# EDGAR Filing Document

**Accession Number:** 0001282224
**File Stem:** 0001079973-25-001298
**Filing Date:** 2025-8
**Character Count:** 379088
**Document Hash:** 6a636cff383d3b54821812d7e7422ae1
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001079973-25-001298.hdr.sgml**: 20250814

**ACCESSION NUMBER**: 0001079973-25-001298

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 84

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250814

**DATE AS OF CHANGE**: 20250814

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Dolphin Entertainment, Inc.
- **CENTRAL INDEX KEY:** 0001282224
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-PERSONAL SERVICES [7200]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 860787790
- **STATE OF INCORPORATION:** FL
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38331
- **FILM NUMBER:** 251221184

**BUSINESS ADDRESS:**
- **STREET 1:** 150 ALHAMBRA CIRCLE
- **STREET 2:** SUITE 1200
- **CITY:** CORAL GABLES
- **STATE:** FL
- **ZIP:** 33134
- **BUSINESS PHONE:** 305-774-0407

**MAIL ADDRESS:**
- **STREET 1:** 150 ALHAMBRA CIRCLE
- **STREET 2:** SUITE 1200
- **CITY:** CORAL GABLES
- **STATE:** FL
- **ZIP:** 33134

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** DOLPHIN DIGITAL MEDIA INC
- **DATE OF NAME CHANGE:** 20080818

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** LOGICA HOLDINGS INC
- **DATE OF NAME CHANGE:** 20070716

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** MAXIMUM AWARDS INC
- **DATE OF NAME CHANGE:** 20040301

?xml version='1.0' encoding='ASCII'?

**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 June 30, 2025**

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**

![](image_001.jpg)

**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 ☐ <br> Non-accelerated filer ☒ Smaller reporting company ☒ <br> 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 11,737,724 as of August 11, 2025.

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | **Page** |
| **PART I — FINANCIAL INFORMATION** | **PART I — FINANCIAL INFORMATION** |  |
| ITEM 1. | [FINANCIAL STATEMENTS](#a_001) | 1 |
|  | [Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 (unaudited)](#a_002) | 1 |
|  | [Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024 (unaudited)](#a_004) | 3 |
|  | [Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (unaudited)](#a_005) | 4 |
|  | [Consolidated Statements of Changes in Stockholders' Equity for the three and six months ended June 30, 2025 and 2024 (unaudited)](#a_006) | 6 |
|  | [Notes to Unaudited Condensed Consolidated Financial Statements](#a_007) | 7 |
| ITEM 2. | [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#a_008) | 24 |
| ITEM 4. | [CONTROLS AND PROCEDURES](#a_009) | 34 |
| **PART II — OTHER INFORMATION** | **PART II — OTHER INFORMATION** |  |
| ITEM 1. | [LEGAL PROCEEDINGS](#a_010) | 36 |
| ITEM 1A. | [RISK FACTORS](#a_011) | 36 |
| ITEM 2. | [UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](#a_012) | 36 |
| ITEM 3. | [DEFAULTS UPON SENIOR SECURITIES](#a_013) | 36 |
| ITEM 4 | [MINE SAFETY DISCLOSURES](#a_014) | 36 |
| ITEM 5. | [OTHER INFORMATION](#a_015) | 36 |
| ITEM 6. | [EXHIBITS](#a_016) | 37 |
| [SIGNATURES](#a_017) | [SIGNATURES](#a_017) | 38 |

---

i

**PART I — FINANCIAL INFORMATION**

**ITEM 1. FINANCIAL STATEMENTS**

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **June 30, 2025** | **December 31, 2024** |
| **<u>ASSETS</u>** |  |  |
| Current |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $8697360 | $8203842 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 925004 | 925004 |
| &nbsp;&nbsp;&nbsp;Accounts receivable: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade, net of allowance of $1,079,169 and $1,327,808, respectively | 6185674 | 5113157 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other receivables | 5792264 | 5451697 |
| &nbsp;&nbsp;&nbsp;Other current assets | 556647 | 373399 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 22156949 | 20067099 |
| Capitalized production costs, net | 628612 | 594763 |
| Employee receivable | 1100918 | 1007418 |
| Right-of-use asset | 3906694 | 4738997 |
| Goodwill | 21507944 | 21507944 |
| Intangible assets, net | 9040541 | 10189026 |
| Property, equipment and leasehold improvements, net | 80478 | 114011 |
| Other long-term assets | 189298 | 218021 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Assets | $58611434 | $58437279 |

---

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

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **June 30, 2025** | **December 31, 2024** |
| **<u>LIABILITIES</u>** |  |  |
| Current |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $3166567 | $2344272 |
| &nbsp;&nbsp;&nbsp;Term loan, current portion | 1742720 | 1686018 |
| &nbsp;&nbsp;&nbsp;Notes payable, current portion | 3350000 | 3750000 |
| &nbsp;&nbsp;&nbsp;Convertible note payable, current portion | 500000 |  |
| &nbsp;&nbsp;&nbsp;Revolving line of credit |  | 400000 |
| &nbsp;&nbsp;&nbsp;Accrued interest – related parties | 2148538 | 1857986 |
| &nbsp;&nbsp;&nbsp;Accrued compensation – related party | 2625000 | 2625000 |
| &nbsp;&nbsp;&nbsp;Lease liability, current portion | 1969744 | 1919672 |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 1581113 | 341153 |
| &nbsp;&nbsp;&nbsp;Contingent consideration |  | 486000 |
| &nbsp;&nbsp;&nbsp;Other current liabilities | 12048048 | 11104036 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 29131730 | 26514137 |
| Term loan, noncurrent portion | 3898604 | 4782271 |
| Notes payable | 4080000 | 3130000 |
| Convertible notes payable | 6500000 | 5100000 |
| Convertible note payable at fair value | 250000 | 320000 |
| Convertible notes payable – related party | 3078197 |  |
| Loans from related party | 983112 | 3225985 |
| Lease liability | 2349788 | 3306033 |
| Deferred tax liability | 437592 | 394547 |
| Other noncurrent liabilities |  | 18915 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Liabilities | 50709023 | 46791888 |
| Commitments and contingencies (Note 14) |  |  |
| **<u>STOCKHOLDERS' EQUITY</u>** |  |  |
| Preferred Stock, Series C, $0.001 par value, 50,000 shares authorized, 50,000 shares issued and outstanding at June 30, 2025 and December 31, 2024 | 1000 | 1000 |
| Common stock, $0.015 par value, 200,000,000 shares authorized, 11,169,449 and 11,162,026 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively | 167542 | 166688 |
| Additional paid-in capital | 157691278 | 157692132 |
| Accumulated deficit | (149957409) | (146214429) |
| Total Stockholders' Equity | 7902411 | 11645391 |
| Total Liabilities and Stockholders' Equity | $58611434 | $58437279 |

---

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

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS** 

**(unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** <br> **June 30,** | **Three Months Ended** <br> **June 30,** | **Six Months Ended** <br> **June 30,** | **Six Months Ended** <br> **June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Revenues | $14087529 | $11449089 | $26257240 | $26684981 |
| Expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Direct costs | 742171 | 216247 | 1086585 | 2535474 |
| &nbsp;&nbsp;&nbsp;Payroll and benefits | 10302292 | 9195018 | 20606985 | 18769269 |
| &nbsp;&nbsp;&nbsp;Selling, general and administrative | 1922336 | 1864852 | 3694319 | 3841843 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 591552 | 555694 | 1183104 | 1108797 |
| &nbsp;&nbsp;&nbsp;Impairment of goodwill |  | 190565 |  | 190565 |
| &nbsp;&nbsp;&nbsp;Acquisition cost |  |  | 416171 |  |
| &nbsp;&nbsp;&nbsp;Legal and professional | 586232 | 546178 | 1100656 | 1193959 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 14144583 | 12568554 | 28087820 | 27639907 |
| Loss from operations | (57054) | (1119465) | (1830580) | (954926) |
| Other (expenses) income, net: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of convertible note | 50000 | 40000 | 70000 | 65000 |
| &nbsp;&nbsp;&nbsp;Change in fair value of warrants |  |  |  | 5000 |
| &nbsp;&nbsp;&nbsp;Loss on extinguishment of debt | (835324) |  | (835324) |  |
| &nbsp;&nbsp;&nbsp;Interest income | 11205 | 731 | 17279 | 6600 |
| &nbsp;&nbsp;&nbsp;Interest expense | (561222) | (522184) | (1121310) | (1025821) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other (expenses) income, net | (1335341) | (481453) | (1869355) | (949221) |
| Loss before income taxes | (1392395) | (1600918) | (3699935) | (1904147) |
| Income tax expense | (21523) | (23540) | (43045) | (47079) |
| Net loss | $(1413918) | $(1624458) | $(3742980) | $(1951226) |
| Loss per share: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $(0.13) | $(0.17) | $(0.33) | $(0.20) |
| &nbsp;&nbsp;&nbsp;Diluted | $(0.13) | $(0.17) | $(0.34) | $(0.20) |
| Weighted average number of shares outstanding: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic | 11168572 | 9723155 | 11166596 | 9481034 |
| &nbsp;&nbsp;&nbsp;Diluted | 11232511 | 9787094 | 11230535 | 9544973 |

---

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

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**

**Condensed Consolidated Statements of Cash Flows**

**(unaudited)**

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
|  | **2025** | **2024** |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(3742980) | $(1951226) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 1183104 | 1108797 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation |  | 212975 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share-based consulting fees |  | 36769 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of capitalized production costs |  | 1781810 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of goodwill |  | 190565 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance for credit losses | 55754 | 286979 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of warrants |  | (5000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of convertible notes | (70000) | (65000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on extinguishment of debt | 835324 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax expense, net | 43045 | 22819 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Debt origination costs amortization | 7012 | 8411 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, trade and other | (1468838) | (1739) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current assets | (183247) | 94371 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capitalized production costs | (33849) | (24766) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other long-term assets and employee receivable | (64775) | (112000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 1239960 | (600306) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 822295 | (3695908) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued interest – related parties | 290552 | 45770 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities | 944010 | 3401749 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other noncurrent liabilities | (18915) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liability, operating leases | (74177) | (121485) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liability, finance leases | 38203 | 47654 |
| Net cash (used in) provided by operating activities | (197522) | 661239 |
| CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of fixed assets | (1088) | (1510) |
| &nbsp;&nbsp;&nbsp;Issuance of notes receivable |  | (1135000) |
| Net cash used in investing activities | (1088) | (1136510) |
| CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from convertible note payable | 1900000 |  |
| &nbsp;&nbsp;&nbsp;Proceeds from notes payable | 550000 |  |
| &nbsp;&nbsp;&nbsp;Proceeds from related party loan |  | 2110000 |
| &nbsp;&nbsp;&nbsp;Proceeds from equity line of credit agreement |  | 1185300 |
| &nbsp;&nbsp;&nbsp;Repayment of term loan | (833977) | (488505) |
| &nbsp;&nbsp;&nbsp;Repayment of revolving line of credit | (400000) |  |
| &nbsp;&nbsp;&nbsp;Payment of contingent consideration | (486000) |  |
| &nbsp;&nbsp;&nbsp;Principal payments on finance leases | (37895) | (45280) |
| Net cash provided by financing activities | 692128 | 2761515 |
| Net increase in cash and cash equivalents and restricted cash | 493518 | 2286244 |
| Cash and cash equivalents and restricted cash, beginning of period | 9128846 | 7560691 |
| Cash and cash equivalents and restricted cash, end of period | $9622364 | $9846935 |

---

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

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**

**Condensed Consolidated Statements of Cash Flows (Continued)**

**(unaudited)**

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended**<br> **June 30,** | **Six Months Ended**<br> **June 30,** |
|  | **2025** | **2024** |
| **SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:** |  |  |
| &nbsp;&nbsp;&nbsp;Interest paid | $767261 | $909355 |
| &nbsp;&nbsp;&nbsp;Lease liabilities arising from obtaining right-of-use assets | $55888 | $50666 |

---

---

| | | |
|:---|:---|:---|
| **SUPPLEMENTAL DISCLOSURES OF NON-CASH FLOWS INFORMATION:** | | |
| &nbsp;&nbsp;&nbsp;Settlement of Special Projects working capital adjustment in shares of common stock | $| $886077 |

---

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:

---

| | | |
|:---|:---|:---|
|  | **As of Six Months Ended**<br> **June 30,** | **As of Six Months Ended**<br> **June 30,** |
|  | **2025** | **2024** |
| Cash and cash equivalents | $8697360 | $8718975 |
| Restricted cash | 925004 | 1127960 |
| Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows | $9622364 | $9846935 |

---

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

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**

**Consolidated Statements of Changes in Stockholders' Equity**

**(unaudited)** 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **For the three and six months ended June 30, 2025** | **For the three and six months ended June 30, 2025** | **For the three and six months ended June 30, 2025** | **For the three and six months ended June 30, 2025** | **For the three and six months ended June 30, 2025** | **For the three and six months ended June 30, 2025** | **For the three and six months ended June 30, 2025** | **For the three and six months ended June 30, 2025** |
|  | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | **Additional**<br> **Paid-in** | **Accumulated** | **Total**<br> **Stockholders'** |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Capital** | **Deficit** | **Equity** |
| **Balance December 31, 2024** | **50000** | $**1000** | **11162026** | $**166688** | $**157692132** | $**(146214429)** | $**11645391** |
| Net loss for the three months ended March 31, 2025 |  |  |  |  |  | (2329062) | (2329062) |
| Issuance of shares related to restricted stock units |  |  | 6093 | 91 | (91) |  |  |
| **Balance March 31, 2025** | **50000** | $**1000** | **11168119** | $**166779** | $**157692041** | $**(148543491)** | $**9316329** |
| Net loss for the three months ended June 30, 2025 |  |  |  |  |  | (1413918) | (1413918) |
| Issuance of shares related to restricted stock units |  |  | 1330 | 20 | (20) |  |  |
| Rounding related to reverse stock split |  |  |  | 743 | (743) |  |  |
| **Balance June 30, 2025** | **50000** | $**1000** | **11169449** | $**167542** | $**157691278** | $**(149957409)** | $**7902411** |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **For the three and six months ended June 30, 2024** | **For the three and six months ended June 30, 2024** | **For the three and six months ended June 30, 2024** | **For the three and six months ended June 30, 2024** | **For the three and six months ended June 30, 2024** | **For the three and six months ended June 30, 2024** | **For the three and six months ended June 30, 2024** | **For the three and six months ended June 30, 2024** |
|  | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | **Additional**<br> **Paid-in** | **Accumulated** | **Total**<br> **Stockholders'** |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Capital** | **Deficit** | **Equity** |
| **Balance December 31, 2023** | **50000** | $**1000** | **9109766** | $**136646** | $**153430403** | $**(133611204)** | $**19956845** |
| Net loss for the three months ended March 31, 2024 |  |  |  |  |  | (326767) | (326767) |
| Issuance of shares to Lincoln Park Capital Fund, LLC |  |  | 175000 | 2625 | 492575 |  | 495200 |
| Share-based compensation |  |  |  |  | 4884 |  | 4884 |
| Issuance of shares related to employment agreements |  |  | 34961 | 524 | 100353 |  | 100877 |
| Issuance of shares related to services received |  |  | 12500 | 188 | 36581 |  | 36769 |
| **Balance March 31, 2024** | **50000** | $**1000** | **9332227** | $**139983** | $**154064796** | $**(133937971)** | $**20267808** |
| Net loss for the three months ended June 30, 2024 |  |  |  |  |  | (1624458) | (1624458) |
| Issuance of shares to Lincoln Park Capital Fund, LLC |  |  | 300000 | 4500 | 685600 |  | 690100 |
| Shared-based compensation |  |  | 1548 | 23 | 4615 |  | 4638 |
| Issuance of shares related to Special Projects acquisition |  |  | 357289 | 5360 | 880717 |  | 886077 |
| Issuance of shares related to GlowLab Collective LLC |  |  | 14552 | 218 | (218) |  |  |
| Issuance of shares related to employment agreements |  |  | 92592 | 1389 | 202416 |  | 203805 |
| **Balance June 30, 2024** | **50000** | $**1000** | **10098208** | $**151473** | $**155837926** | $**(135562429)** | $**20427970** |

---

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

 **DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**NOTE 1 – GENERAL** 

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

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

***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. ("<u>Dolphin Films</u>"), Dolphin SB Productions LLC, Dolphin Max Steel Holdings, LLC, Dolphin JB Believe Financing, LLC, Dolphin JOAT Productions, LLC, Always Alpha, 42West, The Door, Viewpoint Computer Animation, Incorporated ("<u>Viewpoint</u>"), Shore Fire, The Digital Dept. and Special Projects. During the second quarter of 2024, the Company ceased the operations of Viewpoint. The Company applies the equity method of accounting for its investments in entities for which it does not have a controlling financial interest, but over which it has the ability to exert significant influence.

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

***Use of Estimates***

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

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

***Recent Accounting Pronouncements***

 ****

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

<u>Accounting Guidance Not Yet Adopted</u>

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

 **NOTE 2 – REVENUE**

*<u>Disaggregation of Revenue</u>*

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

*<u>Entertainment Publicity and Marketing</u>*

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

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

*<u>Content Production</u>*

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

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

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

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

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended** <br> **June 30,** | **For the Three Months Ended** <br> **June 30,** | **For the Six Months Ended** <br> **June 30,** | **For the Six Months Ended** <br> **June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Entertainment publicity and marketing | $14087529 | $11449089 | $26165207 | $23263840 |
| Content production |  |  | 92033 | 3421141 |
| Total Revenues | $14087529 | $11449089 | $26257240 | $26684981 |

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*Contract Balances*

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

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Accounts Receivable** | **Other Receivables** | **Contract Assets** | **Contract Liabilities** |
| Balance at December 31, 2024 | $5113157 | $5451697 | $— | $341153 |
| Balance at June 30, 2025 | 6185674 | 5792264 | 206196 | 1581113 |
| Change | $1072517 | $340567 | $206196 | $1239960 |

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

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

Revenues for the three and six months ended June 30, 2025 and 2024 include the following:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended <br> June 30,** | **Three Months Ended <br> June 30,** | **Six Months Ended <br> June 30,** | **Six Months Ended <br> June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Amounts included in the beginning of year contract liability balance | $9801 | $97533 | $341153 | $1106077 |

---

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

 **NOTE 3 — GOODWILL AND INTANGIBLE ASSETS**

***Goodwill***

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

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

The Company evaluates goodwill in the fourth quarter or more frequently if management believes indicators of impairment exist. Such indicators could include but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, (3) significant decline in market capitalization or (4) an adverse action or assessment by a regulator. There were no triggering events noted during the six months ended June 30, 2025, that would require the Company to reassess goodwill for impairment outside its annual impairment test. During the three months ended June 30, 2024, the Company determined to close the Viewpoint subsidiary, and therefore the Company impaired goodwill for $190,565, which is the balance of goodwill attributable to Viewpoint as of June 30, 2024 immediately prior to the decision to shut down. This impairment is included in the condensed consolidated statement of operations for the three and six months ended June 30, 2024.

***Intangible Assets***

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

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **June 30, 2025** | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Gross <br> Carrying <br> Amount** | **Accumulated <br> Amortization** | **Net <br> Carrying <br> Amount** | **Gross <br> Carrying <br> Amount** | **Accumulated <br> Amortization** | **Net <br> Carrying <br> Amount** |
| Intangible assets subject to amortization: |  |  |  |  |  |  |
| Customer relationships | $17592387 | $10120094 | $7472293 | $17592387 | $9236609 | $8355778 |
| Trademarks and trade names | 5128583 | 3560335 | 1568248 | 5128583 | 3295335 | 1833248 |
| Non-compete agreements | 690000 | 690000 |  | 690000 | 690000 |  |
|  | $23410970 | $14370429 | $9040541 | $23410970 | $13221944 | $10189026 |

---

Amortization expense associated with the Company's intangible assets was $574,242 and $530,847 for the three months ended June 30, 2025 and 2024, respectively, and $1,148,485 and $1,061,694 for the six months ended June 30, 2025 and 2024, respectively.

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

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| | |
|:---|:---|
| 2025 | $1141935 |
| 2026 | 2091505 |
| 2027 | 1406262 |
| 2028 | 1064106 |
| 2029 | 906886 |
| Thereafter | 2429847 |
|  | $9040541 |

---

 **NOTE 4 — OTHER CURRENT LIABILITIES**

Other current liabilities consisted of the following:

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| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2025** | **December 31,**<br> **2024** |
| Accrued funding under Max Steel production agreement | $620000 | $620000 |
| Accrued audit, legal and other professional fees | 154501 | 369347 |
| Accrued commissions | 836361 | 1285751 |
| Accrued bonuses | 1084380 | 1207829 |
| Talent liability | 5778347 | 5595816 |
| Accumulated customer deposits | 2187174 | 937766 |
| Other | 1387285 | 1087527 |
| Other current liabilities | $12048048 | $11104036 |

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**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

During the six months ended June 30, 2025, the Company entered into an agreement with Andrea Oliveri and Nicole Vecchiarelli, ("<u>Special Projects Sellers</u>), to pay $416,171 of additional consideration related to the working capital adjustment. Since the agreement was made outside of the measurement period of one year from the acquisition date of October 1, 2023, the payment due to the Special Projects Sellers was recorded as acquisition costs in the condensed consolidated statement of operations for the six months ended June 30, 2025. The additional consideration related to the working capital adjustment is being paid in installments and as of June 30, 2025 there was a balance of $277,447 recorded in other current liabilities on the Company's condensed consolidated balance sheet.

**NOTE 5 — DEBT**

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

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| | | |
|:---|:---|:---|
| **Debt Type** | **June 30, <br> 2025** | **December 31, <br> 2024** |
| Convertible notes payable | $7000000 | $5100000 |
| Convertible note payable - fair value option | 250000 | 320000 |
| Non-convertible promissory notes | 4430000 | 3880000 |
| Non-convertible promissory notes – Socialyte | 3000000 | 3000000 |
| Convertible note payable – related party | 3078197 |  |
| Loans from related party | 983112 | 3225985 |
| Revolving line of credit |  | 400000 |
| First BKU Term loan | 4033725 | 4565048 |
| Second BKU Term loan | 1695946 | 2000000 |
| Debt issuance costs | (88347) | (96759) |
| Total debt | $24382633 | $22394274 |
| Less current portion of debt | (5592720) | (5836018) |
| Noncurrent portion of debt | $18789913 | $16558256 |

---

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

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Debt Type** | **Maturity Date** | **2025** | **2026** | **2027** | **2028** | **2029** | **Thereafter** |
| Convertible notes payable | Between October 2026 and March 2030 | $— | $2250000 | $3650000 | $100000 | $575000 | $925000 |
| Non-convertible promissory notes | Between June 2025 and March 2029 | 750000 | 500000 |  | 2465000 | 715000 |  |
| Non-convertible promissory notes - Socialyte | September 2023 <sup>(A)</sup> | 3000000 <sup>(A)</sup> |  |  |  |  |  |
| BKU First Term Loan | September 2028 | 552544 | 1176307 | 1276631 | 1028243 |  |  |
| BKU Second Term Loan | December 2027 | 314920 | 665501 | 715525 |  |  |  |
| Loans and convertible notes from related party | Between December 2026 and June 2029 |  |  | 1107873 |  | 2118112 |  |
|  |  | $4617464 | $4591808 | $6750029 | $3593243 | $3408112 | $925000 |

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<sup>(A)</sup> The Socialyte Purchase Agreement (as defined below) allows the Company to offset a working capital deficit against the Socialyte Promissory Note (as defined below). As such, the Company deferred the installment payments until the final post-closing working capital adjustment is agreed upon with the seller of Socialyte.

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

**Convertible Notes Payable**

During the six months ended June 30, 2025, the Company issued fourteen convertible notes payable and received proceeds of $1,900,000. As of June 30, 2025, the Company had twenty-four convertible notes payable outstanding. The convertible notes payable bear interest at a rate of 10% per annum, with maturity dates ranging between the first anniversary and the sixth anniversary of their respective issuances.

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

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| | | |
|:---|:---|:---|
| **Aggregate Convertible Notes balance** | **Conversion Price** | **Floor/Conversion Price** |
| $2700000 | &nbsp;&nbsp;90-day average closing market price of our common stock | $5.00 |
| 900000 | &nbsp;&nbsp;90-day average closing market price of our common stock | $4.00 |
| 1500000 | &nbsp;&nbsp;90-day average closing market price of our common stock | $1.00 |
| 100000 | &nbsp;&nbsp;90-day average closing market price of our common stock | $1.01 |
| 100000 | &nbsp;&nbsp;30-day average closing market price of our common stock | $1.01 |
| 325000 | &nbsp;&nbsp;Fixed conversion price | $1.11 |
| 100000 | &nbsp;&nbsp;Fixed conversion price | $1.02 |
| 150000 | &nbsp;&nbsp;Fixed conversion price | $1.01 |
| 150000 | &nbsp;&nbsp;Fixed conversion price | $1.07 |
| 125000 | &nbsp;&nbsp;Fixed conversion price | $1.03 |
| 110000 | &nbsp;&nbsp;Fixed conversion price | $1.12 |
| 740000 | &nbsp;&nbsp;Fixed conversion price | $1.00 |
| $7000000 |  |  |

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As of June 30, 2025 and December 31, 2024, the principal balance of the convertible notes payable of $6,500,000 and $5,100,000, respectively, was recorded in noncurrent liabilities under the caption "Convertible notes payable" and $500,000 was recorded in current liabilities under the same caption on the Company's condensed consolidated balance sheets.

The Company recorded interest expense related to these convertible notes payable of $165,251 and $127,750 during the three months ended June 30, 2025 and 2024, respectively, and $301,251 and $255,250, respectively, during the six months ended June 30, 2025 and 2024. In addition, the Company made cash interest payments amounting to $286,212 and $255,250, respectively, during the six months ended June 30, 2025 and 2024, related to the convertible notes payable.

Subsequent to June 30, 2025, the Company issued three convertible notes payable and received proceeds of $450,000. The convertible promissory notes bear interest of 10% per annum. One note matures three years from its issuance date and the other two notes mature four years from their issuance date. On July 7, 2025 and July 23, 2025, a holder of a convertible note payable that had been issued in 2022 with a principal balance of $500,000 converted the convertible note payable into an aggregate of 463,861 shares of the Company's common stock. On July 23, 2025, another holder of a convertible notes payable issued on January 16, 2025 with a principal balance of $100,000 converted the convertible note payable into 91,744 shares of the Company's common stock.

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

**Convertible Note Payable at Fair Value**

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

The Company had a balance of $250,000 and $320,000 in noncurrent liabilities as of June 30, 2025 and December 31, 2024, respectively, on its condensed consolidated balance sheets related to the March 4<sup>th</sup> Note. See Note 7 – Fair Value Measurements for further discussion on the valuation of the convertible promissory note payable.

The Company recorded a gain in fair value of $50,000 and $40,000 for the three months ended June 30, 2025 and 2024, respectively, and a gain of $70,000 and $65,000 for the six months ended June 30, 2025 and 2024 on its condensed consolidated statements of operations related to the March 4<sup>th</sup> Note.

The March 4<sup>th</sup> Note bears interest at a rate of 8% per annum. The Company recorded interest expense related to the March 4<sup>th</sup> Note of $9,863 for each of the three months ended June 30, 2025 and 2024, and $19,726 for each of the six months ended June 30, 2025 and 2024. In addition, the Company made cash interest payments amounting to $19,726 for each of the six months ended June 30, 2025 and 2024, related to the March 4<sup>th</sup> Note.

**Nonconvertible Promissory Notes**

During the six months ended June 30, 2025, the Company issued two unsecured nonconvertible promissory notes and received proceeds of $550,000. As of June 30, 2025, the Company had outstanding seven unsecured nonconvertible promissory notes in the aggregate amount of $4,430,000, which bear interest at a rate of 10% per annum and mature between November 2025 and June 2029.

As of June 30, 2025 and December 31, 2024, the Company had a balance of $350,000 and $750,000, respectively, recorded as current liabilities and $4,080,000 and $3,130,000, respectively, in noncurrent liabilities on its condensed consolidated balance sheets related to these unsecured nonconvertible promissory notes.

The Company recorded interest expense related to these nonconvertible promissory notes of $104,667 and $97,000 for the three months ended June 30, 2025 and 2024, respectively, and $203,750 and $194,000 for the six months ended June 30, 2025 and 2024, respectively. The Company made interest payments of $200,250 and $194,000 during the six months ended June 30, 2025 and 2024, respectively, related to the unsecured nonconvertible promissory notes.

**Nonconvertible Unsecured Promissory Note - Socialyte Promissory Note**

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

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

The Company recorded interest expense related to this Socialyte Promissory Note of $30,000 for the three months ended June 30, 2025 and 2024, and $60,000 for the six months ended June 30, 2025 and 2024. No interest payments were made during the six months ended June 30, 2025 and 2024, related to the Socialyte Promissory Note.

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

**BankUnited Term Loans**

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

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

Interest accrues at 8.10% fixed rate per annum on the First BKU Term Loan and 7.10% fixed rate per annum on the Second BKU Term Loan. Principal and interest are payable on a monthly basis based on a 5-year amortization for the First BKU Term Loan and 3-year amortization for the Second BKU Term Loan. Interest on the BKU Line of credit is payable on a monthly basis, with all principal due at maturity. The BKU Commercial Card payment is due in full at the end of each bi-weekly billing cycle. During the six months ended June 30, 2025 and the year ended December 31, 2024, the Company did not use the BKU Commercial Card. During each of the three months ended June 30, 2025 and 2024, the Company made payments in the amount of $354,621, inclusive of $87,197 and $108,437, respectively, of interest related to the First BKU Term Loan. During each of the six months ended June 30, 2025 and 2024, the Company made payments in the amount of $709,241, inclusive of $177,919 and $220,737, respectively, of interest related to the First BKU Term Loan. During the three and six months ended June 30, 2025, the Company made payments in amount of $185,995 and $371,991, respectively, inclusive of $32,949 and $67,937, respectively, of interest related to the Second BKU Term Loan. During the three and six months ended June 30, 2024, there were no payments made in connection with the Second BKU Term Loan.

Interest on the BKU Line of Credit is variable based on the Lender's Prime Rate. During the three months ended June 30, 2025 and 2024, the Company recorded interest expense and made payments of $7,667 and $8,689, respectively, and $15,217 and $17,283 for the six months ended June 30, 2025 and 2024, respectively, related to the BKU Line of Credit.

As of June 30, 2025, the Company had a balance of $1,742,720 classified as current liabilities and $3,898,604 classified as noncurrent liabilities, net of $88,347 of debt issuance costs, in its condensed consolidated balance sheet related to the First BKU Term Loan and the Second BKU Term Loan. During the three months ended June 30, 2025, the Company repaid $400,000 of the line of credit for a period of 30-days in compliance with the covenants of the line of credit. As of June 30, 2025 and December 31, 2024, the Company had a balance of $0 and $400,000, respectively, of principal outstanding under the BKU Line of Credit. Subsequent to June 30, 2025, the Company drew $400,000 on the BKU Line of Credit.

Amortization of debt origination costs under the Bank United Credit Facility is included as a component of interest expense in the condensed consolidated statements of operations and amounted to approximately $7,012 and $4,206 for the three months ended June 30, 2025 and 2024, respectively, and 14,024 and $8,411 for the six months ended June 30, 2025 and 2024, respectively.

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

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

**NOTE 6 — LOANS FROM RELATED PARTY**

***Dolphin Entertainment, LLC Notes***

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

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

As of June 30, 2025 the Company had an aggregate principal balance of $3,078,197 related to the DE New Notes under the caption convertible notes payable – related party in its condensed consolidated balance sheet. As of December 31, 2024, the Company had an aggregate balance of $2,242,873 related to DE LLC Notes under the caption loans from related party in its condensed consolidated balance sheet. For the six months ended June 30, 2025, the Company did not repay any principal balance or make interest payments on the DE LLC Notes. During the six months ended June 30, 2024, the Company made cash interest payments in the amount of $200,000 related to the DE LLC Notes.

The Company recorded interest expense of $55,918 and $45,593 for the three months ended June 30, 2025 and 2024, respectively, and $99,938 and $73,214 for the six months ended June 30, 2025 and 2024, respectively, related to the DE New Notes. As of June 30, 2025 and December 31, 2024, the Company had a balance in accrued interest – related parties of $374,989 and $263,767, respectively, on its condensed consolidated balance sheets related to the DE LLC Notes.

***Mock Notes***

 ****

During 2024, the Company issued three nonconvertible promissory notes to Mr. Donald Scott Mock, brother of Mr. O'Dowd in the amount of $900,000, $75,000, and $8,112 respectively, and received proceeds of $983,112 (the "<u>Mock Notes</u>"). The Mock Notes bear interest at a rate of 10% per annum and mature on the fourth anniversary of their respective issuance dates.

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

The Company recorded interest expense of $24,578 and $23,167 for the three months ended June 30, 2025 and 2024, respectively, and $49,156 and $41,667 for the six months ended June 30, 2025 and 2024, respectively, related to the Mock Notes. As of June 30, 2025 and December 31, 2024, the Company had a balance in accrued interest – related parties of $139,573 and $90,417, respectively, on its condensed consolidated balance sheets related to the Mock Notes.

**NOTE 7 — FAIR VALUE MEASUREMENTS**

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

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

**Financial Disclosures about Fair Value of Financial Instruments**

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
|  | **Level in**<br>**Fair Value**<br>**Hierarchy** | **Carrying**<br>**Amount** | **Fair**<br>**Value** | **Carrying**<br>**Amount** | **Fair**<br>**Value** |
| Assets: |  |  |  |  |  |
| Cash and cash equivalents | 1 | $8697360 | $8697360 | $8203842 | $8203842 |
| Restricted cash | 1 | 925004 | 925004 | 925004 | 925004 |
| Liabilities: |  |  |  |  |  |
| Convertible notes payable | 3 | $7000000 | $6632000 | $5100000 | $5065000 |
| Convertible notes payable, related party | 3 | 3078197 | 3246259 |  |  |
| Convertible note payable at fair value | 3 | 250000 | 250000 | 320000 | 320000 |
| Contingent consideration<sup>(1)</sup> | 3 |  |  | 486000 | 486000 |

---

<sup>(1)</sup> On December 31, 2024, the Company calculated the final contingent consideration to be $486,000 and it was paid on April 14, 2025.

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

**Convertible notes payable**

As of June 30, 2025, the Company has twenty-four outstanding convertible notes payable with aggregate principal amount of $7,000,000 and three outstanding convertible notes payable with a related party amounting to $2,523,000. See Note 5 for further information on the terms of these convertible notes and Note 6 for further information on terms of convertible notes with a related party.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | **June 30, 2025** | **June 30, 2025** | **December 31, 2024** | **December 31, 2024** |
|  |<br>**Level** | **Carrying Amount** | **Fair Value** | **Carrying Amount** | **Fair Value** |
| 10% convertible notes due in May 2026 | 3 | $500000 | $500000 | $— | $— |
| 10% convertible notes due in October 2026 | 3 | 800000 | 753000 | 800000 | 793000 |
| 10% convertible notes due in November 2026 | 3 | 300000 | 281000 | 300000 | 298000 |
| 10% convertible notes due in December 2026 | 3 | 650000 | 606000 | 650000 | 643000 |
| 10% convertible notes due in January 2027 | 3 | 900000 | 887000 | 800000 | 839000 |
| 10% convertible note due in March 2027 | 3 | 100000 | 104000 |  |  |
| 10% convertible note due in April 2027 | 3 | 100000 | 100000 |  |  |
| 10% convertible notes due in June 2027 | 3 | 150000 | 137000 | 150000 | 148000 |
| 10% convertible notes due in August 2027 | 3 | 2000000 | 1795000 | 2000000 | 1955000 |
| 10% convertible notes due in September 2027 | 3 | 400000 | 357000 | 400000 | 389000 |
| 10% convertible notes due in January 2028 | 3 | 100000 | 96000 |  |  |
| 10% convertible note due in March 2029 | 3 | 50000 | 52000 |  |  |
| 10% convertible note due in April 2029 | 3 | 315000 | 315000 |  |  |
| 10% convertible note due in May 2029 | 3 | 100000 | 100000 |  |  |
| 10% convertible note due in June 2029 | 3 | 110000 | 110000 |  |  |
| 10% convertible notes due in February 2030 | 3 | 425000 | 438000 |  |  |
| 10% convertible note with related party due in June 2027 | 3 | 1393708 | 1494213 |  |  |
| 10% convertible note with related party due in October 2029 | 3 | 1482562 | 1543454 |  |  |
| 10% convertible note with related party due in December 2029 | 3 | 201927 | 208592 |  |  |
|  |  | $10078197 | $9877259 | $5100000 | $5065000 |

---

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

---

| | | |
|:---|:---|:---|
| **Fair Value Assumption – Convertible Debt** | **June 30, 2025** | **December 31, 2024** |
| Stock Price | $1.15 | $1.07 |
| Minimum Conversion Price | $1.00 – 5.00 | $4.00 – 5.00 |
| Annual Asset Volatility Estimate | 60% | 65% |
| Risk Free Discount Rate | 3.70 % – 4.07 | 4.23% – 4.26 |

---

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

---

| | |
|:---|:---|
| **Fair Value Assumption – Convertible Notes Payable – Related Party** | **May 12, 2025** |
| Stock Price | $1.00 |
| Conversion Price | $1.00 |
| Annual Asset Volatility Estimate | 55% – 80 |
| Risk Free Discount Rate | 3.99 % – 4.05 |

---

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

**Fair Value Option ("<u>FVO</u>") Election – Convertible note payable and freestanding warrants** 

*<u>Convertible note payable, at fair value</u>*

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

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

---

| | |
|:---|:---|
|  | **March 4<sup>th</sup> Note** |
| Beginning fair value balance reported on the condensed consolidated balance sheet at December 31, 2024 | $320000 |
| Gain on the change in fair value reported in the condensed consolidated statements of operations | (70000) |
| Ending fair value balance reported on the condensed consolidated balance sheet at June 30, 2025 | $250000 |

---

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

---

| | | |
|:---|:---|:---|
|  | **June 30, 2025** | **December 31, 2024** |
| Face value principal payable | $500000 | $500000 |
| Original conversion price | $7.82 | $7.82 |
| Value of common stock | $1.15 | $1.07 |
| Expected term (years) | 4.68 | 5.18 |
| Volatility | 75% | 90% |
| Risk free rate | 3.77% | 5.18% |

---

 

*<u>Warrant</u>*

In connection with the March 4th Note, the Company issued the Series I Warrant, which is exercisable for 10,000 shares at a purchase price of $7.82 per share. The Series I Warrant is measured at fair value and categorized within Level 3 of the fair value hierarchy. The fair value of the Series I Warrant was nominal as of June 30, 2025 and December 31, 2024. The Series I Warrant expires on September 4, 2025.

**NOTE 8 — STOCKHOLDERS' EQUITY**

*<u>2022 Lincoln Park Transaction</u>*

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

During the three and six months ended June 30, 2025, the Company did not sell shares of common stock under the LP 2022 Purchase Agreement. During the three and six months ended June 30, 2024, the Company sold 300,000 and 475,000 shares of its common stock at prices ranging between $2.14 and $3.06 and received proceeds of $690,000 and $1,185,300.

*<u>Series C Convertible Preferred Stock</u>*

 

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

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

*<u>Special Projects Working Capital Adjustment</u>*

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

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

**NOTE 9— LOSS PER SHARE**

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** <br> **June 30,** | **Three Months Ended** <br> **June 30,** | **Six Months Ended**<br> **June 30,** | **Six Months Ended**<br> **June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| **Numerator** |  |  |  |  |
| Net loss | $(1413918) | $(1624458) | $(3742980) | $(1951226) |
| Net income attributable to participating securities |  |  |  |  |
| Net loss attributable to Dolphin Entertainment common stock shareholders and numerator for basic loss per share | (1413918) | (1624458) | (3742980) | (1951226) |
| Change in fair value of convertible note | (50000) | (40000) | (70000) | (65000) |
| Interest expense | 9863 | 9863 | 19726 | 19726 |
| Numerator for diluted loss per share | $(1454055) | $(1654595) | $(3793254) | $(1996500) |
| **Denominator** |  |  |  |  |
| Denominator for basic EPS - weighted-average shares | 11168572 | 9723155 | 11166596 | 9481034 |
| Effect of dilutive securities: |  |  |  |  |
| Convertible note payable at fair value | 63939 | 63939 | 63939 | 63939 |
| Denominator for diluted EPS - adjusted weighted-average shares | 11232511 | 9787094 | 11230535 | 9544973 |
| Basic loss per share | $(0.13) | $(0.17) | $(0.33) | $(0.20) |
| Diluted loss per share | $(0.13) | $(0.17) | $(0.34) | $(0.20) |

---

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

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

For the three and six months ended June 30, 2025, potentially dilutive instruments including 6,257,833 shares and 5,747,879 shares, respectively, of common stock issuable upon conversion of convertible notes outstanding and 10,000 shares of common stock issuable upon exercise of the Series I Warrant were not included in the diluted loss per share as inclusion was considered to be antidilutive.

For the three and six months ended June 30, 2024, potentially dilutive instruments including 2,234,043 shares and 1,991,435 shares, respectively, of common stock upon conversion of convertible notes outstanding and 10,000 shares of common stock issuable upon exercise of the Series I Warrant were not included in the diluted loss per share as inclusion was considered to be antidilutive.

 **NOTE 10 — RELATED PARTY TRANSACTIONS**

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

As of June 30, 2025 and December 31, 2024, the Company had accrued $2,625,000 of compensation as accrued compensation and has balances of $1,633,976 and $1,503,805, respectively, in accrued interest in current liabilities on its condensed consolidated balance sheets, related to the CEO's employment agreement. Amounts owed under this arrangement are payable on demand.

The Company recorded interest expense related to the accrued compensation in the condensed consolidated statements of operations amounting to $65,445 for the three months ended June 30, 2025 and 2024, and $130,171 and $130,890 for the six months ended June 30, 2025 and 2024, respectively. During the six months ended June 30, 2025 and 2024, the Company did not make cash interest payments in connection with the accrued compensation to the CEO.

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

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

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

**NOTE 11 — SEGMENT INFORMATION**

The Company operates in two reportable segments, Entertainment Publicity and Marketing Segment ("<u>EPM</u>") and Content Production Segment ("<u>CPD</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Entertainment Publicity and Marketing segment is composed of 42West, The Door, Shore Fire, The Digital Dept, Special Projects, Always Alpha and Elle. 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.

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

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

---

| | | | |
|:---|:---|:---|:---|
| <br>**Three months ended June 30, 2025** | | | |
|  |<br>**EPM** |<br>**CPD** |<br>**Total** |
| &nbsp;&nbsp;Segment revenue | $14087529 | $— | $14087529 |
| &nbsp;&nbsp;Significant expenses: |  |  |  |
| &nbsp;&nbsp;Segment direct costs | 738325 | 3846 | 742171 |
| &nbsp;&nbsp;Segment payroll and benefits | 9900740 | 401552 | 10302292 |
| &nbsp;&nbsp;Segment selling, general and administrative <sup>(1)</sup> | 1454933 | 345699 | 1800632 |
| &nbsp;&nbsp;Segment legal and professional | 514408 | 71824 | 586232 |
| &nbsp;&nbsp;Adjusted income (loss) from operations | $1479123 | $(822921) | $656202 |
| &nbsp;&nbsp;Reconciliation to consolidated loss from operations: |  |  |  |
| &nbsp;&nbsp;Bad debt expense |  |  | 93407 |
| &nbsp;&nbsp;State and local tax payments |  |  | 28297 |
| &nbsp;&nbsp;Depreciation and amortization |  |  | 591552 |
| &nbsp;&nbsp;Loss from operations | $— | $— | $(57054) |

---

<sup>(1)</sup> Excludes bad debt

---

| | | | |
|:---|:---|:---|:---|
| <br>**Six months ended June 30, 2025** | | | |
| |<br>**EPM** |<br>**CPD** |<br>**Total** |
| &nbsp;&nbsp;Segment revenue | $26165207 | $92033 | $26257240 |
| &nbsp;&nbsp;Significant expenses: |  |  |  |
| &nbsp;&nbsp;Segment direct costs | 1082739 | 3846 | 1086585 |
| &nbsp;&nbsp;Segment payroll and benefits | 19799621 | 807364 | 20606985 |
| &nbsp;&nbsp;Segment selling, general and administrative <sup>(1)</sup> | 2790047 | 726814 | 3516861 |
| &nbsp;&nbsp;Segment legal and professional | 952770 | 147886 | 1100656 |
| &nbsp;&nbsp;Adjusted income (loss) from operations | $1540030 | $(1593877) | $(53847) |
| &nbsp;&nbsp;Reconciliation to consolidated loss from operations: |  |  |  |
| &nbsp;&nbsp;Bad debt expense |  |  | 149161 |
| &nbsp;&nbsp;Acquisition cost |  |  | 416171 |
| &nbsp;&nbsp;State and local tax payments |  |  | 28297 |
| &nbsp;&nbsp;Depreciation and amortization |  |  | 1183104 |
| &nbsp;&nbsp;Loss from operations | $— | $— | $(1830580) |

---

<sup>(1)</sup> Excludes bad debt

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

---

| | | | |
|:---|:---|:---|:---|
| <br>**Three months ended June 30, 2024** | <br>**Three months ended June 30, 2024** | | |
|  | **EPM** |<br>**CPD** |<br>**Total** |
| &nbsp;&nbsp;Segment revenue | $11449089 | $— | $11449089 |
| &nbsp;&nbsp;Significant expenses: |  |  |  |
| &nbsp;&nbsp;Segment direct costs | 203297 | 12950 | 216247 |
| &nbsp;&nbsp;Segment payroll and benefits | 8709231 | 485787 | 9195018 |
| &nbsp;&nbsp;Segment selling, general and administrative <sup>(1)</sup> | 1483704 | 298189 | 1781893 |
| &nbsp;&nbsp;Segment legal and professional | 388874 | 157304 | 546178 |
| &nbsp;&nbsp;Adjusted income (loss) from operations | $663983 | $(954230) | $(290247) |
| &nbsp;&nbsp;Reconciliation to consolidated income from operations |  |  |  |
| &nbsp;&nbsp;Bad debt expense |  |  | 82959 |
| &nbsp;&nbsp;Depreciation and amortization |  |  | 555694 |
| &nbsp;&nbsp;Impairment of goodwill |  |  | 190565 |
| &nbsp;&nbsp;Loss from operations | $— | $— | $(1119465) |

---

<sup>(1)</sup> Excludes bad debt

---

| | | | |
|:---|:---|:---|:---|
| **Six months ended June 30, 2024** | **Six months ended June 30, 2024** | | |
|  | **EPM** |<br>**CPD** |<br>**Total** |
| &nbsp;&nbsp;Segment revenue | $23263840 | $3421141 | $26684981 |
| &nbsp;&nbsp;Significant expenses: |  |  |  |
| &nbsp;&nbsp;Segment direct costs | 741464 | 1794010 | 2535474 |
| &nbsp;&nbsp;Segment payroll and benefits | 17616592 | 1152677 | 18769269 |
| &nbsp;&nbsp;Segment selling, general and administrative <sup>(1)</sup> | 2984405 | 570458 | 3554863 |
| &nbsp;&nbsp;Segment legal and professional | 794138 | 399821 | 1193959 |
| &nbsp;&nbsp;Adjusted income (loss) from operations | $1127241 | $(495825) | $631416 |
| &nbsp;&nbsp;*Reconciliation to consolidated income from operations* |  |  |  |
| &nbsp;&nbsp;Bad debt expense |  |  | 286980 |
| &nbsp;&nbsp;Depreciation and amortization |  |  | 1108797 |
| &nbsp;&nbsp;Impairment of goodwill |  |  | 190565 |
| &nbsp;&nbsp;Loss from operations | $— | $— | $(954926 |

---

<sup>(1)</sup> Excludes bad debt

The CODM does not review assets on a segment basis. In connection with the acquisitions of its wholly owned subsidiaries, as of June 30, 2025 the Company had assigned $9,040,542 of intangible assets, net of accumulated amortization of $14,370,429, and goodwill of $21,507,944, net of impairments, to the EPM segment.

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

**NOTE 12 — LEASES**

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

---

| | | |
|:---|:---|:---|
| **Operating Leases** | **As of <br> June 30, 2025** | **As of<br> December 31, 2024** |
| **Assets** |  |  |
| Right-of-use asset | $3763305 | $4606431 |
| **Liabilities** |  |  |
| Current |  |  |
| Lease liability | $1874303 | $1839323 |
| Noncurrent |  |  |
| Lease liability | $2295007 | $3247291 |
| Total operating lease liability | $4169310 | $5086614 |

---

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

---

| | | |
|:---|:---|:---|
| **Finance Lease** | **As of <br> June 30, 2025** | **As of<br> December 31, 2024** |
| **Assets** |  |  |
| Right-of-use asset | $143389 | $132566 |
| **Liabilities** |  |  |
| Current |  |  |
| Lease liability | $95441 | $80349 |
| Noncurrent |  |  |
| Lease liability | $54781 | $58742 |
| Total finance lease liability | $150222 | $139091 |

---

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| <br>**Lease costs** | <br>**Classification** | **2025** | **2024** | **2025** | **2024** |
| Operating lease costs | Selling, general and administrative expenses | $490821 | $681523 | $1040219 | $1356192 |
| Sublease income | Selling, general and administrative expenses |  | (105732) | (12665) | (211083) |
| Net operating lease costs |  | $490821 | $575791 | $1027554 | $1145109 |

---

**Lease Payments**

For the six months ended June 30, 2025 and 2024, the Company made payments in cash related to its operating leases in the amounts of $1,129,444 and $1,333,342, respectively.

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

---

| | | |
|:---|:---|:---|
| **Year** | **Operating Leases** | **Finance Leases** |
| 2025 | $1097574 | $54313 |
| 2026 | 2054617 | 75119 |
| 2027 | 918827 | 26663 |
| 2028 | 155710 | 3902 |
| 2029 | 159255 |  |
| Thereafter | 355538 |  |
| Total lease payments | $4741521 | $159997 |
| Less: Imputed interest | (572211) | (9775) |
| Present value of lease liabilities | $4169310 | $150222 |

---

As of June 30, 2025, the Company's weighted average remaining lease term on its operating and finance leases is 3.96 years and 1.83 years, respectively, and the Company's weighted average discount rate is 8.83% and 7.93% related to its operating and finance leases, respectively.

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

**NOTE 13 — COLLABORATIVE ARRANGEMENT**

<u>IMAX Co-Production Agreement</u>

On June 24, 2022, the Company entered into an agreement with IMAX to co-produce and co-finance a documentary motion picture on the flight demonstration squadron of the United States Navy, called The Blue Angels ("<u>Blue Angels Agreement</u>"). IMAX and Dolphin each agreed to fund 50% of the production budget. As of June 30, 2024, we had paid $2,250,000 in connection with this agreement.

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

During the three months ended June 30, 2024, the Company recorded net revenues of $3,421,141 from the Amazon Agreement. On February 22, 2024, the Company received $777,905 from the Amazon Agreement upon delivery of the film by IMAX to Amazon Content Services LLC, the Company's single performance obligation under the Amazon Agreement.

**NOTE 14— COMMITMENTS AND CONTINGENCIES**

<u>Litigation</u>

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

**NOTE 15— SUBSEQUENT EVENTS**

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

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

**DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES**<br>**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**<br>(Unaudited)<br>

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

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

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

On August 13, 2025 we issued 244,698 shares of Common Stock to Lincoln Park as an initial fee for its commitment to Purchase Shares of our Common Stock under the 2025 LP Purchase Agreement (the "Initial Commitment Shares"). We may issue up to 122,349 additional shares of Common Stock pro-rata in connection with the sale of Purchase Shares (the "Additional Commitment Shares, and together with the Initial Commitment Shares, the "Commitment Shares").

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

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

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

The Company agrees that it shall file with the Securities Exchange Commission (the "SEC") within 20 business days of the date of the 2025 LP Purchase Agreement, a new Registration Statement on Form S-1 (the "Registration Statement") covering the resale of Common Stock in accordance with the terms of the 2025 LP Registration Rights Agreement, and until the Registration Statement is declared effective, the Company shall not

On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act ("OBBBA"). The OBBBA includes various provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements and will recognize the income tax effects in the consolidated financial statements beginning in the period in which the OBBBA was signed into law.

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

*You should read the following management's discussion and analysis together with our unaudited condensed consolidated financial statements and related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q, together with the audited consolidated financial statements, the accompanying notes, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the "Risk Factors" section of our Annual Report on Form 10-K and other factors set forth in other parts of this Quarterly Report on Form 10-Q and our filings with the SEC.*

**Overview**

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

Through our subsidiaries, 42West LLC ("4<u>2West</u>"), The Door Marketing Group LLC ("<u>The Door</u>"), Shore Fire Media, Ltd ("<u>Shore Fire</u>"), The Digital Dept, LLC ("<u>The Digital Dept</u>.") formerly known as Socialyte LLC ("<u>Socialyte</u>") and Be Social Public Relations LLC ("<u>Be Social</u>") that merged effective January 1, 2024, Special Projects Media, LLC ("<u>Special Projects</u>"), Always Alpha Sports Management, LLC ("<u>Always Alpha</u>") and Elle Communications, LLC ("<u>Elle</u>") we provide expert strategic marketing and publicity services to many of the top brands, both individual and corporate, in the motion picture, television, music, gaming, culinary, hospitality, lifestyle and charitable industries. 42West (Film and Television, Gaming), Shore Fire (Music), The Door (Culinary, Hospitality, Lifestyle) and Elle (Impact, Philanthropy, Non-Profit) are each recognized global public relations ("<u>PR</u>") and marketing leaders for the industries they serve. As a group, they were recognized as the #1 PR firm in the country in the prestigious Observer rankings earlier this year. The Digital Dept. provides influencer marketing capabilities through divisions dedicated to influencer talent management, brand campaign strategy and execution, and influencer event ideation and production. Always Alpha is a talent management firm primarily focused on representing female athletes, broadcasters and coaches. Special Projects is the entertainment industry's leading celebrity booking firm, specializing in uniting brands and events with celebrities and influencers across the entertainment, media, fashion, consumer product and tech industries. Dolphin's legacy content production business, Dolphin Films, founded by our Emmy-nominated Chief Executive Officer, Bill O'Dowd, has produced multiple feature films and award-winning digital series, primarily aimed at family and young adult markets.

We have established an acquisition strategy based on identifying and acquiring companies that complement our existing entertainment publicity and marketing services and content production businesses. We believe that complementary businesses can create synergistic opportunities and bolster profits and cash flow. While we may acquire additional companies in the future, we are not in active negotiations with any such companies, and there is no assurance that we will be successful in acquiring any additional companies, whether in 2025 or at all.

We have also established an investment strategy, "Ventures" or "Dolphin 2.0," based upon identifying opportunities to develop internally owned assets, or acquire ownership stakes in others' assets, in the categories of entertainment content, live events and consumer products. We believe these categories represent the types of assets wherein our expertise and relationships in entertainment marketing most influences the likelihood of success. We are in various stages of internal development and outside conversations on a wide range of opportunities within these Ventures. We intend to enter into Venture investments during 2025, but there is no assurance that we will be successful in doing so, whether in 2025 or at all.

**How We Assess the Performance of Our Business**

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

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

**Entertainment Publicity and Marketing ("<u>EPM</u>")**

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

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Talent</u> – 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Entertainment Marketing and Brand Strategy</u> – 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Strategic Communications</u> – 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Digital Media Influencer Marketing Campaigns</u> – 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.

· <u>Celebrity Booking and Live Event Programming</u> – We arrange for brands and events to book celebrity and influencer talent. Our services include the creation of the strategy to
 elevate the brand or event through celebrity and/or influencer inclusion, to the booking of celebrities and influencers for commercial
 endorsements or appearances, to the curation of event lists and securing attendance, to the coordination and production of live events.
 We believe the expansion of brands seeking celebrity and/or influencer endorsements, as well as celebrity and/or influencers to attend
 brand-sponsored live events, will drive growth and revenue for the next several years.

 

**Content Production ("<u>CPD</u>")**

 ****

***Project Development and Related Services***

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

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

In June 2022, we entered into an agreement with IMAX Corporation ("<u>IMAX</u>") to co-produce and co-finance a documentary motion picture on the flight demonstration squadron of the United States Navy called the Blue Angels. IMAX and Dolphin each agreed to fund 50% of the production budget and we paid $2,250,000 related to production costs of The Blue Angels in connection with this agreement. IMAX entered into an acquisition agreement with Amazon Content Services LLC, (the "<u>Amazon Agreement</u>") for the distribution rights of The Blue Angels and during the six months ended June 30, 2024, we recorded $3,421,141 of revenue related to the Amazon Agreement. The Blue Angels documentary motion picture was released in theatres on May 17, 2024 and began streaming on Amazon Prime Video on May 23, 2024.

In February 2025, Dolphin Films partnered with Aircraft Productions of Toronto, Canada to produce a re-boot of the popular 1986 MGM hockey movie "Youngblood." The film is expected to be completed and ready for a premiere at the Toronto Film Festival in September 2025.

**Revenues**

For the three months ended June 30, 2025 and 2024, we derived a majority of our revenues from our entertainment publicity and marketing segment. During the six months ended June 30, 2024, we generated income in our content production segment related to The Blue Angels documentary motion picture and during the six months ended June 30, 2025, we generated income in our content production segment related to sales of our motion picture Believe released in 2013.

The table below sets forth the percentage of total revenue derived from our segments for the three and six months ended June 30, 2025 and 2024:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the three months ended <br> June 30,** | **For the three months ended <br> June 30,** | **For the six months ended** <br> **June 30,** | **For the six months ended** <br> **June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| **Revenues:** |  |  |  |  |
| Entertainment publicity and marketing | 100% | 100% | 99.6% | 86.9% |
| Content production | — % | — % | 0.4% | 13.1% |
| Total revenue | 100% | 100% | 100% | 100% |

---

**Expenses**

Our expenses consist primarily of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Direct costs – include certain costs of services, as well as certain production costs, related to our entertainment publicity and marketing business. In the same period of the prior year, direct cost includes the amortization of film production costs related to The Blue Angels, using the individual film-forecast-computation method which amortizes film production costs in the same ratio as the current period actual revenue bears to estimated remaining unrecognized ultimate revenue.

(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) Acquisition costs – includes agreed upon payment to the Special Projects sellers.

(5) Impairment of goodwill – includes an impairment charge related to ceasing operations of Viewpoint in 2024.

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

(7) 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 (Expense) Income** 

For the three months ended June 30, 2025 and 2024, other expense (income) consisted primarily of: (1) changes in fair value of convertible notes; (2) interest income; and (3) interest expense. For the three and six months ended June 30, 2025, other expense (income) also included loss of extinguishment of debt. For the six months ended June 30, 2024, other expense (income) also included the change in fair value of the outstanding warrants.

**RESULTS OF OPERATIONS**

*<u>Three and six months ended June 30, 2025 as compared to three and six months ended June 30, 2024</u>*

**Revenues**

For the three and six months ended June 30, 2025 and 2024 revenues were as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the three months ended <br> June 30,** | **For the three months ended <br> June 30,** | **For the six months ended** <br> **June 30,** | **For the six months ended** <br> **June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| **Revenues:** |  |  |  |  |
| Entertainment publicity and marketing | $14087529 | $11449089 | $26165207 | $23263840 |
| Content production |  |  | 92033 | 3421141 |
| Total revenue | $14087529 | $11449089 | $26257240 | $26684981 |

---

Revenues from entertainment publicity and marketing increased by approximately $2.6 million for the three months ended June 30, 2025, as compared to the same period in the prior year. The increase for the three months ended June 30, 2025, is primarily driven by the inclusion of approximately $0.9 million in revenues of Elle that were not present in 2024, an increase in revenues of approximately $0.8 million in The Digital Dept., an increase in revenues of approximately $0.6 million in Special Projects, and an increase of revenue of approximately $0.3 million in The Door, offset by a decrease in the revenues of Viewpoint that ceased operations during the three months ended June 30, 2024. Revenue from entertainment publicity and marketing increased by $2.9 million for the six months ended June 30, 2025, as compared to the same period in the prior year. The increase for the six months ended June 30, 2025, is primarily driven by the inclusion of $1.8 million in revenues of Elle that were not present in 2024, an increase of $1.5 million in The Digital Dept., and an increase in revenues of approximately $0.6 million in revenues of Special Projects, offset by a decrease in revenues of Viewpoint that ceased operations during the three months ended June 30, 2024.

Revenues from content production decreased by approximately $3.3 million during the six months ended June 30, 2025, compared to the same period in the prior year. The decrease was related to revenue from the Amazon Agreement for The Blue Angels documentary film that was released in 2024.

**Expenses**

For the three and six months ended June 30, 2025 and 2024, our expenses were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the three months ended <br> June 30,** | **For the three months ended <br> June 30,** | **For the six months ended** <br> **June 30,** | **For the six months ended** <br> **June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| **Expenses:** |  |  |  |  |
| Direct costs | $742171 | $216247 | $1086585 | $2535474 |
| Payroll and benefits | 10302292 | 9195018 | 20606985 | 18769269 |
| Selling, general and administrative | 1922336 | 1864852 | 3694319 | 3841843 |
| Depreciation and amortization | 591552 | 555694 | 1183104 | 1108797 |
| Impairment of goodwill |  | 190565 |  | 190565 |
| Acquisition cost |  |  | 416171 |  |
| Legal and professional | 586232 | 546178 | 1100656 | 1193959 |
| Total expenses | $14144583 | $12568554 | $28087820 | $27639907 |

---

Direct costs increased by approximately $0.5 million in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. The increase of direct costs is attributed to cost incurred of approximately $0.3 million for The Digital Dept. showrooms, during the three months ended June 30, 2025. Direct costs decreased by approximately $1.4 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The decrease in direct costs for the six months ended June 30, 2025 is directly attributable to approximately $1.8 million of capitalized production costs being amortized for the production costs of The Blue Angels that was recorded during the six months ended June 30, 2024. The decrease was offset by an increase of direct cost of approximately $0.4 million for The Digital Dept. event. During the six months ended June 30, 2025, the Company did not amortize capitalized production costs related to The Blue Angels documentary film.

Payroll and benefits expenses increased by approximately $1.1 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to the inclusion of the Elle and Always Alpha payroll expenses of approximately $0.9 million in the three months ended June 30, 2025. Payroll and benefits increased by approximately $1.8 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to the inclusion of the Elle and Always Alpha payroll expenses of approximately $1.9 million in the six months ended June 30, 2025.

Selling, general and administrative expenses increased by approximately $0.06 million, for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, due to the inclusion of Elle and Always Alpha's selling, general, and administrative expenses of $0.1 million that were not included in the same period of the prior year, and an increase of $0.03 million in travel expenses. The increase is offset by the decrease in office rent expense of $0.08 million from the expiration of two of our leases in December 2024. Selling, general and administrative expenses decreased by approximately $0.15 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The decrease is mainly due to a decrease in office rent expense of $0.1 million from the expiration of two of our leases in December 2024.

Acquisition costs for the six months ended June 30, 2025 were approximately $0.4 million, related to an agreed upon payment to the Special Projects Sellers related to the working capital adjustment. There were no acquisition costs recorded for the three months ended June 30, 2025 and the three and six months ended June 30, 2024.

Impairment of goodwill was approximately $0.2 million for both the three and six months ended June 30, 2024 relating to the goodwill allocated to Viewpoint subsidiary, which ceased operations on June 30, 2024. Goodwill was not impaired for the three and six months ended June 30, 2025. Refer to Note 3 – Goodwill and Intangibles Assets in the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional discussion on the impairment.

Depreciation and amortization increased by approximately $0.04 million and $0.07 million, for the three and six months ended June 30, 2025, respectively, as compared to the three and six months ended June 30, 2024. The increase in depreciation and amortization expense are related primarily to the amortization of Elle's intangibles assets, such as the trade name and customers list, during the three and six months ended June 30, 2025, which were not present in the same period of the prior year.

Legal and professional fees increased by approximately $0.04 million for the three months ended June 30, 2025, as compared to same period of the prior year. The increase is primarily due to legal fees incurred in connection with employee related contracts. Legal and professional fees decreased by $0.1 million for the six months ended June 30, 2025 as compared to the same period in the prior year. The decrease is primarily due to a decrease in the usage of consultants for our financial reporting.

**Other Expense (Income), net** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the three months ended <br> June 30,** | **For the three months ended <br> June 30,** | **For the six months ended** <br> **June 30,** | **For the six months ended** <br> **June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| **Other (expense) income, net:** |  |  |  |  |
| Change in fair value of convertible notes | $50000 | $40000 | $70000 | $65000 |
| Change in fair value of warrants |  |  |  | 5000 |
| Loss on extinguishment of debt | (835324) |  | (835324) |  |
| Interest income | 11205 | 731 | 17279 | 6600 |
| Interest expense | (561222) | (522184) | (1121310) | (1025821) |
| Total other (expenses) income, net | $(1335341) | $(481453) | $(1869355) | $(949221) |

---

*Change in fair value of convertible notes* – 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 and six months ended June 30, 2025, we recorded a gain in the change in fair value of the convertible note issued in 2020 in the amount of $0.05 million and $0.07 million, respectively. For the three and six months ended June 30, 2024, we recorded a gain in fair value of the convertible note issued in 2020 in the amount of $0.04 million and $0.07 million, respectively. None of the decrease in the value of the convertible note was attributable to instrument specific credit risk and as such, all the gain or loss in the change in fair value was recorded within net loss.

*Change in fair value of warrant* – The warrant issued with the convertible note payable at fair value issued in 2020 was initially measured at fair value at the time of issuance and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date, with changes in estimated fair value of the warrant liability recognized as other income or expense. The change in fair value of the 2020 warrant that was not exercised decreased minimally for the six months ended June 30, 2024. For the three and six months ended June 30, 2025 and the three months ended June 30, 2024, there was no change in fair value. The warrant expires on September 4, 2025.

*Loss on extinguishment of debt* – On May 12, 2025, we exchanged three nonconvertible promissory notes held by our CEO for three convertible promissory notes. We determined that the transaction should be accounted for as an extinguishment of debt and recorded a loss on the extinguishment of debt of $0.8 million for the difference between the carrying value of the nonconvertible notes payable and the fair value of the convertible notes payable on May 12, 2025.

*Interest income* – The increase of interest income was inconsequential for the three and six months ended June 30, 2025 as compared to same period of the prior year.

*Interest expense* – Interest expense increased by approximately $0.04 million and $0.1 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in the prior year. The increases were primarily due to the new convertible and nonconvertible notes entered into during the six months ended June 30, 2025 and the second term loan outstanding during 2025 as compared to the same period in the prior year.

**Income Taxes** 

We recorded an income tax expense of approximately $0.02 million and $0.04 million for the three and six months ended June 30, 2025, respectively, and approximately $0.02 million and $0.05 million for the three and six months ended June 30, 2024, respectively, which reflects the accrual of a valuation allowance in connection with the limitations of our indefinite lived tax assets to offset our indefinite lived tax liabilities. To the extent the tax assets are unable to offset the tax liabilities, we have recorded a deferred expense for the tax liability (a "naked credit").

**Net Loss**

Net loss was approximately $1.4 million or $(0.13) per share based on 11,168,572 weighted average shares outstanding for basic loss per share and $1.5 million or $(0.13) per share based on 11,232,511 fully diluted loss per share, for the three months ended June 30, 2025. Net loss was approximately $1.62 million or $(0.17) per share based on 9,723,155 weighted average shares outstanding for basic loss per share and $1.65 million or $(0.17) fully diluted loss per share based on 9,787,094 weighted average shares for the three months ended June 30, 2024. The change in net loss for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, is related to the factors discussed above.

Net loss was approximately $3.7 million or $(0.33) per share based on 11,166,596 weighted average shares outstanding for basic loss per share and $3.8 million or $(0.34) per share based on 11,230,535 for fully diluted loss per share, for the six months ended June 30, 2025. Net loss was approximately $1.95 million or $(0.20) per share based on 9,481,034 weighted average shares outstanding for basic loss per share and was approximately $2.0 million or $(0.20) per share based on 9,544,973 for fully diluted loss per share for the six months ended June 30, 2024. The change in net loss for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, is related to the factors discussed above.

**LIQUIDITY AND CAPITAL RESOURCES**

**Cash Flows**

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| | | |
|:---|:---|:---|
|  | **Six Months Ended <br> June 30,** | **Six Months Ended <br> June 30,** |
|  | **2025** | **2024** |
| Statement of Cash Flows Data: |  |  |
| Net cash used in operating activities | $(197522) | $661239 |
| Net cash used in investing activities | (1088) | (1136510) |
| Net cash provided by financing activities | 692128 | 2761515 |
| Net increase in cash and cash equivalents and restricted cash | 493518 | 2286244 |
| Cash and cash equivalents and restricted cash, beginning of period | 9128846 | 7560691 |
| Cash and cash equivalents and restricted cash, end of period | $9622364 | $9846935 |

---

 ****

***Operating Activities***

Cash used in operating activities was approximately $0.2 million for the six months ended June 30, 2025, a change of approximately $0.9 million from cash provided by operating activities of approximately $0.7 million for six months ended June 30, 2024. The increase in cash used in operating activities was primarily a result of an approximately $2.1 million increase in net loss for the period, a decrease of approximately $1.5 million non-cash items such as depreciation and amortization, bad debt expense, share-based compensation, loss on extinguishment of debt, amortization of capitalized production costs, and other non-cash losses, which was offset by an increase of approximately $2.5 million net change in working capital.

***Investing Activities***

 ****

Cash flows used in investing activities for the six months ended June 30, 2025 was inconsequential. Cash flows used in investing activities for the six months ended June 30, 2024 were $1.13 million, mainly related to the issuance of notes receivable to Midnight Theatre, a prior joint venture.

***Financing Activities***

 ****

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

Inflows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· $1.9 million of proceeds from convertible notes payable and;

· $0.6 million of proceeds from nonconvertible notes payable.

Outflows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· $0.8 million of repayment of existing term loan

· $0.4 million of repayment of revolving line of credit;

· $0.5 million payment of the contingent consideration related to the Elle acquisition; and

· $0.04 million of repayment of finance leases.

Cash flows provided by financing activities for the six months ended June 30, 2024 were approximately $2.8 million, which mainly related to:

Inflows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· $2.1 million of proceeds from related party loan; and

· $1.2 million of proceeds from the Lincoln Park equity line of credit described below.

Outflows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· $0.5 million of repayment of existing term loan; and

· $0.05 million of repayment
of finance leases.

 **Debt and Financing Arrangements** 

Total debt amounted to $23.5 million as of June 30, 2025, compared to $22.4 million as of December 31, 2024, an increase of $1.1 million, primarily related to an increase in convertible and nonconvertible promissory notes, offset by the repayment of the term loan.

Our debt obligations in the next twelve months from June 30, 2025 are approximately $5.6 million. We expect our current cash position, cash expected to be generated from our operations and other availability of funds, as detailed below, to be sufficient to meet our debt requirements.

***2022 Lincoln Park Transaction***

On August 10, 2022, we entered into a purchase agreement (the "<u>LP 2022 Purchase Agreement</u>") and a registration rights agreement (the "<u>LP 2022 Registration Rights Agreement</u>") with Lincoln Park, pursuant to which we could sell and issue to Lincoln Park, and Lincoln Park was obligated to purchase, up to $25,000,000 in value of shares of our common stock from time to time over a 36-month period.

During the three and six months ended June 30, 2025, we did not sell shares of common stock under the LP 2022 Purchase Agreement. During the three and six months ended June 30, 2024, the Company sold 300,000 and 475,000 shares of its common stock, respectively, at prices ranging between $2.14 and $3.06 and received proceeds of $690,100 and $1,185,300, respectively.

 ***Convertible Notes Payable***

As of June 30, 2025, we had twenty-four convertible notes payable outstanding. The convertible notes payable bear interest at a rate of 10% per annum, with maturity dates ranging between the first anniversary and the sixth anniversary of their respective issuances.

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

---

| | | |
|:---|:---|:---|
| **Aggregate Convertible Notes balance** | **Conversion Price** | **Floor/Conversion Price** |
| $2700000 | &nbsp;&nbsp;90-day average closing market price of our common stock | $5.00 |
| 900000 | &nbsp;&nbsp;90-day average closing market price of our common stock | $4.00 |
| 1500000 | &nbsp;&nbsp;90-day average closing market price of our common stock | $1.00 |
| 100000 | &nbsp;&nbsp;90-day average closing market price of our common stock | $1.01 |
| 100000 | &nbsp;&nbsp;30-day average closing market price of our common stock | $1.01 |
| 325000 | &nbsp;&nbsp;Fixed conversion price | $1.11 |
| 100000 | &nbsp;&nbsp;Fixed conversion price | $1.02 |
| 150000 | &nbsp;&nbsp;Fixed conversion price | $1.01 |
| 150000 | &nbsp;&nbsp;Fixed conversion price | $1.07 |
| 125000 | &nbsp;&nbsp;Fixed conversion price | $1.03 |
| 110000 | &nbsp;&nbsp;Fixed conversion price | $1.12 |
| 740000 | &nbsp;&nbsp;Fixed conversion price | $1.00 |
| $7000000 |  |  |

---

We recorded interest expense related to these convertible notes payable of $165,251 and $127,750 during the three months ended June 30, 2025 and 2024, respectively, and $301,251 and $255,250, respectively, during the six months ended June 30, 2025 and 2024. In addition, the we made cash interest payments amounting to $286,212 and $255,250, respectively, during the three months ended June 30, 2025 and 2024, related to the convertible notes payable.

As of June 30, 2025 and December 31, 2024, the principal balance of the convertible notes payable of $6.5 million and $5.1 million was recorded in noncurrent liabilities under the caption "Convertible notes payable" and $0.5 million was recorded in current liabilities under the same caption as of June 30, 2025 on our condensed consolidated balance sheets.

Subsequent to June 30, 2025, we issued three convertible notes payable and received proceeds of $450,000. The convertible promissory notes bear interest of 10% per annum. One note matures three years from its issuance date and the other two notes mature four years from their issuance date. On July 7, 2025 and July 23, 2025, a holder of a convertible note payable that had been issued in 2022 with a principal balance of $500,000 converted the convertible note payable into an aggregate of 463,861 shares of our common stock. On July 23, 2025, another holder of a convertible notes payable issued on January 16, 2025 with a principal balance of $100,000 converted the convertible note payable into 91,744 shares of our common stock.

***Convertible Note Payable at Fair Value***

We had one convertible promissory note outstanding with aggregate principal amount of $500,000 as of June 30, 2025 for which it elected the fair value option. As such, the estimated fair value of the note was recorded on its issue date. At each balance sheet date, we record the fair value of the convertible promissory note with any changes in the fair value recorded in the condensed consolidated statements of operations.

We had a balance of $250,000 and $320,000 in noncurrent liabilities as of June 30, 2025, and December 31, 2024, respectively, on our condensed consolidated balance sheets related to the convertible promissory note payable measured at fair value.

We recorded a gain in fair value of $50,000 and $40,000 for the three months ended June 30, 2025 and 2024, respectively, and a gain of $70,000 and $65,000 for the six months ended June 30, 2025 and 2024 on our condensed consolidated statements of operations related to this convertible promissory note payable at fair value.

We recorded interest expense related to this convertible note payable at fair value of $9,863 for each of the three months ended June 30, 2025 and 2024, and $19,726 for both the six months ended June 30, 2025 and 2024. In addition, we made cash interest payments amounting to $19,726 for both the three months ended June 30, 2025 and 2024, related to the convertible promissory note at fair value.

***Nonconvertible Promissory Notes***

During the six months ended June 30, 2025, we issued two unsecured nonconvertible promissory notes and received proceeds of $550,000. As of June 30, 2025, we had seven outstanding unsecured nonconvertible promissory notes in the aggregate amount of $4,430,000, which bear interest at a rate of 10% per annum and mature between November 2025 and June 2029.

As of June 30, 2025 and December 31, 2024, we had a balance of $350,000 and $750,000, respectively, recorded as current liabilities and $4,080,000 and $3,130,000, respectively, in noncurrent liabilities on our condensed consolidated balance sheets related to these unsecured nonconvertible promissory notes.

We recorded interest expense related to these nonconvertible promissory notes of $104,667 and $97,000 for the three months ended June 30, 2025 and 2024, respectively, and $203,750 and $194,000 for the six months ended June 30, 2025 and 2024, respectively. We made interest payments of $200,250 and $194,000 during the six months ended June 30, 2025 and 2024, respectively, related to the unsecured nonconvertible promissory notes.

***Nonconvertible Unsecured Promissory Note - Socialyte Promissory Note***

In connection with the purchase agreement for the acquisition of Socialyte ("<u>Socialyte Purchase Agreement</u>"), we entered into a promissory note with the sellers of Socialyte ("the <u>Socialyte Promissory Note</u>") 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 us to offset a working capital deficit against the Socialyte Promissory Note. As such, we deferred these installment payments until the final post-closing working capital adjustment is agreed upon with the seller of Socialyte. We filed a lawsuit against the seller of Socialyte and certain of its principals related to the Socialyte Purchase Agreement. See Note 14 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

We recorded interest expense related to this Socialyte Promissory Note of $30,000 for the three months ended June 30, 2025 and 2024, and $60,000 for the six months ended June 30, 2025 and 2024. No interest payments were made during the six months ended June 30, 2025 and 2024, related to the Socialyte Promissory Note.

***Promissory Notes from Related Parties***

 ****

**<u>Dolphin Entertainment, LLC Notes</u>**

We issued Dolphin Entertainment, LLC ("<u>DE LLC</u>"), an entity wholly owned by our Chief Executive Officer, William O'Dowd (the "<u>CEO</u>"), a nonconvertible promissory note with a principal balance of $1,107,873 which matures on December 31, 2026. On April 29, 2024 and June 10, 2024, we issued two nonconvertible promissory notes to DE LLC in the amounts of $1,000,000 and $135,000, respectively, which mature on April 29, 2029 and June 10, 2029, respectively, (collectively, "the <u>DE LLC Notes</u>"). The DE LLC Notes each bear interest at a rate of 10% per annum.

On May 12, 2025, we entered into an exchange agreement (the "<u>Exchange Agreement</u>") with DE LLC, pursuant to which, we and DE LLC agreed to exchange the three nonconvertible promissory notes in the aggregate principal amount of $2,242,873 currently held by DE LLC for three convertible promissory notes (the "<u>DE New Notes</u>") in the same principal amounts. As consideration for the exchange, we and DE LLC agreed to extend the maturity dates on each of the notes by six months. One note, with a principal balance of $1,107,873 now matures on June 30, 2027, one note with a principal balance of $1,000,000 now matures on October 29, 2029 and one note with a principal balance of $135,000, now matures on December 10, 2029. The DE New Notes continue to bear interest at a rate of 10% per annum. DE LLC may convert the principal balance of the DE New Notes and any accrued interest thereon at any time before the maturity date of the DE New Notes into our common stock. The conversion price of each of the DE New Notes is $1.00 per share. We accounted for this exchange as an extinguishment of debt and recorded the difference between the carrying value of DE LLC Notes and the fair value of the DE New Notes of $0.8 million as a loss from extinguishment of debt in our condensed consolidated statement of operations for the three and six months ended June 30, 2025.

As of June 30, 2025 we had an aggregate principal balance of $3,078,197 related to the DE New Notes under the caption convertible note payable – related party in our condensed consolidated balance sheets. As of December 31, 2024, we had an aggregate balance of $2,242,873 related to DE LLC notes under the caption with loans from related party. During the six months ended June 30, 2025, we did not repay any principal balance or make interest payments on the DE LLC Notes. During the six months ended June 30, 2024, we made cash interest payments in the amount of $200,000 related to the DE LLC Notes.

We recorded interest expense of $55,918 and $45,593 for the three months ended June 30, 2025 and 2024, respectively, and $99,938 and $73,214 for the six months ended June 30, 2025 and 2024, respectively, related to the DE LLC Notes. As of June 30, 2025 and December 31, 2024, we had a balance in accrued interest – related parties of $374,989 and $263,767, respectively, on our condensed consolidated balance sheets related to the DE LLC Notes.

 **<u>Mock Notes</u>**

During 2024, we issued three nonconvertible promissory notes to Mr. Donald Scott Mock, the brother of Mr. O'Dowd, in the amount of $900,000, $75,000 and $8,112, respectively, and received proceeds of $983,112 (the "<u>Mock Notes</u>"). The Mock Notes bear interest at a rate of 10% per annum and mature on January 16, 2029, May 28, 2029 and December 30, 2029, respectively.

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

We recorded interest expense of $24,578 and $23,167 for the three months ended June 30, 2025 and 2024, respectively, and $49,156 and $41,667 for the six months ended June 30, 2025 and 2024, respectively, related to the DE New Notes and Mock Notes. As of June 30, 2025 and December 31, 2024, we had a balance in accrued interest – related parties of $139,573 and $90,417, respectively, on our condensed consolidated balance sheets related to the Mock Notes.

***BankUnited Loan Agreement***

 ****

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

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

Interest accrues at 8.10% fixed rate per annum on the First BKU Term Loan and 7.10% fixed rate per annum on the Second BKU Term Loan. Principal and interest are payable on a monthly basis based on a 5-year amortization for the First BKU Term Loan and 3-year amortization for the Second BKU Term Loan. Interest on the BKU Line of credit is payable on a monthly basis, with all principal due at maturity. The BKU Commercial Card payment is due in full at the end of each bi-weekly billing cycle. During the six months ended June 30, 2025 and the year ended December 31, 2024, we did not use the BKU Commercial Card. During each the three months ended June 30, 2025 and 2024, we made payments in the amount of $354,621, inclusive of $87,197 and $108,437, respectively, of interest related to the First BKU Term Loan, respectively. During each of the six months ended June 30, 2025 and 2024, we made payments in the amount of $709,241, inclusive of $177,919 and $220,737 related to the First BKU Term Loan, respectively. During the three and six months ended June 30, 2025, we made payments in amount of $185,995 and $371,991, inclusive of $32,949 and $67,937, respectively, of interest related to the Second BKU Term Loan. During the three and six months ended June 30, 2024, there were no payments made in connection with the Second BKU Term Loan.

Interest on the BKU Line of Credit is variable based on the Lender's Prime Rate. During the three months ended June 30, 2025 and 2024, we recorded interest expense and made payments of $7,667 and $8,689, respectively, and $15,214 and $17,283 for the six months ended June 30, 2025 and 2024, respectively, related to the BKU Line of Credit.

As of June 30, 2025, we had a balance of $1,742,720 classified as current liabilities and $3,898,604 classified as noncurrent liabilities, net of $88,347 of debt issuance costs, in our condensed consolidated balance sheet related to the First BKU Term Loan and the Second BKU Term Loan. As of December 31, 2024, we had a balance of $1,686,018 classified as current liabilities and $4,782,271 classified as noncurrent liabilities, net of $96,759 of debt issuance costs, in our condensed consolidated balance sheet related to the First BKU Term Loan and the Second BKU Term Loan. During the three months ended June 30, 2025, we repaid $400,000 of the line of credit for a period of 30-days in compliance with the covenants of the line of credit. As of June 30, 2025 and December 31, 2024, we had a balance of $0 and $400,000, respectively, of principal outstanding under the BKU Line of Credit. Subsequent to June 30, 2025, we drew $400,000 on the BKU Line of Credit.

Amortization of debt origination costs under the Bank United Credit Facility is included as a component of interest expense in the condensed consolidated statements of operations and amounted to approximately $7,012 and $4,206 for the three months ended June 30, 2025 and 2024, respectively, and 14,024 and $8,411 for the six months ended June 30, 2025 and 2024, respectively.

The BankUnited Credit Facility contains financial covenants tested semi-annually, on June 30<sup>th</sup> and December 31st, on a trailing twelve-month basis that require us to maintain a minimum debt service coverage ratio of 1.25:1.00 and a maximum funded debt/EBITDA ratio of 3.00:1.00. In addition, the BankUnited Credit Facility contains a liquidity covenant that requires us to hold a cash balance at BankUnited with a daily minimum deposit balance of $2,000,000. As of June 30, 2025, we believe that we are in compliance with all of the debt covenants.

**Critical Accounting Estimates**

The preparation of financial statements in accordance with accounting principles generally accepted in the United States ("<u>U.S. GAAP</u>") 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, 2024.

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.

**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, 2024.

**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 June 30, 2025. 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, 2024, filed with the SEC on March 27, 2025, as amended, 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Developing formal policies and procedures over the Company's fraud risk assessment and risk management function;

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Entering into an agreement with a third-party consultant that assists us in analyzing complex transactions and the appropriate accounting treatment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Enhancing our policies, procedures and documentation of period end closing procedures;

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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.

**PART II** — **OTHER INFORMATION**

**ITEM 1. LEGAL PROCEEDINGS**

On June 21, 2024, the Company filed a complaint in Los Angeles County Superior Court against NSL Ventures ("<u>NSL</u>"), the Socialyte seller, and its principals alleging that the defendants breached the Socialyte Purchase Agreement and committed acts of fraud and negligence in connection with that transaction, and that the Company is entitled to monetary damages caused by those acts. On September 16, 2024, the defendants answered the Complaint with a general denial and affirmative defenses. On September 16, 2024 defendant NSL also filed a Cross-complaint against the Company and Social Midco, LLC, alleging a single cause of action for breach of contract. The Company and Social Midco answered the cross-complaint on October 1, 2024. Trial has been scheduled by the Court for February 2026. Due to the early stage of the litigation, an estimate of any possible loss or range of loss cannot be made at this time. The Company is not aware of any other 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 other pending litigation is not expected to have a material effect in the Company's financial position, results of operations and cash flows.

**ITEM 1A. RISK FACTORS**

Not required for a "smaller reporting company."

**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**

No officers or directors, as defined in Rule 16a-1(f), adopted and/or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement, as defined in Regulation S-K Item 408, during the quarter ended June 30, 2025.

The following information is included in this Item 5 in lieu of filing a Form 8-K:

**Item 1.01 Entry into a Material Definitive Agreement**

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

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

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

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

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

On August 13, 2025 we issued 244,698 shares of Common Stock to Lincoln Park as an initial fee for its commitment to Purchase Shares of our Common Stock under the 2025 LP Purchase Agreement (the "Initial Commitment Shares"). We may issue up to 122,349 additional shares of Common Stock pro-rata in connection with the sale of Purchase Shares (the "Additional Commitment Shares, and together with the Initial Commitment Shares, the "Commitment Shares").

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

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

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

The Company agrees that it shall file with the Securities Exchange Commission (the "SEC") within 20 business days of the date of the 2025 LP Purchase Agreement, a new Registration Statement on Form S-1 (the "Registration Statement") covering the resale of Common Stock in accordance with the terms of the 2025 LP Registration Rights Agreement, and until the Registration Statement is declared effective, the Company shall not file any other registration statement with the SEC under the Securities Act.

The foregoing is a summary description of certain terms of the 2025 LP Purchase Agreement and the 2025 LP Registration Rights Agreement and, by its nature, is incomplete. Copies of the 2025 LP Purchase Agreement and the 2025 LP Registration Rights Agreement are filed as Exhibits 10.3 and 4.2 attached hereto. The foregoing descriptions of the 2025 LP Purchase Agreement and the 2025 LP Registration Rights Agreement are qualified in their entirety by reference to such exhibits. The 2025 LP Purchase Agreement and 2025 LP Registration Rights Agreement contain customary representations and warranties, covenants and indemnification provisions that the parties made to, and solely for the benefit of, each other in the context of all of the terms and conditions of such agreements and in the context of the specific relationship between the parties thereto. The provisions of the 2025 LP Purchase Agreement and the 2025 LP Registration Rights Agreement, including any representations and warranties contained therein, are not for the benefit of any party other than the parties thereto and are not intended as documents for investors and the public to obtain factual information about the current state of affairs of the parties thereto. Rather, investors and the public should look to other disclosures contained in the Company's annual, quarterly and current reports it may file with the SEC.

The information contained in this Item 5 on this Quarterly Report on Form 10-Q shall not constitute an offer to sell or the solicitation of an offer to buy the shares of the Company's Common Stock discussed herein, nor shall there be any offer, solicitation or sale of the shares in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

**Item 3.02 Unregistered Sales of Equity Securities.**

Between May 30, 2025 and July 28, 2025, the Company entered into five subscription agreements (the "<u>Subscription Agreements</u>") with investors for five convertible promissory notes (each a <u>"Notes</u>") in the aggregate principal amount of $660,000 and received cash proceeds of $660,000. The Notes bear interest at a rate of 10% per annum. Four of the Notes, with an aggregate principal amount of $560,000, mature four years from their respective issuance dates and one of the Notes with an aggregate principal amount of $100,000 matures three years from its issuance date. The noteholders may convert the principal balance of the Notes and any accrued interest thereon at any time before the maturity date of the Notes into common stock of the Company ("<u>Common Stock</u>"). The conversion price of a $100,000 Note is $1.07 per share, the conversion price of a $100,000 Note is $1.12 per share, the conversion price of a $100,000 Note is $1.06 per share, the conversion price of a $100,000 Note is $1.25 per share and the conversion price of a $250,000 Note is $1.28 per share. The conversion prices for these Notes were either above or the closing price of the Common Stock on the Nasdaq Stock Market on the respective dates of those Notes.

The foregoing description of the terms of the Subscription Agreements, the Notes, and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the form of Subscription Agreement and the form of Note, which are included as Exhibits 4.1 and 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 13, 2023 and are incorporated herein by reference.

The issuance and sale of the Notes, and any shares of common stock to be issued upon conversion thereof will be issued, by the Company in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act.

 

**ITEM 6. EXHIBITS**

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| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 3.1 | [Amended and Restated Articles of Incorporation of Dolphin Entertainment, Inc.](https://www.sec.gov/Archives/edgar/data/1282224/000107997325000795/ex3x1.htm) (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q filed on May 13, 2025 (File No. 001-38331)) |
| 3.2 | [Bylaws of Dolphin Digital Media, Inc. dated as of December 3, 2014](https://www.sec.gov/Archives/edgar/data/1282224/000135448814006106/dpdm_ex32.htm) (incorporated by reference to Exhibit 3.2 to Current Report on Form 8-K, filed on December 9, 2014 (File No. 000-560621)) |
| 4.1 | [Form of Dolphin Entertainment LLC Convertible Note](https://www.sec.gov/Archives/edgar/data/1282224/000107997325000795/ex4x1.htm) (incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q filed on May 13, 2025 (File No. 001-38331)) |
| 4.2\* | [Lincoln Park Registration Rights Agreement dated August 12, 2025 (filed herewith)](ex4x2.htm) |
| 10.1 | [Bass Consulting Agreement dated May 13, 2025](https://www.sec.gov/Archives/edgar/data/1282224/000107997325000795/ex10x1.htm) (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on May 13, 2025 (File No. 001-38331)) |
| 10.2 | [Dolphin Entertainment LLC Note Exchange Agreement](https://www.sec.gov/Archives/edgar/data/1282224/000107997325000795/ex10x2.htm) [Dolphin Entertainment LLC Note Exchange Agreement](https://www.sec.gov/Archives/edgar/data/1282224/000107997325000795/ex10x2.htm) (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed on May 13, 2025 (File No. 001-38331)) |
| 10.3\* | [Lincoln Park Purchase Agreement dated August 12, 2025 (filed herewith)](ex10x3.htm) |
| 31.1\* | [Certification of Chief Executive Officer of the Company pursuant to Section 302 of the Sarbanes Oxley Act of 2002](ex31x1.htm) |
| 31.2\* | [Certification of Chief Financial Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex31x2.htm) |
| 32.1# | [Certification of Chief Executive Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex32x1.htm) |
| 32.2# | [Certification of Chief Financial Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex32x2.htm) |
| 101.INS\* | Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH\* | Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
| 101.DEF\* | Inline XBRL Taxonomy Extension Definition Linkbase |
| 101.LAB\* | Inline XBRL Taxonomy Extension Label Linkbase |
| 101.SCH\* | Inline XBRL Taxonomy Extension Presentation Linkbase |
| 104\* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

---

\* Filed herewith. <br> # Furnished herewith.

**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 August 14, 2025.

---

| | |
|:---|:---|
| **Dolphin Entertainment, Inc.** | **Dolphin Entertainment, Inc.** |
| By: | /s/Willaim O'Dowd IV |
|  | Name: William O'Dowd IV |
|  | Chief Executive Officer |

---

---

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

---

## Exhibit 4.2

Exhibit 4.2

**REGISTRATION RIGHTS AGREEMENT**

**THIS REGISTRATION RIGHTS AGREEMENT** (this "<u>Agreement</u>"), dated as of August 12, 2025, is made by and between **DOLPHIN ENTERTAINMENT, INC.**, a Florida corporation (the "<u>Company</u>"), and **LINCOLN PARK CAPITAL FUND, LLC**, an Illinois limited liability company (together with its permitted assigns, the "<u>Buyer</u>"). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement by and between the parties hereto, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the "<u>Purchase Agreement</u>").

**WHEREAS:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.Upon the terms and subject to the conditions of the Purchase Agreement, (i) the Company has agreed to issue to the Investor, and the Investor has agreed to purchase, up to Fifteen Million Dollars ($15,000,000) of the Company's common stock, par value $0.015 per share (the "<u>Common Stock</u>"), pursuant to the Purchase Agreement (such shares, the "<u>Purchase Shares</u>"), and (ii) the Company has agreed to issue to the Investor such number of shares of shares of Common Stock as is required pursuant to the Purchase Agreement (the "<u>Commitment Shares</u>"); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.To induce the Investor to enter into the Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "<u>Securities Act</u>"), and applicable state securities laws.

**NOW, THEREFORE,** in consideration of the promises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Buyer hereby agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>DEFINITIONS</u>.

As used in this Agreement, the following terms shall have the following meanings:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a."<u>Investor</u>" means the Buyer, any transferee or assignee thereof to whom the Buyer assigns its rights under this Agreement in accordance with <u>Section 9</u> and who agrees to become bound by the provisions of this Agreement, and any transferee or assignee thereof to whom a transferee or assignee assigns its rights under this Agreement in accordance with <u>Section 9</u> and who agrees to become bound by the provisions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b."<u>Person</u>" means any individual or entity including but not limited to any corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c."<u>Register</u>," "<u>registered</u>," and "<u>registration</u>" refer to a registration effected by preparing and filing one or more registration statements of the Company in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule providing for offering securities on a continuous basis ("<u>Rule 415</u>"), and the declaration or ordering of effectiveness of such registration statement(s) by the United States Securities and Exchange Commission (the "<u>SEC</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d."<u>Registrable Securities</u>" means all of the Commitment Shares and the Purchase Shares that may, from time to time, be issued or become issuable to the Investor under the Purchase Agreement (without regard to any limitation or restriction on purchases), and any and all shares of capital stock issued or issuable with respect to the Purchase Shares or the Commitment Shares or the Purchase Agreement as a result of any stock split, reverse stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitation on purchases under the Purchase Agreement, provided however, that "Registrable Securities" shall not include any security that is eligible to be sold by the holder thereof, without the application of any current public information, volume or manner of sale restrictions pursuant to Rule 144 promulgated under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e."<u>Registration Statement</u>" means one or more registration statements of the Company covering only the resale of the Registrable Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>REGISTRATION</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Mandatory Registration.</u> The Company shall, within twenty (20) Business Days from the date of this Agreement, file with the SEC an initial Registration Statement on Form S-1 covering the maximum number of Registrable Securities as the Company shall be permitted to be included thereon in accordance with applicable SEC rules, regulations and interpretations so as to permit the resale of such Registrable Securities by the Investor under Rule 415 under the Securities Act at then prevailing market prices (and not fixed prices), as mutually determined by both the Company and the Investor in consultation with their respective legal counsel (in any case including all of the Commitment Shares), subject to the aggregate number of authorized shares of the Company's Common Stock then available for issuance in its Articles of Incorporation. The initial Registration Statement shall register only the Registrable Securities. The Investor and its counsel shall have a reasonable opportunity to review and comment upon such Registration Statement and any amendment or supplement to such Registration Statement and any related prospectus prior to its filing with the SEC, and the Company shall give due consideration to all comments received from the Investor or its counsel. The Investor acknowledges that it will be identified in the initial Registration Statement as an underwriter within the meaning of Section 2(a)(11) of the Securities Act and shall furnish all information reasonably requested by the Company for inclusion therein. The Company shall use commercially reasonable efforts to have the Registration Statement and any amendment declared effective by the SEC as soon as practicable. The Company shall use reasonable best efforts to keep the Registration Statement effective pursuant to Rule 415 promulgated under the Securities Act and available for the resale by the Investor of all of the Registrable Securities covered thereby at all times until the date on which the Investor shall have resold all the Registrable Securities covered thereby and no Available Amount remains under the Purchase Agreement (the "<u>Registration Period</u>"). The Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Rule 424 Prospectus</u>. The Company shall, as required by applicable securities regulations, from time-to-time file with the SEC, pursuant to Rule 424 promulgated under the Securities Act, the prospectus and prospectus supplements, if any, to be used in connection with resales of the Registrable Securities by the Investor under the Registration Statement during the Registration Period. The Investor and its counsel shall have a reasonable opportunity to review and comment upon such prospectus prior to its filing with the SEC, and the Company shall give due consideration to all comments received from the Investor or its counsel. The Investor shall use its commercially reasonable efforts to provide any such comments within one (1) Business Day from the date the Investor receives the final pre-filing version of such prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>Sufficient Number of Shares Registered</u>. In the event the number of shares available under the Registration Statement is insufficient to cover all of the Registrable Securities, the Company shall, to the extent necessary and permissible, amend the Registration Statement or file a new Registration Statement (a "<u>New Registration Statement</u>"), so as to cover all of such Registrable Securities (subject to the limitations set forth in <u>Section 2(a)</u> hereof) as soon as reasonably practicable, but in any event not later than ten (10) Business Days after the necessity therefor arises, subject to any limits that may be imposed by the SEC pursuant to Rule 415 under the Securities Act. The Company shall use its commercially reasonable efforts to cause such amendment and/or New Registration Statement to become effective as soon as practicable following the filing thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. <u>Offering</u>. If the staff of the SEC (the "<u>Staff</u>") or the SEC seeks to characterize any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities that does not permit such Registration Statement to become effective and be used for resales by the Investor under Rule 415 at then-prevailing market prices (and not fixed prices), or if after the filing of the initial Registration Statement with the SEC pursuant to <u>Section 2(a)</u> hereof, the Company is otherwise required by the Staff or the SEC to reduce the number of Registrable Securities included in such initial Registration Statement, then the Company shall reduce the number of Registrable Securities to be included in such initial Registration Statement (with the prior consent, which shall not be unreasonably withheld, delayed or conditioned, of the Investor and its legal counsel as to the specific Registrable Securities to be removed therefrom) until such time as the Staff and the SEC shall so permit such Registration Statement to become effective and be used as aforesaid. In the event of any reduction in Registrable Securities pursuant to this paragraph, the Company shall file one or more New Registration Statements in accordance with <u>Section 2(c)</u> hereof until such time as all Registrable Securities have been included in Registration Statements that have been declared effective and the prospectus contained therein is available for use by the Investor. Notwithstanding any provision herein or in the Purchase Agreement to the contrary, the Company's obligations to register Registrable Securities (and any related conditions to the Investor's obligations) shall be qualified as necessary to comport with any requirement of the SEC or the Staff as addressed in this <u>Section 2(d)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>RELATED OBLIGATIONS</u>.

With respect to the Registration Statement and whenever any Registrable Securities are to be registered pursuant to <u>Section 2</u> hereof, including on any New Registration Statement, the Company shall use its commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to any Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep the Registration Statement or any New Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement or any New Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the Investor as set forth in such Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.The Company shall permit the Investor to review and comment upon the Registration Statement or any New Registration Statement and all amendments and supplements thereto at least two (2) Business Days prior to their filing with the SEC (except to the extent any such document contains material non-public information after the effective date of the initial Registration Statement), and not file any document in a form to which Investor reasonably objects. The Investor shall use its commercially reasonable efforts to comment upon the Registration Statement or any New Registration Statement and any amendments or supplements thereto within two (2) Business Days from the date the Investor receives the final version thereof. The Company shall furnish to the Investor, without charge any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to the Registration Statement or any New Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Upon request of the Investor, the Company shall furnish to the Investor, (i) promptly after the same is prepared and filed with the SEC, at least one copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits, (ii) upon the effectiveness of any Registration Statement, a copy of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as the Investor may reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as the Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by the Investor. For the avoidance of doubt, any filing available to the Investor via the SEC's live EDGAR system shall be deemed "furnished to the Investor" hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.The Company shall use commercially reasonable efforts to (i) register and qualify the Registrable Securities covered by a Registration Statement under such other securities or "blue sky" laws of such jurisdictions in the United States as the Investor reasonably requests (unless an exemption from registration and qualification applies), (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this <u>Section 3(d)</u>, (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify the Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or "blue sky" laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.As promptly as practicable after becoming aware of such event or facts, the Company shall notify the Investor of the happening of any event or existence of such facts as a result of which the prospectus included in any Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, non-public information regarding the Company), and promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and deliver a copy of such supplement or amendment to the Investor (or such other number of copies as the Investor may reasonably request). The Company shall also promptly notify the Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to the Investor by email on the same day of such effectiveness or by overnight mail), (ii) of any request by the SEC for amendments or supplements to any Registration Statement or related prospectus or related information, and (iii) of the Company's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.The Company shall use its commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of any Registration Statement, or the suspension of the qualification of any Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Investor of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g.The Company shall (i) cause all the Registrable Securities to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) secure designation and quotation of all the Registrable Securities on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligation under this <u>Section 3(g)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h.The Company shall comply with <u>Section 6(b)</u> of the Purchase Agreement with respect to the issuance of Registrable Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.The Company shall at all times provide a transfer agent and registrar with respect to its Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j.If reasonably requested in writing by the Investor, the Company shall (i) as soon as practicable after receipt of written notice from the Investor, incorporate in a prospectus supplement or post-effective amendment such information as the Investor reasonably believes necessary to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities; (ii) make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k.The Company shall use its commercially reasonable efforts to cause the Registrable Securities covered by any Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l.On the date any Registration Statement which includes the Registrable Securities is declared effective by the SEC, the Company shall deliver, and shall cause its legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investor) confirmation that such Registration Statement has been declared effective by the SEC in a form acceptable to the transfer agent. Thereafter, if reasonably requested by the Investor at any time, the Company (acting directly or through its counsel) shall deliver to the Investor, which may be via e-mail, a written confirmation whether or not the effectiveness of such Registration Statement has lapsed at any time for any reason (including, without limitation, the issuance of a stop order by the SEC) and whether or not the Registration Statement is available to the Investor for sale of all of the Registrable Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m.Company agrees to take all other reasonable actions as necessary and reasonably requested in writing by the Investor to expedite and facilitate disposition by the Investor of the Registrable Securities pursuant to any Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>OBLIGATIONS OF THE INVESTOR</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.The Company shall notify the Investor in writing of the information the Company reasonably requires from the Investor in connection with any Registration Statement hereunder. The Investor shall as soon as practicable furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.The Investor agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder and any amendments and supplements thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.The Investor agrees that, upon receipt of any notice from the Company of the happening of any event or existence of facts of the kind described in <u>Section 3(f)</u> hereof or the first sentence of <u>Section 3(e)</u> hereof, the Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until the Investor's receipt of the copies of a notice regarding the resolution or withdrawal of the stop order or suspension as contemplated by <u>Section 3(f)</u> hereof or the supplemented or amended prospectus as contemplated by the first sentence of <u>Section 3(e)</u> hereof. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to promptly deliver shares of Common Stock without any restrictive legend in accordance with the terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which the Investor has entered into a contract for sale prior to the Investor's receipt of a notice from the Company to the Investor of the happening of any event of the kind described in <u>Section 3(f)</u> hereof or the first sentence of <u>Section 3(e)</u> hereof and for which the Investor has not yet settled.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>EXPENSES OF REGISTRATION</u>.

All reasonable expenses of the Company, other than sales or brokerage commissions and fees and disbursements or counsel for, and other expenses of, the Investor, incurred in connection with registrations, filings or qualifications pursuant to <u>Sections 2</u> and <u>3</u> hereof, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company, shall be paid by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.<u>INDEMNIFICATION</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor, each Person, if any, who controls the Investor, the members, directors, officers, partners, employees, agents, managers, and representatives of the Investor and each Person, if any, who controls the Investor within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the "<u>Exchange Act</u>") (each, an "<u>Indemnified Person</u>"), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys' fees, amounts paid in settlement (with the prior written consent of the Company, which shall not be unreasonably withheld, conditioned or delayed) or reasonable expenses, joint or several (collectively, "<u>Claims</u>"), in each case, reasonably incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto ("<u>Indemnified Damages</u>"), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in the Registration Statement, any New Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other "blue sky" laws of any jurisdiction in which Registrable Securities are offered, or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to the Registration Statement or any New Registration Statement or (iv) any material violation by the Company of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, "<u>Violations</u>"). The Company shall reimburse each Indemnified Person promptly as such expenses are incurred and are due and payable, for any reasonable, out-of-pocket and documented legal fees or other reasonable, out-of-pocket and documented expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this <u>Section 6(a)</u>: (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information about the Investor furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the Registration Statement, any New Registration Statement or any such amendment thereof or supplement thereto or prospectus contained therein, if such Registration Statement, New Registration Statement or amendment thereof or supplement thereto or prospectus was timely made available by the Company pursuant to <u>Section 3(c)</u> or <u>Section 3(e)</u> hereof; (ii) with respect to any superseded prospectus, shall not inure to the benefit of any Indemnified Person from whom the Indemnified Person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any person controlling such Indemnified Person) if the untrue statement or omission of material fact contained in the superseded prospectus was corrected in the revised prospectus, as then amended or supplemented, if such revised prospectus was timely made available by the Company pursuant to Section 3(c) or Section 3(e), and the Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding such advice, used it; (iii) shall not be available to the extent such Claim is based on a failure of the Investor to provide notice to or to deliver or to cause to be delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to <u>Section 3(c)</u> or <u>Section 3(e)</u>; (iv) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld, delayed or conditioned and (v) shall not apply if and to the extent any Claim arises due to the gross negligence, fraud or willful misconduct of any Indemnified Person, as determined by a court of competent jurisdiction. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the rights and obligations hereunder pursuant to <u>Section 9</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.In connection with the Registration Statement or any New Registration Statement, the Investor agrees to indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in <u>Section 6(a)</u> hereof, the Company, each of its directors, each of its officers who signs the Registration Statement or any New Registration Statement, each Person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (collectively and together with an Indemnified Person, an "<u>Indemnified Party</u>"), against any Claim or Indemnified Damages to which any of them may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information about the Investor set forth on <u>Exhibit A</u> attached hereto and furnished to the Company by the Investor expressly for use in connection with such Registration Statement (as such information about the Investor may be updated and furnished to the Company by the Investor expressly for use in connection with any New Registration Statement or prospectus); and, subject to <u>Section 6(d)</u> hereof, the Investor will reimburse any legal or other expenses reasonably incurred by any Indemnified Party in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in <u>Section 7</u> hereof shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld, delayed or conditioned; provided, further, however, that the Investor shall be liable under this <u>Section 6(b)</u> for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to the Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investor pursuant to <u>Section 9</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Promptly after receipt by an Indemnified Person or Indemnified Party under this <u>Section 6</u> of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this <u>Section 6</u>, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly notified, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the reasonable fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this <u>Section 6</u>, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.The indemnification required by this <u>Section 6</u> shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred. Any Person receiving a payment pursuant to this Section 6 which person is later determined to not be entitled to such payment shall return such payment to the person making it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.<u>CONTRIBUTION</u>.

To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under <u>Section 6</u> hereof to the fullest extent permitted by law; provided, however, that: (i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.<u>REPORTS AND DISCLOSURE UNDER THE SECURITIES ACT</u>.

With a view to making available to the Investor the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration ("<u>Rule 144</u>"), the Company agrees, at the Company's sole expense, so long as the Investor owns Registrable Securities, to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.make and keep public information available, as those terms are understood and defined in Rule 144;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.furnish to the Investor so long as the Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting and or disclosure provisions of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.take such additional action as is reasonably requested by the Investor to enable the Investor to sell the Registrable Securities pursuant to Rule 144, including, without limitation, delivering all such legal opinions, consents, certificates, resolutions and instructions to the Company's Transfer Agent as may be reasonably requested from time to time by the Investor and otherwise fully cooperate with Investor and Investor's broker to effect such sale of securities pursuant to Rule 144.

The Company agrees that damages may be an inadequate remedy for any breach of the terms and provisions of this <u>Section 8</u> and that Investor shall, whether or not it is pursuing any remedies at law, be entitled to seek equitable relief in the form of a preliminary or permanent injunction, without having to post any bond or other security, upon any breach or threatened breach of any such terms or provisions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>ASSIGNMENT OF REGISTRATION RIGHTS</u>.

The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor; provided, however, that any transaction, whether by merger, reorganization, restructuring, consolidation, financing or otherwise, whereby the Company remains the surviving entity immediately after such transaction shall not be deemed an assignment. The Investor may not assign its rights under this Agreement without the prior written consent of the Company, other than to an affiliate of the Investor controlled by Jonathan Cope or Josh Scheinfeld, in which case the assignee must agree in writing to be bound by the terms and conditions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.<u>AMENDMENT OF REGISTRATION RIGHTS</u>.

No provision of this Agreement may be amended or waived by the parties from and after the date that is one (1) Business Day immediately preceding the initial filing of the Registration Statement with the SEC. Subject to the immediately preceding sentence, no provision of this Agreement may be (i) amended other than by a written instrument signed by both parties hereto or (ii) waived other than in a written instrument signed by the party against whom enforcement of such waiver is sought. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.<u>MISCELLANEOUS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by email (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses for such communications shall be:

If to the Company:

Dolphin Entertainment, Inc.

150 Alhambra Circle, Suite 1200

Coral Gables, FL 33134

Telephone:(305) 774-0407

E-mail:William O' Dowd

Attention:billodowd@dolphinentertainment.com

With a copy to (which shall not constitute notice or service of process):

K&L Gates LLP

200 S. Biscayne Blvd., Suite 3900

Miami, FL 33131

Telephone:(305) 539-3306

E-mail: clayton.parker@klgates.com

Attention:Clayton E. Parker, Esq.

If to the Investor:

Lincoln Park Capital Fund, LLC

415 North LaSalle Drive, Suite 700B

Chicago, IL 60654

Telephone:(312) 822-9300

E-mail:jscheinfeld@lpcfunds.com/jcope@lpcfunds.com

Attention:Josh Scheinfeld/Jonathan Cope

If to the Transfer Agent:

Nevada Agency and Transfer Company

50 West Liberty Street, Suite 880

Reno, Nevada 89501

Telephone:(775) 322-0626

Email: tiffany@natco.com

Attention:Tiffany Baxter

or at such other address, email address and/or to the attention of such other person as the recipient party has specified by written notice given to each other party at least three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's email account containing the time, date, recipient email address, as applicable, or (C) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by email or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively. Any party to this Agreement may give any notice or other communication hereunder using any other means (including messenger service, ordinary mail or electronic mail), but no such notice or other communication shall be deemed to have been duly given unless it actually is received by the party for whom it is intended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.The corporate laws of the State of Florida shall govern all issues concerning the relative rights of the Company and its stockholders. All questions concerning the construction, validity, enforcement and interpretation of this Agreement and the other Transaction Documents shall be governed by the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of Illinois, County of Cook, for the adjudication of any dispute hereunder or under the other Transaction Documents or in connection herewith or therewith, or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. **EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.This Agreement and the Purchase Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings among the parties hereto, other than those set forth or referred to herein and therein. This Agreement and the Purchase Agreement supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.Subject to the requirements of <u>Section 9</u> hereof, this Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g.This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by e-mail in a ".pdf" format data file of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h.Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j.This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <u>TERMINATION</u>.

The obligations of the Company contained in Sections 2, 3, 5 and 8 of this Agreement shall terminate in their entirety upon the earlier of (i) the date on which the Investor shall have sold all the Registrable Securities and no Available Amount remains under the Purchase Agreement and (ii) 180 days following the earlier of (A) the Maturity Date and (B) the date of termination of the Purchase Agreement; provided that as long as any Registrable Securities remain unsold by the Investor, the Company must make available "current public information" pursuant to Rule 144 promulgated under the Securities Act until the Investor may sell the Securities thereunder without any restrictions (including any restrictions under Rule 144(c) or Rule 144(i)).

**\* \* \* \* \* \***

**IN WITNESS WHEREOF,** the parties have caused this Registration Rights Agreement to be duly executed as of day and year first above written.

**<u>THE COMPANY</u>:**

**DOLPHIN ENTERTAINMENT, INC.**

By: <u>/s/ William O'Dowd, IV</u>

Name: William O'Dowd, IV

Title: Chief Executive Officer

**<u>THE INVESTOR:</u>**

**LINCOLN PARK CAPITAL FUND, LLC**

**BY: LINCOLN PARK CAPITAL, LLC**

**BY: ROCKLEDGE CAPITAL CORPORATION**

By: <u>/s/ Josh Scheinfeld</u>

Name: Josh Scheinfeld

Title: President

## Exhibit 10.3

Exhibit 10.3

**PURCHASE AGREEMENT**

**THIS PURCHASE AGREEMENT** (the "<u>Agreement</u>"), dated as of August 12, 2025, is made by and between **DOLPHIN ENTERTAINMENT, INC.,** a Florida corporation (the "<u>Company</u>"), and **LINCOLN PARK CAPITAL FUND**, **LLC**, an Illinois limited liability company (the "<u>Investor</u>"). Capitalized terms used herein and not otherwise defined herein are defined in <u>Section 1</u> hereof.

**WHEREAS:**

Subject to the terms and conditions set forth in this Agreement, the Company wishes to sell to the Investor, and the Investor wishes to buy from the Company, up to Fifteen Million Dollars ($15,000,000) of the Company's common stock, $0.015 par value per share (the "<u>Common Stock</u>"). The shares of Common Stock to be purchased hereunder are referred to herein as the "<u>Purchase Shares</u>."

NOW THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Investor hereby agree as follows:

1. CERTAIN DEFINITIONS.

For purposes of this Agreement, the following terms shall have the following meanings:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>"Accelerated Purchase Date"</u> means, with respect to any Accelerated Purchase made pursuant to <u>Section 2(b)</u> hereof or any Additional Accelerated Purchase pursuant to <u>Section 2(c)</u> hereof, the Business Day immediately following the applicable Regular Purchase Date with respect to the corresponding Regular Purchase made pursuant to <u>Section 2(a)</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>"Accelerated Purchase Period"</u> means, with respect to an Accelerated Purchase made pursuant to <u>Section 2(b)</u> hereof, such period of time on the Accelerated Purchase Date beginning at the official open of trading on the Principal Market, and ending at the earliest of (i) the official close of trading on the Principal Market on such Accelerated Purchase Date, (ii) such time that the total number (or volume) of shares of Common Stock traded on the Principal Market has exceeded the quotient of (A) the Accelerated Purchase Share Amount, divided by (B) 0.3, and (iii) such time on the Accelerated Purchase Date that the Sale Price has fallen below any minimum price threshold set forth in the applicable Purchase Notice by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>"Accelerated Purchase Share Amount"</u> means, with respect to an Accelerated Purchase made pursuant to <u>Section 2(b)</u> hereof or an Additional Accelerated Purchase made pursuant to <u>Section 2(c)</u> hereof, the number of Purchase Shares directed by the Company to be purchased by the Investor in a Purchase Notice, which number of Purchase Shares shall not exceed the lesser of (i) 300% of the applicable Regular Purchase Share Limit for the corresponding Regular Purchase and (ii) 30% of the total volume of shares of Common Stock traded on the Principal Market during the Accelerated Purchase Period or the Additional Accelerated Purchase Period, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>"Additional Accelerated Purchase Period"</u> means, with respect to an Additional Accelerated Purchase pursuant to <u>Section 2(c)</u> hereof, such period of time on the Accelerated Purchase Date beginning at the latest of (i) the end of the Accelerated Purchase Period for the corresponding Accelerated Purchase made pursuant to <u>Section 2(b)</u> hereof on such Accelerated Purchase Date, (ii) the end of the Additional Accelerated Purchase Period for the most recently completed prior Additional Accelerated Purchase pursuant to <u>Section 2(c)</u> hereof on such Accelerated Purchase Date, as applicable, and (iii) the time at which all Purchase Shares for all prior Purchases, including, those effected on the applicable Accelerated Purchase Date have theretofore been received by the Investor as DWAC Shares in accordance with this Agreement, and ending at the earliest of (i) the official close of trading on the Principal Market on the Accelerated Purchase Date, (ii) such time that the total number (or volume) of shares of Common Stock traded on the Principal Market has exceeded the quotient of (A) the Accelerated Purchase Share Amount, divided by (B) 0.3, and (iii) such time that the Sale Price has fallen below any minimum price threshold set forth in the applicable Purchase Notice by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "Alternate Adjusted Regular Purchase Share Limit" means, with respect to a Regular Purchase made pursuant to <u>Section 2(a)</u> hereof, the maximum number of Purchase Shares which, taking into account the applicable per share Purchase Price therefor calculated in accordance with this Agreement, would enable the Company to deliver to the Investor, on the applicable Regular Purchase Date for such Regular Purchase, a Regular Purchase Notice for a Purchase Amount equal to, or as closely approximating without exceeding, Fifty Thousand Dollars ($50,000).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>"Available Amount"</u> means, initially, Fifteen Million Dollars ($15,000,000) in the aggregate, which amount shall be reduced by the Purchase Amount each time the Investor purchases shares of Common Stock pursuant to <u>Section 2</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>"Bankruptcy Law"</u> means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>"Business Day"</u> means any day on which the Principal Market is open for trading, including any day on which the Principal Market is open for trading for a period of time less than the customary time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>"Closing Sale Price"</u> means, for any security as of any date, the last closing sale price for such security on the Principal Market as reported by the Principal Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>"Confidential Information"</u> means any information disclosed by either party to the other party, either directly or indirectly, in writing, orally or by inspection of tangible objects (including, without limitation, documents, prototypes, samples, plant and equipment), which is designated , either orally or in writing, as "Confidential," "Proprietary" or some similar designation. Information communicated orally shall be considered Confidential Information if such information is confirmed in writing as being Confidential Information within ten (10) Business Days after the initial disclosure. Confidential Information may also include information disclosed to a disclosing party by third parties. Confidential Information shall not, however, include any information which (i) was publicly known and made generally available in the public domain prior to the time of disclosure by the disclosing party; (ii) becomes publicly known and made generally available after disclosure by the disclosing party to the receiving party through no action or inaction of the receiving party; (iii) is already in the possession of the receiving party without any confidentiality restriction at the time of disclosure by the disclosing party as shown by the receiving party's files and records immediately prior to the time of disclosure; (iv) is obtained by the receiving party from a third party without a breach of such third party's obligations of confidentiality; or (v) is independently developed by the receiving party without use of or reference to the disclosing party's Confidential Information, as shown by documents and other competent evidence in the receiving party's possession. Confidential information that is required by law to be disclosed by the receiving party may so be disclosed, provided that (X) the receiving party gives (1) the disclosing party prompt written notice, if legally permissible, of such requirement prior to such disclosure and assistance, if legally permissible, in obtaining an order protecting the information from public disclosure, and (2) will furnish only that proportion of the Confidential Information that is legally required to be disclosed, and (Y) any Confidential Information so disclosed shall maintain its confidentiality protection for all other purposes than such legally compelled disclosure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>"DTC"</u> means The Depository Trust Company, or any successor performing substantially the same function for the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>"DWAC Shares"</u> means shares of Common Stock that are (i) issued in electronic form, (ii) freely tradable and transferable and without restriction on resale and (iii) timely credited by the Company , once a DWAC notice is received, to the Investor's or its designee's specified Deposit/Withdrawal at Custodian (DWAC) account with DTC under its Fast Automated Securities Transfer (FAST) Program, or any similar program hereafter adopted by DTC performing substantially the same function.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>"Exchange Act"</u> means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>"Fully Adjusted Regular Purchase Share Limit"</u> means, with respect to any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction from and after the date of this Agreement, the Regular Purchase Share Limit in effect on the applicable date of determination, after giving effect to the full proportionate adjustment thereto made pursuant to Section 2(a) hereof for or in respect of such reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) <u>"Material Adverse Effect"</u> means any material adverse effect on (i) the enforceability of any Transaction Document, (ii) the results of operations, assets, business or financial condition of the Company and its Subsidiaries, taken as a whole, other than any material adverse effect that resulted primarily from (A) any change in the United States or foreign economies or securities or financial markets in general that does not have a disproportionate effect on the Company and its Subsidiaries, taken as a whole, (B) any change that generally affects the industry in which the Company and its Subsidiaries operate that does not have a disproportionate effect on the Company and its Subsidiaries, taken as a whole, (C) any change arising in connection with earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing as of the date hereof, (D) any action taken by the Investor, its affiliates or its or their successors and assigns with respect to the transactions contemplated by this Agreement, (E) the effect of any change in applicable laws or accounting rules that does not have a disproportionate effect on the Company and its Subsidiaries, taken as a whole, or (F) any change resulting from compliance with terms of this Agreement or the consummation of the transactions contemplated by this Agreement, or (iii) the Company's ability to perform in any material respect on a timely basis its obligations under any Transaction Document to be performed as of the date of determination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) <u>"Maturity Date"</u> means the first day of the month immediately following the thirty-six (36) month anniversary of the Commencement Date (as defined herein).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) <u>"New Registration Statement"</u> has the meaning set forth in the Registration Rights Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) <u>"Person"</u> means an individual or entity including but not limited to any limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) <u>"Principal Market"</u> means The Nasdaq Capital Market (or any nationally recognized successor thereto); provided, however, that in the event the Company's Common Stock is ever listed or traded on The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock Exchange, NYSE American, the NYSE Arca, or the OTCQX or OTCQB operated by the OTC Markets Group, Inc. (or any nationally recognized successor to any of the foregoing), then the "Principal Market" shall mean such other market or exchange on which the Company's Common Stock is then listed or traded.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) <u>"Purchase"</u> means any Regular Purchase, Accelerated Purchase or Additional Accelerated Purchase made hereunder, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) <u>"Purchase Amount"</u> means, with respect to any Regular Purchase, Accelerated Purchase or Additional Accelerated Purchase made hereunder, as applicable, the portion of the Available Amount to be purchased by the Investor pursuant to <u>Section 2</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>"Purchase Notice"</u> means a notice delivered to the Investor pursuant to <u>Section 2</u> with respect to any Regular Purchase, Accelerated Purchase or Additional Accelerated Purchase, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) <u>"Registration Rights Agreement"</u> means that certain Registration Rights Agreement, of even date herewith between the Company and the Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) <u>"Registration Statement"</u> has the meaning set forth in the Registration Rights Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) <u>"Regular Purchase Date"</u> means, with respect to a Regular Purchase made pursuant to <u>Section 2(a)</u> hereof, the Business Day for which the Investor receives, after 4:00 p.m., Eastern time, on such Business Day, or thereafter as permitted by <u>Section 2(a)</u> hereof, a valid Purchase Notice for such Regular Purchase in accordance with this Agreement; provided that any Business Day that is twenty (20) days or less before the filing of any post-effective amendment to the Registration Statement or New Registration Statement, and until the effective date of any such post-effective amendment to the Registration Statement or New Registration Statement, shall not be a Regular Purchase Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) <u>"Regular Purchase Notice"</u> means a Purchase Notice delivered to the Investor with respect to any Regular Purchase.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) <u>"Regular Purchase Share Limit"</u> means Twenty Thousand (20,000) Purchase Shares, <u>provided</u> that the Closing Sale Price is not below $0.10; <u>provided</u>, <u>however</u>, that (i) if the Closing Sale Price of the Common Stock is not below $1.50 on the applicable Regular Purchase Date, the Regular Purchase Share Limit may be increased to up to Twenty-Five Thousand (25,000) Purchase Shares for such Regular Purchase Date; (ii) if the Closing Sale Price of the Common Stock is not below $1.75 on the applicable Regular Purchase Date, the Regular Purchase Share Limit may be increased to up to Fifty Thousand (50,000) Purchase Shares for such Regular Purchase Date; (iii) if the Closing Sale Price of the Common Stock is not below $2.00 on the applicable Regular Purchase Date, the Regular Purchase Share Limit may be increased to up to Seventy-Five Thousand (75,000) Purchase Shares for such Regular Purchase Date; and (iv) if the Closing Sale Price of the Common Stock is not below $2.50 on the applicable Regular Purchase Date, the Regular Purchase Share Limit may be increased to up to One Hundred Thousand (100,000) Purchase Shares for such Regular Purchase Date, in each case such number of Purchase Shares and price per share to be adjusted following any reorganization, recapitalization, non-cash dividend, stock split, reverse stock, split or other similar transaction effected with respect to the Common Stock; <u>provided,</u> that the Investor's committed obligation under any single Regular Purchase shall not exceed Five Hundred Thousand Dollars ($500,000).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) <u>"Sale Price"</u> means any sale price for the shares of Common Stock on the Principal Market as reported by the Principal Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) <u>"SEC"</u> means the U.S. Securities and Exchange Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) <u>"Securities"</u> means, collectively, the Purchase Shares and the Commitment Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee) <u>"Securities Act"</u> means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff) <u>"Subsidiary"</u> means any Person the Company wholly owns or controls, or in which the Company, directly or indirectly, owns a majority of the voting stock or similar voting interest, in each case that would be required to be disclosed pursuant to Item 601(b)(21) of Regulation S-K promulgated under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg) <u>"Transaction Documents"</u> means, collectively, this Agreement and the schedules and exhibits hereto, the Registration Rights Agreement and the schedules and exhibits thereto and each of the other agreements, documents, certificates and instruments entered into or furnished by the parties hereto in connection with the transactions contemplated hereby and thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh) <u>"Transfer Agent"</u> means Nevada Agency and Transfer Company, or such other Person who is then serving as the transfer agent for the Company in respect of the Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>"VWAP"</u> means in respect of an applicable Accelerated Purchase Date, the volume weighted average price of the Common Stock on the Principal Market, as reported on the Principal Market or by another reputable source such as Bloomberg, L.P.

2. PURCHASE OF COMMON STOCK.

Subject to the terms and conditions set forth in this Agreement, the Company has the right, but not the obligation, to sell to the Investor, in the Company's sole and absolute discretion, and the Investor has the obligation to purchase from the Company, Purchase Shares as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Commencement of Regular Purchases of Common Stock</u>. Beginning one (1) Business Day following the satisfaction of the conditions set forth in <u>Sections 7</u> and <u>8</u> hereof (the "<u>Commencement</u>" and the date of satisfaction of such conditions the "<u>Commencement Date</u>") and thereafter, the Company shall have the right, but not the obligation, to direct the Investor, by its delivery to the Investor of a Purchase Notice from time to time on any Regular Purchase Date, if the Closing Sale Price of the Common Stock on the applicable Regular Purchase Date is not below $0.10,to purchase up to the Regular Purchase Share Limit (each such purchase, a "<u>Regular Purchase</u>") at a per share purchase price equal to ninety-seven percent (97%) of the lesser of: (i) the lowest Sale Price of the Common Stock on the applicable Regular Purchase Date and (ii) the arithmetic average of the three (3) lowest Closing Sale Prices for the Common Stock during the ten (10) consecutive Business Days ending on the Business Day immediately preceding such Regular Purchase Date (the "<u>Purchase Price</u>") (such share and dollar amounts shall be appropriately proportionately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction); provided that if, after giving effect to the full proportionate adjustment to the Regular Purchase Share Limit therefor, the Fully Adjusted Regular Purchase Share Limit then in effect would preclude the Company from delivering to the Investor a Regular Purchase Notice hereunder for a Purchase Amount (calculated by multiplying (X) the number of Purchase Shares equal to the Fully Adjusted Regular Purchase Share Limit, by (Y) the Purchase Price per Purchase Share covered by such Regular Purchase Notice on the applicable Regular Purchase Date therefor) equal to or greater than the Alternate Adjusted Regular Purchase Share Limit, the Regular Purchase Share Limit for such Regular Purchase Notice shall not be fully adjusted to equal the applicable Fully Adjusted Regular Purchase Share Limit, but rather the Regular Purchase Share Limit for such Regular Purchase Notice shall be adjusted to equal the applicable Alternate Adjusted Regular Purchase Share Limit as of the applicable Regular Purchase Date for such Regular Purchase Notice. The Company may deliver a Purchase Notice to the Investor for a Regular Purchase as often as each Business Day subject to the second sentence of <u>Section 2(g) hereof</u>. For purposes of this <u>Section 2(a)</u>, a Purchase Notice delivered on a day that is not a Business Day shall be deemed to have been delivered on the most recent Business Day prior to delivery of such Purchase Notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Accelerated Purchases</u>. On any Regular Purchase Date, provided that the Company properly submitted a Purchase Notice for a Regular Purchase for a number of Purchase Shares not less than the Regular Purchase Share Limit then in effect on such Regular Purchase Date and subject to the terms and conditions of this Agreement, the Company shall also have the right, but not the obligation, to direct the Investor, by its delivery to the Investor of a Purchase Notice from time to time in accordance with this Agreement, to purchase the applicable Accelerated Purchase Share Amount (each such purchase, an "<u>Accelerated Purchase</u>") at a per share purchase price equal to ninety-seven percent (97%) of the lesser of (i) the Closing Sale Price of the Common Stock on such applicable Accelerated Purchase Date and (ii) the VWAP for the Accelerated Purchase Period (the "<u>Accelerated Purchase Price</u>"). The Company may deliver Purchase Notices to the Investor for multiple Accelerated Purchases on an Accelerated Purchase Date subject to the second sentence of <u>Section 2(g)</u>. Within one (1) Business Day after completion of each Accelerated Purchase Date for an Accelerated Purchase, the Investor will provide to the Company a written confirmation of such Accelerated Purchase setting forth the applicable Accelerated Purchase Share Amount and Accelerated Purchase Price for such Accelerated Purchase.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Additional Accelerated Purchases</u>. On any Accelerated Purchase Date, provided that the Company properly submitted a Purchase Notice for an Accelerated Purchase and subject to the terms and conditions of this Agreement, the Company shall also have the right, but not the obligation, to direct the Investor, by its delivery to the Investor of a Purchase Notice from time to time in accordance with this Agreement, to purchase the applicable Accelerated Purchase Share Amount (each such purchase, an "<u>Additional Accelerated Purchase</u>") at the Accelerated Purchase Price. The Company may deliver Purchase Notices to the Investor for multiple Additional Accelerated Purchases on an Accelerated Purchase Date subject to the second sentence of <u>Section 2(g)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Payment for Purchase Shares.</u> For each Regular Purchase, the Investor shall pay to the Company an amount equal to the Purchase Amount with respect to such Regular Purchase as full payment for such Purchase Shares via wire transfer of immediately available funds on the same Business Day that the Investor receives such Purchase Shares, if such Purchase Shares are received by the Investor before 1:00 p.m., Eastern time, or, if such Purchase Shares are received by the Investor after 1:00 p.m., Eastern time, the next Business Day. Within one (1) Business Day after completion of each Accelerated Purchase Date for an Accelerated Purchase or Additional Accelerated Purchase, respectively, the Investor will provide to the Company a written confirmation of such Accelerated Purchase setting forth the applicable Accelerated Purchase Share Amount and Accelerated Purchase Price for such Purchase. For each Accelerated Purchase and each Additional Accelerated Purchase, the Investor shall pay to the Company an amount equal to the Purchase Amount with respect to such Purchase as full payment for such Purchase Shares via wire transfer of immediately available funds no later than the second Business Day following the date that the Investor receives the Purchase Shares for such Purchase. If the Company or the Transfer Agent shall fail for any reason or for no reason to electronically transfer any Purchase Shares as DWAC Shares with respect to any Purchase within two (2) Business Days following the receipt by the Company of the Purchase Price or Accelerated Purchase Price, as applicable, for any Purchase therefor in compliance with this <u>Section 2(d)</u>, and if on or after such Business Day the Investor purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Investor of Purchase Shares in anticipation of receiving Purchase Shares from the Company with respect to such Purchase, then the Company shall, within two (2) Business Days after the Investor's request, either (i) pay cash to the Investor in an amount equal to the Investor's total purchase price (including customary brokerage commissions, if any) for the shares of Common Stock so purchased (the "<u>Cover Price</u>"), at which point the Company's obligation to deliver such Purchase Shares as DWAC Shares shall terminate, or (ii) promptly honor its obligation to deliver to the Investor such Purchase Shares as DWAC Shares and pay cash to the Investor in an amount equal to the excess (if any) of the Cover Price over the total Purchase Amount paid by the Investor pursuant to this Agreement for all of the Purchase Shares to be purchased by the Investor in connection with such purchases. All payments made under this Agreement shall be made in lawful money of the United States of America or wire transfer of immediately available funds to such account as the Company may from time to time designate by written notice in accordance with the provisions of this Agreement. Whenever any amount expressed to be due by the terms of this Agreement is due on any day that is not a Business Day, the same shall instead be due on the next succeeding day that is a Business Day.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Compliance with Rules of the Principal Market</u>. Notwithstanding anything in this Agreement to the contrary, and in addition to the limitations set forth in <u>Section 2(f)</u> hereof, the Company shall not issue more than 2,346,371 shares (including the Commitment Shares) of Common Stock for less than $1.12 (the "<u>Minimum Price</u>") under this Agreement, which equals 19.99% of the Company's outstanding shares of Common Stock as of the date hereof (the "<u>Exchange Cap</u>"), unless shareholder approval is obtained to issue shares of Common Stock in excess of the Exchange Cap and otherwise in accordance with the applicable rules of the Principal Market. Notwithstanding the foregoing, the Company shall not be required or permitted to issue, and the Investor shall not be required to purchase, any shares of Common Stock under this Agreement if such issuance would violate the rules or regulations of the Principal Market. The Company may, in its sole discretion, determine whether to obtain shareholder approval to issue and sell shares in excess of the Exchange Cap at a price less than the Minimum Price if such issuance would require shareholder approval under the rules or regulations of the Principal Market. The Exchange Cap shall be reduced, on a share-for-share basis, by the number of shares of Common Stock issued or issuable that may be aggregated with the transactions contemplated by this Agreement under applicable rules of the Principal Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Beneficial Ownership Limitation.</u> Notwithstanding anything to the contrary contained in this Agreement, the Company shall not issue or sell, and the Investor shall not purchase or acquire, any shares of Common Stock under this Agreement which, when aggregated with all other shares of Common Stock then beneficially owned by the Investor and its affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder) would result in the beneficial ownership by the Investor and its affiliates of more than 4.99% of the then issued and outstanding shares of Common Stock (the "<u>Beneficial Ownership Limitation</u>"). Upon the written or oral request of the Investor, the Company shall promptly (but not later than twenty-four (24) hours) confirm orally or in writing to the Investor the number of shares of Common Stock then outstanding. The Investor and the Company shall each cooperate in good faith in the determinations required hereby and the application hereof. The Investor's written certification to the Company of the applicability of the Beneficial Ownership Limitation, and the resulting effect thereof hereunder at any time, shall be conclusive with respect to the applicability thereof and such result absent manifest error.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Excess Share Limitations.</u> If the Company delivers any Purchase Notice for a Purchase Amount in excess of the limitations contained in this <u>Section 2</u>, such Purchase Notice shall be void *ab initio* to the extent of the amount by which the number of Purchase Shares set forth in such Purchase Notice exceeds the number of Purchase Shares which the Company is permitted to include in such Purchase Notice in accordance herewith, and the Investor shall have no obligation to purchase such excess Purchase Shares in respect of such Purchase Notice; <u>provided</u>, <u>however</u>, that the Investor shall remain obligated to purchase the number of Purchase Shares which the Company is permitted to include in such Purchase Notice. If the Company delivers a Purchase Notice, and all Purchase Shares subject to all prior Purchases have not theretofore been received by the Investor as DWAC Shares in accordance with this Agreement, such Purchase Notice shall not be deemed to have been delivered and the Investor shall not be required to purchase any Purchase Shares pursuant to such Purchase Notice until all Purchase Shares for such prior Purchases have been received by the Investor as DWAC Shares. If any issuance of Purchase Shares would result in the issuance of a fraction of a share of Common Stock, the Company shall round down such fraction of a share of Common Stock to the nearest whole share and no fractional shares will be issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Adjustments for Shares and Prices</u>. Except as specifically stated otherwise, all share-related and dollar-related limitations contained in this <u>Section 2</u>, shall be adjusted to take into account any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split, or other similar transaction effected with respect to the Common Stock.

3. INVESTOR'S REPRESENTATIONS AND WARRANTIES.

The Investor represents and warrants to the Company that as of the date hereof and as of the Commencement Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Organization, Authority</u>. The Investor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Accredited Investor Status</u>. The Investor is an "accredited investor" as that term is defined in Rule 501(a)(3) of Regulation D (without regard to Rule 501(a)(4)) promulgated under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Reliance on Exemptions</u>. The Investor understands that the Securities may be offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Investor's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Investment Purpose</u>. The Investor is acquiring the Securities as principal for its own account for investment only and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other Persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting the Investor's right to sell the Securities at any time pursuant to the Registration Statement described herein or otherwise in compliance with applicable federal and state securities laws). The Investor is acquiring the Securities hereunder in the ordinary course of its business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Information; Independent Investigation</u>. The Investor understands that its investment in the Securities involves a high degree of risk. The Investor (i) is able to bear the economic risk of an investment in the Securities including a total loss thereof, (ii) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the proposed investment in the Securities and (iii) has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Company. Neither such inquiries nor any other due diligence investigations conducted by the Investor or its representatives shall modify, amend or affect the Investor's right to rely on the Company's representations and warranties contained in <u>Section 4</u> below. The Investor has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities and is not relying on any accounting, legal, tax or other advice from the Company or its officers, employees, representatives or advisors. The Investor has relied solely upon its own investigation and acknowledges and agrees that the Company neither makes nor has made any representations or warranties with respect to the transactions contemplated hereby other than those expressly set forth in <u>Section 4</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>No Governmental Review</u>. The Investor understands that no U.S. federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of an investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Transfer or Sale</u>. The Investor understands that (i) the Securities may not be offered for sale, sold, assigned, pledged, hypothecated or otherwise transferred unless (A) registered pursuant to the Securities Act or (B) an exemption exists permitting such Securities to be sold, assigned or transferred without such registration; and (ii) any sale of the Securities made in reliance on Rule 144 promulgated under the Securities Act ("<u>Rule 144</u>") may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as such term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Validity; Enforcement</u>. This Agreement and the other Transaction Documents have been duly and validly authorized, executed and delivered on behalf of the Investor and each is a valid and binding agreement of the Investor enforceable against the Investor in accordance with its terms, subject as to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Residency</u>. The Investor's principal place of business is in the State of Illinois.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>No Short Selling</u>. The Investor represents and warrants to the Company that at no time prior to the date of this Agreement has any of the Investor, its agents, representatives or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any (i) "short sale" (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of the Common Stock or (ii) hedging transaction, which establishes a net short position with respect to the Common Stock.

4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to the Investor that, except as set forth in the disclosure schedules attached hereto, which exceptions shall be deemed to be a part of the representations and warranties hereunder, as of the date hereof and as of the Commencement Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Organization and Qualification</u>. The Company and each of its Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any of its Subsidiaries are in violation or default of any of the provisions of its respective certificate or articles of incorporation or formation, bylaws or other organizational or charter documents, except as would not be expected to result in a Material Adverse Effect. Each of the Company and its Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not reasonably be expected to result in a Material Adverse Effect, and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification. The Company has no significant Subsidiaries except as set forth in the SEC Documents (as defined in <u>Section 4(f)</u>).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Authorization; Enforcement; Validity</u>. The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and each of the other Transaction Documents, and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby, including without limitation, the issuance of the Commitment Shares (as defined in <u>Section 5(e)</u>) and the reservation for issuance and the issuance of the Purchase Shares issuable under this Agreement have been duly authorized by the Company's Board of Directors or a validly authorized committee thereof (collectively, the "<u>Board of Directors</u>"), and no further consent or authorization is required by the Company, its Board of Directors or any committee thereof, or its shareholders (except as set forth in <u>Section 2(e)</u> hereof). This Agreement has been, and each other Transaction Document shall be on the Commencement Date, duly executed and delivered by the Company, and this Agreement constitutes, and each other Transaction Document upon its execution on behalf of the Company, shall constitute, the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors' rights and remedies. The Board of Directors of the Company has adopted all applicable resolutions (the "<u>Signing Resolutions</u>") to authorize the Company to enter into and deliver this Agreement and to perform the transactions contemplated hereby. The Signing Resolutions are valid, in full force and effect and have not been modified or supplemented in any respect. The Company has delivered to the Investor a true and correct copy of the Signing Resolutions adopted by the Board of Directors. Except as set forth in this Agreement, no other approvals or consents of the Company's Board of Directors and/or shareholders are necessary under applicable laws and the Company's Amended and Restated Articles of Incorporation in effect on the date hereof (the "<u>Articles of Incorporation</u>") and/or the Company's Bylaws in effect on the date hereof (the "<u>Bylaws</u>") for the Company to authorize the execution and delivery of this Agreement or to perform any of the transactions contemplated hereby, including, but not limited to, the issuance of the Commitment Shares and the issuance of the Purchase Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Capitalization</u>. As of the date hereof, the authorized capital stock of the Company is set forth in the SEC Documents (as defined in <u>Section 4(f)</u>). Except as disclosed in the SEC Documents, (i) no shares of the Company's capital stock are subject to preemptive rights or any other similar rights or any liens, encumbrances and defects ("<u>Liens</u>") suffered, incurred or permitted by the Company, (ii) there are no outstanding debt securities of the Company, (iii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries are or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, (iv) except for the Registration Rights Agreement, there are no agreements or arrangements under which the Company or any of its Subsidiaries are obligated to register the sale of any of their securities under the Securities Act that have not been fulfilled, (v) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries are or may become bound to redeem a security of the Company or any of its Subsidiaries, (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities as described in this Agreement and (vii) the Company does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement. The Company has furnished to the Investor true and correct copies of the Articles of Incorporation, and the Bylaws, and summaries of the material terms of all securities convertible into or exercisable for Common Stock outstanding on the date hereof, if any, which are not otherwise disclosed in the Registration Statement, any SEC Document or filed as an exhibit thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Issuance of Securities</u>. Upon issuance and payment therefor in accordance with the terms and conditions of this Agreement, the Purchase Shares shall be validly issued, fully paid and nonassessable and free from all taxes, Liens, charges, restrictions (other than such restrictions on transfer arising under the Securities Act prior to the effective date of the Registration Statement registering the resale thereof by the Investor under the Securities Act), rights of first refusal and preemptive rights with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. The Company is authorized to issue shares of Common Stock upon the purchase of Purchase Shares up to the Available Amount under this Agreement in accordance with the terms of this Agreement. Two Million Three Hundred Thousand (2,300,000) shares of Common Stock (subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction) have been or will be reserved for issuance upon purchase under this Agreement as Purchase Shares. Two Hundred Forty-Four Thousand Six Hundred Ninety-Eight (244,698) shares of Common Stock (subject to equitable adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction) have been duly authorized and reserved for issuance as Initial Commitment Shares (as defined in <u>Section 5(e))</u> in accordance with this Agreement. The Initial Commitment Shares shall be validly issued, fully paid and nonassessable and free from all taxes, Liens, charges, restrictions, rights of first refusal and preemptive rights with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. One Hundred Twenty-Two Thousand Three Hundred Forty-Nine (122,349) shares of Common Stock (subject to equitable adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction) have been duly authorized and reserved for issuance as Additional Commitment Shares (as defined in <u>Section 5(e)</u>) in accordance with this Agreement. When issued in accordance with this Agreement, the Additional Commitment Shares shall be validly issued, fully paid and nonassessable and free from all taxes, Liens, charges, restrictions, rights of first refusal and preemptive rights with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Upon receipt of the Purchase Shares and the Commitment Shares, the Investor will have good and marketable title to such Securities and such Securities will be immediately freely tradable on the Principal Market by any holder who is not an "affiliate" under the Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>No Conflicts</u>. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the reservation for issuance and issuance of the Securities) will not (i) result in a violation of the Articles of Incorporation, any Certificate of Designations, Preferences and Rights of any outstanding series of preferred stock of the Company or the Bylaws or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the Principal Market applicable to the Company or any of its Subsidiaries) or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except in the case of conflicts, defaults, terminations, amendments, accelerations, cancellations and violations under clause (ii), which would not reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary is in violation of any term of or is in default under any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or any Subsidiary, except for possible conflicts, defaults, terminations or amendments that would not reasonably be expected to have a Material Adverse Effect. The business of the Company and each Subsidiary is not being conducted, and shall not be conducted, in violation of any law, ordinance, regulation of any governmental entity, except for possible violations, the sanctions for which either individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. Except as specifically contemplated by this Agreement, the Registration Rights Agreement, and as required under the Securities Act or the Exchange Act or applicable state securities laws and the rules and regulations of the Principal Market, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency or any regulatory or self-regulatory agency in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents in accordance with the terms hereof or thereof. Except as set forth elsewhere in this Agreement or the Registration Rights Agreement (including with respect to the receipt of shareholder approval for any issuance in excess of the Exchange Cap), all consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence shall be obtained or effected on or prior to the Commencement Date. Except as disclosed in the SEC Documents, since one (1) year prior to the date hereof, the Company has not received nor delivered any notices or correspondence from or to the Principal Market, other than notices with respect to listing of additional shares of Common Stock and other routine correspondence. Except as disclosed in the SEC Documents, since one (1) year prior to the date hereof, the Principal Market has not commenced any delisting proceedings against the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>SEC Documents; Financial Statements</u>. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company with the SEC under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve (12) months preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such documents) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the "<u>SEC Documents</u>") on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Documents prior to the expiration of any such extension. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable. The SEC Documents, taken together, do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Documents comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements (i) have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved ("<u>GAAP</u>"), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and (ii) fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. Except as disclosed in the SEC documents or as publicly available through the SEC's Electronic Data Gathering, Analysis, and Retrieval system (EDGAR), or in connection with a confidential treatment request submitted to the SEC, the Company has received no notices or correspondence from the SEC for the one (1) year preceding the date hereof other than SEC comment letters relating to the Company's filings under the Exchange Act and the Securities Act. There are no outstanding or unresolved comments in comment letters received from the SEC staff with respect to any of the SEC Documents. To the Company's knowledge, the SEC has not commenced any enforcement proceedings against the Company or any of its Subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Absence of Certain Changes</u>. Except as disclosed in the SEC Documents, since March 31, 2025, there has been no change that would constitute a Material Adverse Effect. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any Bankruptcy Law nor does the Company or any of its Subsidiaries have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy or insolvency proceedings. The Company is financially solvent and is generally able to pay its debts as they become due.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Absence of Litigation</u>. Except as disclosed in the SEC documents, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company's or its Subsidiaries' officers or directors in their capacities as such, which would reasonably be expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Acknowledgment Regarding Investor's Status</u>. The Company acknowledges and agrees that the Investor is acting solely in the capacity of arm's length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby and any advice given by the Investor or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Investor's purchase of the Securities. The Company further represents to the Investor that the Company's decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives and advisors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>No General Solicitation; No Aggregated Offering</u>. Neither the Company, nor any of its affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Securities. Neither the Company, nor or any of its affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the offer and sale of any of the Securities under the Securities Act, whether through integration with prior offerings or otherwise, or cause this offering of the Securities to be aggregated with prior offerings by the Company in a manner that would require shareholder approval pursuant to the rules of the Principal Market on which any of the securities of the Company are listed or designated. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Principal Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Intellectual Property Rights</u>. Except as disclosed in the SEC Documents, the Company and its Subsidiaries own or possess adequate rights or licenses to use all material trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted. None of the Company's material trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets or other intellectual property rights have expired or terminated, or, by the terms and conditions thereof, could expire or terminate within two (2) years from the date of this Agreement, except as would not reasonably be expected to have a Material Adverse Effect. The Company and its Subsidiaries do not have any knowledge of any infringement by the Company or its Subsidiaries of any material trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other similar rights of others, or of any such development of similar or identical trade secrets or technical information by others, and there is no claim, action or proceeding being made or brought against, or to the Company's knowledge, being threatened against, the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other infringement, which would reasonably be expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Environmental Laws</u>. To the Company's knowledge, the Company and its Subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("<u>Environmental Laws</u>"), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where, in each of the three foregoing clauses, the failure to so comply could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>Title</u>. Except as disclosed in the SEC Documents, the Company and its Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and its Subsidiaries, in each case free and clear of all Liens and, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and its Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties and Liens that would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and its Subsidiaries are in compliance with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries or would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>Insurance</u>. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for and neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Company and its Subsidiaries, taken as a whole.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) <u>Regulatory Permits</u>. Except as disclosed in the SEC Documents, the Company and its Subsidiaries possess all material certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as currently conducted, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such material certificate, authorization or permit except in the case of each of the two foregoing clauses, as would not reasonably be expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) <u>Tax Status</u>. The Company and each of its Subsidiaries have made or filed all federal, state, local or foreign income and all other material tax returns, reports and declarations required by any jurisdiction to which it is subject or otherwise filed timely extensions (unless and only to the extent that the Company and each of its Subsidiaries have set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and have paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) <u>Transactions with Affiliates</u>. Except as disclosed in the SEC Documents, none of the Company's shareholders covered by Item 403(a) of Regulation S-K, officers or directors or any family member or affiliate of any of the foregoing, has either directly or indirectly an interest in, or is a party to, any transaction that is required to be disclosed as a related party transaction pursuant to Item 404 of Regulation S-K promulgated under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) <u>Application of Takeover Protections</u>. The Company and its Board of Directors have taken or will take prior to the Commencement Date all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Articles of Incorporation or the laws of the state of its incorporation which is or could become applicable to the Investor as a result of the transactions contemplated by this Agreement, including, without limitation, the Company's issuance of the Securities and the Investor's ownership of the Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) <u>Disclosure</u>. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents or any other agreements to be entered into by the Company and the Investor that, in each case, which shall be timely publicly disclosed by the Company, the Company confirms that neither it nor any other Person acting on its behalf has provided the Investor or its agents or counsel with any information that the Company believes constitutes or might constitute material, non-public information which is not otherwise disclosed in the SEC Documents. The Company understands and confirms that the Investor will rely on the foregoing representation in effecting purchases and sales of securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Investor regarding the Company, its business and the transactions contemplated hereby, including the disclosure schedules to this Agreement, is true and correct in and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve (12) months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that the Investor neither makes nor has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in <u>Section 3</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) <u>Foreign Corrupt Practices</u>. Neither the Company, nor to the knowledge of the Company, any agent or other Person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any Person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) <u>DTC Eligibility</u>. The Company, through the Transfer Agent, currently participates in the DTC Fast Automated Securities Transfer (FAST) Program and the Common Stock can be transferred electronically to third parties via the DTC Fast Automated Securities Transfer (FAST) Program.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Sarbanes-Oxley</u>. The Company is in compliance with all provisions of the Sarbanes-Oxley Act of 2002, as amended, which are applicable to it as of the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) <u>Certain Fees</u>. No brokerage or finder's fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Investor shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this <u>Section 4(w)</u> that may be due in connection with the transactions contemplated by the Transaction Documents. The Company shall pay, and hold the Investor harmless against, any liability, loss or expense (including, without limitation, attorneys' fees and out of pocket expenses) arising in connection with any such claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) <u>Investment Company</u>. The Company is not, and immediately after giving effect to the sale of the Purchase Shares in accordance with this Agreement and the application of the proceeds as described in the Registration Statement under the caption "Use of Proceeds," will not be, required to register as an "investment company" or a company "controlled by" an entity required to register as an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) <u>Listing and Maintenance Requirements</u>. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock pursuant to the Exchange Act nor has the Company received any notification that the SEC is currently contemplating terminating such registration. The Company has not been since December 31, 2020, and currently is not, an Ineligible Issuer (as defined in Rule 405 of the Securities Act).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) <u>Accountants</u>. The Company's accountants are set forth in the SEC Documents and, to the knowledge of the Company, such accountants are an independent registered public accounting firm as required by the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) <u>No Market Manipulation</u>. The Company has not, and to its knowledge no Person acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) <u>Shell Company Status</u>. The Company is not, and has not been in the past twenty-four (24) months, an issuer identified in Rule 144(i)(1)(i) and, if so, has filed with the SEC current "Form 10 information" (as defined in Rule 144(i)(3)) at least twelve (12) months prior to the date of this Agreement reflecting its status as an entity that is no longer an issuer identified in Rule 144(i)(1)(i).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) <u>Benefit Plans; Labor Matters</u>. Each benefit and compensation plan, agreement, policy and arrangement that is maintained, administered or contributed to by the Company for current or former employees or directors of, or independent contractors with respect to, the Company has been maintained in compliance in all material respects with its terms and the requirements of any applicable statutes, orders, rules and regulations, and the Company has complied in all material respects with all applicable statutes, orders, rules and regulations in regard to such plans, agreements, policies and arrangements. Each stock option granted under any equity incentive plan of the Company (each, a "<u>Stock Plan</u>") since the Company's initial public offering was granted with a per share exercise price no less than the market price per share of Common Stock on the grant date of such option in accordance with the rules of the Principal Market, and no such grant involved any "back-dating," "forward-dating" or similar practice with respect to the effective date of such grant; each such option (i) was granted in compliance in all material respects with applicable laws and with the applicable Stock Plan(s), (ii) was duly approved by the Board of Directors, a duly authorized committee thereof, or the Chief Executive Officer pursuant to delegated authority, and (iii) has been properly accounted for in the Company's financial statements and disclosed, to the extent required, in the Company's filings or submissions with the SEC, and the Principal Market. No labor problem or dispute with the employees of the Company exists or is threatened or imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its principal suppliers or contractors, that would have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) <u>No Disqualification Events</u>. None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company's outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an "<u>Issuer Covered Person</u>") is subject to any of the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a "<u>Disqualification Event</u>"), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event.

5. COVENANTS.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Filing of Current Report and Registration Statement</u>. The Company agrees that it shall, within the time required under the Exchange Act, file with the SEC a report on Form 10-Q relating to the transactions contemplated by, and describing the material terms and conditions of, the Transaction Documents (the "<u>Current Report</u>"). The Company shall also file with the SEC within twenty (20) Business Days of the date hereof, a new registration statement (the "<u>Registration Statement</u>") covering the resale of Securities in accordance with the terms of the Registration Rights Agreement, and until the Registration Statement is declared effective, the Company shall not file any other registration statement with the SEC under the Securities Act. The Company shall permit the Investor to review and comment upon the final pre-filing draft version of the Registration Statement at least two (2) Business Days prior to the filing of it with the SEC, and the Company shall not file the Registration Statement with the SEC in a form to which the Investor reasonably objects. The Investor shall use its reasonable best efforts to comment upon the final pre-filing draft version of the Registration Statement, and provide such information regarding itself, the Registrable Securities (as defined in the Registration Rights Agreement) held by the Investor, and the intended method of disposition of the Registrable Securities held by the Investor as shall be reasonably necessary to effect the registration of the Registrable Securities, within one (1) Business Day from the date the Investor receives it from the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Blue Sky</u>. The Company shall take all such action, if any, as is reasonably necessary in order to obtain an exemption for or to register or qualify (i) the issuance of the Commitment Shares and the sale of the Purchase Shares to the Investor under this Agreement and (ii) any subsequent resale of all Securities by the Investor, in each case, under applicable securities or "Blue Sky" laws of the states of the United States in such states as is reasonably requested by the Investor from time to time, and shall provide evidence of any such action so taken to the Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Listing/DTC</u>. The Company shall promptly secure the listing of all of the Securities to be issued to the Investor hereunder on the Principal Market (subject to official notice of issuance) and upon each other national securities exchange or automated quotation system, if any, upon which the Common Stock is then listed, and shall use commercially reasonable efforts to maintain, so long as any shares of Common Stock shall be so listed, such listing of all such Securities from time to time issuable hereunder. The Company shall use commercially reasonable efforts to maintain the listing of the Common Stock on the Principal Market and shall comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules and regulations of the Principal Market. Neither the Company nor any of its Subsidiaries shall take any action that would reasonably be expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall promptly, and in no event later than the following Business Day, provide to the Investor copies of any notices it receives from the Principal Market regarding the continued eligibility of the Common Stock for listing on the Principal Market; provided, however, that the Company shall not provide the Investor copies of any such notice that the Company reasonably believes constitutes material non-public information and that the Company would not be required to publicly disclose in any report or statement filed with the SEC under the Exchange Act (including on Form 8-K) or the Securities Act. The Company shall pay all fees and expenses in connection with satisfying its obligations under this <u>Section 5(c)</u>. The Company shall take all action necessary to ensure that its Common Stock can be transferred electronically as DWAC Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Prohibition of Short Sales and Hedging Transactions</u>. The Investor agrees that beginning on the date of this Agreement and ending on the date of termination of this Agreement as provided in <u>Section 11</u> hereof, the Investor and its agents, representatives and affiliates shall not in any manner whatsoever enter into or effect, directly or indirectly, any (i) "short sale" (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of the Common Stock or (ii) hedging transaction, which establishes a short position with respect to the Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Issuance of Commitment Shares</u>. In consideration for the Investor's execution and delivery of this Agreement, the Company shall cause the Transfer Agent to issue on the date of this Agreement Two Hundred Forty-Four Thousand Six Hundred Ninety-Eight (244,698) shares of Common Stock (the "<u>Initial Commitment Shares</u>") directly to the Investor and shall deliver to the Transfer Agent the Irrevocable Transfer Agent Instructions in the form as set forth in <u>Section 6</u> hereof. For the avoidance of doubt, all of the Initial Commitment Shares shall be fully earned as of the date of this Agreement, whether or not Commencement shall occur or any Purchase Shares are purchased by the Investor under this Agreement and irrespective of any termination of this Agreement. In connection with each Regular Purchase and each Accelerated Purchase of Purchase Shares hereunder, the Company shall issue to the Investor a number of shares of Common Stock (the "<u>Additional Commitment Shares</u>" and, together with the Initial Commitment Shares, the "<u>Commitment Shares</u>") equal to the product of (x) One Hundred Twenty-Two Thousand Three Hundred Forty-Nine (122,349) shares and (y) the Purchase Amount Fraction. The "<u>Purchase Amount Fraction</u>" shall mean a fraction, the numerator of which is the Purchase Amount purchased by the Investor with respect to such Regular Purchase and Accelerated Purchase (as applicable) of Purchase Shares and the denominator of which is Fifteen Million Dollars ($15,000,000). The Additional Commitment Shares shall be issued to the Investor on the same Business Day as Purchase Shares are issued to the Investor in connection with the applicable Regular Purchase and Accelerated Purchase (as applicable) in accordance with <u>Section 2</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Due Diligence; Non-Public Information</u>. During the term of this Agreement, the Investor shall have the right, from time to time as the Investor may reasonably deem appropriate, and upon reasonable advance notice to the Company, to perform reasonable due diligence on the Company during normal business hours. The Company and its officers and employees shall provide information and reasonably cooperate with the Investor in connection with any reasonable request by the Investor related to the Investor's due diligence of the Company; *provided however*, that the Company will not disclose any material non-public information to the Investor. Each party hereto agrees not to disclose any Confidential Information (which shall not include material non-public information) of the other party to any third party and shall not use the Confidential Information for any purpose other than in connection with, or in furtherance of, the transactions contemplated hereby. Each party hereto acknowledges that the Confidential Information shall remain the property of the disclosing party and agrees that it shall take all reasonable measures to protect the secrecy of any Confidential Information disclosed by the other party. The receiving party may disclose Confidential Information to the extent such information is required to be disclosed by law, regulation or order of a court of competent jurisdiction or regulatory authority, provided that the receiving party shall promptly notify the disclosing party when such requirement to disclose arises, and shall cooperate with the disclosing party so as to enable the disclosing party to: (i) seek an appropriate protective order; and (ii) make any applicable claim of confidentiality in respect of such Confidential Information; and provided, further, that the receiving party shall disclose Confidential Information only to the extent required by the protective order or other similar order, if such an order is obtained, and, if no such order is obtained, the receiving party shall disclose only the minimum amount of such Confidential Information required to be disclosed in order to comply with the applicable law, regulation or order. In addition, any such Confidential Information disclosed pursuant to this <u>Section 5(f)</u> shall continue to be deemed Confidential Information. Notwithstanding anything in this Agreement to the contrary, the Company shall not be obligated to provide the Investor with any information that constitutes or may reasonably be considered to constitute material, non-public information pursuant to a request for information hereunder, and the Company and the Investor agree that neither the Company nor any other Person acting on its behalf shall provide the Investor or its agents or counsel with any information that constitutes or may reasonably be considered to constitute material, non-public information, unless a simultaneous public announcement thereof is made by the Company in the manner contemplated by Regulation FD under the Exchange Act. In the event of a breach of the foregoing covenant by the Company or any Person acting on its behalf (as determined in the reasonable good faith judgment of the Investor), in addition to any other remedy provided herein or in the other Transaction Documents, if the Investor is holding any Securities at the time of the disclosure of such material non-public information, the Investor shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material, non-public information without receiving the prior approval by the Company; provided the Investor shall have first provided notice to the Company that it believes, based on the advice of external counsel, it has received information that constitutes material, non-public information, the Company shall have at least two (2) Business Days from such notice to either publicly disclose such material, non-public information or to demonstrate to the Investor that such information does not constitute material, non-public information (assuming the Investor and the Investor's counsel disagree in their reasonable good faith judgment with the Company's determination) prior to any such disclosure by the Investor and the Company shall have failed to publicly disclose such material, non-public information. The Investor shall not have any liability to the Company, or any of its directors, officers, employees, shareholders or agents, for any such disclosure made in compliance with this <u>Section 5(f)</u>. The Company understands and confirms that the Investor shall be relying on the foregoing covenants in effecting transactions in securities of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Purchase Records</u>. The Investor and the Company shall each maintain records showing the remaining Available Amount at any given time and the dates and Purchase Amounts for each Regular Purchase, Accelerated Purchase and Additional Accelerated Purchase or shall use such other method, reasonably satisfactory to the Investor and the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Taxes</u>. The Company shall pay any and all transfer, stamp or similar taxes that may be payable with respect to the issuance and delivery of any shares of Common Stock to the Investor made under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>No Aggregation</u>. From and after the date of this Agreement, neither the Company, nor any of its affiliates will, and the Company shall use its reasonable best efforts to ensure that no Person acting on their behalf will, directly or indirectly, make any offers or sales of any security or solicit any offers to buy any security, under circumstances that would cause this offering of the Securities by the Company to the Investor to be aggregated with other offerings by the Company in a manner that would require shareholder approval pursuant to the rules of the Principal Market on which any of the securities of the Company are listed or designated unless shareholder approval is obtained before the closing of such subsequent transaction in accordance with the rules of such Principal Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Use of Proceeds</u>. The Company will use the net proceeds from the offering for any corporate purpose at the sole discretion of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Other Transactions</u>. During the term of this Agreement, the Company shall not enter into, announce or recommend to its shareholders any agreement, plan, arrangement or transaction in or of which the terms thereof would restrict, materially delay, conflict with or impair the ability or right of the Company to perform its obligations under the Transaction Documents, including, without limitation, the obligation of the Company to deliver the Securities to the Investor in accordance with the terms of the Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>No Integration</u>. From and after the date of this Agreement, neither the Company, nor or any of its affiliates will, and the Company shall use its reasonable best efforts to ensure that no Person acting on their behalf will, directly or indirectly, make any offers or sales of any security or solicit any offers to buy any security, under circumstances that would require registration of the offer and sale of any of the Securities under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>Limitation on Variable Rate Transactions.</u> From and after the date of this Agreement until the thirty-six (36) month anniversary of the date of this Agreement (irrespective of any earlier termination of this Agreement), the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock involving a Variable Rate Transaction other than with the Investor. "<u>Variable Rate Transaction</u>" means an "equity line of credit" or substantially similar transaction whereby an investor is irrevocably bound to purchase securities over a period of time from the Company at a price based on the market price of the Company's Common Stock at the time of each such purchase, provided, however, that this <u>Section 5(m)</u> shall not be deemed to prohibit the issuance and sale of Common Stock pursuant to an "at-the-market offering" by the Company exclusively through a registered broker-dealer acting as agent of the Company pursuant to a written agreement between the Company and such registered broker-dealer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>Publicity</u>. The Company shall afford the Investor and its counsel with the opportunity to review and comment upon, shall consult with the Investor and its counsel on the form and substance of, and shall give due consideration to all such comments from the Investor or its counsel on, disclosure that is part of any press release, SEC filing or any other public disclosure by or on behalf of the Company that identifies the Investor, describes its purchases hereunder or summarizes any aspect of the Transaction Documents or the transactions contemplated thereby, not less than twenty-four (24) hours prior to the issuance, filing or public disclosure thereof; <u>provided</u> that (i) the Company shall not be required to provide to the Investor any press release, SEC filing or any other public disclosure that solely discloses the number of shares sold to the Investor and the amounts paid by the Investor for such shares and (ii) the Company shall not be required to provide to the Investor any disclosures that are materially similar to those previously reviewed by the Investor. The Investor must be provided with a substantially final version of any such disclosure that relates to the Investor, at least twenty-four (24) hours prior to any release, filing or use by the Company thereof.

6. TRANSFER AGENT INSTRUCTIONS.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) On the date of this Agreement, the Company shall issue irrevocable instructions to the Transfer Agent, in the form substantially similar to those used by the Investor in substantially similar transactions, to issue the Initial Commitment Shares in accordance with the terms of this Agreement (the "<u>Irrevocable Transfer Agent Instructions</u>"). The certificate(s) or book-entry statement(s) representing the Initial Commitment Shares, except as set forth below, shall bear the following restrictive legend (the "<u>Restrictive Legend</u>") and no other legend whatsoever.

**THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933**, **AS AMENDED**, **OR APPLICABLE STATE SECURITIES LAWS**. **THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE**, **SOLD**, **TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933**, **AS AMENDED**, **OR APPLICABLE STATE SECURITIES LAWS**, **UNLESS SOLD PURSUANT TO:** (**1**) **RULE 144 UNDER THE SECURITIES ACT OF 1933**, **AS AMENDED**, **OR** (**2**) **AN OPINION OF COMPANY**'**S COUNSEL**, **IN A CUSTOMARY FORM**, **THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) On the earlier of (i) the date the Registration Statement is declared effective by the SEC and (ii) such time that the Investor shall request, provided all conditions of Rule 144 under the Securities Act are met, the Company shall, no later than two (2) Business Days following the delivery by the Investor to the Company or the Transfer Agent of one or more legended certificates or book-entry statements representing the Initial Commitment Shares (which certificates or book-entry statements the Investor shall promptly deliver on or prior to the first to occur of the events described in clauses (i) and (ii) of this sentence), as directed by the Investor, issue and deliver (or cause to be issued and delivered) to the Investor, as requested by the Investor, either: (A) a certificate or book-entry statement representing such Initial Commitment Shares that is free from all restrictive and other legends or (B) a number of shares of Common Stock equal to the number of Initial Commitment Shares represented by the certificate(s) or book-entry statement(s) so delivered by the Investor as DWAC Shares. The Company shall take all actions reasonably necessary to carry out the intent and accomplish the purposes of the immediately preceding sentence, including, without limitation, delivering all such legal opinions, consents, certificates, resolutions and instructions to the Transfer Agent, and any successor transfer agent of the Company, as may be reasonably requested from time to time by the Investor or necessary or desirable to carry out the intent and accomplish the purposes of the immediately preceding sentence. On or before the Commencement Date, the Company shall issue to the Transfer Agent, and any subsequent transfer agent, (i) irrevocable instructions in the form substantially similar to those used by the Investor in substantially similar transactions (the "<u>Commencement Irrevocable Transfer Agent Instructions</u>") and (ii) the notice of effectiveness of the Registration Statement in a form acceptable to the Transfer Agent (the "<u>Notice of Effectiveness of Registration Statement</u>"), in each case to issue the Securities in accordance with the terms of this Agreement and the Registration Rights Agreement. All Purchase Shares and Additional Commitment Shares to be issued from and after the Commencement Date to the Investor pursuant to this Agreement shall be issued only as DWAC Shares. The Company represents and warrants to the Investor that, while this Agreement is effective, no instruction other than the Commencement Irrevocable Transfer Agent Instructions and the Notice of Effectiveness of Registration Statement referred to in this <u>Section 6(b)</u> will be given by the Company to the Transfer Agent with respect to the Initial Commitment Shares, or any of the Purchase Shares or Additional Commitment Shares covered by the Registration Statement from and after Commencement, and the Commitment Shares and the Purchase Shares covered by the Registration Statement shall otherwise be freely transferable on the books and records of the Company. The Company agrees that if the Company fails to fully comply with the provisions of this <u>Section 6(b)</u> within five (5) Business Days of the Investor providing the deliveries referred to above, the Company shall, at the Investor's written instruction, purchase such shares of Common Stock containing the Restrictive Legend from the Investor at the greater of the (i) purchase price paid by the Investor for such shares of Common Stock and (ii) the Closing Sale Price of the Common Stock on the date of the Investor's written instruction.

7. CONDITIONS TO THE COMPANY'S RIGHT TO COMMENCE SALES OF SHARES OF COMMON
STOCK.

The right of the Company hereunder to commence sales of the Purchase Shares on the Commencement Date is subject to the satisfaction or, where legally permissible, the waiver of each of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Investor shall have executed each of the Transaction Documents and delivered the same to the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Registration Statement covering the resale of all of such Purchase Shares as required pursuant to the Registration Rights Agreement shall have been declared effective under the Securities Act by the SEC and no stop order with respect to the Registration Statement shall be pending or, to the Company's knowledge, threatened by the SEC;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Common Stock shall be listed on the Principal Market, and all Securities to be issued by the Company to the Investor under the Transaction Documents shall have been approved for listing on the Principal Market in accordance with the applicable rules and regulations of the Principal Market, subject only to official notice of issuance; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The representations and warranties of the Investor shall be true and correct in all material respects (except to the extent that any of such representations and warranties is already qualified as to materiality in <u>Section 3</u> above, in which case, such representations and warranties shall be true and correct without further qualification) as of the date hereof and as of the Commencement Date as though made at that time.

8. CONDITIONS TO THE INVESTOR'S OBLIGATION TO PURCHASE SHARES OF COMMON STOCK.

The obligation of the Investor to buy Purchase Shares (other than the Commitment Shares) under this Agreement is subject to the satisfaction or, where legally permissible, the waiver of each of the following conditions on or prior to the Commencement Date and, once such conditions have been initially satisfied, there shall not be any ongoing obligation to satisfy such conditions after Commencement has occurred:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall have executed each of the Transaction Documents and delivered the same to the Investor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Investor shall have received the opinion and negative assurance letter of the Company's corporate legal counsel (the "<u>Company Counsel</u>") dated as of the Commencement Date substantially in the form agreed to prior to the date of this Agreement by the Company Counsel and the Investor's legal counsel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The representations and warranties of the Company shall be true and correct in all material respects (except to the extent that any of such representations and warranties is already qualified as to materiality in <u>Section 4</u> above, in which case, such representations and warranties shall be true and correct without further qualification) as of the date when made and as of the Commencement Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct in all material respects as of such date) and the Company shall have performed, satisfied and complied with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Commencement Date. The Investor shall have received a certificate, executed by the Chief Executive Officer or the Chief Financial Officer of the Company, dated as of the Commencement Date, to the foregoing effect in the form attached hereto as **<u>Exhibit A</u>**;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Board of Directors of the Company shall have adopted the Signing Resolutions, substantially in the form agreed to prior to the date of this Agreement by the Company Counsel and the Investor's legal counsel, to authorize this Agreement and the transactions contemplated hereby, which shall be in full force and effect without any amendment or supplement thereto as of the Commencement Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) As of the Commencement Date, the Company shall have reserved out of its authorized and unissued Common Stock, solely for the purpose of effecting purchases of Purchase Shares hereunder, Two Million Three Hundred Thousand (2,300,000) shares of Common Stock (excluding the Commitment Shares); and (ii) solely for the purpose of effecting the issuance of Additional Commitment Shares hereunder, One Hundred Twenty-Two Thousand Three Hundred Forty-Nine (122,349) shares of Common Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Commencement Irrevocable Transfer Agent Instructions and the Notice of Effectiveness of Registration Statement each shall have been delivered to and acknowledged in writing by the Company and the Company's Transfer Agent (or any successor transfer agent);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Company shall have delivered to the Investor a certificate evidencing the incorporation and good standing of the Company in the State of Florida issued by the Secretary of State of the State of Florida and a certificate or its equivalent evidencing the good standing of the Company as a foreign corporation in any other jurisdiction where the Company is duly qualified to conduct business, in each case, as of a date within ten (10) Business Days of the Commencement Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Company shall have delivered to the Investor a certified copy of the Articles of Incorporation as certified by the Secretary of State of the State of Florida within ten (10) Business Days of the Commencement Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Company shall have delivered to the Investor a secretary's certificate executed by the Secretary of the Company, dated as of the Commencement Date, in the form attached hereto as **<u>Exhibit B</u>**;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) The Registration Statement covering the resale of the Securities in accordance with the Registration Rights Agreement shall have been declared effective under the Securities Act by the SEC and no stop order with respect to the Registration Statement shall be pending or, to the Company's knowledge, threatened by the SEC. If required, the Company shall have prepared and filed with the SEC, not later than two (2) Business Days after the effective date of the Registration Statement, a final prospectus (the preliminary form of which shall be included in the Registration Statement) and shall have delivered to the Investor a true and complete copy thereof. When filed, such prospectus shall be current and available for the resale by the Investor of all of the Securities covered thereby. The Current Report shall have been filed with the SEC, as required pursuant to <u>Section 5(a)</u> hereof. All reports, schedules, registrations, forms, statements, information and other documents required to have been filed by the Company with the SEC at or prior to the Commencement Date pursuant to the reporting requirements of the Exchange Act shall have been filed with the SEC within the applicable time periods prescribed for such filings under the Exchange Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) No Suspension Event (as defined herein) has occurred, and no event which, after notice and/or lapse of time, would reasonably be expected to become a Suspension Event has occurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated, threatened or endorsed by any federal, state, local or foreign court or governmental authority of competent jurisdiction which prohibits the consummation of or which would materially modify or delay any of the transactions contemplated by the Transaction Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) No action, suit or proceeding before any federal, state, local or foreign arbitrator or any court or governmental authority of competent jurisdiction shall have been commenced or threatened, and no inquiry or investigation by any federal, state, local or foreign governmental authority of competent jurisdiction shall have been commenced or threatened, against the Company, or any of the officers, directors or affiliates of the Company, seeking to restrain, prevent or change the transactions contemplated by the Transaction Documents, or seeking material damages in connection with such transactions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) All federal, state and local governmental laws, rules and regulations applicable to the transactions contemplated by the Transaction Documents and necessary for the execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated thereby in accordance with the terms thereof shall have been complied with, and all consents, authorizations and orders of, and all filings and registrations with, all federal, state and local courts or governmental agencies and all federal, state and local regulatory or self-regulatory agencies necessary for the execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated thereby in accordance with the terms thereof shall have been obtained or made, including, without limitation, in each case those required under the Securities Act, the Exchange Act, applicable state securities or "Blue Sky" laws or applicable rules and regulations of the Principal Market, or otherwise required by the SEC, the Principal Market or any state securities regulators.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) The Company shall have provided the Investor with the information requested by the Investor in connection with its due diligence requests in accordance with the terms of <u>Section 5(f)</u> hereof.

9. INDEMNIFICATION.

In consideration of the Investor's execution and delivery of the Transaction Documents and acquiring the Securities hereunder and in addition to all of the Company's other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless the Investor and all of its affiliates, officers, directors, members, managers, employees and direct or indirect investors and any of the foregoing Person's agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "<u>Indemnitees</u>") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "<u>Indemnified Liabilities</u>"), incurred by any Indemnitee as a result of, or arising out of or relating to: (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document executed by the Company contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document executed by the Company contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee and arising out of or resulting from the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby other than, in the case of <u>clause (c)</u>, with respect to Indemnified Liabilities which directly and primarily result from the fraud, gross negligence or willful misconduct of an Indemnitee. The indemnity in this <u>Section 9</u> shall not apply to amounts paid in settlement of any claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Payment under this indemnification shall be made within thirty (30) days from the date the Indemnitee makes written request for it. A certificate containing reasonable detail as to the amount of such indemnification submitted to the Company by the Indemnitee shall be conclusive evidence, absent manifest error, of the amount due from the Company to the Indemnitee; provided that the Indemnitee shall undertake to repay any amounts paid to it hereunder if it is ultimately determined, by a final and non-appealable order of a court of competent jurisdiction, that the Indemnitee is not entitled to be indemnified against such Indemnified Liabilities by the Company pursuant to this Agreement. If any action shall be brought against any Indemnitee in respect of which indemnity may be sought pursuant to this Agreement, such Indemnitee shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Indemnitee. Any Indemnitee shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnitee, except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of such Indemnitee, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.

10. SUSPENSION EVENTS.

In addition to any other rights and remedies under applicable law and this Agreement, so long as a "Suspension Event" has occurred and is continuing, or if any event that, after notice and/or lapse of time, would reasonably be expected to become a Suspension Event, has occurred and is continuing, the Company shall not deliver to the Investor any Purchase Notice, and the Investor shall not purchase any shares of Common Stock under this Agreement. For the avoidance of doubt, following a Suspension Event, purchases by the Investor pursuant to <u>Section 2</u> hereof may resume as soon as such Suspension Event has been resolved. A "Suspension Event" shall be deemed to have occurred at any time as any of the following events occurs:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the effectiveness of the Registration Statement registering the Securities lapses for any reason (including, without limitation, the issuance of a stop order or similar order), the Registration Statement or any prospectus thereunder is unavailable for the sale by the Company to the Investor (or the resale by the Investor of any or all of the Securities to be issued to the Investor under the Transaction Documents, and any such lapse or unavailability continues for a period of ten (10) consecutive Business Days or for more than an aggregate of thirty (30) Business Days in any 365-day period, but excluding a lapse or unavailability where (i) the Company terminates the Registration Statement after the Investor has confirmed in writing that all of the Securities covered thereby have been resold or (ii) the Company supersedes the Registration Statement with a New Registration Statement, including (without limitation) when the Registration Statement is effectively replaced with a New Registration Statement covering Securities (provided in the case of this clause (ii) that all of the Securities covered by the superseded (or terminated) registration statement that have not theretofore been sold to the Investor are included in the superseding (or new) registration statement);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the suspension of the Common Stock from trading on the Principal Market for a period of one (1) Business Day, provided that the Company may not direct the Investor to purchase any shares of Common Stock during any such suspension;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the delisting of the Common Stock from The Nasdaq Capital Market; provided, however, that the Common Stock is not immediately thereafter trading on The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock Exchange, the NYSE Arca, the NYSE American, or the OTCQB or the OTCQX operated by the OTC Markets Group, Inc. (or any nationally recognized successor to any of the foregoing);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the failure for any reason by the Transfer Agent to issue (i) the Additional Commitment Shares to the Investor by the second Business Day after the date on which the Investor is entitled to receive such Additional Commitment Shares pursuant to <u>Section 5(e)</u> hereof and (ii) the Purchase Shares to the Investor by the second Business Day after the applicable Regular Purchase Date or Accelerated Purchase Date (as applicable) on which the Investor is entitled to receive such Purchase Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the Company breaches any representation, warranty, covenant or other term or condition under any Transaction Document if such breach would reasonably be expected to have a Material Adverse Effect and except, in the case of a breach of a covenant which is reasonably curable, only if such breach continues for a period of at least five (5) Business Days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) if any Person commences a proceeding against the Company pursuant to or within the meaning of any Bankruptcy Law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) if the Company pursuant to or within the meaning of any Bankruptcy Law, (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law (a "<u>Custodian</u>") of it or for all or substantially all of its property, or (iv) makes a general assignment for the benefit of its creditors or is generally unable to pay its debts as the same become due;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against the Company in an involuntary case, (ii) appoints a Custodian of the Company or for all or substantially all of its property, or (iii) orders the liquidation of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) if at any time the Company is not eligible to transfer its Common Stock electronically as DWAC Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) if at any time after the Commencement Date, the Exchange Cap is reached (to the extent the Exchange Cap is applicable pursuant to <u>Section 2(e)</u> hereof) and the Company's shareholders have not approved the transactions contemplated by this Agreement in accordance with the applicable rules and regulations of the Principal Market; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) if at any time the Investor's broker is unable to accept Purchase Shares for deposit for reasons not within the Investor's control.

11. TERMINATION

This Agreement may be terminated only as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If pursuant to or within the meaning of any Bankruptcy Law, the Company commences a voluntary case or any Person commences a proceeding against the Company, a Custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors (any of which would be a Suspension Event as described in <u>Sections 10(f)</u>, <u>10(g)</u> and <u>10(h)</u> hereof), this Agreement shall automatically terminate without any liability or payment to the Company (except as set forth in the final paragraph of this <u>Section 11</u>) without further action or notice by any Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event that Commencement shall not have occurred on or before December 15, 2025 due to the failure to satisfy the conditions set forth in <u>Sections 7</u> and <u>8</u> above with respect to Commencement, either the Company or the Investor shall have the option to terminate this Agreement at the close of business on such date or thereafter without liability of any party to any other party (except as set forth in the final paragraph of this <u>Section 11</u>); provided, however, that the right to terminate this Agreement under this <u>Section 11(b)</u> shall not be available to any party if such party is then in breach of any covenant or agreement contained in this Agreement or any representation or warranty of such party contained in this Agreement fails to be true and correct such that the conditions set forth in <u>Section 7(d)</u> or <u>Section 8(c)</u>, as applicable, could not then be satisfied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) At any time after the Commencement Date, the Company shall have the option to terminate this Agreement for any reason or for no reason by delivering notice (a "<u>Company Termination Notice</u>") to the Investor electing to terminate this Agreement without any liability whatsoever of any party to any other party under this Agreement (except as set forth in the final paragraph of this <u>Section 11</u>). The Company Termination Notice shall be effective one (1) Business Day after it has been received by the Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) This Agreement shall automatically terminate on the date that the Company sells and the Investor purchases the full Available Amount as provided herein, without any action or notice on the part of any party and without any liability whatsoever of any party to any other party under this Agreement (except as set forth below).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) If, for any reason or for no reason, the full Available Amount has not been purchased in accordance with <u>Section 2</u> of this Agreement by the Maturity Date, this Agreement shall automatically terminate on the Maturity Date, without any action or notice on the part of any party and without any liability whatsoever of any party to any other party under this Agreement (except as set forth in the final paragraph of this <u>Section 11</u>).

Except as set forth in <u>Sections 11(a)</u> (in respect of a Suspension Event under <u>Sections 10(f)</u>, <u>10(g)</u> and <u>10(h)</u>, <u>11(d)</u> and <u>11(e)</u>), any termination of this Agreement pursuant to this <u>Section 11</u> shall be effected by written notice from the Company to the Investor, or the Investor to the Company, as the case may be, setting forth the basis for the termination hereof. The representations and warranties of the Company and the Investor contained in <u>Sections 3</u> and <u>4</u> hereof, the indemnification provisions set forth in <u>Section 9</u> hereof and the agreements and covenants set forth in <u>Sections 5</u>, <u>6</u>, <u>10</u>, <u>11</u> and <u>12</u> hereof shall survive Commencement and any termination of this Agreement. No termination of this Agreement shall (i) affect the Company's or the Investor's rights or obligations under (A) this Agreement with respect to any pending Regular Purchases, Accelerated Purchases, and Additional Accelerated Purchases and the Company and the Investor shall complete their respective obligations with respect to any pending Regular Purchases, Accelerated Purchases and Additional Accelerated Purchases under this Agreement and (B) the Registration Rights Agreement, which shall survive any such termination in accordance with its terms, or (ii) be deemed to release the Company or the Investor from any liability for intentional misrepresentation or willful breach of any of the Transaction Documents.

12. MISCELLANEOUS.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Governing Law; Jurisdiction; Jury Trial</u>. The corporate laws of the State of Florida shall govern all issues concerning the relative rights of the Company and its shareholders. All other questions concerning the construction, validity, enforcement and interpretation of this Agreement and the other Transaction Documents shall be governed by the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of Illinois, County of Cook, for the adjudication of any dispute hereunder or under the other Transaction Documents or in connection herewith or therewith, or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. **EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE**, **AND AGREES NOT TO REQUEST**, **A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Counterparts</u>. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a signature delivered by e-mail in a ".pdf" format data file shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original signature.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Headings</u>. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Severability</u>. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Entire Agreement</u>. The Transaction Documents supersede all other prior oral or written agreements between the Investor, the Company, their affiliates and Persons acting on their behalf with respect to the subject matter thereof, and this Agreement, the other Transaction Documents and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Investor makes any representation, warranty, covenant or undertaking with respect to such matters. The Company acknowledges and agrees that it has not relied on, in any manner whatsoever, any representations or statements, written or oral, other than as expressly set forth in the Transaction Documents. The Investor acknowledges and agrees that it has not relied on, in any manner whatsoever, any representations or statements, written or oral, other than as expressly set forth in the Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Notices</u>. Any notices, consents or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt when delivered personally; (ii) upon receipt when sent by email (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses for such communications shall be:

If to the Company:

Dolphin Entertainment, Inc.

150 Alhambra Circle, Suite 1200

Coral Gables, FL 33134

Telephone:(305) 774-0407

E-mail:William O' Dowd

Attention:billodowd@dolphinentertainment.com

With a copy to (which shall not constitute notice or service of process):

K&L Gates LLP

200 S. Biscayne Blvd., Suite 3900

Miami, FL 33131

Telephone:(305) 539-3306

E-mail: clayton.parker@klgates.com

Attention:Clayton E. Parker, Esq.

If to the Investor:

Lincoln Park Capital Fund, LLC

415 North LaSalle Drive, Suite 700B

Chicago, IL 60654

Telephone:(312) 822-9300

E-mail:jscheinfeld@lpcfunds.com/jcope@lpcfunds.com

Attention:Josh Scheinfeld/Jonathan Cope

If to the Transfer Agent:

Nevada Agency and Transfer Company

50 West Liberty Street, Suite 880

Reno, Nevada 89501

Telephone:(775) 322-0626

Email: tiffany@natco.com

Attention:Tiffany Baxter

or at such other address, e-mail and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent or other communication, (B) mechanically or electronically generated by the sender's e-mail account containing the time, date, and recipient e-mail address, as applicable, and an image of the first page of such transmission or (C) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by email or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Successors and Assigns</u>. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor, including by merger or consolidation. The Investor may not assign its rights or obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>No Third Party Beneficiaries</u>. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and, except as set forth in <u>Section 9</u>, is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Further Assurances</u>. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to consummate and make effective, as soon as reasonably possible, Commencement, and to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>No Strict Construction</u>. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>No Financial Advisor, Placement Agent, Broker or Finder</u>. The Company represents and warrants to the Investor that it has not engaged any financial advisor, placement agent, broker or finder in connection with the transactions contemplated hereby. The Investor represents and warrants to the Company that it has not engaged any financial advisor, placement agent, broker or finder in connection with the transactions contemplated hereby. The Company shall be responsible for the payment of any fees or commissions, if any, of any financial advisor, placement agent, broker or finder relating to or arising out of the transactions contemplated hereby. The Company shall pay, and hold the Investor harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys' fees and out of pocket expenses) arising in connection with any such claim made by a third party for any such fees or commissions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Remedies, Other Obligations, Breaches and Injunctive Relief.</u> The Investor's remedies provided in this Agreement, including, without limitation, the Investor's remedies provided in <u>Section 9</u> hereof, shall be cumulative and in addition to all other remedies available to the Investor under this Agreement, at law or in equity (including a decree of specific performance and/or other injunctive relief). No remedy of the Investor contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit the Investor's right to pursue actual damages for any failure by the Company to comply with the terms of this Agreement. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Investor and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Investor shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>Enforcement Costs</u>. If: (i) this Agreement is placed by the Investor in the hands of an attorney for enforcement or is enforced by the Investor through any legal proceeding; (ii) an attorney is retained to represent the Investor in any bankruptcy, reorganization, receivership or other proceedings affecting creditors' rights and involving a claim under this Agreement; or (iii) subject to <u>Section 9</u>, an attorney is retained to represent the Investor in any other proceedings whatsoever in connection with this Agreement, then the Company shall pay to the Investor, as incurred by the Investor, all reasonable costs and expenses including attorneys' fees incurred in connection therewith if the Investor is the prevailing party in any such proceeding, in addition to all other amounts due hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>Amendment and Waiver; Failure or Indulgence Not Waiver</u>. No provision of this Agreement may be amended other than by a written instrument signed by both parties hereto and no provision of this Agreement may be waived other than in a written instrument signed by the party against whom enforcement of such waiver is sought. No failure or delay in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

 

*\*\* Signature Page Follows \*\**

 

**IN WITNESS WHEREOF,** the Investor and the Company have caused this Purchase Agreement to be duly executed as of the date first written above.

**<u>THE COMPANY:</u>**

**DOLPHIN ENTERTAINMENT, INC.**

By: <u>/s/ William O'Dowd, IV</u>

Name: William O'Dowd, IV

Title: Chief Executive Officer

**<u>INVESTOR:</u>**

**LINCOLN PARK CAPITAL FUND, LLC**

**BY: LINCOLN PARK CAPITAL, LLC**

**BY: ROCKLEDGE CAPITAL CORPORATION**

By: <u>/s/ Josh Scheinfeld</u>

Name: Josh Scheinfeld

Title: President

## Exhibit 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: August 14, 2025 | /s/ William O'Dowd IV |
|  | William O'Dowd IV |
|  | Chief Executive Officer |

---

## Exhibit 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: August 14, 2025 | /s/ Mirta A Negrini |
|  | Mirta A Negrini |
|  | Chief Financial Officer |

---

## Exhibit 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 June 30, 2025, 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:

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

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

---

| | | |
|:---|:---|:---|
| Date: August 14, 2025 | By: | /s/ William O'Dowd IV |
|  |  | William O'Dowd IV |
|  |  | Chief Executive Officer |

---

## Exhibit 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 June 30, 2025, 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:

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

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

---

| | | |
|:---|:---|:---|
| Date: August 14, 2025 | By: | /s/ Mirta A Negrini |
|  |  | Mirta A Negrini |
|  |  | Chief Financial Officer |

---