of Credit.

As of MarchJune 31,30, 2026, we had a balance of $1,852,548$1,890,056 classified as current liabilities and $2,502,601$2,016,967 classified as noncurrent liabilities, net of $58,894$51,880 of debt issuance issuance costs, in our condensed consolidated balance sheet related to the First BKU Term Loan and the Second BKU Term Loan. As of December 31, 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 $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 MarchJune 31,30, 2026 and December 31, 2025, we 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 $12,624 and $7,012, respectively, for both the three months ended MarchJune 31,30, 2026 and 2025.2025, and $19,636 and $14,024 for the six months ended June 30, 2026 and 2025, 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 MarchJune 31,30, 2026, we believe we are in compliance with the debt covenants.