| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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. Statement of Comprehensive Income In accordance with Financial Accounting
Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 220, Comprehensive Income Revenue Recognition The Company’s revenues are
primarily derived 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; (viii) planning and execution of events for clients and (ix) content productions of marketing materials on a
project contract basis. For these revenue streams, we collect fees through either fixed fee monthly retainer agreements, fees based on
a percentage of contracts or project-based fees. In addition, the Company also earns revenue from content production of feature films,
primarily by usage-based royalties for domestic sales. The Company recognizes revenue when our customer obtains control of promised goods
or services, in an amount that reflects the consideration to which we expect to receive in exchange for those goods or services. To determine recognition, we perform
the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contracts; (iii)
determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contracts; and (v) recognize
revenue as or when we satisfy the performance obligation. We only apply the five-step model to contracts when it is probable that Dolphin
will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception,
we assess the goods or services promised within each contract and determine those that are distinct performance obligations. We then assess
whether we act as an agent or a principal for each identified performance obligation. We typically do not capitalize costs to obtain a
contract as these amounts would generally be recognized over a period of one year or less. The majority of our fees are recognized
over time as services are performed, and are generally recognized on a straight-line or monthly basis, as the services are consumed by
our clients, which approximates the proportional performance on such contracts. We also enter into management agreements with a roster
of social media influencers and are paid a percentage of the revenue earned by the social media influencer. Due to the short-term nature
of these contracts, the performance obligation is typically completed and revenue is recognized at a point in time, typically the date
of publication. Principal vs. Agent When a third party is involved
in the delivery of our services to the client, we assess whether or not we are acting as a principal or an agent in the arrangement. The
assessment is based on whether we control the specified services at any time before they are transferred to the customer. We have determined
that in our events and public relations businesses, we generally act as a principal as our agencies provide a significant service of integrating
goods or services provided by third parties into the specified deliverable to our clients. In addition, we have determined that we are
responsible for the performance of the third-party suppliers, which are combined with our own services, before transferring those services
to the customer. We have also determined that we act as principal when providing creative services and media planning services, as we
perform a significant integration service in these transactions. For performance obligations in which we act as principal, we record the
gross amount billed to the customer within total revenue and the related incremental direct costs incurred as billable expenses. When a third party is involved
in the production and execution of an advertising campaign and for media buying services, we have determined that we act as the agent
and are solely arranging for the third-party suppliers to provide services to the customer. Specifically, we do not control the specified
services before transferring those services to the customer, we are not primarily responsible for the performance of the third-party services,
nor can we redirect those services to fulfill any other contracts. We do not have inventory risk or discretion in establishing pricing
in our contracts with customers. For performance obligations for which we act as the agent, we record our revenue as the net amount of
our gross billings less amounts remitted to third parties. In these types of arrangements, the gross billings are recorded as other receivables
in the consolidated balance sheets and the amounts remitted to third parties are recorded as “talent liability” within other
current liabilities in the consolidated balance sheets. Collaborative Arrangements The Company analyzes our collaboration
agreements to assess whether such arrangements, or transactions between arrangement participants, involve joint operating activities performed
by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial
success of such activities or are more akin to a vendor-customer relationship. In making this evaluation, the Company considers whether
the activities of the collaboration are considered to be distinct and deemed to be within the scope of the collaboration guidance and
those that are more reflective of a vendor-customer relationship and, therefore, within the scope of the revenue with contracts with customer
guidance. This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties
in the arrangement. For collaboration arrangements
that are in the scope of the collaboration guidance, we may analogize to the revenue from contracts with customers’ guidance for
some aspects of these arrangements. Revenue from transactions with collaboration participants is presented apart from revenue with contracts
with customers in our consolidated statements of operations. To date, there has been no revenue generated from collaboration arrangements. Cash and Cash Equivalents Cash and cash equivalents consist
of cash deposits at financial institutions. The Company considers all highly liquid investments with a maturity of three months or less
when purchased to be cash equivalents. Restricted Cash Restricted cash represents amounts
held by banking institutions as collateral for security deposits under leases for office space in New York City and Los Angeles. As of
December 31, 2023 and 2022 the Company had a balance of $ 1,127,960 Accounts Receivable Trade The Company’s trade accounts
receivable relate to its entertainment publicity and marketing business, and are recorded at their net realizable value, which is net
of an allowance for credit losses. The carrying amount of accounts receivable is reduced by an allowance for credit losses that reflects
management’s best estimate of the amounts that will not be collected. Management individually reviews all delinquent accounts receivable
balances and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected.
When preparing these estimates, management considers a number of factors, including the age of the receivables, current economic conditions,
historical losses and other information management obtains regarding the financial condition of customers. The policy for determining
past due status is based on the contractual payment terms of each customer, which are generally net 30 days. Once collection efforts by
the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. Other Receivables Prior to the Company’s acquisition,
Socialyte entered into a factoring agreement with Peblo LLC (“Peblo”) and agreed to sell trade receivables in exchange for
a fee of 1 1 June 1, 2024 0.9 For the year ended December 31,
2023, Socialyte sold $ 12,670,021 107,678 3.1 31,300 1,025,239 10,356 no Other receivables also include
gross amounts to be collected from third party suppliers in transactions in which we act as an agent (refer to Revenue Recognition, “Principal
vs. Agent” section), which amount to $ 6,643,960 5,552,993 Notes Receivable The notes receivable held by the
Company were convertible notes receivables from JDDC Elemental LLC (“Midnight Theatre”) (the “Midnight Theatre Notes”).
The Midnight Theatre Notes were recorded at their principal face amount plus accrued interest and are convertible at the option of the
Company into Class A and B Units of Midnight Theatre. The Midnight Theatre Notes each originally had maturity dates six months from their
issuance date, but the maturity date for all of the Midnight Theatre Notes has been extended to September 30, 2024. The Midnight
Theatre Notes allow the Company to convert the principal and accrued interest into Class A and B Units of Midnight Theatre on the maturity
date. The Company previously held convertible
notes receivable from Stanton South LLC (“Crafthouse Cocktails”). These notes were converted in February 2022. Refer to Note 8 for additional
information on the Midnight Theatre Notes and the Crafthouse Cocktails notes receivable. Employee Receivable The Company records receivables
from employees separately on its consolidated balance sheets. During the years ended December 31, 2023 and 2022, the Company made payments
to Amanda Lundberg, the CEO of 42West, in the aggregate amount of $ 192,000 238,000 16,000 December 31, 2027 2 796,085 604,085 Other Current Assets and Other Long-Term Assets Other current assets consist primarily
of prepaid expenses, interest receivable, and other non-customer receivables. As of December 31, 2023 and 2022, other long-term assets
consists of security deposits. For the year ended December 31, 2022, other long-term assets also included equity method investments (see
Note 9). Capitalized Production Costs Capitalized production costs include
the Company’s investment in the production costs of the Blue Angels Investments and Strategic Arrangements From time to time, the Company
may participate in selected investment or strategic arrangements to expand its operations or customer base, including arrangements that
combine the Company’s skills and resources with those of others to allow for the performance of particular projects. Management determines whether
each business entity in which it has equity interests, debt, or other investments constitutes a variable interest entity (“VIE”)
based on the nature and characteristics of such arrangements. If an investment arrangement is determined to be a VIE, then management
determines if the Company is the VIE’s primary beneficiary by evaluating several factors, including the Company’s: (i) risks
and responsibilities; (ii) ownership interests; (iii) decision making powers; and (iv) financial interests, among other factors. If management
determines the Company is the primary beneficiary of a VIE, then it would be consolidated, and other parties’ interests in the VIE
would be accounted for as non-controlling interests. The primary beneficiary consolidating the VIE must normally have both (i) the
power to direct the primary activities of the VIE and (ii) the obligation to absorb losses of the VIE or the right to receive benefits
from the VIE, which, in either case, could be significant to the VIE. The Company has determined that it is the primary beneficiary of
JB Believe, LLC, formed on December 4, 2012 in the State of Florida; as such it has included it in its consolidated financial statements
as of and for the years ended December 31, 2023 and 2022 as a VIE. Refer to Note 17 for additional information on Variable Interest Entities. The Company’s investments
in entities for which it does not have a controlling interest and is not the primary beneficiary, but for which it has the ability to
exert significant influence, are accounted for using the equity method of accounting. Under the equity method of accounting, the initial
investment is recorded at cost and the investment is subsequently adjusted for its proportionate share of earnings or losses, including
consideration of basis differences resulting from the difference between the initial carrying amount of the investment and the underlying
equity in net assets. The equity method investments are recorded in other long-term assets in the consolidated balance sheets. Refer to
Note 9 for additional information on equity method investments. Intangible Assets In connection with the acquisitions
of the Company’s subsidiaries and other asset acquisitions, the Company acquired an estimated $ 22,472,387 2 13 Intangible assets are initially
recorded at fair value and are amortized over their respective estimated useful lives (see table below) and reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If a triggering event has occurred,
an impairment analysis is required. The impairment test first requires a comparison of undiscounted future cash flows expected to be generated
over the useful life of an asset to the carrying value of the asset. If the carrying value of the asset exceeds the undiscounted cash
flows, the asset would not be deemed recoverable. Impairment would then be measured as the excess of the asset’s carrying value
over its fair value. See Note 5 for further discussion. The range of estimated useful
lives to be used to calculate amortization for finite-lived intangibles are as follows:
Schedule of intangible assets
Intangible Asset Amortization Method Amortization Period (Years)
Customer relationships Accelerated Method 3 13
Trademarks and trade names Straight-line 2 10
Non-compete agreements Straight-line 2 3 Goodwill Goodwill results from business
combinations and is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value
of the net tangible assets and other intangible assets acquired. The Company accounts for goodwill in accordance with FASB ASC No. 350,
“ Intangibles—Goodwill and Other” Each period and for each reporting
unit the Company can elect to first assess qualitatively whether it is necessary to perform goodwill impairment testing. If the Company
believes, as a result of its qualitative assessment, that it is not more likely than not that the fair value of any reporting unit containing
goodwill is less than its carrying amount, the quantitative goodwill impairment test is unnecessary. If the Company elects to bypass the
qualitative assessment option, or if the qualitative assessment was performed and resulted in the Company being unable to conclude that
it is not more likely than not that the fair value of a reporting unit containing goodwill is greater than its carrying amount, the Company
will perform the quantitative goodwill impairment test. The Company evaluates various
factors affecting a reporting unit in its qualitative assessment, including, but not limited to, macroeconomic conditions, industry and
market considerations, cost factors, and financial performance. If the Company concludes from its qualitative assessment that goodwill
impairment testing is required or if the Company bypasses the qualitative test, the fair value of the reporting unit is compared to its
carrying amount. Property, Equipment and Leasehold Improvements Property and equipment is recorded
at cost and depreciated over the estimated useful lives of the assets using the straight-line method. When items are retired or otherwise
disposed of, income is charged or credited for the difference between net book value and proceeds realized thereon. Ordinary maintenance
and repairs are charged to expense as incurred, and replacements and betterments are capitalized. Leasehold improvements are amortized
over the lesser of the term of the related lease or the estimated useful lives of the assets. The range of estimated useful lives to be
used to calculate depreciation and amortization for principal items of property and equipment are as follows:
Schedule of estimated useful lives for property and equipment
Asset Category
Depreciation/Amortization Period (Years)
Furniture and fixtures 5 7
Computers, office equipment and software 3 5
Leasehold improvements 5 8 The Company periodically reviews
and evaluates the recoverability of property, equipment and leasehold improvements. Where applicable, estimates of net future cash flows,
on an undiscounted basis, are calculated based on future revenue estimates. If appropriate and where deemed necessary, a reduction in
the carrying amount is recorded. The Company has not had any material impairments of property, equipment and leasehold improvements. Business Combinations The Company evaluates acquisitions
pursuant to ASC 805, “ Business Combinations Contingent Consideration The Company records contingent
consideration as a result of certain acquisitions (see Note 4). The Company records the fair value of the contingent consideration liability
in the consolidated balance sheets under the caption “Contingent consideration” and records changes to the liability against
earnings or loss under the caption “Changes in fair value of contingent consideration” in the consolidated statements of operations. Acquisition Costs Direct costs related to business
combinations are expensed as incurred and included as Acquisition costs in the consolidated statements of operations. These costs include
all internal and external costs directly related to acquisitions, consisting primarily of legal, consulting, accounting, advisory and
financing fees. Asset Acquisitions The Company evaluates acquisitions
pursuant to ASC 805, “ Business Combinations Convertible Debt and Convertible Preferred Stock When the Company issues
convertible debt or convertible preferred stock, it evaluates the balance sheet classification to determine whether the instrument should
be classified either as debt or equity, and whether the conversion feature should be accounted for separately from the host instrument.
A conversion feature of a convertible debt instrument or certain convertible preferred stock would be separated from the convertible
instrument and classified as a derivative liability if the conversion feature, were it a standalone instrument, meets the definition
of an “embedded derivative” in ASC 815, “ Derivatives and Hedging” Fair Value Option (“FVO”) Election The Company accounts for a convertible
note issued during the year ended December 31, 2020 under the fair value option election of ASC 825, “ Financial Instruments The convertible note accounted
for under the FVO election is a debt host financial instrument containing embedded features which would otherwise be required to be bifurcated
from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements
under ASC 815. Notwithstanding, ASC 825-10-15-4 provides for the “fair value option” (“FVO”) election, to the
extent not otherwise prohibited by ASC 825-10-15-5, to be afforded to financial instruments, wherein bifurcation of an embedded derivative
is not necessary, and the financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured
at estimated fair value on a recurring basis at each reporting period date. The estimated fair value adjustment,
as required by ASC 825-10-45-5, is recognized as a component of other comprehensive income (“OCI”) with respect to the portion
of the fair value adjustment attributed to a change in the instrument-specific credit risk, with the remaining amount of the fair value
adjustment recognized as other income (expense) in the accompanying consolidated statement of operations. With respect to the above note,
as provided for by ASC 825-10-50-30(b), the estimated fair value adjustment is presented in a respective single line item within other
income (expense) in the accompanying consolidated statements of operations, since the change in fair value of the convertible note payable
was not attributable to instrument specific credit risk. Warrants When the Company issues warrants,
it evaluates the proper balance sheet classification of the warrant to determine whether it should be classified as equity or as a derivative
liability on the consolidated balance sheets. In accordance with ASC 815-40, “ Derivatives and Hedging-Contracts in the Entity’s
Own Equity Distinguishing
Liabilities from Equity” Fair Value Measurements Fair value is defined as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree
that the inputs are observable. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability,
including assumptions about risk. Observable inputs are based on market data obtained from sources independent of the Company. Unobservable
inputs reflect the Company’s own assumptions based on the best information available in the circumstances. The fair value hierarchy prioritizes the inputs used to measure fair value
into three broad levels, defined as follows:
Level 1 — Inputs are quoted prices in active markets for identical assets or liabilities as of the reporting date.
Level 2 — Inputs other than quoted prices included within Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs. Unobservable inputs for the asset or liability that reflect management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability as of the reporting date. To account for the acquisitions
of 42West, The Door, Viewpoint, Shore Fire, Be Social, B/HI, Socialyte and Special Projects, the Company made a number of fair value measurements
related to the different forms of consideration paid and of the identified assets acquired and liabilities assumed. In addition, the Company
makes fair value measurements of its contingent consideration. See Notes 4 and 16 for further discussion and disclosures. Right-of-Use Asset and Lease Liability The Company accounts for leases
under ASC 842, “ Leases” The lease liability is recognized
based on the present value of the remaining fixed lease payments discounted using the Company’s incremental borrowing rate on the
date of the lease. The ROU asset is calculated based on the lease liability adjusted for any lease payments paid to the lessor at or before
the commencement date (i.e. prepaid rent) and initial direct costs incurred by the Company and excluding any lease incentives received
from the lessor. If a lease does not provide a discount rate and the rate cannot be readily determined, an incremental borrowing rate
is used to determine the present value of future lease payments. For operating leases, the lease expense is recognized on a straight-line
basis over the lease term. The Company accounts for its lease and non-lease components as a single component, and therefore both are included
in the calculation of lease liability recognized on the consolidated balance sheets. Income Taxes Deferred taxes are recognized
for the future tax effects of temporary differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases using tax rates in effect for the years in which the differences are expected to reverse. The effects of
changes in tax laws on deferred tax balances are recognized in the period the new legislation in enacted. Valuation allowances are recognized
to reduce deferred tax assets to the amount that is more likely than not to be realized. In assessing the likelihood of realization, management
considers estimates of future taxable income. We calculate our current and deferred tax position based on estimates and assumptions that
could differ from the actual results reflected in income tax returns filed in subsequent years. Adjustments based on filed returns are
recorded when identified. Tax benefits from an uncertain
tax position are only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities,
based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured
based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and
penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. Earnings (Loss) Per Share Basic earnings (loss) per share
is computed by dividing income (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 earnings (loss) per share
equals net income (loss) available to shareholders of common stock divided by the weighted-average number of common shares outstanding,
plus any additional common shares that would have been outstanding if potentially dilutive shares had been issued. Diluted earnings (loss)
per share reflects the potential dilution that would occur if certain potentially dilutive instruments were exercised. The potential issuance
of common stock is assumed to occur at the beginning of the year (or at the time of issuance of the potentially dilutive instrument, if
later), under the if-converted method. Incremental shares are also included using the treasury stock method. The proceeds utilized in
applying the treasury stock method consist of the amount, if any, to be paid upon exercise. These proceeds are then assumed to be used
to purchase common stock at the average market price of the Company’s common stock during the period. The incremental shares (difference
between the shares assumed to be issued and the shares assumed to be purchased), to the extent they would have been dilutive, are included
in the denominator of the diluted earnings per share calculation. Potentially dilutive instruments are not included in the computation
of diluted loss per share because their inclusion is anti-dilutive. Concentration of Risk The Company maintains its cash
and cash equivalents with financial institutions, which at times, may exceed federally insured limits. The Company has not incurred any
losses on these accounts. Reclassification Certain prior year amounts have
been reclassified to conform with current year presentation. These reclassifications had no impact on the Company’s condensed consolidated
statements of operations or condensed consolidated statements of cash flows. Recent Accounting Pronouncements Accounting guidance adopted in fiscal year
2023
In June 2016, the FASB issued new guidance on measurement of credit losses (ASU 2016-13, “Measurement of Credit Losses on
Financial Instruments”) with subsequent amendments issued in November 2018 (ASU 2018-19) and April 2019 (ASU 2019-04). This update
changes the accounting for credit losses on loans and held-to-maturity debt securities and requires a current expected credit loss (CECL)
approach to determine the allowance for credit losses. The Company adopted this guidance effective January 1, 2023 and the adoption of
this accounting standard did not have a material impact on the Company’s condensed consolidated financial statements. Accounting guidance not yet adopted In December 2023, the FASB issued
new guidance on income tax disclosures (ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”).
Among other requirements, this update adds specific disclosure requirements for income taxes, including: (1) disclosing specific categories
in the rate reconciliation and (2) providing additional information for reconciling items that meet quantitative thresholds. The guidance
is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is
permitted. The Company is in the process of evaluating the impact of the adoption of ASU 2023-09 on the Company’s consolidated financial
statements and disclosures. In November 2023, the FASB issued
new guidance on segment reporting (ASU 2023-08, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”).
The amendments in the ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about
significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within
fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is in the process of evaluating the impact of
the adoption of ASU 2023-08 on the Company’s consolidated financial statements and disclosures. |
