10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

———————

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number: 001-38331

DOLPHIN ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

———————

Florida	86-0787790
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

150 Alhambra Circle, Suite 1200, Coral Gables, Florida 33134

(Address of principal executive offices, including zip code)

(305) 774-0407

(Registrant’s telephone number)

———————

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.015 par value per share	DLPN	The Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

The number of shares of common stock outstanding was 18,141,344 as of November 10, 2023.  

TABLE OF CONTENTS

		Page
PART I — FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	1
	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 (unaudited)	1
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (unaudited)	4
	Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022 (unaudited)	6
	Notes to Unaudited Condensed Consolidated Financial Statements	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	23
ITEM 4.	CONTROLS AND PROCEDURES	33
PART II — OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	34
ITEM 1A.	RISK FACTORS	34
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	34
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	34
ITEM 4	MINE SAFETY DISCLOSURES	34
ITEM 5.	OTHER INFORMATION	34
ITEM 6.	EXHIBITS	35
SIGNATURES		36

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2023		December 31, 2022
ASSETS
Current
Cash and cash equivalents	$	6,406,646	$	6,069,889
Restricted cash		3,723,868		1,127,960
Accounts receivable:
Trade, net of allowance of $1,208,726 and $736,820, respectively		4,993,703		6,162,472
Other receivables		4,299,330		5,552,993
Notes receivable		4,608,962		4,426,700
Other current assets		954,029		523,812
Total current assets		24,986,538		23,863,826
Capitalized production costs, net		2,070,275		1,598,412
Employee receivable		748,085		604,085
Right-of-use asset		5,996,732		7,341,045
Goodwill		22,796,683		29,314,083
Intangible assets, net		8,030,366		9,884,336
Property, equipment and leasehold improvements, net		214,877		293,206
Other long-term assets		896,712		2,477,839
Total Assets	$	65,740,268	$	75,376,832

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1 

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(Unaudited)

	September 30, 2023			December 31, 2022
LIABILITIES
Current
Accounts payable	$	4,309,920		$	4,798,221
Term loan, current portion		960,503			408,905
Notes payable, current portion		3,380,859			3,868,960
Contingent consideration		—			500,000
Accrued interest – related party		1,623,921			1,744,723
Accrued compensation – related party		2,625,000			2,625,000
Lease liability, current portion		2,089,297			2,073,547
Deferred revenue		1,923,076			1,641,459
Other current liabilities		6,052,420			7,626,836
Total current liabilities		22,964,996			25,287,651
Term loan, noncurrent portion		4,755,384			2,458,687
Notes payable		3,530,000			500,000
Convertible notes payable		5,150,000			5,050,000
Convertible note payable at fair value		350,000			343,556
Loan from related party		1,107,873			1,107,873
Contingent consideration		—			238,821
Lease liability		4,613,704			6,012,049
Deferred tax liability		344,432			253,188
Warrant liability		10,000			15,000
Other noncurrent liabilities		18,915			18,915
Total Liabilities		42,845,304			41,285,740
Commitments and contingencies (Note 18)		—			—
STOCKHOLDERS’ EQUITY
Preferred Stock, Series C, $0.001 par value, 50,000 shares authorized, 50,000 shares issued and outstanding at September 30, 2023 and December 31, 2022		1,000			1,000
Common stock, $0.015 par value, 200,000,000 shares authorized, 14,225,487 and 12,340,664 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		213,382			185,110
Additional paid-in capital		146,686,953			143,119,461
Accumulated deficit		(124,006,371	)		(109,214,479	)
Total Stockholders’ Equity		22,894,964			34,091,092
Total Liabilities and Stockholders’ Equity	$	65,740,268		$	75,376,832

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues	$	10,184,511		$	9,899,013		$	31,100,867		$	29,366,748
Expenses:
Direct costs		185,308			837,429			621,449			2,941,044
Payroll and benefits		8,382,659			7,030,814			26,114,881			20,947,531
Selling, general and administrative		2,150,889			1,663,288			6,023,954			4,644,264
Acquisition costs		4,666			315,800			8,823			315,800
Depreciation and amortization		535,740			415,836			1,612,776			1,248,621
Impairment of goodwill		—			—			6,517,400			—
Impairment of intangible assets		341,417			—			341,417			—
Change in fair value of contingent consideration		—			(5,000	)		33,226			(81,106	)
Legal and professional		695,188			774,613			1,955,037			2,317,800
Total expenses		12,295,867			11,032,780			43,228,963			32,333,954
Loss from operations		(2,111,356	)		(1,133,767	)		(12,128,096	)		(2,967,206	)
Other (expenses) income:
Change in fair value of convertible note		—			45,642			(6,444	)		577,522
Change in fair value of warrants		—			10,000			5,000			105,000
Interest income		104,303			91,722			309,424			204,943
Interest expense		(604,669	)		(217,869	)		(1,413,177	)		(605,827	)
Total other (expenses) income, net		(500,366	)		(70,505	)		(1,105,197	)		281,638
Loss before income taxes and equity in losses of unconsolidated affiliates		(2,611,722	)		(1,204,272	)		(13,233,293	)		(2,685,568	)
Income tax expense		(31,059	)		(7,224	)		(91,243	)		(21,672	)
Net loss before equity in losses of unconsolidated affiliates		(2,642,781	)		(1,211,496	)		(13,324,536	)		(2,707,240	)
Equity in losses of unconsolidated affiliates		(1,220,547	)		(100,223	)		(1,467,356	)		(143,623	)
Net loss	$	(3,863,328	)	$	(1,311,719	)	$	(14,791,892	)	$	(2,850,863	)
Loss per share:
Basic	$	(0.27	)	$	(0.14	)	$	(1.11	)	$	(0.31	)
Diluted	$	(0.27	)	$	(0.14	)	$	(1.11	)	$	(0.37	)
Weighted average number of shares outstanding:
Basic		14,121,275			9,664,681			13,328,138			9,307,830
Diluted		14,121,275			9,793,715			13,328,138			9,437,807

The accompanying notes are an integral part of these condensed consolidated financial statements.

3 

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Nine Months Ended September 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(14,791,892	)	$	(2,850,863	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,612,776			1,248,621
Share-based compensation		218,154			166,582
Equity in losses of unconsolidated affiliates		297,769			143,623
Impairment of equity method investment		1,169,587			—
Commitment shares issued to Lincoln Park Capital Fund, LLC		—			232,118
Bonus payment issued in shares		50,000			50,000
Impairment of goodwill		6,517,400			—
Impairment of intangible assets		341,417			—
Impairment of right-of-use asset		—			98,857
Impairment of capitalized production costs		49,412			87,323
Write-off of debt origination costs		91,859			—
Change in allowance for credit losses		566,610			276,579
Change in fair value of contingent consideration		33,226			(81,106	)
Change in fair value of warrants		(5,000	)		(105,000	)
Change in fair value of convertible notes		6,444			(577,522	)
Deferred income tax expense, net		91,244			21,672
Debt origination costs amortization		13,229			—
Changes in operating assets and liabilities:
Accounts receivable, trade and other		1,673,559			209,600
Other current assets		(430,217	)		145,492
Capitalized production costs		(521,275	)		(1,548,500	)
Other long-term assets and employee receivable		(134,397	)		(196,353	)
Deferred revenue		374,269			(494,403	)
Accounts payable		(1,120,809	)		630,770
Accrued interest – related party		279,198			29,198
Other current liabilities		(851,107	)		(1,157,985	)
Lease liability		(24,101	)		17,994
Other noncurrent liabilities		—			18,915
Net cash used in operating activities		(4,492,645	)		(3,634,388	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets		(21,893	)		(64,464	)
Issuance of notes receivable		—			(3,108,080	)
Net cash used in investing activities		(21,893	)		(3,172,544	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from equity line of credit agreement		2,162,150			5,049,100
Cash settlement of contingent consideration for Be Social (2023) and B/HI (2022)		(506,587	)		(600,000	)
Proceeds from convertible notes payable		1,000,000			—
Proceeds from term loan		5,800,000			—
Repayment of term loan		(2,972,402	)		—
Proceeds from notes payable		2,630,000			—
Repayment of notes payable		(88,101	)		(279,749	)
Payment of interest to related party		(400,000	)		—
Early payment penalty on debt refinancing		(79,286	)		—
Debt origination costs		(84,391	)		—
Principal payments on finance leases		(14,180	)		—
Net cash provided by financing activities		7,447,203			4,169,351
Net increase (decrease) in cash and cash equivalents and restricted cash		2,932,665			(2,637,581	)
Cash and cash equivalents and restricted cash, beginning of period		7,197,849			8,230,626
Cash and cash equivalents and restricted cash, end of period	$	10,130,514		$	5,593,045

The accompanying notes are an integral part of these condensed consolidated financial statements.

4 

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Continued)

(unaudited)

	Nine Months Ended September 30,
	2023		2022
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Interest paid	$	1,216,956	$	554,897
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of commitment shares to Lincoln Park Capital Fund, LLC	$	—	$	232,118
Receipt of Crafthouse equity in connection with marketing agreement	$	—	$	1,000,000
Settlement of contingent consideration for B/HI (2022), The Door (2022) and Be Social (2023) in shares of common stock	$	265,460	$	1,539,444
Employee compensation paid in shares of common stock	$	268,154	$	—
Issuance of shares of common stock for the conversion of convertible notes payable	$	900,000	$	500,000
Employee bonus paid in stock	$	50,000	$	50,000
Lease liabilities arising from obtaining right-of-use assets.	$	159,090	$	—

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the statements of cash flows that sum to the total of the same such amounts shown in the statements of cash flows:

	Nine Months Ended September 30,
	2023		2022
Cash and cash equivalents	$	6,406,646	$	4,452,562
Restricted cash		3,723,868		1,140,483
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statement of cash flows	$	10,130,514	$	5,593,045

The accompanying notes are an integral part of these condensed consolidated financial statements.

5 

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity

(unaudited) 

For the three and nine months ended September 30, 2023
	Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance December 31, 2022		50,000	$	1,000		12,340,664	$	185,110	$	143,119,461	$	(109,214,479	)	$	34,091,092
Net loss for the three months ended March 31, 2023		—		—		—		—		—		(2,969,320	)		(2,969,320	)
Issuance of shares to Lincoln Park Capital Fund, LLC		—		—		250,000		3,750		525,700		—			529,450
Issuance of shares related to employment agreements		—		—		36,672		550		74,091		—			74,641
Balance March 31, 2023		50,000	$	1,000		12,627,336	$	189,410	$	143,719,252	$	(112,183,799	)	$	31,725,863
Net loss for the three months ended June 30, 2023		—		—		—		—		—		(7,959,244	)		(7,959,244	)
Issuance of shares to Lincoln Park Capital Fund LLC		—		—		600,000		9,000		1,072,850		—			1,081,850
Conversion of convertible note payable		—		—		450,000		6,750		893,250		—			900,000
Issuance of shares related to the Be Social acquisition		—		—		145,422		2,181		263,279		—			265,460
Issuance of shares related to employment agreements		—		—		45,245		679		89,880		—			90,559
Balance June 30, 2023		50,000	$	1,000		13,868,003	$	208,020	$	146,038,511	$	(120,143,043	)	$	26,104,488
Net loss for the three months ended September 30, 2023		—		—		—		—		—		(3,863,328	)		(3,863,328	)
Issuance of shares to Lincoln Park Capital Fund, LLC		—		—		300,000		4,500		546,350		—			550,850
Issuance of shares related to employment agreements		—		—		57,484		862		102,092		—			102,954
Balance September 30, 2023		50,000	$	1,000		14,225,487	$	213,382	$	146,686,953	$	(124,006,371	)	$	22,894,964

The accompanying notes are an integral part of these condensed consolidated financial statements.

6 

DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

For the three and nine months ended September 30, 2022
	Preferred Stock				Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Equity
Balance December 31, 2021		50,000	$	1,000		8,020,381	$	120,306	$	127,247,928		$	(104,434,344	)	$	22,934,890
Net loss for the three months ended March 31, 2022		—		—		—		—		—			(1,717,832	)		(1,717,832	)
Issuance of shares to Lincoln Park Capital Fund, LLC		—		—		622,019		9,330		2,506,020			—			2,515,350
Shares issuable for contingent consideration		—		—		—		—		2,381,869			—			2,381,869
Issuance of restricted shares, net of shares withheld for taxes		—		—		8,645		130		(130	)		—			—
Share-based compensation		—		—		—		—		59,305			—			59,305
Balance March 31, 2022		50,000	$	1,000		8,651,045	$	129,766	$	132,194,992		$	(106,152,176	)	$	26,173,582
Net income for the three months ended June 30, 2022		—		—		—		—		—			178,687			178,687
Issuance of shares to Lincoln Park Capital Fund, LLC		—		—		450,000		6,750		1,845,540			—			1,852,290
Issuance of restricted shares, net of shares withheld for taxes		—		—		7,982		120		(120	)		—			—
Issuance of shares to sellers of The Door Marketing Group LLC for earnout consideration		—		—		279,562		4,193		(4,193	)		—			—
Issuance of shares to seller of B/HI Communication Inc. for earnout consideration		—		—		163,369		2,451		513,796			—			516,247
Share-based compensation		—		—		—		—		54,757			—			54,757
Balance June 30, 2022		50,000	$	1,000		9,551,958	$	143,280	$	134,604,772		$	(105,973,489	)	$	28,775,563
Net loss for the three months ended September 30, 2022		—		—		—		—		—			(1,311,719	)		(1,311,719	)
Issuance of shares related to conversion of note payable		—		—		125,604		1,884		498,116			—			500,000
Issuance of shares to Lincoln Park Capital Fund, LLC		—		—		302,313		4,534		909,043			—			913,577
Issuance of common stock on vesting of restricted stock units, net of shares withheld for taxes		—		—		7,656		115		(115	)		—			—
Issuance of shares related to employment agreement		—		—		11,521		173		49,827			—			50,000
Share-based compensation		—		—		—		—		52,520			—			52,520
Balance September 30, 2022		50,000	$	1,000		9,999,052	$	149,986	$	136,114,163		$	(107,285,208	)	$	28,979,941

The accompanying notes are an integral part of these condensed consolidated financial statements.

7 

 DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – GENERAL

Dolphin Entertainment, Inc., a Florida corporation (the “Company,” “Dolphin,” “we,” “us” or “our”), is a leading independent entertainment marketing and premium content development company. Through its acquisitions of 42West LLC (“42West”), The Door Marketing Group, LLC (“The Door”), Shore Fire Media, Ltd (“Shore Fire”), Viewpoint Computer Animation Incorporated (“Viewpoint”), Be Social Public Relations, LLC (“Be Social”), B/HI Communications, Inc. (“B/HI”) and Socialyte, LLC (“Socialyte”), the Company provides expert strategic marketing and publicity services throughout the United States of America (“U.S.”) to all of the major film studios and many of the leading independent and digital content providers, A-list celebrity talent, including actors, directors, producers, celebrity chefs, social media influencers and recording artists. The Company also provides strategic marketing publicity services and creative brand strategies for prime hotel and restaurant groups and consumer brands throughout the U.S. The strategic acquisitions of 42West, The Door, Shore Fire, Viewpoint, Be Social, B/HI and Socialyte bring together premium marketing services, including digital and social media marketing capabilities, with premium content production, creating significant opportunities to serve respective constituents more strategically and to grow and diversify the Company’s business. Dolphin’s content production business is a long established, leading independent producer, committed to distributing premium, best-in-class film and digital entertainment. Dolphin produces original feature films and digital programming primarily aimed at family and young adult markets.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Dolphin, and all of its wholly owned subsidiaries, comprising Dolphin Films, Inc. (“Dolphin Films”), Dolphin SB Productions LLC, Dolphin Max Steel Holdings, LLC, Dolphin JB Believe Financing, LLC, Dolphin JOAT Productions, LLC, 42West, The Door, Viewpoint, Shore Fire, Be Social, B/HI and Socialyte. The Company applies the equity method of accounting for its investments in entities for which it does not have a controlling financial interest, but over which it has the ability to exert significant influence. 

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of its financial position as of September 30, 2023, and its results of operations and cash flows for the three and nine months ended September 30, 2023 and 2022. All significant inter-company balances and transactions have been eliminated from the condensed consolidated financial statements. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read together with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Use of Estimates

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

Reclassifications

Certain prior year amounts have been reclassified to conform with current year presentation. These reclassifications had no impact on the Company’s condensed consolidated statements of operations or condensed consolidated statements of cash flows.

Recent Accounting Pronouncements

Accounting Guidance Adopted

In June 2016, the FASB issued new guidance on measurement of credit losses (ASU 2016-13, “Measurement of Credit Losses on Financial Instruments”) with subsequent amendments issued in November 2018 (ASU 2018-19) and April 2019 (ASU 2019-04). This update changes the accounting for credit losses on loans and held-to-maturity debt securities and requires a current expected credit loss (CECL) approach to determine the allowance for credit losses. The Company adopted this guidance effective January 1, 2023 and the adoption of this accounting standard did not have a material impact on the Company’s condensed consolidated financial statements.

8 

NOTE 2 – REVENUE

Disaggregation of Revenue

The Company’s principal geographic markets are within the U.S. The following is a description of the principal activities, by reportable segment, from which we generate revenue. For more detailed information about reportable segments, see Note 15.

Entertainment Publicity and Marketing

The Entertainment Publicity and Marketing (“EPM”) segment generates revenue from diversified marketing services, including public relations, entertainment and hospitality content marketing, strategic marketing consulting and content production of marketing materials. Within the EPM segment, we typically identify one performance obligation, the delivery of professional publicity services, in which we typically act as the principal. Fees are generally recognized on a straight-line or monthly basis, as the services are consumed by our clients, which approximates the proportional performance on such contracts.

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

Content Production

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

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

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Entertainment publicity and marketing	$	10,184,511	$	9,899,013	$	31,100,867	$	29,366,748
Content production		—		—		—		—
Total Revenues	$	10,184,511	$	9,899,013	$	31,100,867	$	29,366,748

Contract Balances

The opening and closing balances of our contract liability balances from contracts with customers as of September 30, 2023 and December 31, 2022 were as follows:

	Contract Liabilities
Balance as of December 31, 2022	$	1,641,459
Balance as of September 30, 2023		1,923,076
Change	$	281,617

Contract liabilities are recorded when the Company receives advance payments from customers for public relations projects or as deposits for promotional or brand-support video projects. Once the work is performed or the projects are delivered to the customer, the contract liabilities are deemed earned and recorded as revenue. Advance payments received are generally for short duration and are recognized once the performance obligation of the contract is met. Contract liabilities are presented within deferred revenue in the condensed consolidated balance sheets. The change in the contract liability balance relates to the advanced consideration received from customers under the terms of our contracts, primarily related to fees, which are generally recognized shortly after billing.

Revenues for the three and nine months ended September 30, 2023 and 2022 include the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
Amounts included in the beginning of year contract liability balance	$	110,834	$	—	$	1,280,985	$	329,937

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

9 

NOTE 3 — GOODWILL AND INTANGIBLE ASSETS

Goodwill

As of September 30, 2023, the Company had a balance of $22,796,683 of goodwill on its condensed consolidated balance sheet arising from the prior acquisitions of 42West, The Door, Viewpoint, Shore Fire, Be Social, B/HI and Socialyte. All of the Company’s goodwill is related to the entertainment, publicity and marketing segment.

The Company evaluates goodwill in the fourth quarter or more frequently if management believes indicators of impairment exist. Such indicators could include but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, (3) significant decline in market capitalization or (4) an adverse action or assessment by a regulator. During the second quarter of the 2023 year, the Company’s stock price remained constant and did not respond as positively as expected to new information on the Company’s future projects and forecasts; this, in combination with recurring net losses, resulted in the Company’s market capitalization to be less than the Company’s book value. The Company considered this to be a triggering event, and therefore performed a quantitative analysis of the fair value of goodwill during the second quarter of 2023.

As a result of this quantitative analysis, during the second quarter of 2023, the Company recorded an impairment of Goodwill amounting to $6,517,400, which is included in the condensed consolidated statement of operations for the nine months ended September 30, 2023.

Intangible Assets

Finite-lived intangible assets consisted of the following as of September 30, 2023 and December 31, 2022:

	September 30, 2023								December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Impairment		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Customer relationships	$	13,350,000	$	6,964,552	$	—	$	6,385,448	$	13,350,000	$	5,842,498	$	7,507,502
Trademarks and trade names		4,640,000		2,658,665		341,417		1,639,918		4,640,000		2,283,166		2,356,834
Non-compete agreements		690,000		685,000		—		5,000		690,000		670,000		20,000
	$	18,680,000	$	10,308,217	$	341,417	$	8,030,366	$	18,680,000	$	8,795,664	$	9,884,336

Amortization expense associated with the Company’s intangible assets was $503,357 and $341,833 for the three months ended September 30, 2023 and 2022, respectively, and $1,512,554 and $1,025,499 for the nine months ended September 30, 2023 and 2022, respectively.

During the three and nine months ended September 30, 2023, the Company recognized an impairment of the trademarks and trade names of Socialyte and Be Social in connection with the rebranding of both subsidiaries as the new “The Digital Dept.” of the Company. The impairment amount was determined to be the carrying value of both the trademark and trade name intangible assets as of September 30, 2023, which amounted to $341,417 during the three and nine months ended September 30, 2023 and is included within impairment of intangible assets in the condensed consolidated statements of operations.

Amortization expense related to intangible assets for the remainder of 2023 and thereafter is as follows:

2023	$	482,357
2024		1,617,993
2025		1,520,039
2026		1,431,978
2027		820,992
Thereafter		2,157,007
	$	8,030,366

The following table presents the changes in goodwill and intangible assets:

	Goodwill			Intangible Assets
Balance December 31, 2022	$	29,314,083		$	9,884,336
Amortization expense		—			(505,840	)
Balance March 31, 2023		29,314,083			9,378,496
Amortization expense		—			(503,357	)
Impairment of goodwill		(6,517,400	)		—
Balance June 30, 2023	$	22,796,683		$	8,875,139
Amortization expense		—			(503,356	)
Impairment of intangible assets		—			(341,417	)
Balance September 30, 2023	$	22,796,683		$	8,030,366

10 

NOTE 4 —ACQUISITIONS

Socialyte, LLC

On November 14, 2022 (“Closing Date”), the Company, through its wholly owned subsidiary, Social MidCo LLC, (“MidCo”), acquired all of the issued and outstanding membership interests of Socialyte, a Delaware limited liability company (the “Socialyte Purchase”), pursuant to a membership interest purchase agreement dated the Closing Date (the “Socialyte Purchase Agreement”) between the Company and NSL Ventures, LLC (the “Socialyte Seller”). Socialyte is a New York and Los Angeles-based creative agency specializing in social media influencer marketing campaigns for brands.

The total consideration paid to the Socialyte Seller in respect to the Socialyte Purchase was $14,290,504, including a provisional working capital adjustment in the amount of $2,103,668. The Purchase Agreement provided for the Socialyte Seller to earn up to an additional $5,000,000 upon meeting certain financial targets in 2022 that were not met. On the Closing Date, the Company paid the Seller $5,053,827 in cash, issued the Seller 1,346,257 shares of its common stock and issued the Seller a $3,000,000 unsecured promissory note (the “Socialyte Promissory Note”), which was to be repaid in two equal installments on June 30, 2023 and September 30, 2023. In addition, the Company issued the Seller 685,234 shares of its common stock in satisfaction of the Closing Date working capital adjustment. These installment payments on the Socialyte Promissory Note have not been made pending agreement of the post-close working capital adjustment. The Company partially financed the cash portion of the consideration with a $3,000,000 five-year secured loan from BankProv with MidCo and Socialyte as co-borrowers, which the Company guaranteed. The common stock that was issued as part of the consideration was not registered under the Securities Act.

The condensed consolidated statement of operations includes revenues and net loss from Socialyte amounting to $1,314,877 and $(107,674), respectively, for the three months ended September 30, 2023 and $3,748,832 and $(444,857), respectively, for the nine months ended September 30, 2023.

The following table summarizes the fair value of the consideration transferred:

Closing common stock (Consideration)	$	4,133,009
Common stock issued at Closing Date as working capital adjustment		2,103,668
Cash consideration paid at closing		5,053,827
Cash consideration paid subsequent to closing (Unsecured Promissory Note issued to Seller)		3,000,000
Fair value of the consideration transferred	$	14,290,504

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed by the Socialyte Purchase on the Closing Date. Amounts in the table are estimates that may change, as described below. There were no measurement period adjustments during the three and nine months ended September 30, 2023. The measurement period of the Socialyte Purchase concludes on November 14, 2023.

	November 14, 2022
Cash	$	314,752
Accounts receivable		2,758,265
Accrued revenue		1,040,902
Property, equipment and leasehold improvements		30,826
Prepaid expenses		351,253
Intangibles		5,210,000
Total identifiable assets acquired	$	9,705,998
Accounts payable		(3,043,871	)
Accrued expenses and other current liabilities		(1,397,292	)
Deferred revenue		(1,173,394	)
Total liabilities assumed	$	(5,614,557	)
Net identifiable assets acquired		4,091,441
Goodwill		10,199,063
Fair value of the consideration transferred	$	14,290,504

11 

NOTE 5 — NOTES RECEIVABLE

The notes receivable held by the Company are unsecured convertible note receivables from JDDC Elemental LLC (“Midnight Theatre”) (the “Notes Receivable”). The Notes Receivable are recorded at their principal face amount plus accrued interest. Due to their short-term maturity and conversion terms, these have been recorded at the face value of the note and an allowance for credit losses has not been established.

As of September 30, 2023, the Notes Receivable amounted to $4,608,962, inclusive of $500,882 of interest receivable, and are convertible at the option of the Company into Class A and B Units of Midnight Theatre. The Notes Receivable each originally had maturity dates six months from their issuance date, but the maturity date for all of the Notes Receivable has been extended to September 30, 2024. The Notes Receivable allow the Company to convert the principal and accrued interest into Class A and B Units of Midnight Theatre on the maturity date. In connection with the Notes Receivable, the Company recorded $103,546 and $91,711 of interest income for the three months ended September 30, 2023 and 2022, respectively, and $307,262 and $204,928 for the nine months ended September 30, 2023 and 2022, respectively. During both the three and nine months ended September 30, 2023, Midnight Theatre made an interest payment of $125,000 related to the Notes Receivable. Subsequent to September 30, 2023, Midnight Theatre made interest payments of $12,500 related to the Notes Receivable.

NOTE 6 — EQUITY METHOD INVESTMENTS

The Company’s equity method investment consisted of: (i) Class A and Class B units of Midnight Theatre and (ii) Series 2 common interest of Stanton South LLC, which operates Crafthouse Cocktails (“Crafthouse Cocktails”).

The Company evaluated these investments under the Variable Interest Entity guidance and determined the Company is not the primary beneficiary of either Midnight Theatre or Crafthouse Cocktails, however, it does exercise significant influence over Midnight Theatre and Crafthouse Cocktails; as a result, it accounts for these investments under the equity method of accounting. Equity method investments are included within other long-term assets in the condensed consolidated balance sheets.

Midnight Theatre

As of September 30, 2023 and December 31, 2022, the investment in Midnight Theatre amounted to $681,694 and $891,494, respectively. In connection with its equity method investment in Midnight Theatre, the Company recorded losses of $50,960 and $209,800, for the three and nine months ended September 30, 2023, respectively, and $60,786 during both the three and nine months ended September 30, 2022. Midnight Theatre commenced operations in late June 2022. The equity in earnings or losses prior to the third quarter of 2022 was negligible and was recorded in the three and nine months ended September 30, 2022.

Crafthouse Cocktails

As part of the Company’s ongoing monitoring of its equity method investments, during the three months ended September 30, 2023, the Company determined their investment in Crafthouse Cocktails was impaired and therefore recorded an impairment for the entire balance of its investment as of September 30, 2023. This determination was made after Crafthouse was unable to secure their latest round of funding and the Company concluded the resulting decline in the carrying value of this investment was determined to be other than temporary in nature. The impairment amounted to $1,169,587 for both the three and nine months ended September 30, 2023 and is recorded within equity in losses of unconsolidated affiliates in the condensed consolidated statements of operations.

During the nine months ended September 30, 2023, prior to the impairment recognition, the Company recorded losses in connection with its equity method investment in Crafthouse Cocktails amounting to $87,970. Except for the impairment, the Company did not recognize any income or loss in connection with its equity method investment in Crafthouse Cocktails for the three months ended September 30, 2023.

As of December 31, 2022, the investment in Crafthouse Cocktails amounted to $361,717. The Company recorded a loss in connection with its equity method investment in Crafthouse Cocktails amounting to $39,437 and $82,837 for the three and nine months ended September 30, 2022, respectively. 

NOTE 7 — OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following:

	September 30,		December 31,
	2023		2022
Accrued funding under Max Steel production agreement	$	620,000	$	620,000
Accrued audit, legal and other professional fees		426,650		573,049
Accrued commissions		643,492		702,410
Accrued bonuses		569,485		469,953
Talent liability		2,316,098		3,990,984
Accumulated customer deposits		837,476		550,930
Other		639,219		719,510
	$	6,052,420	$	7,626,836

12 

NOTE 8 — DEBT

Total debt of the Company was as follows as of September 30, 2023 and December 31, 2022:

Debt Type	September 30, 2023			December 31, 2022
Convertible notes payable	$	5,150,000		$	5,050,000
Convertible note payable - fair value option		350,000			343,556
Non-convertible promissory notes		3,910,859			1,368,960
Non-convertible promissory notes – Socialyte		3,000,000			3,000,000
Loans from related party (see Note 9)		1,107,873			1,107,873
Term loan, net of debt issuance costs (see Note 12)		5,715,887			2,867,592
Total debt	$	19,234,619		$	13,737,981
Less current portion of debt		(4,341,362	)		(4,277,697	)
Noncurrent portion of debt	$	14,893,257		$	9,460,284

The table below details the maturity dates of the principal amounts for the Company’s debt as of September 30, 2023:

Debt Type	Maturity Date	2023		2024		2025		2026		2027		Thereafter
Convertible notes payable	Between October 2024 and March 2030	$	—	$	1,300,000	$	800,000	$	450,000	$	2,600,000	$	500,000
Non-convertible promissory notes	Between November 2023 and March 2029		380,859		500,000		400,000		—		—		2,630,000
Non-convertible promissory notes - Socialyte	September 2023		3,000,000		—		—		—		—		—
Term loan	September 2028		237,479		997,473		1,083,866		1,176,307		1,276,631		1,028,244
Loans from related party	December 2026		—		—		—		1,107,873		—		—
		$	3,618,338	$	2,797,473	$	2,283,866	$	2,734,180	$	3,876,631	$	4,158,244

Convertible Notes Payable

On January 9, 2023, January 13, 2023 and June 15, 2023, the Company issued three convertible notes payable in the aggregate amount of $1,000,000. As of September 30, 2023, the Company had ten 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 note payable and any accrued interest may be converted at the noteholder’s option at any time at a purchase price based on a 90-day average closing market price per share of the common stock. Five of the convertible notes payable may not be converted at a price less than $2.50 per share and five of the convertible notes payable may not be converted at a price less than $2.00 per share. As of September 30, 2023 and December 31, 2022, the principal balance of the convertible notes payable of $5,150,000 and $5,050,000, respectively, was recorded in noncurrent liabilities under the caption “Convertible Notes Payable” on the Company’s condensed consolidated balance sheets.

The Company recorded interest expense related to these convertible notes payable of $128,750 and $80,278 during the three months ended September 30, 2023 and 2022, respectively, and $414,880 and $215,278 during the nine months ended September 30, 2023 and 2022, respectively. In addition, the Company made cash interest payments amounting to $413,764 and $199,445 during the nine months ended September 30, 2023 and 2022, respectively, related to the convertible notes payable.

On June 8, 2023, the holder of two convertible notes converted the aggregate principal balance of $900,000 into 450,000 shares of common stock at a conversion price of $2.00 per share. At the moment of conversion, accrued interest related to these notes amounted to $9,500 and was paid in cash.

Convertible Note Payable at Fair Value

The Company had one convertible promissory note outstanding with aggregate principal amount of $500,000 as of September 30, 2023 for which it elected the fair value option. As such, the estimated fair value of the note was recorded on its issue date. At each balance sheet date, the Company records the fair value of the convertible promissory note with any changes in the fair value recorded in the condensed consolidated statements of operations.

The Company had a balance of $350,000 and $343,556 in noncurrent liabilities as of September 30, 2023 and December 31, 2022, respectively, on its condensed consolidated balance sheets related to the convertible note payable measured at fair value.

There was no change in the fair value for the three months ended September 30, 2023. The Company recorded a gain in fair value of $45,642 for the three months ended September 30, 2022, and a loss in fair value of $6,444 and a gain in fair value of $577,522 for the nine months ended September 30, 2023 and 2022, respectively, on its condensed consolidated statements of operations related to this convertible promissory note at fair value.

The Company recorded interest expense related to these convertible notes payable at fair value of $9,863 for both the three months ended September 30, 2023 and 2022, and $29,589 for both the nine months ended September 30, 2023 and 2022, respectively. In addition, the Company made cash interest payments amounting to $29,589 for both the nine months ended September 30, 2023 and 2022, related to the convertible promissory notes at fair value.

13 

Nonconvertible Promissory Notes

On February 22, 2023, the Company issued an unsecured nonconvertible promissory note in the amount of $2,215,000 and received proceeds of $2,215,000. On August 1, 2023, the Company issued an unsecured nonconvertible promissory note in the amount of $415,000 and received proceeds of $415,000. As of September 30, 2023, the Company has outstanding unsecured nonconvertible promissory notes in the aggregate amount of $3,910,859, which bear interest at a rate of 10% per annum and mature between November 2023 and March 2029.

As of September 30, 2023 and December 31, 2022, the Company had a balance of $380,859 and $868,960, respectively, net of debt discounts recorded as current liabilities and $3,530,000 and $500,000 respectively, in noncurrent liabilities on its condensed consolidated balance sheets related to these unsecured nonconvertible promissory notes.

During the nine months ended September 30, 2023, one unsecured nonconvertible promissory note amounting to $400,000 matured and was extended for an additional period of two years, now maturing on June 14, 2025.

The Company recorded interest expense related to these nonconvertible promissory notes of $93,142 and $22,719 for the three months ended September 30, 2023 and 2022, respectively, and $238,195 and $70,996 for the nine months ended September 30, 2023 and 2022, respectively. The Company made interest payments of $215,111 and $73,217 during the nine months ended September 30, 2023 and 2022, respectively, related to the nonconvertible promissory notes.

Nonconvertible promissory note - Socialyte Promissory Note

As discussed in Note 4, as part of the Socialyte Purchase, the Company entered into the Socialyte Promissory Note amounting to $3,000,000. The Socialyte Promissory Note matured on September 30, 2023 and was payable in two payments: $1,500,000 on June 30, 2023 and $1,500,000 on September 30, 2023. The Socialyte Promissory Note carries an interest of 4% per annum, which accrues monthly, and all accrued interest was to be due and payable on September 30, 2023.

The Socialyte Purchase Agreement allows the Company to offset a working capital deficit against the Socialyte Promissory Note. As such, on June 30, 2023, the Company deferred these installment payments until the final post-closing working capital adjustment is agreed upon with the Socialyte Seller.

The Company recorded interest expense related to the Socialyte Promissory Note of $30,000 for the three months ended September 30, 2023, and $95,000 for the nine months ended September 30, 2023.

Credit and Security Agreement

In connection with the Socialyte Purchase discussed in Note 4, Socialyte, with MidCo entered into a Credit and Security Agreement with BankProv (“Credit Agreement”), which included a $3,000,000 secured term note (“Term Loan”) and $500,000 of a secured revolving line of credit (“Revolver”). The Credit Agreement carried an annual facility fee of $5,000 payable on the first anniversary of the Credit Agreement’s Closing Date and of $875 on each one-year anniversary thereafter.

The Credit Agreement contained financial covenants that require Socialyte to maintain: (1) a quarterly minimum debt service ratio of 1.25:1.00; (2) a quarterly senior funded debt to EBITDA (as defined in the Credit Agreement) not to exceed 3.00:1.00 and (3) quarterly total funded debt to EBITDA (as defined in the Credit Agreement) not to exceed 5.00:1.00, as well as the Company to maintain a minimum liquidity of $1,500,000. The Credit Agreement also contained covenants that limit Socialyte’s and MidCo’s ability to, among other things, grant liens, incur additional indebtedness, make acquisitions or investments, dispose of certain assets, change the nature of their businesses, enter into certain transactions with affiliates or amend the terms of material indebtedness.

Term Loan

The Term Loan had a term of five years, with a maturity date of November 14, 2027. The Company was required to repay the Term Loan through 60 consecutive monthly payments of principal, based upon a straight-line amortization period of 84 months, based on the principal amount outstanding, plus interest at an annual rate of 7.37%, commencing on December 14, 2022, and continuing on the corresponding day of each month thereafter until it was paid in full. Any remaining unpaid principal balance, including accrued and unpaid interest and fees, if any was to be due and payable in full on November 14, 2027, its maturity date.

Interest on the Term Loan was to be payable on a monthly basis. Interest was computed on the basis of a three hundred sixty (360) day year, for the actual number of days elapsed. Default interest was to be charged in accordance with the terms of the Term Loan. During the nine months ended September 30, 2023, the Company made payments of $479,745, inclusive of $158,316 of interest. The Term Loan was repaid on September 29, 2023 as part of the Refinancing Transaction discussed below, therefore, as of September 30, 2023, there were no amounts outstanding under the Term Loan.

14 

Revolver

During both the three and nine months ended September 30, 2023, the Company drew $400,000 from the Revolver, which was repaid on September 29, 2023 as part of the Refinancing Transaction discussed below, therefore, as of September 30, 2023, there were no amounts outstanding under the Revolver. When drawn, the outstanding principal balance of the Revolver accrued interest from the date of the draw of the greater of (i) 5.50% per annum, or (ii) the Prime Rate (as defined in the Revolver) plus 0.75% per annum.

Refinancing Transaction

On September 29, 2023, the Company entered into a loan agreement with BankUnited (“BankUnited Loan Agreement”) in which the existing Credit Agreement with BankProv was repaid (the “Refinancing Transaction”). The BankUnited Loan Agreement includes: (i) $5,800,000 secured term loan (“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 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 an 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.

Interest on the BKU Term Loan accrues at 8.10% fixed rate per annum. Principal and interest on the BKU Term Loan shall be payable on a monthly basis based on a 5-year amortization. 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.

The BankUnited Credit Facility contains financial covenants tested semi-annually on a trailing twelve-month basis that require the Company to maintain a minimum debt service coverage ratio of 1.25:1.00 and a maximum funded debt/EBITDA ratio of 3.00:1.00. In addition, the BankUnited Credit Facility contains a liquidity covenant that requires the Company to hold a cash balance at BankUnited with a daily minimum deposit balance of $1,500,000.

The Refinancing Transaction was accounted for as an extinguishment of debt. In connection with this extinguishment, the Company incurred a prepayment penalty of $79,286 and wrote-off of unamortized debt origination costs of $91,859 related to the Term Loan, which were both recognized as interest expense in the condensed consolidated statement of operations in this third quarter of 2023.

NOTE 9 — LOANS FROM RELATED PARTY

The Company issued Dolphin Entertainment, LLC (“DE LLC”), an entity wholly owned by the Company’s Chief Executive Officer, William O’Dowd (the “CEO”), a promissory note (the “DE LLC Note”) which matures on December 31, 2026.

As of both September 30, 2023 and December 31, 2022, the Company had a principal balance of $1,107,873, and accrued interest amounted to $249,499 and $166,636 as of September 30, 2023 and December 31, 2022, respectively. For both the nine months ended September 30, 2023 and 2022, the Company did not repay any principal balance on the DE LLC Note.

The Company recorded interest expense of $27,924 for both the three months ended September 30, 2023 and 2022, and $82,863 for both the nine months ended September 30, 2023 and 2022, respectively, related to this loan from related party. The Company did not make cash payments during both the nine months ended September 30, 2023 and 2022, related to this loan from related party.

NOTE 10 — FAIR VALUE MEASUREMENTS

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

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

Financial Disclosures about Fair Value of Financial Instruments

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

	Level in	September 30, 2023				December 31, 2022
	Fair Value	Carrying		Fair		Carrying		Fair
	Hierarchy	Amount		Value		Amount		Value
Assets:
Cash and cash equivalents	1	$	6,406,646	$	6,406,646	$	6,069,889	$	6,069,889
Restricted cash	1		3,723,868		3,723,868		1,127,960		1,127,960
Liabilities:
Convertible notes payable	3	$	5,150,000	$	4,725,000	$	5,050,000	$	4,865,000
Convertible note payable at fair value	3		350,000		350,000		343,556		343,556
Warrant liability	3		10,000		10,000		15,000		15,000
Contingent consideration	3		—		—		738,821		738,821

15 

Convertible notes payable

As of September 30, 2023, the Company has ten outstanding convertible notes payable with aggregate principal amount of $5,150,000. See Note 8 for further information on the terms of these convertible notes.

		September 30, 2023				December 31, 2022
	Level	Carrying Amount		Fair Value		Carrying Amount		Fair Value
10% convertible notes due in October 2024	3	$	800,000	$	807,000	$	800,000	$	817,000
10% convertible notes due in November 2024	3		—		—		500,000	$	513,000
10% convertible notes due in December 2024	3		500,000		499,000		900,000	$	912,000
10% convertible notes due in January 2025	3		800,000		806,000		—	$	—
10% convertible notes due in November 2026	3		300,000		271,000		300,000	$	285,000
10% convertible notes due in December 2026	3		150,000		135,000		150,000	$	143,000
10% convertible notes due in June 2027	3		200,000		174,000		—		—
10% convertible notes due in August 2027	3		2,000,000		1,700,000		2,000,000	$	1,834,000
10% convertible notes due in September 2027	3		400,000		333,000		400,000	$	361,000
		$	5,150,000	$	4,725,000	$	5,050,000	$	4,865,000

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

Fair Value Assumption – Convertible Debt		September 30, 2023			December 31, 2022
Stock Price	$	1.80		$	1.81
Minimum Conversion Price	$	2.00 - 2.50		$	2.00 - 2.50
Annual Asset Volatility Estimate		100	%		100	%
Risk Free Discount Rate (based on U.S. government treasury obligation with a term similar to that of the convertible note)		4.70% - 5.46	%		4.02% - 4.49	%

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

Convertible note payable, at fair value

As of September 30, 2023, the Company has one outstanding convertible note payable with a face value of $500,000 (the “March 4^th Note”), which is accounted for under the Accounting Standards Codification (“ASC”) 825-10-15-4 FVO election. Under the FVO election, the financial instrument is initially measured at its issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The estimated fair value adjustment is presented as a single line item within other (expenses) income in the accompanying condensed consolidated statements of operations under the caption “Change in fair value of convertible notes.”

The March 4^th Note is measured at fair value and categorized within Level 3 of the fair value hierarchy. The following is a reconciliation of the fair values from December 31, 2022 to September 30, 2023:

	March 4th Note
Beginning fair value balance reported on the condensed consolidated balance sheet at December 31, 2022	$	343,556
(Gain) Loss on the change in fair value reported in the condensed consolidated statements of operations		6,444
Ending fair value balance reported on the condensed consolidated balance sheet at September 30, 2023	$	350,000

The estimated fair value of the March 4^th Note as of September 30, 2023 and December 31, 2022, was computed using a Black-Scholes simulation of the present value of its cash flows using a synthetic credit rating analysis and a required rate of return, using the following assumptions:

	September 30, 2023			December 31, 2022
Face value principal payable	$	500,000		$	500,000
Original conversion price	$	3.91		$	3.91
Value of common stock	$	1.80		$	1.81
Expected term (years)		6.43			7.18
Volatility		90	%		100	%
Risk free rate		4.61	%		3.96	%

16 

Warrants

In connection with the March 4^th Note, the Company issued the Series I Warrants. The Series I Warrants are measured at fair value and categorized within Level 3 of the fair value hierarchy. The following is a reconciliation of the fair values from December 31, 2022 to September 30, 2023:

Fair Value:	Series I
Beginning fair value balance reported on the condensed consolidated balance sheet at December 31, 2022	$	15,000
(Gain) Loss on the change in fair value reported in the condensed consolidated statements of operations		(5,000)
Ending fair value balance reported on the condensed consolidated balance sheet at September 30, 2023	$	10,000

The estimated fair value of the Series “I” Warrants was computed using a Black-Scholes valuation model, using the following assumptions:

Fair Value Assumption - Series “I” Warrants	September 30, 2023			December 31, 2022
Exercise Price per share	$	3.91		$	3.91
Value of common stock	$	1.80		$	1.81
Expected term (years)		1.92			2.67
Volatility		80	%		100	%
Dividend yield		0	%		0	%
Risk free rate		5.06	%		4.28	%

Contingent consideration

The Company records the fair value of the contingent consideration liability in the consolidated balance sheets under the caption “Contingent consideration” and records changes to the liability against earnings or loss under the caption “Change in fair value of contingent consideration” in the consolidated statements of operations. As of September 30, 2023, the Company had paid off all contingent consideration related to the acquisition of Be Social.

For the contingent consideration, which is measured at fair value categorized within Level 3 of the fair value hierarchy, the following is a reconciliation of the fair values from December 31, 2022 to September 30, 2023:

	Be Social
Beginning fair value balance reported on the condensed consolidated balance sheet at December 31, 2022	$	738,821
Loss on change of fair value reported in the condensed consolidated statements of operations		33,226
Settlement of contingent consideration(1)		(772,047	)
Ending fair value balance reported in the condensed consolidated balance sheet at September 30, 2023	$	—

⁽¹⁾ On April 25, 2023, the Company settled the contingent consideration liability related to Be Social through payment of $500,000 in cash and 148,687 shares of the Company’s common stock, with a value of $272,047.

NOTE 11 — STOCKHOLDERS’ EQUITY

2021 Lincoln Park Transaction

On December 29, 2021, the Company entered into a purchase agreement (the “LP 2021 Purchase Agreement”) and a registration rights agreement (the “LP 2021 Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park agreed to purchase from the Company up to $25,000,000 of the Company’s common stock (subject to certain limitations) from time to time during the term of the LP 2021 Purchase Agreement. Pursuant to the terms of the LP 2021 Purchase Agreement, at the time the Company signed the LP 2021 Purchase Agreement and the LP 2021 Registration Rights Agreement, the Company issued 51,827 shares of the Company’s common stock to Lincoln Park as consideration for its commitment (“2021 LP commitment shares”) to purchase shares of the Company’s common stock under the LP 2021 Purchase Agreement. Pursuant to the LP 2021 Purchase Agreement, the Company issued an additional 37,019 LP commitment shares on March 7, 2022.

During the nine months ended September 30, 2022, excluding the additional commitment shares disclosed above, the Company sold 1,035,000 shares of common stock, respectively, at prices ranging between $3.47 and $5.15 pursuant to the LP 2021 Purchase Agreement and received proceeds of $4,367,640.

The LP 2021 Purchase Agreement was terminated effective August 12, 2022 and the Company did not sell any shares pursuant to this agreement during the three months ended September 30, 2022.

17 

2022 Lincoln Park Transaction

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

The Company may direct Lincoln Park, at its sole discretion, and subject to certain conditions, to purchase up to 50,000 shares of its common stock on any business day (a “Regular Purchase”). The amount of a Regular Purchase may be increased under certain circumstances up to 75,000 shares if the closing price is not below $7.50 and up to 100,000 shares if the closing price is not below $10.00, provided that Lincoln Park’s committed obligation for Regular Purchases on any business day shall not exceed $2,000,000. In the event we purchase the full amount allowed for a Regular Purchase on any given business day, we may also direct Lincoln Park to purchase additional amounts as accelerated and additional accelerated purchases. The purchase price of shares of the Company’s common stock related to the future funding will be based on the then prevailing market prices of such shares at the time of sales as described in the LP 2022 Purchase Agreement.

Pursuant to the terms of the LP 2022 Purchase Agreement, at the time the Company signed the LP 2022 Purchase Agreement and the LP 2022 Registration Rights Agreement, the Company issued 57,313 shares of its common stock to Lincoln Park as consideration for its commitment (“LP 2022 commitment shares”) to purchase shares of its common stock under the LP 2022 Purchase Agreement. The commitment shares were recorded as a period expense and included within selling, general and administrative expenses in the consolidated statements of operations.

During the three and nine months ended September 30, 2023, the Company sold 300,000 and 1,150,000 shares of its common stock, respectively, at prices ranging between $1.65 and $2.27 pursuant to the LP 2022 Purchase Agreement and received proceeds of $550,850 and $2,162,150, respectively.

During both the three and nine months ended September 30, 2022, excluding the additional commitment shares disclosed above, the Company sold 245,000 shares of common stock at prices ranging between $2.42 and $3.72 pursuant to the LP 2022 Purchase Agreement and received proceeds of $681,460.

The Company evaluated the contract that includes the right to require Lincoln Park to purchase shares of its common stock in the future (“put right”) considering the guidance in ASC 815-40, “Derivatives and Hedging — Contracts on an Entity’s Own Equity” (“ASC 815-40”) and concluded that it is an equity-linked contract that does not qualify for equity classification, and therefore requires fair value accounting. The Company has analyzed the terms of the freestanding put right and has concluded that it has insignificant value as of September 30, 2023.

NOTE 12 — SHARE-BASED COMPENSATION

Shares issued related to employment agreements

Pursuant to the employment agreement between the Company and Mr. Anthony Francisco, he is entitled to receive share awards amounting to $25,000 at each of certain dates in 2023 and 2024, in the aggregate amounting to $100,000. Relating to this agreement, on January 11, 2023, the Company issued to Mr. Francisco 6,366 shares of common stock at a price of $2.24 per share. On July 28, 2023, the Company issued to Mr. Francisco 7,966 shares of common stock at a price of $2.01 per share. The shares are issued based on the 30-day trailing closing sale price for the common stock on the respective dates the shares were issued.

During the three and nine months ended September 30, 2023, the Company paid the salary of certain employees at one if its subsidiaries in fully vested shares of the Company’s common stock. During the three and nine months ended September 30, 2023, the Company issued an aggregate of 49,518 and 125,069 shares, respectively, amounting to $86,942 and $237,883, respectively, in the aggregate on different dates though the nine months ended September 30, 2023, following the normal payroll cycle.

NOTE 13 — LOSS PER SHARE

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Numerator
Net loss	$	(3,863,328	)	$	(1,311,719	)	$	(14,791,892	)	$	(2,850,863	)
Net income attributable to participating securities		—			—			—			—
Net loss attributable to Dolphin Entertainment common stock shareholders and numerator for basic loss per share		(3,863,328	)		(1,311,719	)		(14,791,892	)		(2,850,863	)
Change in fair value of convertible notes payable		—			(45,642	)		—			(577,522	)
Change in fair value of warrants		—			(10,000	)		—			(105,000	)
Interest expense		—			9,863			—			29,589
Numerator for diluted loss per share	$	(3,863,328	)	$	(1,357,498	)	$	(14,791,892	)	$	(3,503,796	)
Denominator
Denominator for basic EPS - weighted-average shares		14,121,275			9,664,681			13,328,138			9,307,830
Effect of dilutive securities:
Warrants		—			1,157			—			2,100
Convertible notes payable		—			127,877			—			127,877
Denominator for diluted EPS - adjusted weighted-average shares		14,121,275			9,793,715			13,328,138			9,437,807
Basic loss per share	$	(0.27	)	$	(0.14	)	$	(1.11	)	$	(0.31	)
Diluted loss per share	$	(0.27	)	$	(0.14	)	$	(1.11	)	$	(0.37	)

18 

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

One of the Company’s convertible notes payable, the warrants and the Series C Preferred Stock have clauses that entitle the holder to participate if dividends are declared to the common stockholders as if the instruments had been converted into shares of common stock. As such, the Company uses the two-class method to compute earnings per share and attributes a portion of the Company’s net income to these participating securities. These securities do not contractually participate in losses. For the three months ended September 30, 2023 and 2022, and the nine months ended September 30, 2023 and 2022, the Company had a net loss and as such the two-class method is not presented.

For the three and nine months ended September 30, 2023 potentially dilutive instruments including 2,883,759 shares and 2,656,640 shares, respectively, of common stock issuable upon conversion of convertible notes payable were not included in the diluted loss per share as inclusion was considered to be antidilutive. For the three and nine months ended September 30, 2023, the warrants were not included in diluted loss per share because the warrants were not “in the money”.

For the three and nine months ended September 30, 2022, the convertible promissory note carried at fair value and the outstanding warrants were included in the calculation of fully diluted loss per share. The other convertible notes carried at their principal loan amount, convertible into an aggregate of 578,313 and 663,801 weighted average shares for the three and nine months ended September 30, 2022 respectively, were not included in the calculation of diluted loss per share as their effect would be antidilutive. 

NOTE 14 — RELATED PARTY TRANSACTIONS

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

As of September 30, 2023 and December 31, 2022, the Company had accrued $2,625,000 of compensation as accrued compensation and has balances of $1,374,422 and $1,578,088, respectively, in accrued interest in current liabilities on its condensed consolidated balance sheets, related to the CEO’s employment agreement. Amounts owed under this arrangement are payable on demand. The Company recorded interest expense related to the accrued compensation in the condensed consolidated statements of operations amounting to $66,164 for both the three months ended September 30, 2023 and 2022, and $196,336 for both the nine months ended September 30, 2023 and 2022. During the nine months ended September 30, 2023, the Company made cash interest payments in the amount of $400,000 in connection with the accrued compensation to the CEO. No cash interest payments were made during the nine months ended September 30, 2022.

The Company entered into the DE LLC Note with an entity wholly owned by our CEO. See Note 9 for further discussion.

NOTE 15 — SEGMENT INFORMATION

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

· The Entertainment Publicity and Marketing segment is composed of 42West, The Door, Viewpoint, Shore Fire, Be Social, B/HI and Socialyte. This segment primarily provides clients with diversified marketing services, including public relations, entertainment and hospitality content marketing, strategic marketing consulting and content production of marketing materials.

· The Content Production segment is composed of Dolphin Entertainment and Dolphin Films. This segment engages in the production and distribution of digital content and feature films. The activities of our Content Production segment also include all corporate overhead activities.

The profitability measure employed by our chief operating decision maker for allocating resources to operating segments and assessing operating segment performance is operating income (loss) which is the same as (Loss) income from operations on the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022. Salaries and related expenses include salaries, bonuses, commissions and other incentive related expenses. Legal and professional expenses primarily include professional fees related to financial statement audits, legal, investor relations and other consulting services, which are engaged and managed by each of the segments. In addition, general and administrative expenses include rental expense and depreciation of property, equipment and leasehold improvements for properties occupied by corporate office employees. All segments follow the same accounting policies as those described in the Annual Report on Form 10-K for the year ended December 31, 2022.

19 

In connection with the acquisitions of 42West, The Door, Viewpoint, Shore Fire, Be Social, B/HI and Socialyte, the Company assigned $8,030,366 of intangible assets, net of accumulated amortization and impairment of $10,649,635, and goodwill of $22,796,683, net of impairment of $6,517,400, as of September 30, 2023 to the EPM segment. Equity method investments are included within the EPM segment.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues:
EPM	$	10,184,511		$	9,899,013		$	31,100,867		$	29,366,748
CPD		—			—			—			—
Total	$	10,184,511		$	9,899,013		$	31,100,867		$	29,366,748
Segment Operating Income (Loss):
EPM	$	1,032,134		$	604,837		$	(8,142,846	)	$	1,978,016
CPD		(3,143,489	)		(1,738,604	)		(3,985,250	)		(4,945,222	)
Total operating (loss) income		(2,111,355	)		(1,133,767	)		(12,128,096	)		(2,967,206	)
Interest expense, net		(604,669	)		(126,147	)		(1,413,177	)		(400,884	)
Other income (expenses), net		104,303			55,642			307,980			682,522
Loss before income taxes and equity in losses of unconsolidated affiliates	$	(2,611,721	)	$	(1,204,272	)	$	(13,233,293	)	$	(2,685,568	)

	As of September 30, 2023		As of December 31, 2022
Total assets:
EPM	$	53,709,956	$	68,678,335
CPD		12,030,312		6,698,497
Total	$	65,740,268	$	75,376,832

NOTE 16 — LEASES

The Company and its subsidiaries are party to various office leases with terms expiring at different dates through November 2027. The amortizable life of the right-of-use asset is limited by the expected lease term. Although certain leases include options to extend the Company did not include these in the right-of-use asset or lease liability calculations because it is not reasonably certain that the options will be executed.

Operating Leases	As of September 30, 2023		As of December 31, 2022
Assets
Right-of-use asset	$	5,853,482	$	7,341,045
Liabilities
Current
Lease liability	$	2,039,462	$	2,073,547
Noncurrent
Lease liability	$	4,518,719	$	6,012,049
Total operating lease liability	$	6,558,181	$	8,085,596

Finance Lease	As of September 30, 2023		As of December 31, 2022
Assets
Right-of-use asset	$	143,250	$	—
Liabilities
Current
Lease liability	$	49,835	$	—
Noncurrent
Lease liability	$	94,985	$	—
Total finance lease liability	$	144,820	$	—

20 

The tables below show the lease income and expenses recorded in the condensed consolidated statements of operations incurred during the three and nine months ended September 30, 2023 and 2022 for operating and financing leases, respectively.

		Three Months Ended September 30,						Nine Months Ended September 30,
Lease costs	Classification	2023			2022			2023			2022
Operating lease costs	Selling, general and administrative expenses	$	699,983		$	709,542		$	2,109,576		$	1,876,153
Sublease income	Selling, general and administrative expenses		(109,807	)		(106,247	)		(330,189	)		(228,230	)
Net operating lease costs		$	590,176		$	603,295		$	1,779,387		$	1,647,923

		Three Months Ended September 30,				Nine Months Ended September 30,
Lease costs	Classification	2023		2022		2023		2022
Amortization of right-of-use assets	Selling, general and administrative expenses	$	10,589	$	—	$	15,840	$	—
Interest on lease liability	Selling, general and administrative expenses		2,415		—		13,089		—
Total finance lease costs		$	13,004	$	—	$	28,929	$	—

During the nine months ended September 30, 2022, the Company recorded an impairment of its ROU asset amounting to $98,857, related to the sublease of one of the Company’s subsidiaries’ offices, which was included in selling, general and administrative expenses in the condensed consolidated statements of operations.

Lease Payments

For the nine months ended September 30, 2023 and 2022, the Company made payments in cash related to its operating leases in the amounts of $1,999,745 and $1,567,453, respectively.

Future minimum lease payments for leases for the remainder of 2023 and thereafter, were as follows:

Year	Operating Leases			Finance Leases
2023	$	640,419		$	14,918
2024		2,531,307			59,670
2025		1,979,589			59,670
2026		1,782,057			26,929
2027		719,794			—
Total lease payments	$	7,653,166		$	161,187
Less: Imputed interest		(1,094,985	)		(16,367	)
Present value of lease liabilities	$	6,558,181		$	144,820

As of September 30, 2023, the Company’s weighted average remaining lease term on its operating and finance leases is 3.27 years and 2.71 years, respectively, and the Company’s weighted average discount rate is 8.79% and 8.60% related to its operating and finance leases, respectively.

NOTE 17 — COLLABORATIVE ARRANGEMENT

IMAX Co-Production Agreement

On June 24, 2022, the Company entered into an agreement with IMAX Corporation (“IMAX”) to co-produce and co-finance a documentary motion picture on the flight demonstration squadron of the United States Navy, called The Blue Angels (“Blue Angels Agreement”). IMAX and Dolphin have each agreed to fund 50% of the production budget. As of December 31, 2022, the Company had paid $1,500,000 pursuant to the Blue Angels Agreement, which were recorded as capitalized production costs. On April 26, 2023, the Company paid the remaining $500,000 pursuant to the Blue Angels Agreement. On November 7, 2023, the Company agreed to pay 50% of additional production costs to complete the documentary in the amount of $250,000.

21 

As production of the documentary motion picture is not complete, no income or expense has been recorded in connection with the Blue Angels Agreement during the three and nine months ended September 30, 2023.

We have evaluated the Blue Angels Agreement and have determined that it is a collaborative arrangement under FASB ASC Topic 808 “Collaborative Arrangements”. We will reevaluate whether an arrangement qualifies or continues to qualify as a collaborative arrangement whenever there is a change in either the roles of the participants or the participants’ exposure to significant risks and rewards, dependent upon the ultimate commercial success of documentary motion picture.

On April 25, 2023, IMAX entered into an acquisition agreement with Amazon Content Services, LLC for the distribution rights of Blue Angels. The Company estimates that it will derive approximately $3.5 million from the acquisition agreement and it expects that the documentary motion picture will be released in the first quarter of 2024.

NOTE 18 — COMMITMENTS AND CONTINGENCIES

Litigation

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

IMAX Co-Production Agreement

As discussed in Note 17, on June 24, 2022, the Company entered into the Blue Angels Agreement with IMAX. Under the terms of this agreement, on April 26, 2023, the Company funded the remaining $500,000 commitment and through September 30, 2023 has now funded its full $2,000,000 commitment of the production budget. On November 7, 2023, the Company agreed to pay 50% of additional production costs to complete the documentary in the amount of $250,000, although it was not contractually obligated to do so.

NOTE 19 — SUBSEQUENT EVENTS

On October 31, 2023, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Maxim Group LLC (the “Underwriter”), pursuant to which the Company agreed to issue and sell to the Underwriter in an underwritten public offering (the “Offering”) an aggregate of 1,400,000 shares of the Company’s common stock at a price of $1.65 per share. Under the terms of the Underwriting Agreement, the Company granted the Underwriter an option, exercisable for 45 days, to purchase an additional 210,000 shares of the Company’s common stock. The Company received gross proceeds of approximately $2,310,000 before deducting underwriting discounts and commissions and estimated offering expenses that are payable by the Company. The Company intends to use the net proceeds for working capital and other general corporate purposes. The Company may also use a portion of the net proceeds to acquire or invest in complementary businesses. The Offering closed November 2, 2023.

On October 2, 2023, (the “Special Projects Closing Date”), the Company acquired all of the issued and outstanding membership interest of Special Projects Media LLC, a New York limited liability company (“Special Projects”), pursuant to a membership interest purchase agreement (the “Special Projects Purchase Agreement”) between the Company and Andrea Oliveri, Nicole Vecchiarelli, Foxglove Corp and Alexandra Alonso (“Sellers”). Special Projects is a talent booking and events agency that elevates media, fashion, and lifestyle brands. Special Projects has headquarters in New York and Los Angeles.

The consideration paid by the Company in connection with the acquisition of Special Projects is approximately $10.0 million, which is subject to adjustments based on a customary post-closing cash consideration adjustment. On the Special Projects Closing Date, the Company paid the Sellers $5.0 million cash and issued the Sellers 2.5 million shares of the Company’s common stock. The Company partially financed the cash portion of the consideration with the Refinancing Transaction described in Note 8. As part of the Special Projects Purchase Agreement, the Company entered into employment agreements with Andrea Oliveri and Nicole Vecchiarelli, each for a period of four years.

22 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

We are a leading independent entertainment marketing and premium content production company. Through our subsidiaries, 42West, The Door, Shore Fire and Viewpoint, we provide expert strategic marketing and publicity services to many of the top brands, both individual and corporate, in the entertainment, hospitality and music industries. 42West (film and television), The Door (culinary, hospitality and consumer products), and Shore Fire (music) are each recognized global leaders in the PR services for the industries they serve. The Digital Department was formed from the combination of two of our subsidiaries, Be Social and Socialyte, and provides best-in-class influencer marketing capabilities. Special Projects is one of the entertainment industry’s leading talent booking and celebrity live event company. Viewpoint adds full-service creative branding and production capabilities to our marketing group. Dolphin’s legacy content production business, founded by our Emmy-nominated Chief Executive Officer, Bill O’Dowd, has produced multiple feature films and award-winning digital series, primarily aimed at family and young adult markets. Our common stock trades on The Nasdaq Capital Market under the symbol “DLPN.”

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.

We have also established an investment strategy, “Dolphin Ventures,” (formerly known as 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 Dolphin Ventures. We intend to enter into additional investments during 2024, but there is no assurance that we will be successful in doing so, whether in 2024 or at all.

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, The Digital Department, Special Projects and Viewpoint and provides clients with diversified services, including public relations, entertainment content marketing, strategic communications, social media marketing, talent booking, live event production, creative branding, and the production of promotional video content. The content production segment is composed of Dolphin Films, Inc. (“Dolphin Films”) and Dolphin Digital Studios, which produce and distribute feature films and digital content. The activities of our Content Production segment also include all corporate overhead activities.

Dolphin Ventures

We believe our ability to engage a broad consumer base through our best-in-class pop culture marketing assets provides us an opportunity to make investments in products or companies which would benefit from our collective marketing power. We call these investments “Dolphin Ventures”. Simply put, we seek to own an interest in some of the assets we are marketing. Specifically, we want to own an interest in assets where our experience, industry relationships and marketing power will most influence the likelihood of success. This leads us to seek investments in the following categories of assets: 1) Content; 2) Live Events; and 3) Consumer Products.

Our most significant Dolphin Ventures investment was made in October, 2021, when we acquired an ownership interest in Midnight Theatre, a state-of-the-art contemporary variety theater and restaurant in the heart of Manhattan. An anchor of Brookfield Properties’ recently opened $4.5 billion Manhattan West development, the Midnight Theatre opened on September 21, 2022. The restaurant, Hidden Leaf, opened on July 6, 2022.

We have also made our first content investment under Dolphin Ventures. See Note 17 above for details regarding our Collaborative Arrangement with IMAX for production and distribution of the documentary feature “The Blue Angels.”

 Revenues

For the three and nine months ended September 30, 2023 and 2022, we derived all of our revenues from our entertainment publicity and marketing segment. The entertainment publicity and marketing segment derives its revenues from providing public relations services for celebrities and musicians, as well as for entertainment and targeted content marketing for film and television series, strategic communications services for corporations and public relations, marketing services and brand strategies for hotels and restaurants and digital marketing through its roster of social media influencers. We expect to generate income in our content production segment over the next eighteen months with the release of “The Blue Angels” documentary motion picture, discussed in the “Project Development and Related Services.”

23 

Entertainment Publicity and Marketing

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 and (viii) content production of marketing materials on a project contract basis. 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. We expect that increased digital streaming marketing budgets at several large key clients will drive growth of revenue and profit in 42West’s Entertainment Marketing division over the next several years.

● 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.

● Creative Branding and Production – We offer clients creative branding and production services from concept creation to final delivery. Our services include brand strategy, concept and creative development, design and art direction, script and copyrighting, live action production and photography, digital development, video editing and composite, animation, audio mixing and engineering, project management and technical support. We expect that our ability to offer these services to our existing clients in the entertainment and consumer products industries will be accretive to our revenue.

● 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.

Content Production

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 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 funded 50% of the production budget, which is estimated at approximately $4.5 million. In April of 2023, IMAX entered into an agreement with Amazon Content Services LLC for the distribution rights of the Blue Angels. We estimate that we will derive approximately $3.5 million from the acquisition agreement and expect that the documentary motion picture will be released in early 2024.

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Expenses

Our expenses consist primarily of:

(1) Direct costs – includes certain costs of services, as well as certain production costs, related to our entertainment publicity and marketing business. Included within direct costs are immaterial impairments for any of our content production projects.

(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 a separate expense item.

(4) Depreciation and amortization – includes the depreciation of our property and equipment and amortization of intangible assets and leasehold improvements.

(5) Impairment of goodwill – includes an impairment charge as a result of triggering events identified during the second quarter of 2023.

(6) Impairment of intangible assets – includes an impairment charge as a result of a rebranding of two of our subsidiaries during the third quarter of 2023.

(7) Change in fair value of contingent consideration – includes changes in the fair value of the contingent earn-out payment obligations for the Company’s acquisitions. 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.

(8) 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 three and nine months ended September 30, 2023 and 2022, other income and expenses consisted primarily of: (1) changes in fair value of convertible notes; (2) changes in fair value of warrants; (3) interest income; and (4) interest expense.

RESULTS OF OPERATIONS

Three and nine months ended September 30, 2023 as compared to three and nine months ended September 30, 2022

Revenues

For the three and nine months ended September 30, 2023 and 2022 revenues were as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	2023		2022		2023		2022
Revenues:
Entertainment publicity and marketing	$	10,184,511	$	9,899,013	$	31,100,867	$	29,366,748
Content production		—		—		—		—
Total revenue	$	10,184,511	$	9,899,013	$	31,100,867	$	29,366,748

Revenues from entertainment publicity and marketing increased by approximately $0.3 million and $1.7 million for the three and nine months ended September 30, 2023, respectively, as compared to the same periods in the prior year. The increase is primarily driven by inclusion of Socialyte revenues for 2023, which were not present in 2022, partially offset by a decrease in revenues from other subsidiaries.

We did not derive any revenues from the content production segment as we have not produced and distributed any of the projects discussed above and the projects that were produced and distributed in 2013 and 2016 have mostly completed their normal revenue cycles. We expect to begin generating income in our content production segment in early 2024 with the release of the Blue Angels documentary film.

Expenses

For the three and nine months ended September 30, 2023 and 2022, our expenses were as follows: 

	For the three months ended September 30,					For the nine months ended September 30,
	2023		2022			2023		2022
Expenses:
Direct costs	$	185,308	$	837,429		$	621,449	$	2,941,044
Payroll and benefits		8,382,659		7,030,814			26,114,881		20,947,531
Selling, general and administrative		2,150,889		1,663,288			6,023,954		4,644,264
Acquisition costs		4,666		315,800			8,823		315,800
Depreciation and amortization		535,740		415,836			1,612,776		1,248,621
Impairment of goodwill		—		—			6,517,400		—
Impairment of intangible assets		341,417		—			341,417		—
Change in fair value of contingent consideration		—		(5,000	)		33,226		(81,106	)
Legal and professional		695,188		774,613			1,955,037		2,317,800
Total expenses	$	12,295,867	$	11,032,780		$	43,228,963	$	32,333,954

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Direct costs decreased by approximately $0.7 million for the three months ended September 30, 2023 and $2.3 million for the nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022. The decrease in direct costs is partially driven by $0.2 million and $0.9 million of NFT production and marketing costs for the three and nine months ended September 30, 2022, respectively, that were not present in the same period in 2023. The decrease in direct costs is also partially attributable to the decrease in certain subsidiaries’ revenues as compared with the same periods in the prior year.

Payroll and benefits expenses increased by approximately $1.4 million and $5.2 million, respectively, for the three and nine months ended September 30, 2023 as compared to the three and nine months ended September 30, 2022, primarily due to the following:

· Inclusion of $1.1 million and $3.5 million for the three and nine months ended September 30, 2023, respectively, of Socialyte payroll expenses;

· The remaining increases are related to salary increases throughout the Company and the hiring of a Chief Marketing Officer.

Depreciation and amortization increased by $0.1 million and $0.4 million for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, related primarily to the amortization of Socialyte intangible assets in 2023.

Selling, general and administrative expenses increased by approximately $0.5 million and $1.4 million for the three and nine months ended September 30, 2023, respectively, as compared to the three and nine months ended September 30, 2022, mainly due to costs incurred by our Los Angeles office that was opened in July of 2022 of $0.1 million and $0.7 million for the three and nine months ended September 30, 2023, respectively, an increase of bad debt of $0.3 for both the three and nine months ended September 30, 2023, and the inclusion of $0.1 million and $0.4 million of Socialyte selling, general and administrative expenses for the three and nine months ended September 30, 2023, respectively.

Impairment of goodwill was $6.5 million for the nine months ended September 30, 2023. As discussed in Note 3 – Goodwill and Intangibles Assets in the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, in the second quarter of 2023, we performed a quantitative assessment driven by triggering events related to declines in our market capitalization combined with the lack of positive response from the market to positive information related to future projects. The quantitative assessment resulted in the impairment of goodwill in the amount of $6.5 million of one of our reporting units. No such charges were recorded in the three and nine months ended September 30, 2022.

Impairment of intangible assets was $0.3 million for the three and nine months ended September 30, 2023. As discussed in Note 3 – Goodwill and Intangibles Assets in the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, during the three and nine months ended September 30, 2023, the Company recognized an impairment of the trademarks and trade names of Socialyte and Be Social in connection with the rebranding of both subsidiaries as the new “The Digital Dept.” of the Company.

Change in fair value of the contingent consideration was a loss of $33.2 thousand for the nine months ended September 30, 2023, compared to the change in fair value of the contingent consideration of gains $5.0 thousand and $(81.1) thousand for the three and nine months ended September 30, 2022. As all contingent consideration was settled by June 2023, there were no changes in fair value of contingent consideration for the three months ended September 30, 2023. The main components of the change in fair value of contingent consideration were the following:

· B/HI: this contingent consideration was settled in June 2022; therefore, no changes were recorded in the three and nine months ended September 30, 2023, nor in the three months ended September 30, 2022. The Company recorded a gain $76.1 thousand for the nine months ended September 30, 2022, up through the date of settlement.

· Be Social: losses of $17.7 thousand and $33.2 thousand for the three and nine months ended September 30, 2023, respectively, compared to a gain of $5.0 thousand for both the three and nine months ended September 30, 2022. The Company settled this contingent consideration on April 25, 2023 through a combination of $500,000 in cash and 148,687 shares of the Company’s stock, with a value of $272,047.

Legal and professional fees decreased by approximately $0.1 million and $0.4 million for the three and nine months ended September 30, 2023, respectively, as compared to the three and nine months ended September 30, 2022 due to legal, consulting and audit fees incurred during the first quarter of 2022 related to our restatement of the financial statements as of, and for the three nine months ended September 30, 2021 included in Form 10-Q for that period, and revisions of the financial statements as of and for the three months ended March 31, 2021 and as of and for the three and six months ended June 30, 2021, respectively, which were included in our Forms 10-Q for March 31, 2021 and June 30, 2021 included our Form 10-K filed on May 26, 2022.

26 

Other Income and Expenses

	For the three months ended September 30,						For the nine months ended September 30,
	2023			2022			2023			2022
Other Income and expenses:
Change in fair value of convertible notes	$	—		$	45,642		$	(6,444	)	$	577,522
Change in fair value of warrants		—			10,000			5,000			105,000
Interest income		104,303			91,722			309,424			204,943
Interest expense		(604,669	)		(217,869	)		(1,413,177	)		(605,827	)
Total other (expenses) income, net	$	(500,366	)	$	(70,505	)	$	(1,105,197	)	$	281,638

Change in fair value of Convertible Notes at Fair Value – We elected the fair value option for one convertible note issued in 2020. The fair value of this convertible note is remeasured at every balance sheet date and any changes are recorded on our condensed consolidated statements of operations. For the three months ended September 30, 2023, there was no change in fair value. For the three months ended September 30, 2022, we recorded a $45.6 thousand gain in the fair value of the convertible notes issued in 2020. For the nine months ended September 30, 2023 and 2022, we recorded a change in the fair value of the convertible notes issued in 2020 in the amount of a $6.0 thousand loss and a $0.6 million gain, respectively. None of the decrease in the value of the convertible notes was attributable to instrument specific credit risk and as such, all of the gain in the change in fair value was recorded within net loss.

Change in fair value of warrants – Warrants issued with convertible notes payable issued in 2020 were 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 each respective warrant liability recognized as other income or expense. The fair value of the 2020 warrants that were not exercised did not have a change in fair value for the three months ended September 30, 2023 and decreased by approximately $5.0 thousand during the nine months ended September 30, 2023; therefore, we recorded a change in the fair value of the warrants for the nine months ended September 30, 2023 for that amount on our condensed consolidated statement of operations. For the three and nine months ended September 30, 2022, the fair value of the 2020 warrants that were not exercised decreased by approximately $10.0 thousand and $0.1 million; therefore, we recorded a gain in the change in fair value of the warrants for the three and nine months ended September 30, 2022 for those amounts, respectively, on our condensed consolidated statement of operations.

Interest income – Interest income increased by $12.6 thousand and $0.1 million for the three and nine months ended September 30, 2023 as compared to the same periods in the prior year, primarily due to increased notes receivable outstanding during 2023 as compared to the same periods in the prior year.

Interest expense – Interest expense increased by $0.4 million and $0.8 million for the three and nine months ended September 30, 2023, respectively, as compared to the same periods in the prior year. The increases were primarily due to increased convertible and nonconvertible notes, the BankProv term loan in connection with the Socialyte Purchase, as well as the Socialyte Promissory Note, which were all outstanding during 2023 for a longer period as compared to the prior year. In addition, interest expense for both the three and nine months ended September 30, 2023 includes the $79,286 prepayment penalty and $91,859 write-off of unamortized debt issue costs in connection with the Refinancing Transaction.

Income Taxes

We recorded an income tax expense of approximately $31.1 thousand and $91.2 thousand for the three and nine months ended September 30, 2023, respectively, and approximately $7.2 thousand and $21.7 thousand for the three and nine months ended September 30, 2022, 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”).

Equity in losses of unconsolidated affiliates

Equity in earnings or losses of unconsolidated affiliates includes our share of income or losses from equity investments.

For the three and nine months ended September 30, 2023, we recorded losses of $51.0 thousand and $0.2 million, respectively, from our equity investment in Midnight Theatre. Midnight Theatre commenced operations at the end of the second quarter of 2022; we recorded a loss of $60.8 thousand for both the three and nine months ended September 30, 2022. No equity gains or losses have been recorded prior to the third quarter of 2022.

For the nine months ended September 30, 2023, we recorded losses of $88.0 thousand from our equity investment in Crafthouse Cocktails, compared to losses of $39.4 thousand and $82.8 thousand for the three and nine months ended September 30, 2022, respectively.

During the three months ended September 30, 2023, the Company determined their investment in Crafthouse Cocktails was deemed to be impaired and therefore recorded an impairment for the entire balance of its investment as of September 30, 2023. As a result, no equity gain or loss was recorded during the three months ended September 30, 2023. This determination was made after Crafthouse Cocktails was unable to secure their latest round of funding. The Company concluded the resulting decline in the carrying value of this investment was not temporary in nature. The impairment amounted to $1,169,587 and is recorded within equity in losses of unconsolidated affiliates in the condensed consolidated statements of operations.

Net (Loss) Income

Net loss was approximately $3.9 million or $0.27 per share based on 14,121,275 weighted average shares outstanding for both basic loss per share and fully diluted loss per share for the three months ended September 30, 2023. Net loss was approximately $1.3 million or $0.14 per share based on 9,664,681 weighted average shares outstanding for basic loss per share and $0.14 per share based on 9,793,715 weighted average shares on a fully diluted basis earnings per share for the three months ended September 30, 2022. The change in net loss for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022, is related to the factors discussed above.

Net loss was approximately $14.8 million or $1.11 per share based on 13,328,128 weighted average shares outstanding for both basic loss per share and fully diluted loss per share for the nine months ended September 30, 2023. Net loss was approximately $2.9 million or $0.31 per share based on 9,307,830 weighted average shares outstanding for basic loss per share and $0.37 per share based on 9,437,807 weighted average shares on a fully diluted basis earnings per share for the nine months ended September 30, 2022. The change in net income for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, is related to the factors discussed above.

27 

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

	Nine Months Ended September 30,
	2023			2022
Statement of Cash Flows Data:
Net cash used in operating activities	$	(4,492,645	)	$	(3,634,388	)
Net cash used in investing activities		(21,893	)		(3,172,544	)
Net cash provided by financing activities		7,447,203			4,169,351
Net increase (decrease) in cash and cash equivalents and restricted cash		2,932,665			(2,637,581	)
Cash and cash equivalents and restricted cash, beginning of period		7,197,849			8,230,626
Cash and cash equivalents and restricted cash, end of period	$	10,130,514		$	5,593,045

Operating Activities

Cash used in operating activities was $4.5 million for the nine months ended September 30, 2023, a change of $0.9 million from cash used in operating activities of $3.6 million for the nine months ended September 30, 2022. The increase in net cash used in operations was primarily as a result of $11.9 million of increased net loss for the period, offset by a $9.5 million increase in non-cash items such as depreciation and amortization, bad debt expense, share-based compensation, impairment of capitalized production costs, impairment of goodwill and intangible asset and other non-cash losses and a $1.5 million net change in working capital.

Investing Activities

There were no significant cash flows used in investing activities for the nine months ended September 30, 2023. Net cash flows used in investing activities for the nine months ended September 30, 2022 were $3.2 million related primarily to the issuance of notes receivable.

Financing Activities

Cash flows provided by financing activities for the nine months ended September 30, 2023 were $7.4 million, which mainly related to:

Inflows:

· $5.8 million of proceeds from new term loan.

· $2.6 million of proceeds from notes payable.

· $2.2 million of proceeds from the Lincoln Park equity line of credit.

· $1.0 million of proceeds from convertible notes payable.

Outflows:

· $3.0 million of repayment of existing term loan.

· $0.5 million of settlement of cash portion of contingent consideration for Be Social.

· $0.4 million of payment of interest to related party.

· $0.1 million of repayment of notes payable.

· $0.1 million of payment of debt origination costs.

· $0.1 million of payment early payment penalty of term loan

Cash flows provided by financing activities for the nine months ended September 30, 2022 were $4.2 million, which mainly related to:

Inflows:

· $5.1 million of proceeds from the Lincoln Park equity line of credit described below.

Outflows:

· $0.6 million of settlement of cash portion of contingent consideration for B/HI.

· $0.3 million of repayment of notes payable.

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Debt and Financing Arrangements 

Total debt amounted to $19.2 million as of September 30, 2023 compared to $13.7 million as of December 31, 2022, an increase of $5.5 million.

Our debt obligations in the next twelve months from September 30, 2023 increased by $63.7 thousand from December 31, 2022. 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.

2022 Lincoln Park Transaction

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

The Company may direct Lincoln Park, at its sole discretion, and subject to certain conditions, to purchase up to 50,000 shares of its common stock on any business day (a “Regular Purchase”). The amount of a Regular Purchase may be increased under certain circumstances up to 75,000 shares if the closing price is not below $7.50 and up to 100,000 shares if the closing price is not below $10.00, provided that Lincoln Park’s committed obligation for Regular Purchases on any business day shall not exceed $2,000,000. In the event we purchase the full amount allowed for a Regular Purchase on any given business day, we may also direct Lincoln Park to purchase additional amounts as accelerated and additional accelerated purchases. The purchase price of shares of the Company’s common stock related to the future funding will be based on the then prevailing market prices of such shares at the time of sales as described in the LP 2022 Purchase Agreement.

Pursuant to the terms of the LP 2022 Purchase Agreement, at the time the Company signed the LP 2022 Purchase Agreement and the LP 2022 Registration Rights Agreement, the Company issued 57,313 shares of its common stock to Lincoln Park as consideration for its commitment (“LP 2022 commitment shares”) to purchase shares of its common stock under the LP 2022 Purchase Agreement. The commitment shares were recorded as a period expense and included within selling, general and administrative expenses in the consolidated statements of operations.

During the three and nine months ended September 30, 2023, the Company sold 300,000 and 1,150,000 shares of its common stock, respectively, at prices ranging between $1.65 and $2.27 pursuant to the LP 2022 Purchase Agreement and received proceeds of $550,850 and $2,162,150, respectively.

The Company evaluated the contract that includes the right to require Lincoln Park to purchase shares of its common stock in the future (“put right”) considering the guidance in ASC 815-40, “Derivatives and Hedging — Contracts on an Entity’s Own Equity” (“ASC 815-40”) and concluded that it is an equity-linked contract that does not qualify for equity classification, and therefore requires fair value accounting. The Company has analyzed the terms of the freestanding put right and has concluded that it has insignificant value as of September 30, 2023.

Convertible Notes Payable

During the nine months ended September 30, 2023, the Company issued three convertible notes payable in the aggregate amount of $1,000,000. As of September 30, 2023, the Company had ten 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 note payable and any accrued interest may be converted at the noteholder’s option at any time at a purchase price based on a 90-day average closing market price per share of the common stock. Five of the convertible notes payable may not be converted at a price less than $2.50 per share and five of the convertible notes payable may not be converted at a price less than $2.00 per share.

The Company recorded interest expense related to these convertible notes payable of $128,750 and $80,278 during the three months ended September 30, 2023 and 2022, respectively, and $414,880 and $215,278 during the nine months ended September 30, 2023 and 2022, respectively. In addition, the Company made cash interest payments amounting to $413,764 and $199,445 during the nine months ended September 30, 2023 and 2022, respectively, related to the convertible notes payable.

On June 8, 2023, the holder of two convertible notes converted the aggregate principal balance of $900,000 into 450,000 shares of common stock at a conversion price of $2.00 per share. At the moment of conversion, accrued interest related to these convertible notes payable amounted to $9,500 and was paid in cash.

As of September 30, 2023, the principal balance of the convertible promissory notes of $5,150,000 was recorded in noncurrent liabilities under the caption “Convertible Notes Payable” on the Company’s condensed consolidated balance sheets.

29 

Convertible Note Payable at Fair Value

The Company had one convertible promissory note outstanding with aggregate principal amount of $500,000 as of September 30, 2023 for which it elected the fair value option. As such, the estimated fair value of the note was recorded on its issue date. At each balance sheet date, the Company records the fair value of the convertible promissory note with any changes in the fair value recorded in the condensed consolidated statements of operations.

The Company had a balance of $350,000 and $343,556 in noncurrent liabilities as of September 30, 2023 and December 31, 2022, respectively, on its condensed consolidated balance sheets related to the convertible note payable measured at fair value.

There was no change in the fair value for the three months ended September 30, 2023. The Company recorded a gain in fair value of $45,642 for the three months ended September 30, 2022, and a loss in fair value of $6,444 and a gain in fair value of $577,522 for the nine months ended September 30, 2023 and 2022, respectively, on its condensed consolidated statements of operations related to this convertible promissory note at fair value.

The Company recorded interest expense related to these convertible notes payable at fair value of $9,863 for both the three months ended September 30, 2023 and 2022, and $29,589 for both the nine months ended September 30, 2023 and 2022, respectively. In addition, the Company made cash interest payments amounting to $29,589 for both the nine months ended September 30, 2023 and 2022, related to the convertible promissory notes at fair value.

Nonconvertible Promissory Notes

On February 22, 2023, the Company issued an unsecured nonconvertible promissory note in the amount of $2,215,000 and received proceeds of $2,215,000. On August 1, 2023, the Company issued an unsecured nonconvertible promissory note in the amount of $415,000 and received proceeds of $415,000. As of September 30, 2023, the Company has outstanding unsecured nonconvertible promissory notes in the aggregate amount of $3,910,859, which bear interest at a rate of 10% per annum and mature between November 2023 and March 2029.

As of September 30, 2023 and December 31, 2022, the Company had a balance of $380,859 and $868,960, respectively, net of debt discounts recorded as current liabilities and $3,530,000 and $500,000 respectively, in noncurrent liabilities on its condensed consolidated balance sheets related to these unsecured nonconvertible promissory notes.

During the nine months ended September 30, 2023, one unsecured nonconvertible promissory note amounting to $400,000 matured and was extended for an additional period of two years, now maturing on June 14, 2025.

The Company recorded interest expense related to these nonconvertible promissory notes of $93,142 and $22,719 for the three months ended September 30, 2023 and 2022, respectively, and $238,195 and $70,996 for the nine months ended September 30, 2023 and 2022, respectively. The Company made interest payments of $215,111 and $73,217 during the nine months ended September 30, 2023 and 2022, respectively, related to the nonconvertible promissory notes.

Nonconvertible promissory note - Socialyte Promissory Note

As discussed in Note 4, as part of the Socialyte Purchase, the Company entered into the Socialyte Promissory Note amounting to $3,000,000. The Socialyte Promissory Note matured on September 30, 2023 and was payable in two payments: $1,500,000 on June 30, 2023 and $1,500,000 on September 30, 2023. The Socialyte Promissory Note carries an interest of 4% per annum, which accrues monthly, and all accrued interest was to be due and payable on September 30, 2023.

The Socialyte Purchase Agreement allows the Company to offset a working capital deficit against the Socialyte Promissory Note. As such, on June 30, 2023, the Company deferred these installment payments until the final post-closing working capital adjustment is agreed upon with the Socialyte Seller.

The Company recorded interest expense related to the Socialyte Promissory Note of $30,000 for the three months ended September 30, 2023, and $95,000 for the nine months ended September 30, 2023.

Credit and Security Agreement

In connection with the Socialyte Purchase discussed in Note 4, Socialyte, with MidCo entered into a Credit and Security Agreement with BankProv (“Credit Agreement”), which included a $3,000,000 secured term note (“Term Loan”) and $500,000 of a secured revolving line of credit (“Revolver”). The Credit Agreement carried an annual facility fee of $5,000 payable on the first anniversary of the Credit Agreement’s Closing Date and of $875 on each one-year anniversary thereafter.

The Credit Agreement contained financial covenants that require Socialyte to maintain: (1) a quarterly minimum debt service ratio of 1.25:1.00; (2) a quarterly senior funded debt to EBITDA (as defined in the Credit Agreement) not to exceed 3.00:1.00 and (3) quarterly total funded debt to EBITDA (as defined in the Credit Agreement) not to exceed 5.00:1.00, as well as the Company to maintain a minimum liquidity of $1,500,000. The Credit Agreement also contained covenants that limited Socialyte’s and MidCo’s ability to, among other things, grant liens, incur additional indebtedness, make acquisitions or investments, dispose of certain assets, change the nature of their businesses, enter into certain transactions with affiliates or amend the terms of material indebtedness.

30 

Term Loan

The Term Loan had a term of five years, with a maturity date of November 14, 2027. The Company was to repay the Term Loan through 60 consecutive monthly payments of principal, based upon a straight-line amortization period of 84 months, based on the principal amount outstanding, plus interest at an annual rate of 7.37%, commencing on December 14, 2022, and continuing on the corresponding day of each month thereafter until it was paid in full. Any remaining unpaid principal balance, including accrued and unpaid interest and fees, if any was to be due and payable in full on November 14, 2027, its maturity date.

Interest on the Term Loan was to be payable on a monthly basis. Interest was computed on the basis of a three hundred sixty (360) day year, for the actual number of days elapsed. Default interest was to be charged in accordance with the terms of the Term Loan. During the nine months ended September 30, 2023, the Company made a payment of $479,745, inclusive of $158,316 of interest. The Term Loan was repaid on September 29, 2023 as part of the Refinancing Transaction discussed below, therefore as of September 30, 2023, there were no amounts outstanding under the Term Loan.

Revolver

During both the three and nine months ended September 30, 2023, the Company drew $400,000 from the Revolver, which was repaid on September 29, 2023 as part of the Refinancing Transaction discussed below, therefore, as of September 30, 2023, there were no amounts outstanding under the Revolver. When drawn, the outstanding principal balance of the revolver accrued interest from the date of the draw of the greater of (i) 5.50% per annum, or (ii) the Prime Rate (as defined in the Revolver) plus 0.75% per annum.

Refinancing Transaction

On September 29, 2023, the Company entered into a loan agreement with BankUnited (“BankUnited Loan Agreement”) in which the existing Credit Agreement with BankProv was repaid (the “Refinancing Transaction”). The BankUnited Loan Agreement includes: (i) $5,800,000 secured term loan (“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 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 an 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.

Interest on the BKU Term Loan accrues at 8.10% fixed rate per annum. Principal and interest on the BKU Term Loan shall be payable on a monthly basis based on a 5-year amortization. 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.

The BankUnited Credit Facility contains financial covenants tested semi-annually on a trailing twelve-month basis that require the Company to maintain a minimum debt service coverage ratio of 1.25:1.00 and a maximum funded debt/EBITDA ratio of 3.00:1.00. In addition, the BankUnited Credit Facility contains a liquidity covenant that requires the Company to hold a cash balance at BankUnited with a daily minimum deposit balance of $1,500,000.

The Refinancing Transaction was accounted for as an extinguishment of debt. In connection with this extinguishment, the Company incurred a prepayment penalty of $79,286 and wrote-off of unamortized debt origination costs of $91,859 related to the Term Loan, which were both recognized as interest expense in the condensed consolidated statement of operations in this third quarter of 2023.

IMAX Agreement

As discussed in Note 17, on June 24, 2022, we entered into the Blue Angels Agreement with IMAX. Under the terms of this agreement, as of December 31, 2022, we had paid $1,500,000 pursuant to the Blue Angels Agreement, which was recorded as capitalized production costs. On April 26, 2023, we paid the remaining $500,000 pursuant to the Blue Angels Agreement. On November 7, 2023, the Company agreed to pay 50% of additional production costs to complete the documentary in the amount of $250,000.

On April 25, 2023, IMAX entered into an acquisition agreement with Amazon Content Services, LLC for the distribution rights of Blue Angels. We estimate that we will derive approximately $3.5 million from the acquisition agreement and we expect that the documentary motion picture will be released in early 2024.

Convertible Notes Receivable

As of September 30, 2023, we hold convertible notes receivable from JDDC Elemental LLC, which operates Midnight Theatre. These convertible notes receivable are recorded at their principal face amount plus accrued interest. Due to their short-term maturity and conversion terms (described below), these have been recorded at the face value of the note and an allowance for credit losses has not been established.

As of September 30, 2023, the Midnight Theatre notes amount to $4.6 million, inclusive accrued interest receivable of $0.5 million, and are convertible at the option of the Company into Class A and B Units of Midnight Theatre. During both the three and nine months ended September 30, 2023, Midnight Theatre made an interest payment of $125,000 related to the Notes Receivable. Subsequent to September 30, 2023, Midnight Theatre made interest payments of $12,500 related to the Notes Receivable.

31 

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 Note 2 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022.

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.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 1 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. 

32 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, as well as statements, other than historical facts, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future. These statements are often characterized by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “goal” or “continue” or the negative of these terms or other similar expressions.

Forward-looking statements are based on assumptions and assessments made in light of our experience and perception of historical trends, current conditions, expected and future developments and other factors believed to be appropriate. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of our control. You should not place undue reliance on these forward-looking statements, which reflect our views only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to update these forward-looking statements in the future, except as required by applicable law.

Risks that could cause actual results to differ materially from those indicated by the forward-looking statements include those described as “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as updated by our subsequently filed Quarterly Reports on Forms 10-Q and Current Reports on Forms 8-K.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Report on the Effectiveness of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure.

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2023. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective due to material weaknesses disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023, which have not been remediated as of the date of the filing of this report.

Remediation of Material Weaknesses in Internal Control over Financial Reporting

We have begun the process of designing and implementing effective internal controls measures to improve our internal control over financial reporting and remediate the material weaknesses. Our internal control remediation efforts include the following:

· Developing formal policies and procedures over the Company’s fraud risk assessment and risk management function;

· Developing policies and procedures to enhance the precision of management review of financial statement information and control impact of changes in the external environment;

· We have entered into an agreement with a third-party consultant that assists us in analyzing complex transactions and the appropriate accounting treatment;

· We are enhancing our policies, procedures and documentation of period end closing procedures;

· Implementing policies and procedures to enhance independent review and documentation of journal entries, including segregation of duties; and

· Reevaluating our monitoring activities for relevant controls.

Management is beginning the process of implementing and monitoring the effectiveness of these and other processes, procedures and controls and will make any further changes deemed appropriate. Management believes our planned remedial efforts will effectively remediate the identified material weaknesses. As we continue to evaluate and work to improve our internal control over financial reporting, management may determine it is necessary to take additional measures to address control deficiencies or determine it necessary to modify the remediation plan described above.

Changes in Internal Control over Financial Reporting

During the most recently completed fiscal quarter, there have been no changes in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting for the fiscal quarter covered by this report.

33 

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 31, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

34 

ITEM 6. EXHIBITS

Exhibit No.	Description
31.1*	Certification of Chief Executive Officer of the Company pursuant to Section 302 of the Sarbanes Oxley Act of 2002
31.2*	Certification of Chief Financial Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1#	Certification of Chief Executive Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2#	Certification of Chief Financial Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*	Filed herewith.
**	Previously filed.
#	Furnished herewith.

35 

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized November 14, 2023.

Dolphin Entertainment, Inc.
By:	/s/ William O’Dowd IV
	Name: William O’Dowd IV
	Chief Executive Officer

By:	/s/ Mirta A Negrini
	Name: Mirta A Negrini
	Chief Financial Officer

36 

EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER

CERTIFICATION PURSUANT TO SECTION 302

I, William O’Dowd IV, Chief Executive Officer of Dolphin Entertainment Inc. (the “Registrant”), certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of the Registrant;
2.	Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report.
3.	Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;
4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
	a)	Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: November 14, 2023	/s/ William O’Dowd IV
	William O’Dowd IV
	Chief Executive Officer

EX-31.2

Exhibit 31.2

PRINCIPAL FINANCIAL OFFICER

CERTIFICATION PURSUANT TO SECTION 302

I, Mirta A Negrini, Chief Financial Officer of Dolphin Entertainment Inc. (the “Registrant”), certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of the Registrant;
2.	Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report.
3.	Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;
4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
	a)	Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: November 14, 2023	/s/ Mirta A Negrini
	Mirta A Negrini
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report of Dolphin Entertainment, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William O’Dowd IV, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 14, 2023	By:	/s/ William O’Dowd IV
		William O’Dowd IV
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report of Dolphin Entertainment, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mirta A Negrini, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 14, 2023	By:	/s/ Mirta A Negrini
		Mirta A Negrini
		Chief Financial Officer

XML

Cover - shares	9 Months Ended
	Sep. 30, 2023	Nov. 10, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2023
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	001-38331
Entity Registrant Name	DOLPHIN ENTERTAINMENT, INC.
Entity Central Index Key	0001282224
Entity Tax Identification Number	86-0787790
Entity Incorporation, State or Country Code	FL
Entity Address, Address Line One	150 Alhambra Circle
Entity Address, Address Line Two	Suite 1200
Entity Address, City or Town	Coral Gables
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33134
City Area Code	(305)
Local Phone Number	774-0407
Title of 12(b) Security	Common Stock, $0.015 par value per share
Trading Symbol	DLPN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		18,141,344

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Current
Cash and cash equivalents	$ 6,406,646	$ 6,069,889
Restricted cash	3,723,868	1,127,960
Accounts receivable:
Trade, net of allowance of $1,208,726 and $736,820, respectively	4,993,703	6,162,472
Other receivables	4,299,330	5,552,993
Notes receivable	4,608,962	4,426,700
Other current assets	954,029	523,812
Total current assets	24,986,538	23,863,826
Capitalized production costs, net	2,070,275	1,598,412
Employee receivable	748,085	604,085
Right-of-use asset	5,996,732	7,341,045
Goodwill	22,796,683	29,314,083
Intangible assets, net	8,030,366	9,884,336
Property, equipment and leasehold improvements, net	214,877	293,206
Other long-term assets	896,712	2,477,839
Total Assets	65,740,268	75,376,832
Current
Accounts payable	4,309,920	4,798,221
Term loan, current portion	960,503	408,905
Notes payable, current portion	3,380,859	3,868,960
Contingent consideration		500,000
Accrued interest – related party	1,623,921	1,744,723
Accrued compensation – related party	2,625,000	2,625,000
Lease liability, current portion	2,089,297	2,073,547
Deferred revenue	1,923,076	1,641,459
Other current liabilities	6,052,420	7,626,836
Total current liabilities	22,964,996	25,287,651
Term loan, noncurrent portion	4,755,384	2,458,687
Notes payable	3,530,000	500,000
Convertible notes payable	5,150,000	5,050,000
Convertible note payable at fair value	350,000	343,556
Loan from related party	1,107,873	1,107,873
Contingent consideration		238,821
Lease liability	4,613,704	6,012,049
Deferred tax liability	344,432	253,188
Warrant liability	10,000	15,000
Other noncurrent liabilities	18,915	18,915
Total Liabilities	42,845,304	41,285,740
Commitments and contingencies (Note 18)
STOCKHOLDERS’ EQUITY
Preferred Stock, Series C, $0.001 par value, 50,000 shares authorized, 50,000 shares issued and outstanding at September 30, 2023 and December 31, 2022	1,000	1,000
Common stock, $0.015 par value, 200,000,000 shares authorized, 14,225,487 and 12,340,664 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	213,382	185,110
Additional paid-in capital	146,686,953	143,119,461
Accumulated deficit	(124,006,371)	(109,214,479)
Total Stockholders’ Equity	22,894,964	34,091,092
Total Liabilities and Stockholders’ Equity	$ 65,740,268	$ 75,376,832

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Net of allowance	$ 1,208,726	$ 736,820
Common Stock, Par or Stated Value Per Share	$ 0.015	$ 0.015
Common Stock, Shares Authorized	200,000,000	200,000,000
Common stock, shares issued	14,225,487	12,340,664
Common stock, shares outstanding	14,225,487	12,340,664
Series C Preferred Stock [Member]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized	50,000	50,000
Preferred stock, issued	50,000	50,000
Preferred stock, Outstanding	50,000	50,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Revenues	$ 10,184,511	$ 9,899,013	$ 31,100,867	$ 29,366,748
Expenses:
Direct costs	185,308	837,429	621,449	2,941,044
Payroll and benefits	8,382,659	7,030,814	26,114,881	20,947,531
Selling, general and administrative	2,150,889	1,663,288	6,023,954	4,644,264
Acquisition costs	4,666	315,800	8,823	315,800
Depreciation and amortization	535,740	415,836	1,612,776	1,248,621
Impairment of goodwill			6,517,400
Impairment of intangible assets	341,417		341,417
Change in fair value of contingent consideration		(5,000)	33,226	(81,106)
Legal and professional	695,188	774,613	1,955,037	2,317,800
Total expenses	12,295,867	11,032,780	43,228,963	32,333,954
Loss from operations	(2,111,356)	(1,133,767)	(12,128,096)	(2,967,206)
Other (expenses) income:
Change in fair value of convertible note		45,642	(6,444)	577,522
Change in fair value of warrants		10,000	5,000	105,000
Interest income	104,303	91,722	309,424	204,943
Interest expense	(604,669)	(217,869)	(1,413,177)	(605,827)
Total other (expenses) income, net	(500,366)	(70,505)	(1,105,197)	281,638
Loss before income taxes and equity in losses of unconsolidated affiliates	(2,611,722)	(1,204,272)	(13,233,293)	(2,685,568)
Income tax expense	(31,059)	(7,224)	(91,243)	(21,672)
Net loss before equity in losses of unconsolidated affiliates	(2,642,781)	(1,211,496)	(13,324,536)	(2,707,240)
Equity in losses of unconsolidated affiliates	(1,220,547)	(100,223)	(1,467,356)	(143,623)
Net loss	$ (3,863,328)	$ (1,311,719)	$ (14,791,892)	$ (2,850,863)
Loss per share:
Basic	$ (0.27)	$ (0.14)	$ (1.11)	$ (0.31)
Diluted	$ (0.27)	$ (0.14)	$ (1.11)	$ (0.37)
Weighted average number of shares outstanding:
Basic	14,121,275	9,664,681	13,328,138	9,307,830
Diluted	14,121,275	9,793,715	13,328,138	9,437,807

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (14,791,892)	$ (2,850,863)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,612,776	1,248,621
Share-based compensation	218,154	166,582
Equity in losses of unconsolidated affiliates	297,769	143,623
Impairment of equity method investment	1,169,587
Commitment shares issued to Lincoln Park Capital Fund, LLC		232,118
Bonus payment issued in shares	50,000	50,000
Impairment of goodwill	6,517,400
Impairment of intangible assets	341,417
Impairment of right-of-use asset		98,857
Impairment of capitalized production costs	49,412	87,323
Write-off of debt origination costs	91,859
Change in allowance for credit losses	566,610	276,579
Change in fair value of contingent consideration	33,226	(81,106)
Change in fair value of warrants	(5,000)	(105,000)
Change in fair value of convertible notes	6,444	(577,522)
Deferred income tax expense, net	91,244	21,672
Debt origination costs amortization	13,229
Changes in operating assets and liabilities:
Accounts receivable, trade and other	1,673,559	209,600
Other current assets	(430,217)	145,492
Capitalized production costs	(521,275)	(1,548,500)
Other long-term assets and employee receivable	(134,397)	(196,353)
Deferred revenue	374,269	(494,403)
Accounts payable	(1,120,809)	630,770
Accrued interest – related party	279,198	29,198
Other current liabilities	(851,107)	(1,157,985)
Lease liability	(24,101)	17,994
Other noncurrent liabilities		18,915
Net cash used in operating activities	(4,492,645)	(3,634,388)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets	(21,893)	(64,464)
Issuance of notes receivable		(3,108,080)
Net cash used in investing activities	(21,893)	(3,172,544)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from equity line of credit agreement	2,162,150	5,049,100
Cash settlement of contingent consideration for Be Social (2023) and B/HI (2022)	(506,587)	(600,000)
Proceeds from convertible notes payable	1,000,000
Proceeds from term loan	5,800,000
Repayment of term loan	(2,972,402)
Proceeds from notes payable	2,630,000
Repayment of notes payable	(88,101)	(279,749)
Payment of interest to related party	(400,000)
Early payment penalty on debt refinancing	(79,286)
Debt origination costs	(84,391)
Principal payments on finance leases	(14,180)
Net cash provided by financing activities	7,447,203	4,169,351
Net increase (decrease) in cash and cash equivalents and restricted cash	2,932,665	(2,637,581)
Cash and cash equivalents and restricted cash, beginning of period	7,197,849	8,230,626
Cash and cash equivalents and restricted cash, end of period	10,130,514	5,593,045
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Interest paid	1,216,956	554,897
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of commitment shares to Lincoln Park Capital Fund, LLC		232,118
Receipt of Crafthouse equity in connection with marketing agreement		1,000,000
Settlement of contingent consideration for B/HI (2022), The Door (2022) and Be Social (2023) in shares of common stock	265,460	1,539,444
Employee compensation paid in shares of common stock	268,154
Issuance of shares of common stock for the conversion of convertible notes payable	900,000	500,000
Employee bonus paid in stock	50,000	50,000
Lease liabilities arising from obtaining right-of-use assets.	159,090
Cash and cash equivalents	6,406,646	4,452,562
Restricted cash	3,723,868	1,140,483
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statement of cash flows	$ 10,130,514	$ 5,593,045

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2021	$ 1,000	$ 120,306	$ 127,247,928	$ (104,434,344)	$ 22,934,890
Beginning Balance, Shares at Dec. 31, 2021	50,000	8,020,381
Net loss				(1,717,832)	(1,717,832)
Issuance of shares to Lincoln Park Capital Fund, LLC		$ 9,330	2,506,020		2,515,350
Issuance of shares to Lincoln Park Capital LLC Fund, shares		622,019
Shares issuable for contingent consideration			2,381,869		2,381,869
Issuance of restricted shares, net of shares withheld for taxes		$ 130	(130)
Issuance of restricted shares, net of shares withheld for taxes, shares		8,645
Share-based compensation			59,305		59,305
Ending balance, value at Mar. 31, 2022	$ 1,000	$ 129,766	132,194,992	(106,152,176)	26,173,582
Ending Balance, Shares at Mar. 31, 2022	50,000	8,651,045
Beginning balance, value at Dec. 31, 2021	$ 1,000	$ 120,306	127,247,928	(104,434,344)	22,934,890
Beginning Balance, Shares at Dec. 31, 2021	50,000	8,020,381
Net loss					(2,850,863)
Ending balance, value at Sep. 30, 2022	$ 1,000	$ 149,986	136,114,163	(107,285,208)	28,979,941
Ending Balance, Shares at Sep. 30, 2022	50,000	9,999,052
Beginning balance, value at Mar. 31, 2022	$ 1,000	$ 129,766	132,194,992	(106,152,176)	26,173,582
Beginning Balance, Shares at Mar. 31, 2022	50,000	8,651,045
Net loss				178,687	178,687
Issuance of shares to Lincoln Park Capital Fund, LLC		$ 6,750	1,845,540		1,852,290
Issuance of shares to Lincoln Park Capital LLC Fund, shares		450,000
Issuance of restricted shares, net of shares withheld for taxes		$ 120	(120)
Issuance of restricted shares, net of shares withheld for taxes, shares		7,982
Issuance of shares to sellers of The Door Marketing Group LLC for earnout consideration		$ 4,193	(4,193)
Issuance of shares to sellers of The Door Marketing Group LLC for earnout consideration, shares		279,562
Issuance of shares to seller of B/HI Communication Inc. for earnout consideration		$ 2,451	513,796		516,247
Issuance of shares to seller of B/HI Communication Inc for earnout consideration, shares		163,369
Share-based compensation			54,757		54,757
Ending balance, value at Jun. 30, 2022	$ 1,000	$ 143,280	134,604,772	(105,973,489)	28,775,563
Ending Balance, Shares at Jun. 30, 2022	50,000	9,551,958
Net loss				(1,311,719)	(1,311,719)
Issuance of shares related to conversion of note payable		$ 1,884	498,116		500,000
Issuance of shares related to conversion of note payable, shares		125,604
Issuance of shares to Lincoln Park Capital Fund, LLC		$ 4,534	909,043		913,577
Issuance of shares to Lincoln Park Capital LLC Fund, shares		302,313
Issuance of common stock on vesting of restricted stock units, net of shares withheld for taxes		$ 115	(115)
Issuance of common stock on vesting of restricted stock units, net of shares withheld for taxes, shares		7,656
Issuance of shares related to employment agreement		$ 173	49,827		50,000
Issuance of shares related to employment agreement, shares		11,521
Share-based compensation			52,520		52,520
Ending balance, value at Sep. 30, 2022	$ 1,000	$ 149,986	136,114,163	(107,285,208)	28,979,941
Ending Balance, Shares at Sep. 30, 2022	50,000	9,999,052
Beginning balance, value at Dec. 31, 2022	$ 1,000	$ 185,110	143,119,461	(109,214,479)	34,091,092
Beginning Balance, Shares at Dec. 31, 2022	50,000	12,340,664
Net loss				(2,969,320)	(2,969,320)
Issuance of shares to Lincoln Park Capital Fund, LLC		$ 3,750	525,700		529,450
Issuance of shares to Lincoln Park Capital LLC Fund, shares		250,000
Issuance of shares related to employment agreements		$ 550	74,091		74,641
Issuance of shares related to employment agreements, shares		36,672
Ending balance, value at Mar. 31, 2023	$ 1,000	$ 189,410	143,719,252	(112,183,799)	31,725,863
Ending Balance, Shares at Mar. 31, 2023	50,000	12,627,336
Beginning balance, value at Dec. 31, 2022	$ 1,000	$ 185,110	143,119,461	(109,214,479)	34,091,092
Beginning Balance, Shares at Dec. 31, 2022	50,000	12,340,664
Net loss					(14,791,892)
Ending balance, value at Sep. 30, 2023	$ 1,000	$ 213,382	146,686,953	(124,006,371)	22,894,964
Ending Balance, Shares at Sep. 30, 2023	50,000	14,225,487
Beginning balance, value at Mar. 31, 2023	$ 1,000	$ 189,410	143,719,252	(112,183,799)	31,725,863
Beginning Balance, Shares at Mar. 31, 2023	50,000	12,627,336
Net loss				(7,959,244)	(7,959,244)
Issuance of shares to Lincoln Park Capital Fund, LLC		$ 9,000	1,072,850		1,081,850
Issuance of shares to Lincoln Park Capital LLC Fund, shares		600,000
Conversion of convertible note payable		$ 6,750	893,250		900,000
Conversion of convertible note payable, shares		450,000
Issuance of shares related to the Be Social acquisition		$ 2,181	263,279		265,460
Issuance of shares related to the Be Social acquisition, shares		145,422
Issuance of shares related to employment agreements		$ 679	89,880		90,559
Issuance of shares related to employment agreements, shares		45,245
Ending balance, value at Jun. 30, 2023	$ 1,000	$ 208,020	146,038,511	(120,143,043)	26,104,488
Ending Balance, Shares at Jun. 30, 2023	50,000	13,868,003
Net loss				(3,863,328)	(3,863,328)
Issuance of shares to Lincoln Park Capital Fund, LLC		$ 4,500	546,350		550,850
Issuance of shares to Lincoln Park Capital LLC Fund, shares		300,000
Issuance of shares related to employment agreements		$ 862	102,092		102,954
Issuance of shares related to employment agreements, shares		57,484
Ending balance, value at Sep. 30, 2023	$ 1,000	$ 213,382	$ 146,686,953	$ (124,006,371)	$ 22,894,964
Ending Balance, Shares at Sep. 30, 2023	50,000	14,225,487

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GENERAL

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

GENERAL

NOTE 1 – GENERAL

Dolphin Entertainment, Inc., a Florida corporation (the “Company,” “Dolphin,” “we,” “us” or “our”), is a leading independent entertainment marketing and premium content development company. Through its acquisitions of 42West LLC (“42West”), The Door Marketing Group, LLC (“The Door”), Shore Fire Media, Ltd (“Shore Fire”), Viewpoint Computer Animation Incorporated (“Viewpoint”), Be Social Public Relations, LLC (“Be Social”), B/HI Communications, Inc. (“B/HI”) and Socialyte, LLC (“Socialyte”), the Company provides expert strategic marketing and publicity services throughout the United States of America (“U.S.”) to all of the major film studios and many of the leading independent and digital content providers, A-list celebrity talent, including actors, directors, producers, celebrity chefs, social media influencers and recording artists. The Company also provides strategic marketing publicity services and creative brand strategies for prime hotel and restaurant groups and consumer brands throughout the U.S. The strategic acquisitions of 42West, The Door, Shore Fire, Viewpoint, Be Social, B/HI and Socialyte bring together premium marketing services, including digital and social media marketing capabilities, with premium content production, creating significant opportunities to serve respective constituents more strategically and to grow and diversify the Company’s business. Dolphin’s content production business is a long established, leading independent producer, committed to distributing premium, best-in-class film and digital entertainment. Dolphin produces original feature films and digital programming primarily aimed at family and young adult markets.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Dolphin, and all of its wholly owned subsidiaries, comprising Dolphin Films, Inc. (“Dolphin Films”), Dolphin SB Productions LLC, Dolphin Max Steel Holdings, LLC, Dolphin JB Believe Financing, LLC, Dolphin JOAT Productions, LLC, 42West, The Door, Viewpoint, Shore Fire, Be Social, B/HI and Socialyte. The Company applies the equity method of accounting for its investments in entities for which it does not have a controlling financial interest, but over which it has the ability to exert significant influence. 

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of its financial position as of September 30, 2023, and its results of operations and cash flows for the three and nine months ended September 30, 2023 and 2022. All significant inter-company balances and transactions have been eliminated from the condensed consolidated financial statements. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read together with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Use of Estimates

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

Reclassifications

Certain prior year amounts have been reclassified to conform with current year presentation. These reclassifications had no impact on the Company’s condensed consolidated statements of operations or condensed consolidated statements of cash flows.

Recent Accounting Pronouncements

Accounting Guidance Adopted

In June 2016, the FASB issued new guidance on measurement of credit losses (ASU 2016-13, “Measurement of Credit Losses on Financial Instruments”) with subsequent amendments issued in November 2018 (ASU 2018-19) and April 2019 (ASU 2019-04). This update changes the accounting for credit losses on loans and held-to-maturity debt securities and requires a current expected credit loss (CECL) approach to determine the allowance for credit losses. The Company adopted this guidance effective January 1, 2023 and the adoption of this accounting standard did not have a material impact on the Company’s condensed consolidated financial statements.

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REVENUE

9 Months Ended

Sep. 30, 2023

Revenue

REVENUE

NOTE 2 – REVENUE

Disaggregation of Revenue

The Company’s principal geographic markets are within the U.S. The following is a description of the principal activities, by reportable segment, from which we generate revenue. For more detailed information about reportable segments, see Note 15.

Entertainment Publicity and Marketing

The Entertainment Publicity and Marketing (“EPM”) segment generates revenue from diversified marketing services, including public relations, entertainment and hospitality content marketing, strategic marketing consulting and content production of marketing materials. Within the EPM segment, we typically identify one performance obligation, the delivery of professional publicity services, in which we typically act as the principal. Fees are generally recognized on a straight-line or monthly basis, as the services are consumed by our clients, which approximates the proportional performance on such contracts.

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

Content Production

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

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

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Entertainment publicity and marketing	$	10,184,511	$	9,899,013	$	31,100,867	$	29,366,748
Content production		—		—		—		—
Total Revenues	$	10,184,511	$	9,899,013	$	31,100,867	$	29,366,748

Contract Balances

The opening and closing balances of our contract liability balances from contracts with customers as of September 30, 2023 and December 31, 2022 were as follows:

	Contract Liabilities
Balance as of December 31, 2022	$	1,641,459
Balance as of September 30, 2023		1,923,076
Change	$	281,617

Contract liabilities are recorded when the Company receives advance payments from customers for public relations projects or as deposits for promotional or brand-support video projects. Once the work is performed or the projects are delivered to the customer, the contract liabilities are deemed earned and recorded as revenue. Advance payments received are generally for short duration and are recognized once the performance obligation of the contract is met. Contract liabilities are presented within deferred revenue in the condensed consolidated balance sheets. The change in the contract liability balance relates to the advanced consideration received from customers under the terms of our contracts, primarily related to fees, which are generally recognized shortly after billing.

Revenues for the three and nine months ended September 30, 2023 and 2022 include the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
Amounts included in the beginning of year contract liability balance	$	110,834	$	—	$	1,280,985	$	329,937

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

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GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

NOTE 3 — GOODWILL AND INTANGIBLE ASSETS

Goodwill

As of September 30, 2023, the Company had a balance of $22,796,683 of goodwill on its condensed consolidated balance sheet arising from the prior acquisitions of 42West, The Door, Viewpoint, Shore Fire, Be Social, B/HI and Socialyte. All of the Company’s goodwill is related to the entertainment, publicity and marketing segment.

The Company evaluates goodwill in the fourth quarter or more frequently if management believes indicators of impairment exist. Such indicators could include but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, (3) significant decline in market capitalization or (4) an adverse action or assessment by a regulator. During the second quarter of the 2023 year, the Company’s stock price remained constant and did not respond as positively as expected to new information on the Company’s future projects and forecasts; this, in combination with recurring net losses, resulted in the Company’s market capitalization to be less than the Company’s book value. The Company considered this to be a triggering event, and therefore performed a quantitative analysis of the fair value of goodwill during the second quarter of 2023.

As a result of this quantitative analysis, during the second quarter of 2023, the Company recorded an impairment of Goodwill amounting to $6,517,400, which is included in the condensed consolidated statement of operations for the nine months ended September 30, 2023.

Intangible Assets

Finite-lived intangible assets consisted of the following as of September 30, 2023 and December 31, 2022:

	September 30, 2023								December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Impairment		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Customer relationships	$	13,350,000	$	6,964,552	$	—	$	6,385,448	$	13,350,000	$	5,842,498	$	7,507,502
Trademarks and trade names		4,640,000		2,658,665		341,417		1,639,918		4,640,000		2,283,166		2,356,834
Non-compete agreements		690,000		685,000		—		5,000		690,000		670,000		20,000
	$	18,680,000	$	10,308,217	$	341,417	$	8,030,366	$	18,680,000	$	8,795,664	$	9,884,336

Amortization expense associated with the Company’s intangible assets was $503,357 and $341,833 for the three months ended September 30, 2023 and 2022, respectively, and $1,512,554 and $1,025,499 for the nine months ended September 30, 2023 and 2022, respectively.

During the three and nine months ended September 30, 2023, the Company recognized an impairment of the trademarks and trade names of Socialyte and Be Social in connection with the rebranding of both subsidiaries as the new “The Digital Dept.” of the Company. The impairment amount was determined to be the carrying value of both the trademark and trade name intangible assets as of September 30, 2023, which amounted to $341,417 during the three and nine months ended September 30, 2023 and is included within impairment of intangible assets in the condensed consolidated statements of operations.

Amortization expense related to intangible assets for the remainder of 2023 and thereafter is as follows:

2023	$	482,357
2024		1,617,993
2025		1,520,039
2026		1,431,978
2027		820,992
Thereafter		2,157,007
	$	8,030,366

The following table presents the changes in goodwill and intangible assets:

	Goodwill			Intangible Assets
Balance December 31, 2022	$	29,314,083		$	9,884,336
Amortization expense		—			(505,840	)
Balance March 31, 2023		29,314,083			9,378,496
Amortization expense		—			(503,357	)
Impairment of goodwill		(6,517,400	)		—
Balance June 30, 2023	$	22,796,683		$	8,875,139
Amortization expense		—			(503,356	)
Impairment of intangible assets		—			(341,417	)
Balance September 30, 2023	$	22,796,683		$	8,030,366

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ACQUISITIONS

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

ACQUISITIONS

NOTE 4 —ACQUISITIONS

Socialyte, LLC

On November 14, 2022 (“Closing Date”), the Company, through its wholly owned subsidiary, Social MidCo LLC, (“MidCo”), acquired all of the issued and outstanding membership interests of Socialyte, a Delaware limited liability company (the “Socialyte Purchase”), pursuant to a membership interest purchase agreement dated the Closing Date (the “Socialyte Purchase Agreement”) between the Company and NSL Ventures, LLC (the “Socialyte Seller”). Socialyte is a New York and Los Angeles-based creative agency specializing in social media influencer marketing campaigns for brands.

The total consideration paid to the Socialyte Seller in respect to the Socialyte Purchase was $14,290,504, including a provisional working capital adjustment in the amount of $2,103,668. The Purchase Agreement provided for the Socialyte Seller to earn up to an additional $5,000,000 upon meeting certain financial targets in 2022 that were not met. On the Closing Date, the Company paid the Seller $5,053,827 in cash, issued the Seller 1,346,257 shares of its common stock and issued the Seller a $3,000,000 unsecured promissory note (the “Socialyte Promissory Note”), which was to be repaid in two equal installments on June 30, 2023 and September 30, 2023. In addition, the Company issued the Seller 685,234 shares of its common stock in satisfaction of the Closing Date working capital adjustment. These installment payments on the Socialyte Promissory Note have not been made pending agreement of the post-close working capital adjustment. The Company partially financed the cash portion of the consideration with a $3,000,000 five-year secured loan from BankProv with MidCo and Socialyte as co-borrowers, which the Company guaranteed. The common stock that was issued as part of the consideration was not registered under the Securities Act.

The condensed consolidated statement of operations includes revenues and net loss from Socialyte amounting to $1,314,877 and $(107,674), respectively, for the three months ended September 30, 2023 and $3,748,832 and $(444,857), respectively, for the nine months ended September 30, 2023.

The following table summarizes the fair value of the consideration transferred:

Closing common stock (Consideration)	$	4,133,009
Common stock issued at Closing Date as working capital adjustment		2,103,668
Cash consideration paid at closing		5,053,827
Cash consideration paid subsequent to closing (Unsecured Promissory Note issued to Seller)		3,000,000
Fair value of the consideration transferred	$	14,290,504

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed by the Socialyte Purchase on the Closing Date. Amounts in the table are estimates that may change, as described below. There were no measurement period adjustments during the three and nine months ended September 30, 2023. The measurement period of the Socialyte Purchase concludes on November 14, 2023.

	November 14, 2022
Cash	$	314,752
Accounts receivable		2,758,265
Accrued revenue		1,040,902
Property, equipment and leasehold improvements		30,826
Prepaid expenses		351,253
Intangibles		5,210,000
Total identifiable assets acquired	$	9,705,998
Accounts payable		(3,043,871	)
Accrued expenses and other current liabilities		(1,397,292	)
Deferred revenue		(1,173,394	)
Total liabilities assumed	$	(5,614,557	)
Net identifiable assets acquired		4,091,441
Goodwill		10,199,063
Fair value of the consideration transferred	$	14,290,504

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NOTES RECEIVABLE

9 Months Ended

Sep. 30, 2023

Credit Loss [Abstract]

NOTES RECEIVABLE

NOTE 5 — NOTES RECEIVABLE

The notes receivable held by the Company are unsecured convertible note receivables from JDDC Elemental LLC (“Midnight Theatre”) (the “Notes Receivable”). The Notes Receivable are recorded at their principal face amount plus accrued interest. Due to their short-term maturity and conversion terms, these have been recorded at the face value of the note and an allowance for credit losses has not been established.

As of September 30, 2023, the Notes Receivable amounted to $4,608,962, inclusive of $500,882 of interest receivable, and are convertible at the option of the Company into Class A and B Units of Midnight Theatre. The Notes Receivable each originally had maturity dates six months from their issuance date, but the maturity date for all of the Notes Receivable has been extended to September 30, 2024. The Notes Receivable allow the Company to convert the principal and accrued interest into Class A and B Units of Midnight Theatre on the maturity date. In connection with the Notes Receivable, the Company recorded $103,546 and $91,711 of interest income for the three months ended September 30, 2023 and 2022, respectively, and $307,262 and $204,928 for the nine months ended September 30, 2023 and 2022, respectively. During both the three and nine months ended September 30, 2023, Midnight Theatre made an interest payment of $125,000 related to the Notes Receivable. Subsequent to September 30, 2023, Midnight Theatre made interest payments of $12,500 related to the Notes Receivable.

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EQUITY METHOD INVESTMENTS

9 Months Ended

Sep. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

EQUITY METHOD INVESTMENTS

NOTE 6 — EQUITY METHOD INVESTMENTS

The Company’s equity method investment consisted of: (i) Class A and Class B units of Midnight Theatre and (ii) Series 2 common interest of Stanton South LLC, which operates Crafthouse Cocktails (“Crafthouse Cocktails”).

The Company evaluated these investments under the Variable Interest Entity guidance and determined the Company is not the primary beneficiary of either Midnight Theatre or Crafthouse Cocktails, however, it does exercise significant influence over Midnight Theatre and Crafthouse Cocktails; as a result, it accounts for these investments under the equity method of accounting. Equity method investments are included within other long-term assets in the condensed consolidated balance sheets.

Midnight Theatre

As of September 30, 2023 and December 31, 2022, the investment in Midnight Theatre amounted to $681,694 and $891,494, respectively. In connection with its equity method investment in Midnight Theatre, the Company recorded losses of $50,960 and $209,800, for the three and nine months ended September 30, 2023, respectively, and $60,786 during both the three and nine months ended September 30, 2022. Midnight Theatre commenced operations in late June 2022. The equity in earnings or losses prior to the third quarter of 2022 was negligible and was recorded in the three and nine months ended September 30, 2022.

Crafthouse Cocktails

As part of the Company’s ongoing monitoring of its equity method investments, during the three months ended September 30, 2023, the Company determined their investment in Crafthouse Cocktails was impaired and therefore recorded an impairment for the entire balance of its investment as of September 30, 2023. This determination was made after Crafthouse was unable to secure their latest round of funding and the Company concluded the resulting decline in the carrying value of this investment was determined to be other than temporary in nature. The impairment amounted to $1,169,587 for both the three and nine months ended September 30, 2023 and is recorded within equity in losses of unconsolidated affiliates in the condensed consolidated statements of operations.

During the nine months ended September 30, 2023, prior to the impairment recognition, the Company recorded losses in connection with its equity method investment in Crafthouse Cocktails amounting to $87,970. Except for the impairment, the Company did not recognize any income or loss in connection with its equity method investment in Crafthouse Cocktails for the three months ended September 30, 2023.

As of December 31, 2022, the investment in Crafthouse Cocktails amounted to $361,717. The Company recorded a loss in connection with its equity method investment in Crafthouse Cocktails amounting to $39,437 and $82,837 for the three and nine months ended September 30, 2022, respectively. 

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OTHER CURRENT LIABILITIES

9 Months Ended

Sep. 30, 2023

Payables and Accruals [Abstract]

OTHER CURRENT LIABILITIES

NOTE 7 — OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following:

	September 30,		December 31,
	2023		2022
Accrued funding under Max Steel production agreement	$	620,000	$	620,000
Accrued audit, legal and other professional fees		426,650		573,049
Accrued commissions		643,492		702,410
Accrued bonuses		569,485		469,953
Talent liability		2,316,098		3,990,984
Accumulated customer deposits		837,476		550,930
Other		639,219		719,510
	$	6,052,420	$	7,626,836

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DEBT

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

DEBT

NOTE 8 — DEBT

Total debt of the Company was as follows as of September 30, 2023 and December 31, 2022:

Debt Type	September 30, 2023			December 31, 2022
Convertible notes payable	$	5,150,000		$	5,050,000
Convertible note payable - fair value option		350,000			343,556
Non-convertible promissory notes		3,910,859			1,368,960
Non-convertible promissory notes – Socialyte		3,000,000			3,000,000
Loans from related party (see Note 9)		1,107,873			1,107,873
Term loan, net of debt issuance costs (see Note 12)		5,715,887			2,867,592
Total debt	$	19,234,619		$	13,737,981
Less current portion of debt		(4,341,362	)		(4,277,697	)
Noncurrent portion of debt	$	14,893,257		$	9,460,284

The table below details the maturity dates of the principal amounts for the Company’s debt as of September 30, 2023:

Debt Type	Maturity Date	2023		2024		2025		2026		2027		Thereafter
Convertible notes payable	Between October 2024 and March 2030	$	—	$	1,300,000	$	800,000	$	450,000	$	2,600,000	$	500,000
Non-convertible promissory notes	Between November 2023 and March 2029		380,859		500,000		400,000		—		—		2,630,000
Non-convertible promissory notes - Socialyte	September 2023		3,000,000		—		—		—		—		—
Term loan	September 2028		237,479		997,473		1,083,866		1,176,307		1,276,631		1,028,244
Loans from related party	December 2026		—		—		—		1,107,873		—		—
		$	3,618,338	$	2,797,473	$	2,283,866	$	2,734,180	$	3,876,631	$	4,158,244

Convertible Notes Payable

On January 9, 2023, January 13, 2023 and June 15, 2023, the Company issued three convertible notes payable in the aggregate amount of $1,000,000. As of September 30, 2023, the Company had ten 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 note payable and any accrued interest may be converted at the noteholder’s option at any time at a purchase price based on a 90-day average closing market price per share of the common stock. Five of the convertible notes payable may not be converted at a price less than $2.50 per share and five of the convertible notes payable may not be converted at a price less than $2.00 per share. As of September 30, 2023 and December 31, 2022, the principal balance of the convertible notes payable of $5,150,000 and $5,050,000, respectively, was recorded in noncurrent liabilities under the caption “Convertible Notes Payable” on the Company’s condensed consolidated balance sheets.

The Company recorded interest expense related to these convertible notes payable of $128,750 and $80,278 during the three months ended September 30, 2023 and 2022, respectively, and $414,880 and $215,278 during the nine months ended September 30, 2023 and 2022, respectively. In addition, the Company made cash interest payments amounting to $413,764 and $199,445 during the nine months ended September 30, 2023 and 2022, respectively, related to the convertible notes payable.

On June 8, 2023, the holder of two convertible notes converted the aggregate principal balance of $900,000 into 450,000 shares of common stock at a conversion price of $2.00 per share. At the moment of conversion, accrued interest related to these notes amounted to $9,500 and was paid in cash.

Convertible Note Payable at Fair Value

The Company had one convertible promissory note outstanding with aggregate principal amount of $500,000 as of September 30, 2023 for which it elected the fair value option. As such, the estimated fair value of the note was recorded on its issue date. At each balance sheet date, the Company records the fair value of the convertible promissory note with any changes in the fair value recorded in the condensed consolidated statements of operations.

The Company had a balance of $350,000 and $343,556 in noncurrent liabilities as of September 30, 2023 and December 31, 2022, respectively, on its condensed consolidated balance sheets related to the convertible note payable measured at fair value.

There was no change in the fair value for the three months ended September 30, 2023. The Company recorded a gain in fair value of $45,642 for the three months ended September 30, 2022, and a loss in fair value of $6,444 and a gain in fair value of $577,522 for the nine months ended September 30, 2023 and 2022, respectively, on its condensed consolidated statements of operations related to this convertible promissory note at fair value.

The Company recorded interest expense related to these convertible notes payable at fair value of $9,863 for both the three months ended September 30, 2023 and 2022, and $29,589 for both the nine months ended September 30, 2023 and 2022, respectively. In addition, the Company made cash interest payments amounting to $29,589 for both the nine months ended September 30, 2023 and 2022, related to the convertible promissory notes at fair value.

Nonconvertible Promissory Notes

On February 22, 2023, the Company issued an unsecured nonconvertible promissory note in the amount of $2,215,000 and received proceeds of $2,215,000. On August 1, 2023, the Company issued an unsecured nonconvertible promissory note in the amount of $415,000 and received proceeds of $415,000. As of September 30, 2023, the Company has outstanding unsecured nonconvertible promissory notes in the aggregate amount of $3,910,859, which bear interest at a rate of 10% per annum and mature between November 2023 and March 2029.

As of September 30, 2023 and December 31, 2022, the Company had a balance of $380,859 and $868,960, respectively, net of debt discounts recorded as current liabilities and $3,530,000 and $500,000 respectively, in noncurrent liabilities on its condensed consolidated balance sheets related to these unsecured nonconvertible promissory notes.

During the nine months ended September 30, 2023, one unsecured nonconvertible promissory note amounting to $400,000 matured and was extended for an additional period of two years, now maturing on June 14, 2025.

The Company recorded interest expense related to these nonconvertible promissory notes of $93,142 and $22,719 for the three months ended September 30, 2023 and 2022, respectively, and $238,195 and $70,996 for the nine months ended September 30, 2023 and 2022, respectively. The Company made interest payments of $215,111 and $73,217 during the nine months ended September 30, 2023 and 2022, respectively, related to the nonconvertible promissory notes.

Nonconvertible promissory note - Socialyte Promissory Note

As discussed in Note 4, as part of the Socialyte Purchase, the Company entered into the Socialyte Promissory Note amounting to $3,000,000. The Socialyte Promissory Note matured on September 30, 2023 and was payable in two payments: $1,500,000 on June 30, 2023 and $1,500,000 on September 30, 2023. The Socialyte Promissory Note carries an interest of 4% per annum, which accrues monthly, and all accrued interest was to be due and payable on September 30, 2023.

The Socialyte Purchase Agreement allows the Company to offset a working capital deficit against the Socialyte Promissory Note. As such, on June 30, 2023, the Company deferred these installment payments until the final post-closing working capital adjustment is agreed upon with the Socialyte Seller.

The Company recorded interest expense related to the Socialyte Promissory Note of $30,000 for the three months ended September 30, 2023, and $95,000 for the nine months ended September 30, 2023.

Credit and Security Agreement

In connection with the Socialyte Purchase discussed in Note 4, Socialyte, with MidCo entered into a Credit and Security Agreement with BankProv (“Credit Agreement”), which included a $3,000,000 secured term note (“Term Loan”) and $500,000 of a secured revolving line of credit (“Revolver”). The Credit Agreement carried an annual facility fee of $5,000 payable on the first anniversary of the Credit Agreement’s Closing Date and of $875 on each one-year anniversary thereafter.

The Credit Agreement contained financial covenants that require Socialyte to maintain: (1) a quarterly minimum debt service ratio of 1.25:1.00; (2) a quarterly senior funded debt to EBITDA (as defined in the Credit Agreement) not to exceed 3.00:1.00 and (3) quarterly total funded debt to EBITDA (as defined in the Credit Agreement) not to exceed 5.00:1.00, as well as the Company to maintain a minimum liquidity of $1,500,000. The Credit Agreement also contained covenants that limit Socialyte’s and MidCo’s ability to, among other things, grant liens, incur additional indebtedness, make acquisitions or investments, dispose of certain assets, change the nature of their businesses, enter into certain transactions with affiliates or amend the terms of material indebtedness.

Term Loan

The Term Loan had a term of five years, with a maturity date of November 14, 2027. The Company was required to repay the Term Loan through 60 consecutive monthly payments of principal, based upon a straight-line amortization period of 84 months, based on the principal amount outstanding, plus interest at an annual rate of 7.37%, commencing on December 14, 2022, and continuing on the corresponding day of each month thereafter until it was paid in full. Any remaining unpaid principal balance, including accrued and unpaid interest and fees, if any was to be due and payable in full on November 14, 2027, its maturity date.

Interest on the Term Loan was to be payable on a monthly basis. Interest was computed on the basis of a three hundred sixty (360) day year, for the actual number of days elapsed. Default interest was to be charged in accordance with the terms of the Term Loan. During the nine months ended September 30, 2023, the Company made payments of $479,745, inclusive of $158,316 of interest. The Term Loan was repaid on September 29, 2023 as part of the Refinancing Transaction discussed below, therefore, as of September 30, 2023, there were no amounts outstanding under the Term Loan.

Revolver

During both the three and nine months ended September 30, 2023, the Company drew $400,000 from the Revolver, which was repaid on September 29, 2023 as part of the Refinancing Transaction discussed below, therefore, as of September 30, 2023, there were no amounts outstanding under the Revolver. When drawn, the outstanding principal balance of the Revolver accrued interest from the date of the draw of the greater of (i) 5.50% per annum, or (ii) the Prime Rate (as defined in the Revolver) plus 0.75% per annum.

Refinancing Transaction

On September 29, 2023, the Company entered into a loan agreement with BankUnited (“BankUnited Loan Agreement”) in which the existing Credit Agreement with BankProv was repaid (the “Refinancing Transaction”). The BankUnited Loan Agreement includes: (i) $5,800,000 secured term loan (“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 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 an 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.

Interest on the BKU Term Loan accrues at 8.10% fixed rate per annum. Principal and interest on the BKU Term Loan shall be payable on a monthly basis based on a 5-year amortization. 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.

The BankUnited Credit Facility contains financial covenants tested semi-annually on a trailing twelve-month basis that require the Company to maintain a minimum debt service coverage ratio of 1.25:1.00 and a maximum funded debt/EBITDA ratio of 3.00:1.00. In addition, the BankUnited Credit Facility contains a liquidity covenant that requires the Company to hold a cash balance at BankUnited with a daily minimum deposit balance of $1,500,000.

The Refinancing Transaction was accounted for as an extinguishment of debt. In connection with this extinguishment, the Company incurred a prepayment penalty of $79,286 and wrote-off of unamortized debt origination costs of $91,859 related to the Term Loan, which were both recognized as interest expense in the condensed consolidated statement of operations in this third quarter of 2023.

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LOANS FROM RELATED PARTY

9 Months Ended

Sep. 30, 2023

Loans From Related Party

LOANS FROM RELATED PARTY

NOTE 9 — LOANS FROM RELATED PARTY

The Company issued Dolphin Entertainment, LLC (“DE LLC”), an entity wholly owned by the Company’s Chief Executive Officer, William O’Dowd (the “CEO”), a promissory note (the “DE LLC Note”) which matures on December 31, 2026.

As of both September 30, 2023 and December 31, 2022, the Company had a principal balance of $1,107,873, and accrued interest amounted to $249,499 and $166,636 as of September 30, 2023 and December 31, 2022, respectively. For both the nine months ended September 30, 2023 and 2022, the Company did not repay any principal balance on the DE LLC Note.

The Company recorded interest expense of $27,924 for both the three months ended September 30, 2023 and 2022, and $82,863 for both the nine months ended September 30, 2023 and 2022, respectively, related to this loan from related party. The Company did not make cash payments during both the nine months ended September 30, 2023 and 2022, related to this loan from related party.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 10 — FAIR VALUE MEASUREMENTS

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

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

Financial Disclosures about Fair Value of Financial Instruments

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

	Level in	September 30, 2023				December 31, 2022
	Fair Value	Carrying		Fair		Carrying		Fair
	Hierarchy	Amount		Value		Amount		Value
Assets:
Cash and cash equivalents	1	$	6,406,646	$	6,406,646	$	6,069,889	$	6,069,889
Restricted cash	1		3,723,868		3,723,868		1,127,960		1,127,960
Liabilities:
Convertible notes payable	3	$	5,150,000	$	4,725,000	$	5,050,000	$	4,865,000
Convertible note payable at fair value	3		350,000		350,000		343,556		343,556
Warrant liability	3		10,000		10,000		15,000		15,000
Contingent consideration	3		—		—		738,821		738,821

Convertible notes payable

As of September 30, 2023, the Company has ten outstanding convertible notes payable with aggregate principal amount of $5,150,000. See Note 8 for further information on the terms of these convertible notes.

		September 30, 2023				December 31, 2022
	Level	Carrying Amount		Fair Value		Carrying Amount		Fair Value
10% convertible notes due in October 2024	3	$	800,000	$	807,000	$	800,000	$	817,000
10% convertible notes due in November 2024	3		—		—		500,000	$	513,000
10% convertible notes due in December 2024	3		500,000		499,000		900,000	$	912,000
10% convertible notes due in January 2025	3		800,000		806,000		—	$	—
10% convertible notes due in November 2026	3		300,000		271,000		300,000	$	285,000
10% convertible notes due in December 2026	3		150,000		135,000		150,000	$	143,000
10% convertible notes due in June 2027	3		200,000		174,000		—		—
10% convertible notes due in August 2027	3		2,000,000		1,700,000		2,000,000	$	1,834,000
10% convertible notes due in September 2027	3		400,000		333,000		400,000	$	361,000
		$	5,150,000	$	4,725,000	$	5,050,000	$	4,865,000

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

Fair Value Assumption – Convertible Debt		September 30, 2023			December 31, 2022
Stock Price	$	1.80		$	1.81
Minimum Conversion Price	$	2.00 - 2.50		$	2.00 - 2.50
Annual Asset Volatility Estimate		100	%		100	%
Risk Free Discount Rate (based on U.S. government treasury obligation with a term similar to that of the convertible note)		4.70% - 5.46	%		4.02% - 4.49	%

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

Convertible note payable, at fair value

As of September 30, 2023, the Company has one outstanding convertible note payable with a face value of $500,000 (the “March 4^th Note”), which is accounted for under the Accounting Standards Codification (“ASC”) 825-10-15-4 FVO election. Under the FVO election, the financial instrument is initially measured at its issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The estimated fair value adjustment is presented as a single line item within other (expenses) income in the accompanying condensed consolidated statements of operations under the caption “Change in fair value of convertible notes.”

The March 4^th Note is measured at fair value and categorized within Level 3 of the fair value hierarchy. The following is a reconciliation of the fair values from December 31, 2022 to September 30, 2023:

	March 4th Note
Beginning fair value balance reported on the condensed consolidated balance sheet at December 31, 2022	$	343,556
(Gain) Loss on the change in fair value reported in the condensed consolidated statements of operations		6,444
Ending fair value balance reported on the condensed consolidated balance sheet at September 30, 2023	$	350,000

The estimated fair value of the March 4^th Note as of September 30, 2023 and December 31, 2022, was computed using a Black-Scholes simulation of the present value of its cash flows using a synthetic credit rating analysis and a required rate of return, using the following assumptions:

	September 30, 2023			December 31, 2022
Face value principal payable	$	500,000		$	500,000
Original conversion price	$	3.91		$	3.91
Value of common stock	$	1.80		$	1.81
Expected term (years)		6.43			7.18
Volatility		90	%		100	%
Risk free rate		4.61	%		3.96	%

Warrants

In connection with the March 4^th Note, the Company issued the Series I Warrants. The Series I Warrants are measured at fair value and categorized within Level 3 of the fair value hierarchy. The following is a reconciliation of the fair values from December 31, 2022 to September 30, 2023:

Fair Value:	Series I
Beginning fair value balance reported on the condensed consolidated balance sheet at December 31, 2022	$	15,000
(Gain) Loss on the change in fair value reported in the condensed consolidated statements of operations		(5,000)
Ending fair value balance reported on the condensed consolidated balance sheet at September 30, 2023	$	10,000

The estimated fair value of the Series “I” Warrants was computed using a Black-Scholes valuation model, using the following assumptions:

Fair Value Assumption - Series “I” Warrants	September 30, 2023			December 31, 2022
Exercise Price per share	$	3.91		$	3.91
Value of common stock	$	1.80		$	1.81
Expected term (years)		1.92			2.67
Volatility		80	%		100	%
Dividend yield		0	%		0	%
Risk free rate		5.06	%		4.28	%

Contingent consideration

The Company records the fair value of the contingent consideration liability in the consolidated balance sheets under the caption “Contingent consideration” and records changes to the liability against earnings or loss under the caption “Change in fair value of contingent consideration” in the consolidated statements of operations. As of September 30, 2023, the Company had paid off all contingent consideration related to the acquisition of Be Social.

For the contingent consideration, which is measured at fair value categorized within Level 3 of the fair value hierarchy, the following is a reconciliation of the fair values from December 31, 2022 to September 30, 2023:

	Be Social
Beginning fair value balance reported on the condensed consolidated balance sheet at December 31, 2022	$	738,821
Loss on change of fair value reported in the condensed consolidated statements of operations		33,226
Settlement of contingent consideration(1)		(772,047	)
Ending fair value balance reported in the condensed consolidated balance sheet at September 30, 2023	$	—

⁽¹⁾ On April 25, 2023, the Company settled the contingent consideration liability related to Be Social through payment of $500,000 in cash and 148,687 shares of the Company’s common stock, with a value of $272,047.

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STOCKHOLDERS’ EQUITY

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 11 — STOCKHOLDERS’ EQUITY

2021 Lincoln Park Transaction

On December 29, 2021, the Company entered into a purchase agreement (the “LP 2021 Purchase Agreement”) and a registration rights agreement (the “LP 2021 Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park agreed to purchase from the Company up to $25,000,000 of the Company’s common stock (subject to certain limitations) from time to time during the term of the LP 2021 Purchase Agreement. Pursuant to the terms of the LP 2021 Purchase Agreement, at the time the Company signed the LP 2021 Purchase Agreement and the LP 2021 Registration Rights Agreement, the Company issued 51,827 shares of the Company’s common stock to Lincoln Park as consideration for its commitment (“2021 LP commitment shares”) to purchase shares of the Company’s common stock under the LP 2021 Purchase Agreement. Pursuant to the LP 2021 Purchase Agreement, the Company issued an additional 37,019 LP commitment shares on March 7, 2022.

During the nine months ended September 30, 2022, excluding the additional commitment shares disclosed above, the Company sold 1,035,000 shares of common stock, respectively, at prices ranging between $3.47 and $5.15 pursuant to the LP 2021 Purchase Agreement and received proceeds of $4,367,640.

The LP 2021 Purchase Agreement was terminated effective August 12, 2022 and the Company did not sell any shares pursuant to this agreement during the three months ended September 30, 2022.

2022 Lincoln Park Transaction

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

The Company may direct Lincoln Park, at its sole discretion, and subject to certain conditions, to purchase up to 50,000 shares of its common stock on any business day (a “Regular Purchase”). The amount of a Regular Purchase may be increased under certain circumstances up to 75,000 shares if the closing price is not below $7.50 and up to 100,000 shares if the closing price is not below $10.00, provided that Lincoln Park’s committed obligation for Regular Purchases on any business day shall not exceed $2,000,000. In the event we purchase the full amount allowed for a Regular Purchase on any given business day, we may also direct Lincoln Park to purchase additional amounts as accelerated and additional accelerated purchases. The purchase price of shares of the Company’s common stock related to the future funding will be based on the then prevailing market prices of such shares at the time of sales as described in the LP 2022 Purchase Agreement.

Pursuant to the terms of the LP 2022 Purchase Agreement, at the time the Company signed the LP 2022 Purchase Agreement and the LP 2022 Registration Rights Agreement, the Company issued 57,313 shares of its common stock to Lincoln Park as consideration for its commitment (“LP 2022 commitment shares”) to purchase shares of its common stock under the LP 2022 Purchase Agreement. The commitment shares were recorded as a period expense and included within selling, general and administrative expenses in the consolidated statements of operations.

During the three and nine months ended September 30, 2023, the Company sold 300,000 and 1,150,000 shares of its common stock, respectively, at prices ranging between $1.65 and $2.27 pursuant to the LP 2022 Purchase Agreement and received proceeds of $550,850 and $2,162,150, respectively.

During both the three and nine months ended September 30, 2022, excluding the additional commitment shares disclosed above, the Company sold 245,000 shares of common stock at prices ranging between $2.42 and $3.72 pursuant to the LP 2022 Purchase Agreement and received proceeds of $681,460.

The Company evaluated the contract that includes the right to require Lincoln Park to purchase shares of its common stock in the future (“put right”) considering the guidance in ASC 815-40, “Derivatives and Hedging — Contracts on an Entity’s Own Equity” (“ASC 815-40”) and concluded that it is an equity-linked contract that does not qualify for equity classification, and therefore requires fair value accounting. The Company has analyzed the terms of the freestanding put right and has concluded that it has insignificant value as of September 30, 2023.

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SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

NOTE 12 — SHARE-BASED COMPENSATION

Shares issued related to employment agreements

Pursuant to the employment agreement between the Company and Mr. Anthony Francisco, he is entitled to receive share awards amounting to $25,000 at each of certain dates in 2023 and 2024, in the aggregate amounting to $100,000. Relating to this agreement, on January 11, 2023, the Company issued to Mr. Francisco 6,366 shares of common stock at a price of $2.24 per share. On July 28, 2023, the Company issued to Mr. Francisco 7,966 shares of common stock at a price of $2.01 per share. The shares are issued based on the 30-day trailing closing sale price for the common stock on the respective dates the shares were issued.

During the three and nine months ended September 30, 2023, the Company paid the salary of certain employees at one if its subsidiaries in fully vested shares of the Company’s common stock. During the three and nine months ended September 30, 2023, the Company issued an aggregate of 49,518 and 125,069 shares, respectively, amounting to $86,942 and $237,883, respectively, in the aggregate on different dates though the nine months ended September 30, 2023, following the normal payroll cycle.

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LOSS PER SHARE

9 Months Ended

Sep. 30, 2023

Loss per share:

LOSS PER SHARE

NOTE 13 — LOSS PER SHARE

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Numerator
Net loss	$	(3,863,328	)	$	(1,311,719	)	$	(14,791,892	)	$	(2,850,863	)
Net income attributable to participating securities		—			—			—			—
Net loss attributable to Dolphin Entertainment common stock shareholders and numerator for basic loss per share		(3,863,328	)		(1,311,719	)		(14,791,892	)		(2,850,863	)
Change in fair value of convertible notes payable		—			(45,642	)		—			(577,522	)
Change in fair value of warrants		—			(10,000	)		—			(105,000	)
Interest expense		—			9,863			—			29,589
Numerator for diluted loss per share	$	(3,863,328	)	$	(1,357,498	)	$	(14,791,892	)	$	(3,503,796	)
Denominator
Denominator for basic EPS - weighted-average shares		14,121,275			9,664,681			13,328,138			9,307,830
Effect of dilutive securities:
Warrants		—			1,157			—			2,100
Convertible notes payable		—			127,877			—			127,877
Denominator for diluted EPS - adjusted weighted-average shares		14,121,275			9,793,715			13,328,138			9,437,807
Basic loss per share	$	(0.27	)	$	(0.14	)	$	(1.11	)	$	(0.31	)
Diluted loss per share	$	(0.27	)	$	(0.14	)	$	(1.11	)	$	(0.37	)

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

One of the Company’s convertible notes payable, the warrants and the Series C Preferred Stock have clauses that entitle the holder to participate if dividends are declared to the common stockholders as if the instruments had been converted into shares of common stock. As such, the Company uses the two-class method to compute earnings per share and attributes a portion of the Company’s net income to these participating securities. These securities do not contractually participate in losses. For the three months ended September 30, 2023 and 2022, and the nine months ended September 30, 2023 and 2022, the Company had a net loss and as such the two-class method is not presented.

For the three and nine months ended September 30, 2023 potentially dilutive instruments including 2,883,759 shares and 2,656,640 shares, respectively, of common stock issuable upon conversion of convertible notes payable were not included in the diluted loss per share as inclusion was considered to be antidilutive. For the three and nine months ended September 30, 2023, the warrants were not included in diluted loss per share because the warrants were not “in the money”.

For the three and nine months ended September 30, 2022, the convertible promissory note carried at fair value and the outstanding warrants were included in the calculation of fully diluted loss per share. The other convertible notes carried at their principal loan amount, convertible into an aggregate of 578,313 and 663,801 weighted average shares for the three and nine months ended September 30, 2022 respectively, were not included in the calculation of diluted loss per share as their effect would be antidilutive. 

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2023

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 14 — RELATED PARTY TRANSACTIONS

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

As of September 30, 2023 and December 31, 2022, the Company had accrued $2,625,000 of compensation as accrued compensation and has balances of $1,374,422 and $1,578,088, respectively, in accrued interest in current liabilities on its condensed consolidated balance sheets, related to the CEO’s employment agreement. Amounts owed under this arrangement are payable on demand. The Company recorded interest expense related to the accrued compensation in the condensed consolidated statements of operations amounting to $66,164 for both the three months ended September 30, 2023 and 2022, and $196,336 for both the nine months ended September 30, 2023 and 2022. During the nine months ended September 30, 2023, the Company made cash interest payments in the amount of $400,000 in connection with the accrued compensation to the CEO. No cash interest payments were made during the nine months ended September 30, 2022.

The Company entered into the DE LLC Note with an entity wholly owned by our CEO. See Note 9 for further discussion.

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SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

SEGMENT INFORMATION

NOTE 15 — SEGMENT INFORMATION

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

· The Entertainment Publicity and Marketing segment is composed of 42West, The Door, Viewpoint, Shore Fire, Be Social, B/HI and Socialyte. This segment primarily provides clients with diversified marketing services, including public relations, entertainment and hospitality content marketing, strategic marketing consulting and content production of marketing materials.

· The Content Production segment is composed of Dolphin Entertainment and Dolphin Films. This segment engages in the production and distribution of digital content and feature films. The activities of our Content Production segment also include all corporate overhead activities.

The profitability measure employed by our chief operating decision maker for allocating resources to operating segments and assessing operating segment performance is operating income (loss) which is the same as (Loss) income from operations on the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022. Salaries and related expenses include salaries, bonuses, commissions and other incentive related expenses. Legal and professional expenses primarily include professional fees related to financial statement audits, legal, investor relations and other consulting services, which are engaged and managed by each of the segments. In addition, general and administrative expenses include rental expense and depreciation of property, equipment and leasehold improvements for properties occupied by corporate office employees. All segments follow the same accounting policies as those described in the Annual Report on Form 10-K for the year ended December 31, 2022.

In connection with the acquisitions of 42West, The Door, Viewpoint, Shore Fire, Be Social, B/HI and Socialyte, the Company assigned $8,030,366 of intangible assets, net of accumulated amortization and impairment of $10,649,635, and goodwill of $22,796,683, net of impairment of $6,517,400, as of September 30, 2023 to the EPM segment. Equity method investments are included within the EPM segment.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues:
EPM	$	10,184,511		$	9,899,013		$	31,100,867		$	29,366,748
CPD		—			—			—			—
Total	$	10,184,511		$	9,899,013		$	31,100,867		$	29,366,748
Segment Operating Income (Loss):
EPM	$	1,032,134		$	604,837		$	(8,142,846	)	$	1,978,016
CPD		(3,143,489	)		(1,738,604	)		(3,985,250	)		(4,945,222	)
Total operating (loss) income		(2,111,355	)		(1,133,767	)		(12,128,096	)		(2,967,206	)
Interest expense, net		(604,669	)		(126,147	)		(1,413,177	)		(400,884	)
Other income (expenses), net		104,303			55,642			307,980			682,522
Loss before income taxes and equity in losses of unconsolidated affiliates	$	(2,611,721	)	$	(1,204,272	)	$	(13,233,293	)	$	(2,685,568	)

	As of September 30, 2023		As of December 31, 2022
Total assets:
EPM	$	53,709,956	$	68,678,335
CPD		12,030,312		6,698,497
Total	$	65,740,268	$	75,376,832

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LEASES

9 Months Ended

Sep. 30, 2023

Leases

LEASES

NOTE 16 — LEASES

The Company and its subsidiaries are party to various office leases with terms expiring at different dates through November 2027. The amortizable life of the right-of-use asset is limited by the expected lease term. Although certain leases include options to extend the Company did not include these in the right-of-use asset or lease liability calculations because it is not reasonably certain that the options will be executed.

Operating Leases	As of September 30, 2023		As of December 31, 2022
Assets
Right-of-use asset	$	5,853,482	$	7,341,045
Liabilities
Current
Lease liability	$	2,039,462	$	2,073,547
Noncurrent
Lease liability	$	4,518,719	$	6,012,049
Total operating lease liability	$	6,558,181	$	8,085,596

Finance Lease	As of September 30, 2023		As of December 31, 2022
Assets
Right-of-use asset	$	143,250	$	—
Liabilities
Current
Lease liability	$	49,835	$	—
Noncurrent
Lease liability	$	94,985	$	—
Total finance lease liability	$	144,820	$	—

The tables below show the lease income and expenses recorded in the condensed consolidated statements of operations incurred during the three and nine months ended September 30, 2023 and 2022 for operating and financing leases, respectively.

		Three Months Ended September 30,						Nine Months Ended September 30,
Lease costs	Classification	2023			2022			2023			2022
Operating lease costs	Selling, general and administrative expenses	$	699,983		$	709,542		$	2,109,576		$	1,876,153
Sublease income	Selling, general and administrative expenses		(109,807	)		(106,247	)		(330,189	)		(228,230	)
Net operating lease costs		$	590,176		$	603,295		$	1,779,387		$	1,647,923

		Three Months Ended September 30,				Nine Months Ended September 30,
Lease costs	Classification	2023		2022		2023		2022
Amortization of right-of-use assets	Selling, general and administrative expenses	$	10,589	$	—	$	15,840	$	—
Interest on lease liability	Selling, general and administrative expenses		2,415		—		13,089		—
Total finance lease costs		$	13,004	$	—	$	28,929	$	—

During the nine months ended September 30, 2022, the Company recorded an impairment of its ROU asset amounting to $98,857, related to the sublease of one of the Company’s subsidiaries’ offices, which was included in selling, general and administrative expenses in the condensed consolidated statements of operations.

Lease Payments

For the nine months ended September 30, 2023 and 2022, the Company made payments in cash related to its operating leases in the amounts of $1,999,745 and $1,567,453, respectively.

Future minimum lease payments for leases for the remainder of 2023 and thereafter, were as follows:

Year	Operating Leases			Finance Leases
2023	$	640,419		$	14,918
2024		2,531,307			59,670
2025		1,979,589			59,670
2026		1,782,057			26,929
2027		719,794			—
Total lease payments	$	7,653,166		$	161,187
Less: Imputed interest		(1,094,985	)		(16,367	)
Present value of lease liabilities	$	6,558,181		$	144,820

As of September 30, 2023, the Company’s weighted average remaining lease term on its operating and finance leases is 3.27 years and 2.71 years, respectively, and the Company’s weighted average discount rate is 8.79% and 8.60% related to its operating and finance leases, respectively.

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COLLABORATIVE ARRANGEMENT

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

COLLABORATIVE ARRANGEMENT

NOTE 17 — COLLABORATIVE ARRANGEMENT

IMAX Co-Production Agreement

On June 24, 2022, the Company entered into an agreement with IMAX Corporation (“IMAX”) to co-produce and co-finance a documentary motion picture on the flight demonstration squadron of the United States Navy, called The Blue Angels (“Blue Angels Agreement”). IMAX and Dolphin have each agreed to fund 50% of the production budget. As of December 31, 2022, the Company had paid $1,500,000 pursuant to the Blue Angels Agreement, which were recorded as capitalized production costs. On April 26, 2023, the Company paid the remaining $500,000 pursuant to the Blue Angels Agreement. On November 7, 2023, the Company agreed to pay 50% of additional production costs to complete the documentary in the amount of $250,000.

As production of the documentary motion picture is not complete, no income or expense has been recorded in connection with the Blue Angels Agreement during the three and nine months ended September 30, 2023.

We have evaluated the Blue Angels Agreement and have determined that it is a collaborative arrangement under FASB ASC Topic 808 “Collaborative Arrangements”. We will reevaluate whether an arrangement qualifies or continues to qualify as a collaborative arrangement whenever there is a change in either the roles of the participants or the participants’ exposure to significant risks and rewards, dependent upon the ultimate commercial success of documentary motion picture.

On April 25, 2023, IMAX entered into an acquisition agreement with Amazon Content Services, LLC for the distribution rights of Blue Angels. The Company estimates that it will derive approximately $3.5 million from the acquisition agreement and it expects that the documentary motion picture will be released in the first quarter of 2024.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 18 — COMMITMENTS AND CONTINGENCIES

Litigation

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

IMAX Co-Production Agreement

As discussed in Note 17, on June 24, 2022, the Company entered into the Blue Angels Agreement with IMAX. Under the terms of this agreement, on April 26, 2023, the Company funded the remaining $500,000 commitment and through September 30, 2023 has now funded its full $2,000,000 commitment of the production budget. On November 7, 2023, the Company agreed to pay 50% of additional production costs to complete the documentary in the amount of $250,000, although it was not contractually obligated to do so.

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 19 — SUBSEQUENT EVENTS

On October 31, 2023, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Maxim Group LLC (the “Underwriter”), pursuant to which the Company agreed to issue and sell to the Underwriter in an underwritten public offering (the “Offering”) an aggregate of 1,400,000 shares of the Company’s common stock at a price of $1.65 per share. Under the terms of the Underwriting Agreement, the Company granted the Underwriter an option, exercisable for 45 days, to purchase an additional 210,000 shares of the Company’s common stock. The Company received gross proceeds of approximately $2,310,000 before deducting underwriting discounts and commissions and estimated offering expenses that are payable by the Company. The Company intends to use the net proceeds for working capital and other general corporate purposes. The Company may also use a portion of the net proceeds to acquire or invest in complementary businesses. The Offering closed November 2, 2023.

On October 2, 2023, (the “Special Projects Closing Date”), the Company acquired all of the issued and outstanding membership interest of Special Projects Media LLC, a New York limited liability company (“Special Projects”), pursuant to a membership interest purchase agreement (the “Special Projects Purchase Agreement”) between the Company and Andrea Oliveri, Nicole Vecchiarelli, Foxglove Corp and Alexandra Alonso (“Sellers”). Special Projects is a talent booking and events agency that elevates media, fashion, and lifestyle brands. Special Projects has headquarters in New York and Los Angeles.

The consideration paid by the Company in connection with the acquisition of Special Projects is approximately $10.0 million, which is subject to adjustments based on a customary post-closing cash consideration adjustment. On the Special Projects Closing Date, the Company paid the Sellers $5.0 million cash and issued the Sellers 2.5 million shares of the Company’s common stock. The Company partially financed the cash portion of the consideration with the Refinancing Transaction described in Note 8. As part of the Special Projects Purchase Agreement, the Company entered into employment agreements with Andrea Oliveri and Nicole Vecchiarelli, each for a period of four years.

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GENERAL (Policies)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Dolphin, and all of its wholly owned subsidiaries, comprising Dolphin Films, Inc. (“Dolphin Films”), Dolphin SB Productions LLC, Dolphin Max Steel Holdings, LLC, Dolphin JB Believe Financing, LLC, Dolphin JOAT Productions, LLC, 42West, The Door, Viewpoint, Shore Fire, Be Social, B/HI and Socialyte. The Company applies the equity method of accounting for its investments in entities for which it does not have a controlling financial interest, but over which it has the ability to exert significant influence. 

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of its financial position as of September 30, 2023, and its results of operations and cash flows for the three and nine months ended September 30, 2023 and 2022. All significant inter-company balances and transactions have been eliminated from the condensed consolidated financial statements. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read together with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Use of Estimates

Use of Estimates

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

Reclassifications

Reclassifications

Certain prior year amounts have been reclassified to conform with current year presentation. These reclassifications had no impact on the Company’s condensed consolidated statements of operations or condensed consolidated statements of cash flows.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Accounting Guidance Adopted

In June 2016, the FASB issued new guidance on measurement of credit losses (ASU 2016-13, “Measurement of Credit Losses on Financial Instruments”) with subsequent amendments issued in November 2018 (ASU 2018-19) and April 2019 (ASU 2019-04). This update changes the accounting for credit losses on loans and held-to-maturity debt securities and requires a current expected credit loss (CECL) approach to determine the allowance for credit losses. The Company adopted this guidance effective January 1, 2023 and the adoption of this accounting standard did not have a material impact on the Company’s condensed consolidated financial statements.

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REVENUE (Tables)

9 Months Ended

Sep. 30, 2023

Revenue

Schedule of revenue by major customers by reporting segments

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Entertainment publicity and marketing	$	10,184,511	$	9,899,013	$	31,100,867	$	29,366,748
Content production		—		—		—		—
Total Revenues	$	10,184,511	$	9,899,013	$	31,100,867	$	29,366,748

Schedule of contract liability with customers

	Contract Liabilities
Balance as of December 31, 2022	$	1,641,459
Balance as of September 30, 2023		1,923,076
Change	$	281,617

Schedule of contract liability balance

	Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
Amounts included in the beginning of year contract liability balance	$	110,834	$	—	$	1,280,985	$	329,937

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GOODWILL AND INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of intangible assets

	September 30, 2023								December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Impairment		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Customer relationships	$	13,350,000	$	6,964,552	$	—	$	6,385,448	$	13,350,000	$	5,842,498	$	7,507,502
Trademarks and trade names		4,640,000		2,658,665		341,417		1,639,918		4,640,000		2,283,166		2,356,834
Non-compete agreements		690,000		685,000		—		5,000		690,000		670,000		20,000
	$	18,680,000	$	10,308,217	$	341,417	$	8,030,366	$	18,680,000	$	8,795,664	$	9,884,336

Schedule of amortization expense

2023	$	482,357
2024		1,617,993
2025		1,520,039
2026		1,431,978
2027		820,992
Thereafter		2,157,007
	$	8,030,366

Schedule of changes in goodwill and intangible assets

	Goodwill			Intangible Assets
Balance December 31, 2022	$	29,314,083		$	9,884,336
Amortization expense		—			(505,840	)
Balance March 31, 2023		29,314,083			9,378,496
Amortization expense		—			(503,357	)
Impairment of goodwill		(6,517,400	)		—
Balance June 30, 2023	$	22,796,683		$	8,875,139
Amortization expense		—			(503,356	)
Impairment of intangible assets		—			(341,417	)
Balance September 30, 2023	$	22,796,683		$	8,030,366

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ACQUISITIONS (Tables)

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Schedule of consideration transferred

Closing common stock (Consideration)	$	4,133,009
Common stock issued at Closing Date as working capital adjustment		2,103,668
Cash consideration paid at closing		5,053,827
Cash consideration paid subsequent to closing (Unsecured Promissory Note issued to Seller)		3,000,000
Fair value of the consideration transferred	$	14,290,504

Schedule of assets acquired and liabilities assumed

	November 14, 2022
Cash	$	314,752
Accounts receivable		2,758,265
Accrued revenue		1,040,902
Property, equipment and leasehold improvements		30,826
Prepaid expenses		351,253
Intangibles		5,210,000
Total identifiable assets acquired	$	9,705,998
Accounts payable		(3,043,871	)
Accrued expenses and other current liabilities		(1,397,292	)
Deferred revenue		(1,173,394	)
Total liabilities assumed	$	(5,614,557	)
Net identifiable assets acquired		4,091,441
Goodwill		10,199,063
Fair value of the consideration transferred	$	14,290,504

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OTHER CURRENT LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2023

Payables and Accruals [Abstract]

Schedule of other liabilities

	September 30,		December 31,
	2023		2022
Accrued funding under Max Steel production agreement	$	620,000	$	620,000
Accrued audit, legal and other professional fees		426,650		573,049
Accrued commissions		643,492		702,410
Accrued bonuses		569,485		469,953
Talent liability		2,316,098		3,990,984
Accumulated customer deposits		837,476		550,930
Other		639,219		719,510
	$	6,052,420	$	7,626,836

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DEBT (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of debt

Debt Type	September 30, 2023			December 31, 2022
Convertible notes payable	$	5,150,000		$	5,050,000
Convertible note payable - fair value option		350,000			343,556
Non-convertible promissory notes		3,910,859			1,368,960
Non-convertible promissory notes – Socialyte		3,000,000			3,000,000
Loans from related party (see Note 9)		1,107,873			1,107,873
Term loan, net of debt issuance costs (see Note 12)		5,715,887			2,867,592
Total debt	$	19,234,619		$	13,737,981
Less current portion of debt		(4,341,362	)		(4,277,697	)
Noncurrent portion of debt	$	14,893,257		$	9,460,284

Schedule of future annual contractual principal payment commitments of debt

Debt Type	Maturity Date	2023		2024		2025		2026		2027		Thereafter
Convertible notes payable	Between October 2024 and March 2030	$	—	$	1,300,000	$	800,000	$	450,000	$	2,600,000	$	500,000
Non-convertible promissory notes	Between November 2023 and March 2029		380,859		500,000		400,000		—		—		2,630,000
Non-convertible promissory notes - Socialyte	September 2023		3,000,000		—		—		—		—		—
Term loan	September 2028		237,479		997,473		1,083,866		1,176,307		1,276,631		1,028,244
Loans from related party	December 2026		—		—		—		1,107,873		—		—
		$	3,618,338	$	2,797,473	$	2,283,866	$	2,734,180	$	3,876,631	$	4,158,244

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2023

Related Party Transaction [Line Items]

Schedule of consolidated financial instruments

	Level in	September 30, 2023				December 31, 2022
	Fair Value	Carrying		Fair		Carrying		Fair
	Hierarchy	Amount		Value		Amount		Value
Assets:
Cash and cash equivalents	1	$	6,406,646	$	6,406,646	$	6,069,889	$	6,069,889
Restricted cash	1		3,723,868		3,723,868		1,127,960		1,127,960
Liabilities:
Convertible notes payable	3	$	5,150,000	$	4,725,000	$	5,050,000	$	4,865,000
Convertible note payable at fair value	3		350,000		350,000		343,556		343,556
Warrant liability	3		10,000		10,000		15,000		15,000
Contingent consideration	3		—		—		738,821		738,821

Schedule of convertible notes payable

		September 30, 2023				December 31, 2022
	Level	Carrying Amount		Fair Value		Carrying Amount		Fair Value
10% convertible notes due in October 2024	3	$	800,000	$	807,000	$	800,000	$	817,000
10% convertible notes due in November 2024	3		—		—		500,000	$	513,000
10% convertible notes due in December 2024	3		500,000		499,000		900,000	$	912,000
10% convertible notes due in January 2025	3		800,000		806,000		—	$	—
10% convertible notes due in November 2026	3		300,000		271,000		300,000	$	285,000
10% convertible notes due in December 2026	3		150,000		135,000		150,000	$	143,000
10% convertible notes due in June 2027	3		200,000		174,000		—		—
10% convertible notes due in August 2027	3		2,000,000		1,700,000		2,000,000	$	1,834,000
10% convertible notes due in September 2027	3		400,000		333,000		400,000	$	361,000
		$	5,150,000	$	4,725,000	$	5,050,000	$	4,865,000

Schedule of estimated fair value of assumptions

	September 30, 2023			December 31, 2022
Face value principal payable	$	500,000		$	500,000
Original conversion price	$	3.91		$	3.91
Value of common stock	$	1.80		$	1.81
Expected term (years)		6.43			7.18
Volatility		90	%		100	%
Risk free rate		4.61	%		3.96	%

Schedule of estimated fair value

	March 4th Note
Beginning fair value balance reported on the condensed consolidated balance sheet at December 31, 2022	$	343,556
(Gain) Loss on the change in fair value reported in the condensed consolidated statements of operations		6,444
Ending fair value balance reported on the condensed consolidated balance sheet at September 30, 2023	$	350,000

Schedule of reconciliation of the fair values

	Be Social
Beginning fair value balance reported on the condensed consolidated balance sheet at December 31, 2022	$	738,821
Loss on change of fair value reported in the condensed consolidated statements of operations		33,226
Settlement of contingent consideration(1)		(772,047	)
Ending fair value balance reported in the condensed consolidated balance sheet at September 30, 2023	$	—

Convertible Debt [Member]

Related Party Transaction [Line Items]

Schedule of estimated fair value of assumptions

Fair Value Assumption – Convertible Debt		September 30, 2023			December 31, 2022
Stock Price	$	1.80		$	1.81
Minimum Conversion Price	$	2.00 - 2.50		$	2.00 - 2.50
Annual Asset Volatility Estimate		100	%		100	%
Risk Free Discount Rate (based on U.S. government treasury obligation with a term similar to that of the convertible note)		4.70% - 5.46	%		4.02% - 4.49	%

Series I Warrant [Member]

Related Party Transaction [Line Items]

Schedule of estimated fair value of assumptions

Fair Value Assumption - Series “I” Warrants	September 30, 2023			December 31, 2022
Exercise Price per share	$	3.91		$	3.91
Value of common stock	$	1.80		$	1.81
Expected term (years)		1.92			2.67
Volatility		80	%		100	%
Dividend yield		0	%		0	%
Risk free rate		5.06	%		4.28	%

Schedule of estimated fair value

Fair Value:	Series I
Beginning fair value balance reported on the condensed consolidated balance sheet at December 31, 2022	$	15,000
(Gain) Loss on the change in fair value reported in the condensed consolidated statements of operations		(5,000)
Ending fair value balance reported on the condensed consolidated balance sheet at September 30, 2023	$	10,000

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LOSS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2023

Loss per share:

Schedule of computation of basic and diluted loss per share

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Numerator
Net loss	$	(3,863,328	)	$	(1,311,719	)	$	(14,791,892	)	$	(2,850,863	)
Net income attributable to participating securities		—			—			—			—
Net loss attributable to Dolphin Entertainment common stock shareholders and numerator for basic loss per share		(3,863,328	)		(1,311,719	)		(14,791,892	)		(2,850,863	)
Change in fair value of convertible notes payable		—			(45,642	)		—			(577,522	)
Change in fair value of warrants		—			(10,000	)		—			(105,000	)
Interest expense		—			9,863			—			29,589
Numerator for diluted loss per share	$	(3,863,328	)	$	(1,357,498	)	$	(14,791,892	)	$	(3,503,796	)
Denominator
Denominator for basic EPS - weighted-average shares		14,121,275			9,664,681			13,328,138			9,307,830
Effect of dilutive securities:
Warrants		—			1,157			—			2,100
Convertible notes payable		—			127,877			—			127,877
Denominator for diluted EPS - adjusted weighted-average shares		14,121,275			9,793,715			13,328,138			9,437,807
Basic loss per share	$	(0.27	)	$	(0.14	)	$	(1.11	)	$	(0.31	)
Diluted loss per share	$	(0.27	)	$	(0.14	)	$	(1.11	)	$	(0.37	)

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SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Schedule of revenue and assets by segment

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues:
EPM	$	10,184,511		$	9,899,013		$	31,100,867		$	29,366,748
CPD		—			—			—			—
Total	$	10,184,511		$	9,899,013		$	31,100,867		$	29,366,748
Segment Operating Income (Loss):
EPM	$	1,032,134		$	604,837		$	(8,142,846	)	$	1,978,016
CPD		(3,143,489	)		(1,738,604	)		(3,985,250	)		(4,945,222	)
Total operating (loss) income		(2,111,355	)		(1,133,767	)		(12,128,096	)		(2,967,206	)
Interest expense, net		(604,669	)		(126,147	)		(1,413,177	)		(400,884	)
Other income (expenses), net		104,303			55,642			307,980			682,522
Loss before income taxes and equity in losses of unconsolidated affiliates	$	(2,611,721	)	$	(1,204,272	)	$	(13,233,293	)	$	(2,685,568	)

	As of September 30, 2023		As of December 31, 2022
Total assets:
EPM	$	53,709,956	$	68,678,335
CPD		12,030,312		6,698,497
Total	$	65,740,268	$	75,376,832

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LEASES (Tables)

9 Months Ended

Sep. 30, 2023

Leases

Schedule of right of use asset or lease liability calculations

Operating Leases	As of September 30, 2023		As of December 31, 2022
Assets
Right-of-use asset	$	5,853,482	$	7,341,045
Liabilities
Current
Lease liability	$	2,039,462	$	2,073,547
Noncurrent
Lease liability	$	4,518,719	$	6,012,049
Total operating lease liability	$	6,558,181	$	8,085,596

Schedule of finance lease

Finance Lease	As of September 30, 2023		As of December 31, 2022
Assets
Right-of-use asset	$	143,250	$	—
Liabilities
Current
Lease liability	$	49,835	$	—
Noncurrent
Lease liability	$	94,985	$	—
Total finance lease liability	$	144,820	$	—

Schedule of lease income and expenses

		Three Months Ended September 30,						Nine Months Ended September 30,
Lease costs	Classification	2023			2022			2023			2022
Operating lease costs	Selling, general and administrative expenses	$	699,983		$	709,542		$	2,109,576		$	1,876,153
Sublease income	Selling, general and administrative expenses		(109,807	)		(106,247	)		(330,189	)		(228,230	)
Net operating lease costs		$	590,176		$	603,295		$	1,779,387		$	1,647,923

		Three Months Ended September 30,				Nine Months Ended September 30,
Lease costs	Classification	2023		2022		2023		2022
Amortization of right-of-use assets	Selling, general and administrative expenses	$	10,589	$	—	$	15,840	$	—
Interest on lease liability	Selling, general and administrative expenses		2,415		—		13,089		—
Total finance lease costs		$	13,004	$	—	$	28,929	$	—

Schedule of future minimum payments under operating lease agreements

Year	Operating Leases			Finance Leases
2023	$	640,419		$	14,918
2024		2,531,307			59,670
2025		1,979,589			59,670
2026		1,782,057			26,929
2027		719,794			—
Total lease payments	$	7,653,166		$	161,187
Less: Imputed interest		(1,094,985	)		(16,367	)
Present value of lease liabilities	$	6,558,181		$	144,820

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REVENUE (Schedule of revenue by segment) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Total Revenues	$ 10,184,511	$ 9,899,013	$ 31,100,867	$ 29,366,748
Entertainment Publicity and Marketing [Member]
Total Revenues	10,184,511	9,899,013	31,100,867	29,366,748
Content Productions [Member]
Total Revenues

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REVENUE (Schedule of contract asset and liability) (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Revenue
Contract liability	$ 1,923,076	$ 1,641,459
Changes in contracts liability	$ 281,617

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REVENUE (Schedule of contract liability balance) (Details 2) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue
Amounts included in the beginning of year contract liability balance	$ 110,834		$ 1,280,985	$ 329,937

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GOODWILL AND INTANGIBLE ASSETS (Intangible Assets) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 18,680,000		$ 18,680,000		$ 18,680,000
Accumulated Amortization	10,308,217		10,308,217		8,795,664
Impairment	341,417		341,417
Net Carrying Amount	8,030,366		8,030,366		9,884,336
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	13,350,000		13,350,000		13,350,000
Accumulated Amortization	6,964,552		6,964,552		5,842,498
Impairment
Net Carrying Amount	6,385,448		6,385,448		7,507,502
Trademarks and Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	4,640,000		4,640,000		4,640,000
Accumulated Amortization	2,658,665		2,658,665		2,283,166
Impairment			341,417
Net Carrying Amount	1,639,918		1,639,918		2,356,834
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	690,000		690,000		690,000
Accumulated Amortization	685,000		685,000		670,000
Impairment
Net Carrying Amount	$ 5,000		$ 5,000		$ 20,000

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GOODWILL AND INTANGIBLE ASSETS (Amortization expense) (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
2023	$ 482,357
2024	1,617,993
2025	1,520,039
2026	1,431,978
2027	820,992
Thereafter	2,157,007
Total	$ 8,030,366	$ 9,884,336

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GOODWILL AND INTANGIBLE ASSETS (Changes in goodwill and intangible assets) (Details) - USD ($)	3 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023
Goodwill [Member]
Finite-Lived Intangible Assets [Line Items]
Balance June 30, 2023	$ 22,796,683	$ 29,314,083	$ 29,314,083
Amortization expense
Impairment of goodwill		(6,517,400)
Impairment of intangible assets
Balance September 30, 2023	22,796,683	22,796,683	29,314,083
Finite-Lived Intangible Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Balance June 30, 2023	8,875,139	9,378,496	9,884,336
Amortization expense	(503,356)	(503,357)	(505,840)
Impairment of goodwill
Impairment of intangible assets	(341,417)
Balance September 30, 2023	$ 8,030,366	$ 8,875,139	$ 9,378,496

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GOODWILL AND INTANGIBLE ASSETS (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill			$ 22,796,683
Impairment of goodwill			6,517,400
Amortization expense	$ 503,357	$ 341,833	1,512,554	1,025,499
Impairment of intangible assets	$ 341,417		$ 341,417

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ACQUISITIONS (Fair value of consideration transferred) (Details) - Socialyte L Lc [Member]	Nov. 14, 2022 USD ($)
Business Acquisition [Line Items]
Closing common stock (Consideration)	$ 4,133,009
Common stock issued at Closing Date as working capital adjustment	2,103,668
Cash consideration paid at closing	5,053,827
Cash consideration paid subsequent to closing (Unsecured Promissory Note issued to Seller)	3,000,000
Fair value of the consideration transferred	$ 14,290,504

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ACQUISITIONS (Fair value of Assets Acquired and Liabilities Assumed) (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022	Nov. 14, 2022
Business Acquisition [Line Items]
Goodwill	$ 22,796,683	$ 29,314,083
Socialyte L Lc [Member]
Business Acquisition [Line Items]
Cash			$ 314,752
Accounts receivable			2,758,265
Accrued revenue			1,040,902
Property, equipment and leasehold improvements			30,826
Prepaid expenses			351,253
Intangibles			5,210,000
Total identifiable assets acquired			9,705,998
Accounts payable			(3,043,871)
Accrued expenses and other current liabilities			(1,397,292)
Deferred revenue			(1,173,394)
Total liabilities assumed			(5,614,557)
Net identifiable assets acquired			4,091,441
Goodwill			10,199,063
Fair value of the consideration transferred			$ 14,290,504

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ACQUISITIONS (Details Narrative) - USD ($)		3 Months Ended						9 Months Ended
	Nov. 14, 2022	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Business Acquisition [Line Items]
Revenue		$ 10,184,511			$ 9,899,013			$ 31,100,867	$ 29,366,748
Net income loss		(3,863,328)	$ (7,959,244)	$ (2,969,320)	(1,311,719)	$ 178,687	$ (1,717,832)	(14,791,892)	$ (2,850,863)
Common Stock [Member]
Business Acquisition [Line Items]
Net income loss
Socialyte Seller [Member]
Business Acquisition [Line Items]
Purchase amount	$ 14,290,504
Working capital adjustment	2,103,668
Additional earned	5,000,000
Payment to seller	$ 5,053,827
Number of shares issued	1,346,257
Socialyte Seller [Member] | Common Stock [Member]
Business Acquisition [Line Items]
Number of shares issued	685,234
Secured debt	$ 3,000,000
Mid Coand Socialyte [Member]
Business Acquisition [Line Items]
Secured debt	$ 3,000,000
Socialyte L Lc [Member]
Business Acquisition [Line Items]
Revenue		1,314,877						3,748,832
Net income loss		$ (107,674)						$ (444,857)

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NOTES RECEIVABLE (Details Narrative) - USD ($)		3 Months Ended		9 Months Ended
	Oct. 02, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Defined Benefit Plan Disclosure [Line Items]
Notes receivable		$ 4,608,962		$ 4,608,962		$ 4,426,700
Interest receivable		500,882		500,882
Interest income		104,303	$ 91,722	$ 309,424	$ 204,943
Midnight Theatre [Member]
Defined Benefit Plan Disclosure [Line Items]
Maturity date				Sep. 30, 2024
Interest income		103,546	$ 91,711	$ 307,262	$ 204,928
Interest payment		$ 125,000		$ 125,000
Midnight Theatre [Member] | Subsequent Event [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest payment	$ 12,500

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EQUITY METHOD INVESTMENTS (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Related Party Transaction [Line Items]
Loss on equity method investment			$ (297,769)	$ (143,623)
Impairment on investments	$ 1,169,587		1,169,587
Midnight Theatre [Member]
Related Party Transaction [Line Items]
Investments			681,694		$ 891,494
Loss on equity method investment	50,960	$ 60,786	209,800	60,786
Crafthouse Cocktails [Member]
Related Party Transaction [Line Items]
Loss on equity method investment	0	$ 39,437		$ 82,837
Investments	$ 87,970		$ 87,970		$ 361,717

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OTHER CURRENT LIABILITIES (Other liabilities) (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Accrued funding under Max Steel production agreement	$ 620,000	$ 620,000
Accrued audit, legal and other professional fees	426,650	573,049
Accrued commissions	643,492	702,410
Accrued bonuses	569,485	469,953
Talent liability	2,316,098	3,990,984
Accumulated customer deposits	837,476	550,930
Other	639,219	719,510
Total other current liabilities	$ 6,052,420	$ 7,626,836

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DEBT (Total debt) (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Debt Disclosure [Abstract]
Convertible notes payable	$ 5,150,000	$ 5,050,000
Convertible note payable - fair value option	350,000	343,556
Non-convertible promissory notes	3,910,859	1,368,960
Non-convertible promissory notes – Socialyte	3,000,000	3,000,000
Loans from related party (see Note 9)	1,107,873	1,107,873
Term loan, net of debt issuance costs (see Note 12)	5,715,887	2,867,592
Total debt	19,234,619	13,737,981
Less current portion of debt	(4,341,362)	(4,277,697)
Noncurrent portion of debt	$ 14,893,257	$ 9,460,284

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DEBT (Principal Payment Commitments of Debt) (Details)	9 Months Ended
	Sep. 30, 2023 USD ($)
Debt Instrument [Line Items]
2023	$ 3,618,338
2024	2,797,473
2025	2,283,866
2026	2,734,180
2027	3,876,631
Thereafter	$ 4,158,244
Convertible Notes Payable [Member]
Debt Instrument [Line Items]
Maturity Date	Between October 2024 and March 2030
2023
2024	1,300,000
2025	800,000
2026	450,000
2027	2,600,000
Thereafter	$ 500,000
Nonconvertible Promissory Notes [Member]
Debt Instrument [Line Items]
Maturity Date	Between November 2023 and March 2029
2023	$ 380,859
2024	500,000
2025	400,000
2026
2027
Thereafter	$ 2,630,000
Nonconvertible Promissory Notes Socialyte [Member]
Debt Instrument [Line Items]
Maturity Date	September 2023
2023	$ 3,000,000
2024
2025
2026
2027
Thereafter
Term Loan [Member]
Debt Instrument [Line Items]
Maturity Date	September 2028
2023	$ 237,479
2024	997,473
2025	1,083,866
2026	1,176,307
2027	1,276,631
Thereafter	$ 1,028,244
Loan From Related Party [Member]
Debt Instrument [Line Items]
Maturity Date	December 2026
2023
2024
2025
2026	1,107,873
2027
Thereafter

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DEBT (Details Narrative) - USD ($)						3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 29, 2023	Aug. 01, 2023	Jun. 30, 2023	Jun. 08, 2023	Feb. 22, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Short-Term Debt [Line Items]
Convertible notes payable						$ 1,000,000		$ 1,000,000
Interest rate								10.00%
Share price						$ 2.00		$ 2.00
Interest payments								$ 413,764	$ 199,445
Accrued interest						$ 1,623,921		1,623,921		$ 1,744,723
Change in fair value of convertible notes and derivative liabilities						0	$ 45,642	(6,444)	577,522
Interest expense						604,669	217,869	1,413,177	605,827
Proceeds from unsecured promissory note								2,630,000
Debt discounts recorded as current liabilities						3,530,000		3,530,000		500,000
Unsecured nonconvertible promissory note amount								400,000
Interest expense related to promissory notes						$ 93,142	22,719	238,195	70,996
Interest paid								215,111	73,217
Socialyte promissory note amount								3,000,000
Payment of loan								479,745
Refinancing transaction amount								$ 158,316
Revolver accrue interest								5.50%
Accrue interest end						0.75%		0.75%
Prepayment penalty								$ 79,286
Unamortized debt origination costs						$ 91,859		91,859
Security Agreement [Member] | Socialyte [Member]
Short-Term Debt [Line Items]
Secured term loan						3,000,000		3,000,000
Annual facility fee								5,000
Payment on line of credit								875
Security Agreement [Member] | Socialyte [Member] | Credit [Member]
Short-Term Debt [Line Items]
Secured term loan						500,000		500,000
Credit Agreement [Member]
Short-Term Debt [Line Items]
Minimum liquidity						1,500,000		1,500,000
One Payments [Member]
Short-Term Debt [Line Items]
Socialyte promissory note amount			$ 1,500,000
Two Payments [Member]
Short-Term Debt [Line Items]
Socialyte promissory note amount								1,500,000
BKU [Member]
Short-Term Debt [Line Items]
Secured term loan	$ 5,800,000
Secured revolving line of credit	750,000
Commercial card amount	400,000
Minimum deposit amount	$ 1,500,000
Convertible Notes Payable [Member]
Short-Term Debt [Line Items]
Conversion price				$ 2.00
Conversion of debt, value				$ 900,000
Interest expense						128,750	80,278	414,880	215,278
Interest payments								29,589	29,589
Conversion of debt, shares				450,000
Accrued interest				$ 9,500
Interest expense						9,863	$ 9,863	29,589	$ 29,589
Convertible Debt [Member]
Short-Term Debt [Line Items]
Debt instrument amount						500,000		500,000
Noncurrent liabilities						350,000		350,000		343,556
Notes Payable to Banks [Member]
Short-Term Debt [Line Items]
Debt instrument amount						$ 3,910,859		$ 3,910,859
Unsecured promissory note		$ 415,000			$ 2,215,000
Proceeds from unsecured promissory note		$ 415,000			$ 2,215,000
Debt instrument rate						10.00%		10.00%
Notes payable, current portion						$ 380,859		$ 380,859		868,960
Nonconvertibel Promissory Note [Member]
Short-Term Debt [Line Items]
Interest expense related to promissory notes						$ 30,000		$ 95,000
Two Convertible Notes [Member]
Short-Term Debt [Line Items]
Conversion price						$ 2.50		$ 2.50
Convertible Promissory Notes [Member]
Short-Term Debt [Line Items]
Conversion of debt, value								$ 5,150,000		$ 5,050,000

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LOANS FROM RELATED PARTY (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Debt Instrument [Line Items]
Accrued interest amounted	$ 1,623,921		$ 1,623,921		$ 1,744,723
Interest expenses related party	27,924	$ 27,924	82,863	$ 82,863
Notes Payable, Other Payables [Member]
Debt Instrument [Line Items]
Principal balance	1,107,873		1,107,873		1,107,873
Accrued interest amounted	$ 249,499		$ 249,499		$ 166,636

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FAIR VALUE MEASUREMENTS (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Schedule of Investments [Line Items]
Carrying amount	$ 5,715,887	$ 2,867,592
Contingent Consideration [Member]
Schedule of Investments [Line Items]
Carrying amount		738,821
Fair value		738,821
Convertible Notes Payable [Member]
Schedule of Investments [Line Items]
Carrying amount	5,150,000	5,050,000
Fair value	4,725,000	4,865,000
Convertible Notes Payable At Fair Value [Member]
Schedule of Investments [Line Items]
Carrying amount	350,000	343,556
Fair value	350,000	343,556
Warrantliability [Member]
Schedule of Investments [Line Items]
Carrying amount	10,000	15,000
Fair value	10,000	15,000
Cash and Cash Equivalents [Member]
Schedule of Investments [Line Items]
Carrying amount	6,406,646	6,069,889
Fair value	6,406,646	6,069,889
Restricted Cash [Member]
Schedule of Investments [Line Items]
Carrying amount	3,723,868	1,127,960
Fair value	$ 3,723,868	$ 1,127,960

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FAIR VALUE MEASUREMENTS (Details 1) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Short-Term Debt [Line Items]
Net Carrying Amount	$ 5,150,000	$ 5,050,000
Fair Value Amount	4,725,000	4,865,000
October 2024 [Member]
Short-Term Debt [Line Items]
Net Carrying Amount	800,000	800,000
Fair Value Amount	807,000	817,000
November 2024 [Member]
Short-Term Debt [Line Items]
Net Carrying Amount		500,000
Fair Value Amount		513,000
December 2024 [Member]
Short-Term Debt [Line Items]
Net Carrying Amount	500,000	900,000
Fair Value Amount	499,000	912,000
January 2025 [Member]
Short-Term Debt [Line Items]
Net Carrying Amount	800,000
Fair Value Amount	806,000
November 2026 [Member]
Short-Term Debt [Line Items]
Net Carrying Amount	300,000	300,000
Fair Value Amount	271,000	285,000
December 2026 [Member]
Short-Term Debt [Line Items]
Net Carrying Amount	150,000	150,000
Fair Value Amount	135,000	143,000
June 2027 [Member]
Short-Term Debt [Line Items]
Net Carrying Amount	200,000
Fair Value Amount	174,000
August 2027 [Member]
Short-Term Debt [Line Items]
Net Carrying Amount	2,000,000	2,000,000
Fair Value Amount	1,700,000	1,834,000
September 2027 [Member]
Short-Term Debt [Line Items]
Net Carrying Amount	400,000	400,000
Fair Value Amount	$ 333,000	$ 361,000

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FAIR VALUE MEASUREMENTS (Details 2) - Monte Carlo Simulation [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Stock Price	$ 1.80	$ 1.81
Annual asset volatility estimate	100.00%	100.00%
Minimum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Minimum conversion price	$ 2.00	$ 2.00
Risk free discount rate	4.70%	4.02%
Maximum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Minimum conversion price	$ 2.50	$ 2.50
Risk free discount rate	5.46%	4.49%

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FAIR VALUE MEASUREMENTS (Details 3)	9 Months Ended
	Sep. 30, 2023 USD ($)
Fair Value Disclosures [Abstract]
Beginning balance	$ 343,556
Loss on change in fair value reported in the condensed consolidated statements of operations	6,444
Ending balance	$ 350,000

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FAIR VALUE MEASUREMENTS (Details 4) - Convertible Debt [Member] - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Short-Term Debt [Line Items]
Face value principal payable	$ 500,000	$ 500,000
Original conversion price	$ 3.91	$ 3.91
Value of common stock	$ 1.80	$ 1.81
Expected term (years)	6 years 5 months 4 days	7 years 2 months 4 days
Volatility	90.00%	100.00%
Risk free rate	4.61%	3.96%

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FAIR VALUE MEASUREMENTS (Details 5) - Series I Warrants [Member]	9 Months Ended
	Sep. 30, 2023 USD ($)
Short-Term Debt [Line Items]
Beginning balance, fair value balance report	$ 15,000
Gain on the change in fair value reported in the condensed consolidated statements of operations	(5,000)
Ending balance, fair value balance report	$ 10,000

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FAIR VALUE MEASUREMENTS (Details 6) - Series I Warrants [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Exercise Price per share	$ 3.91	$ 3.91
Value of Common Stock	$ 1.80	$ 1.81
Expected term (years)	1 year 11 months 1 day	2 years 8 months 1 day
Volatility	80.00%	100.00%
Dividend yield	0.00%	0.00%
Risk free rate	5.06%	4.28%

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FAIR VALUE MEASUREMENTS (Details 7) - Contingent Consideration [Member] - Be Social [Member]	9 Months Ended
	Sep. 30, 2023 USD ($) shares
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance, fair value balance report	$ 738,821
Loss on change of fair value reported in the condensed consolidated statements of operations	33,226
Settlement of contingent consideration	(772,047)	[1]
Ending balance, fair value balance report
Settlement of contingent consideration liability	$ 500,000
Number of shares issued | shares	148,687
Number of shares issued, value	$ 272,047

[1] On April 25, 2023, the Company settled the contingent consideration liability related to Be Social through payment of $500,000 in cash and 148,687 shares of the Company’s common stock, with a value of $272,047.

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FAIR VALUE MEASUREMENTS (Details Narrative)	9 Months Ended
	Sep. 30, 2023 USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Face value	$ 500,000
Contingent Consideration [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Aggregate principal amount	$ 5,150,000

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STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)				3 Months Ended		9 Months Ended
	Aug. 10, 2022	Mar. 07, 2022	Dec. 29, 2021	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Lincoln Park Transaction [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares issued and sold				300,000	245,000	1,150,000	245,000
Minimum [Member] | Lincoln Park Transaction [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Shares issued price per share				$ 1.65	$ 2.42	$ 1.65	$ 2.42
Maximum [Member] | Lincoln Park Transaction [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Shares issued price per share				2.27	$ 3.72	$ 2.27	$ 3.72
LP Purchase Agreement 2021 [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Shares available to purchase per agreement, value	$ 25,000,000		$ 25,000,000
Shares issued during period		37,019				51,827
Number of shares issued and sold					1,035,000
Proceeds from issuance of common stock							$ 4,367,640
LP Purchase Agreement 2021 [Member] | Minimum [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Shares issued price per share				3.47		$ 3.47
LP Purchase Agreement 2021 [Member] | Maximum [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Shares issued price per share				$ 5.15		$ 5.15
L P Purchase Agreement 2022 [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Shares issued during period						57,313
Proceeds from issuance of common stock				$ 550,850		$ 2,162,150	$ 681,460
Regular Purchase, description						The Company may direct Lincoln Park, at its sole discretion, and subject to certain conditions, to purchase up to 50,000 shares of its common stock on any business day (a “Regular Purchase”). The amount of a Regular Purchase may be increased under certain circumstances up to 75,000 shares if the closing price is not below $7.50 and up to 100,000 shares if the closing price is not below $10.00, provided that Lincoln Park’s committed obligation for Regular Purchases on any business day shall not exceed $2,000,000

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SHARE-BASED COMPENSATION (Details Narrative) - USD ($)	3 Months Ended				9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Jul. 28, 2023	Jan. 11, 2023
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Share price	$ 2.00				$ 2.00
Number of shares issued, value		$ 52,520	$ 54,757	$ 59,305
Employment Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares issued, shares	49,518				125,069
Number of shares issued, value	$ 86,942				$ 237,883
Mr Anthony Francisco [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Receiving shares amount					25,000
Aggregate amount					$ 100,000
Shares issued						7,966	6,366
Share price						$ 2.01	$ 2.24

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LOSS PER SHARE (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Loss per share:
Net loss	$ (3,863,328)	$ (1,311,719)	$ (14,791,892)	$ (2,850,863)
Net income attributable to participating securities
Net loss attributable to Dolphin Entertainment common stock shareholders and numerator for basic loss per share	(3,863,328)	(1,311,719)	(14,791,892)	(2,850,863)
Change in fair value of convertible notes payable		(45,642)		(577,522)
Change in fair value of warrants		(10,000)		(105,000)
Interest expense		9,863		29,589
Numerator for diluted loss per share	$ (3,863,328)	$ (1,357,498)	$ (14,791,892)	$ (3,503,796)
Denominator for basic EPS - weighted-average shares	14,121,275	9,664,681	13,328,138	9,307,830
Warrants		1,157		2,100
Convertible notes payable		$ 127,877		$ 127,877
Denominator for diluted EPS - adjusted weighted-average shares	14,121,275	9,793,715	13,328,138	9,437,807
Basic loss per share	$ (0.27)	$ (0.14)	$ (1.11)	$ (0.31)
Diluted loss per share	$ (0.27)	$ (0.14)	$ (1.11)	$ (0.37)

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LOSS PER SHARE (Details Narrative) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock issued upon conversion, shares	2,883,759		2,656,640
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock issued upon conversion, shares	0	578,313	0	663,801

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		9 Months Ended
	Dec. 31, 2012	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Related Party Transaction [Line Items]
Interest expense		$ 66,164	$ 66,164	$ 196,336	$ 196,336
Interest paid related to accrued compensation				400,000
Chief Executive Officer [Member]
Related Party Transaction [Line Items]
Signing bonus owed to related party per signed agreement	$ 1,000,000
Base salary	$ 1,625,000
Interest rate	10.00%
Accrued Salaries		2,625,000		2,625,000		$ 2,625,000
Accrued interest and liabilities		$ 1,374,422		$ 1,374,422		$ 1,578,088

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SEGMENT INFORMATION (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Revenue from External Customer [Line Items]
Revenue	$ 10,184,511	$ 9,899,013	$ 31,100,867	$ 29,366,748
Total operating income (loss)	(2,111,355)	(1,133,767)	(12,128,096)	(2,967,206)
Interest expense	(604,669)	(126,147)	(1,413,177)	(400,884)
Other income (loss), net	104,303	55,642	307,980	682,522
Loss before income taxes and equity in losses of unconsolidated affiliates	(2,611,721)	(1,204,272)	(13,233,293)	(2,685,568)
Total assets	65,740,268		65,740,268		$ 75,376,832
EPM [Member]
Revenue from External Customer [Line Items]
Revenue	10,184,511	9,899,013	31,100,867	29,366,748
Total operating income (loss)	1,032,134	604,837	(8,142,846)	1,978,016
Total assets	53,709,956		53,709,956		68,678,335
CPD [Member]
Revenue from External Customer [Line Items]
Revenue
Total operating income (loss)	(3,143,489)	$ (1,738,604)	(3,985,250)	$ (4,945,222)
Total assets	$ 12,030,312		$ 12,030,312		$ 6,698,497

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SEGMENT INFORMATION (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Restructuring Cost and Reserve [Line Items]
Net accumulated amortization	$ 10,308,217	$ 8,795,664
Net impairment assets	6,517,400
Forty Second West Door and Viewpoint Shore Media [Member]
Restructuring Cost and Reserve [Line Items]
Intangible assets	8,030,366
Net accumulated amortization	10,649,635
Goodwill acquired	$ 22,796,683

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LEASES (Right of Use Asset or Lease Liability Calculations) (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Assets
Right-of-use asset	$ 5,853,482	$ 7,341,045
Current
Lease liability	2,039,462	2,073,547
Noncurrent
Lease liability	4,518,719	6,012,049
Total operating lease liability	$ 6,558,181	$ 8,085,596

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LEASES (Finance lease liability) (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Assets
Right-of-use asset	$ 143,250
Current
Lease liability	49,835
Noncurrent
Lease liability	94,985
Total finance lease liability	$ 144,820

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LEASES (Lease Income and Expenses) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Net lease costs	$ 590,176	$ 603,295	$ 1,779,387	$ 1,647,923
Total finance lease costs	13,004		28,929
Selling, General and Administrative Expenses [Member]
Operating lease costs	699,983	709,542	2,109,576	1,876,153
Sublease income	(109,807)	(106,247)	(330,189)	(228,230)
Amortization of right-of-use assets	10,589		15,840
Interest on lease liability	$ 2,415		$ 13,089

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LEASES (Maturities of Lease Liabilities) (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Present value of lease liabilities, operating leases	$ 6,558,181	$ 8,085,596
Present value of lease liabilities, finance leases	144,820
Property Subject To Finance Lease [Member]
2023	14,918
2024	59,670
2025	59,670
2026	26,929
2027
Total lease payments	161,187
Less: Imputed interest	(16,367)
Property Subject to Operating Lease [Member]
2023	640,419
2024	2,531,307
2025	1,979,589
2026	1,782,057
2027	719,794
Total lease payments	7,653,166
Less: Imputed interest	$ (1,094,985)

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LEASES (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Leases
Lease impairment	$ 98,857
Operating lease payment	$ 1,999,745	$ 1,567,453
Operating lease term	3 years 3 months 7 days
Finance lease term	2 years 8 months 15 days
Lease operating discount rate	8.79%
Finance lease discount rate	8.60%

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COLLABORATIVE ARRANGEMENT (Details Narrative) - USD ($)		9 Months Ended	12 Months Ended
	Nov. 07, 2023	Sep. 30, 2023	Dec. 31, 2022	Apr. 26, 2023
Blue Angels Agreement [Member]
Offsetting Assets [Line Items]
Capitalized production costs			$ 1,500,000
Remaining payment made				$ 500,000
Blue Angels Agreement [Member] | Subsequent Event [Member]
Offsetting Assets [Line Items]
Capitalized production costs	$ 250,000
IMAXCo Production Agreement [Member]
Offsetting Assets [Line Items]
Derive from acquisition agreement		$ 3,500,000

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COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)		1 Months Ended	9 Months Ended	12 Months Ended
	Nov. 07, 2023	May 26, 2022	Sep. 30, 2023	Dec. 31, 2022
Product Liability Contingency [Line Items]
Repayments of Other Debt		$ 500,000
Blue Angels Agreement [Member]
Product Liability Contingency [Line Items]
Capitalized production costs				$ 1,500,000
Blue Angels Agreement [Member] | Subsequent Event [Member]
Product Liability Contingency [Line Items]
Capitalized production costs	$ 250,000
Production Budget [Member]
Product Liability Contingency [Line Items]
Repayments of Other Debt			$ 2,000,000

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SUBSEQUENT EVENTS (Details Narrative) - USD ($) shares in Millions		9 Months Ended
	Oct. 02, 2023	Sep. 30, 2023	Sep. 30, 2022
Subsequent Event [Line Items]
Underwriting agreement description		On October 31, 2023, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Maxim Group LLC (the “Underwriter”), pursuant to which the Company agreed to issue and sell to the Underwriter in an underwritten public offering (the “Offering”) an aggregate of 1,400,000 shares of the Company’s common stock at a price of $1.65 per share. Under the terms of the Underwriting Agreement, the Company granted the Underwriter an option, exercisable for 45 days, to purchase an additional 210,000 shares of the Company’s common stock. The Company received gross proceeds of approximately $2,310,000 before deducting underwriting discounts and commissions and estimated offering expenses that are payable by the Company.
Cash consideration		$ 21,893	$ 64,464
Subsequent Event [Member]
Subsequent Event [Line Items]
Cash consideration	$ 10,000,000.0
Cash payments	$ 5,000,000.0
Issuance of shares	2.5