Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 14, 2023 | |
Document Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-55029 | |
Entity Registrant Name | Chosen, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 82-3246222 | |
Entity Address, Address Line One | 4 S 2600 W, Suite 5 | |
Entity Address, City or Town | Hurricane, | |
Entity Address State Or Province | UT | |
Entity Address, Postal Zip Code | 84737 | |
City Area Code | 435 | |
Local Phone Number | 767-1338 | |
Title of 12(g) Security | None | |
No Trading Symbol Flag | true | |
Security Exchange Name | NONE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001733443 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Series A Common Stock | ||
Document Information | ||
Entity Common Stock, Shares Outstanding | 6,950,000 | |
Series B Common Stock | ||
Document Information | ||
Entity Common Stock, Shares Outstanding | 5,595,015 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Cash | $ 95,290 | $ 124,790 |
Accounts receivable, net of allowances of $1,682 and $0 at September 30, 2023 and December 31, 2022, respectively | 3,214 | 8,983 |
Inventory | 10,179 | 6,110 |
Prepaid assets | 6,714 | 754 |
Other current assets | 1,243 | 864 |
Total current assets | 116,640 | 141,501 |
Property and equipment, net | 34,350 | 34,426 |
Film costs, net | 63,813 | 33,276 |
Other assets | 1,258 | 1,042 |
Total assets | 216,061 | 210,245 |
Liabilities and Equity | ||
Accounts payable | 2,656 | 5,549 |
Accrued expenses and other current liabilities | 9,423 | 12,827 |
Current portion of long-term debt and lease liabilities | 2,572 | 2,463 |
Total current liabilities | 14,651 | 20,839 |
Long-term debt and lease liabilities, net | 142,844 | 143,377 |
Other noncurrent liabilities | 4,453 | 2,571 |
Deferred tax liability, net | 6,394 | 5,104 |
Total liabilities | 168,342 | 171,891 |
Commitments and contingencies | ||
Series A Preferred Stock, $0.001 par value; 120% dividend preference; 8,000 shares authorized; 0 and 4,341 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | 5 | |
Additional paid-in capital | 10,237 | 10,237 |
Retained earnings | 26,373 | 18,004 |
Noncontrolling interest | 11,096 | 10,100 |
Total equity | 47,719 | 38,354 |
Total liabilities and equity | 216,061 | 210,245 |
Series A Common Stock | ||
Liabilities and Equity | ||
Common Stock | 7 | 7 |
Series B Common Stock | ||
Liabilities and Equity | ||
Common Stock | $ 6 | $ 1 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Accounts receivable, net of allowances | $ 1,682 | $ 0 |
Series A Preferred Stock, par value (in dollars per shares) | $ 0.001 | $ 0.001 |
Series A Preferred Stock, dividend preference | 120% | 120% |
Series A Preferred Stock, shares authorized | 8,000 | 8,000 |
Series A Preferred Stock, shares issued | 0 | 4,341 |
Series A Preferred Stock, shares outstanding | 0 | 4,341 |
Series A Common Stock | ||
Common Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 10,900 | 10,900 |
Common Stock, shares issued | 6,950 | 6,950 |
Common Stock, shares outstanding | 6,950 | 6,950 |
Series B Common Stock | ||
Common Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 25,000 | 25,000 |
Common Stock, shares issued | 5,595 | 1,254 |
Common Stock, shares outstanding | 5,595 | 1,254 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Revenues | |||||
Total revenues | $ 14,486 | $ 5,262 | $ 65,934 | $ 13,195 | |
Cost of revenues | 4,279 | 301 | 14,317 | 950 | |
Advertising | 3,775 | 705 | 7,961 | 1,031 | |
Amortization of film costs | 2,608 | 667 | 11,284 | 2,056 | |
Depreciation and amortization | 2,192 | 1,237 | 6,569 | 1,333 | |
General and administrative | 7,846 | 2,317 | 21,218 | 6,532 | |
Net operating income (loss) | (6,214) | 35 | 4,585 | 1,293 | |
Interest income | 676 | 1 | 2,172 | 1 | |
Interest expense | (369) | (2) | (1,100) | (2) | |
Other income (expense) | (46) | (25) | |||
Net income (loss) before income taxes | (5,953) | 34 | 5,632 | 1,292 | |
Benefit (provision) for income taxes | 1,851 | (210) | (1,290) | (545) | |
Net income (loss) | (4,102) | (176) | 4,342 | 747 | |
Net loss attributable to noncontrolling interest | 1,406 | 712 | 4,027 | 804 | |
Net income (loss) attributable to The Chosen, Inc. | (2,696) | 536 | 8,369 | 1,551 | |
Less: | |||||
Contractual preferred distributions to participating securities | $ 536 | $ 1,551 | |||
Net income (loss) attributable to Common Stock/Common Units | $ (2,696) | $ 8,369 | |||
Earnings (loss) per Common Stock/Common Units, Basic | [1] | $ (0.21) | $ 0.67 | ||
Earnings (loss) per Common Stock/Common Units, Diluted | $ (0.21) | $ 0.67 | |||
Weighted average Common Stock/Common Units outstanding, basic | [1] | 12,545 | 7,190 | 12,545 | 7,190 |
Weighted average Common Stock/Common Units outstanding, diluted | 12,545 | 7,190 | 12,545 | 7,190 | |
Licensed content and merchandise revenues | |||||
Revenues | |||||
Total revenues | $ 8,508 | $ 5,262 | $ 36,971 | $ 13,195 | |
Contribution revenues | |||||
Revenues | |||||
Total revenues | $ 5,978 | $ 28,963 | |||
[1]Represents earnings (loss) per share and weighted average issued and outstanding Series A Common Stock and Series B Common Stock for the period after the change in share structure as result of the Company’s conversion on November 29, 2022 (see Note 3 and Note 6). |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Equity - USD ($) $ in Thousands | Common Units Member's Equity | Class A Preferred Units Member's Equity | Series A Common Stock Common Stock | Series B Common Stock Common Stock | Series A Preferred Stock Preferred Stock | Additional Paid-In Capital | Retained earnings | Noncontrolling Interest | Total |
Balance at the beginning at Dec. 31, 2021 | $ 11,190 | $ (940) | $ 32,215 | $ 1,914 | $ 44,379 | ||||
Balance at the beginning (in shares) at Dec. 31, 2021 | 14,380,000 | 11,190,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Contributions from noncontrolling interest | 4,688 | 4,688 | |||||||
Net income (loss) | 1,551 | (804) | 747 | ||||||
Balance at the end at Sep. 30, 2022 | $ 11,190 | (940) | 33,766 | 5,798 | 49,814 | ||||
Balance at the end (in shares) at Sep. 30, 2022 | 14,380,000 | 11,190,000 | |||||||
Balance at the beginning at Jun. 30, 2022 | $ 11,190 | (940) | 33,230 | 5,974 | 49,454 | ||||
Balance at the beginning (in shares) at Jun. 30, 2022 | 14,380,000 | 11,190,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Contributions from noncontrolling interest | 536 | 536 | |||||||
Net income (loss) | 536 | (712) | (176) | ||||||
Balance at the end at Sep. 30, 2022 | $ 11,190 | (940) | 33,766 | 5,798 | 49,814 | ||||
Balance at the end (in shares) at Sep. 30, 2022 | 14,380,000 | 11,190,000 | |||||||
Balance at the beginning at Dec. 31, 2022 | $ 7 | $ 1 | $ 5 | 10,237 | 18,004 | 10,100 | 38,354 | ||
Balance at the beginning (in shares) at Dec. 31, 2022 | 6,950 | 1,254 | 4,341 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Conversion to Series B Common Stock | $ 5 | $ (5) | |||||||
Conversion to Series B Common Stock (in shares) | 4,341 | (4,341) | |||||||
Contributions from noncontrolling interest | 5,023 | 5,023 | |||||||
Net income (loss) | 8,369 | (4,027) | 4,342 | ||||||
Balance at the end at Sep. 30, 2023 | $ 7 | $ 6 | 10,237 | 26,373 | 11,096 | 47,719 | |||
Balance at the end (in shares) at Sep. 30, 2023 | 6,950 | 5,595 | |||||||
Balance at the beginning at Jun. 30, 2023 | $ 7 | $ 6 | 10,237 | 29,069 | 7,589 | 46,908 | |||
Balance at the beginning (in shares) at Jun. 30, 2023 | 6,950 | 5,595 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Contributions from noncontrolling interest | 4,913 | 4,913 | |||||||
Net income (loss) | (2,696) | (1,406) | (4,102) | ||||||
Balance at the end at Sep. 30, 2023 | $ 7 | $ 6 | $ 10,237 | $ 26,373 | $ 11,096 | $ 47,719 | |||
Balance at the end (in shares) at Sep. 30, 2023 | 6,950 | 5,595 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities | ||
Net income (loss) | $ 4,342 | $ 747 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Depreciation and amortization expense | 6,569 | 1,333 |
Amortization of film costs | 11,284 | 2,056 |
Deferred income tax provision | 1,290 | 820 |
Amortization of debt issuance costs | 101 | |
Non-cash lease expense | 48 | 4 |
Allowance for doubtful accounts | 1,682 | |
Gain/loss on sale of assets | 39 | |
Changes in operating assets and liabilities: | ||
(Increase) decrease in accounts receivable | 3,962 | 8,178 |
(Increase) decrease in inventory | (2,699) | (179) |
(Increase) decrease in prepaids and other current assets | (6,139) | 781 |
(Increase) decrease in film costs | (39,628) | (27,044) |
Increase (decrease) in accounts payable | (3,922) | (985) |
Increase (decrease) in accrued expenses and other current liabilities | 4,028 | 463 |
Increase (decrease) in other noncurrent liabilities | 1,882 | |
Net cash flows provided by (used in) operating activities | (17,161) | (13,826) |
Cash flows from investing activities | ||
Acquisition of property & equipment | (6,677) | (21,748) |
Acquisition of trademark | (3) | (61) |
Proceeds from sale of property & equipment | 184 | |
Net cash flows provided by (used in) investing activities | (6,496) | (21,809) |
Cash flows from financing activities | ||
Contributions from noncontrolling interest member | 5,023 | 6,630 |
Proceeds from issuance of debt | 15,000 | |
Principal paid on finance lease | (12) | (7) |
Principal paid on debt | (437) | |
Dividends paid | (10,417) | |
Net cash flows provided by (used in) financing activities | (5,843) | 21,623 |
Net change in cash | (29,500) | (14,012) |
Cash, beginning of period | 124,790 | 15,932 |
Cash, end of period | 95,290 | 1,920 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 1,100 | 2 |
Purchase of property and equipment with accounts payable | 22 | $ 2,600 |
Accounts payable and accrued expenses and other current liabilities related to film costs, net | $ 2,422 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 1 – Basis of Presentation and Summary of Significant Accounting Policies The Chosen, Inc., a Delaware corporation, is an independent television and film production company, which was created to develop and produce an episodic television series entitled The Chosen The condensed consolidated financial statements of The Chosen, Inc., its wholly owned subsidiaries, and its variable controlling interest in Impossible Math, LLC (collectively the “Company”), have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and are consistent in all material respects with those applied in the Company’s Annual Report for the year ended December 31, 2022 included in the Company’s amended registration statement on Form 10 filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 23, 2023 (as amended, the “Form 10”). The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the amortization of content assets and the recognition and measurement of income tax assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. On a regular basis, the Company evaluates the assumptions, judgments and estimates. Actual results may differ from these estimates. The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Form 10. Interim results are not necessarily indicative of the results for a full year. There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report for the year ended December 31, 2022. Revision of Previously Issued Financial Statements In connection with the preparation of the Company’s condensed consolidated financial statements, certain prior period adjustments in previously issued interim financial statements were identified. The prior period misstatement related to estimates for and recognition of accrued compensation costs and capitalization of film costs as of and for the three months ended June 30, 2023. The Company evaluated the errors, both qualitatively and quantitatively, and concluded that the corrections did not have a material impact on, nor require amendment of, any previously issued financial statements. The correction of this misstatement resulted in an increase to Film costs, net of $1,790 thousand, and an increase to Accrued expenses and other current liabilities of $399 thousand in the Condensed Consolidated Balance Sheets as of June 30, 2023, a decrease to Cost of revenues of $1,391 thousand in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and an increase to Retained earnings of $1,391 thousand in the Condensed Consolidated Balance Sheets as of June 30, 2023 and in the Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2023. This correction increased Net income (loss) by $1,391 thousand and increased Earnings (loss) per Common Stock/Common Units, basic and diluted by $0.11 for the three and six months ended June 30, 2023. The Company retrospectively corrected the misstatements and revised the Condensed Consolidated Balance Sheets as of June 30, 2023 and the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Equity as of and for the three and six months ended June 30, 2023. There is no impact to Cash flows provided by (used in) operating, investing, or financing activities in the in the Condensed Consolidated Statements of Cash Flow. Accounts Receivable Accounts receivable are carried at the original invoice amount less an allowance for doubtful accounts. Management determines the allowance for doubtful accounts by identifying accounts and by using historical experience applied to an aging of accounts. Accounts receivable are written off when deemed uncollectible. Even though management determines the allowance for doubtful accounts by identifying accounts and using historical experience applied to an aging of accounts, the Company remains committed to pursuing the balances. Recoveries of receivables previously written off are recorded when received. The Company does not charge interest on past due balances or require collateral on its accounts receivable. As of September 30, 2023 and December 31, 2022, the allowance for doubtful accounts was $1,682 and $0, respectively. As of September 30, 2023 the Company recognized a reserve of $1,639 thousand for accounts receivables from Angel Studios, Inc. (“Angel Studios”) due to the Company’s delivery of a Notice of Termination, effective on October 20, 2023, of the Content License Agreement between Angel Studios and the Company. Although the Company reserved for the Angel Studios Receivable, the Company intends to continue to pursue collection. Refer to Note 10 - Subsequent Events Internal-Use Software The Company capitalizes costs incurred to develop or obtain internal-use software and website development costs during the application development stage. Capitalization of software development costs occurs after the preliminary project stage is complete, management authorizes the project, it is probable that the project will be completed, and the software will be used for the function intended. The Company expenses costs incurred for training, data conversion, and maintenance, and in the post-implementation stage. A subsequent addition, modification or upgrade to internal-use software is capitalized only to the extent that it enables the software to perform a task it previously could not perform. The internal-use software is included in Software under Property and equipment, net in the Condensed Consolidated Balance Sheets once the software development is completed. The internal-use software is included in Construction in process under Property and equipment, net in the Condensed Consolidated Balance Sheets when the software is still in development. The Company amortizes internal-use software over its estimated useful life on a straight-line basis. Concentrations of Credit Risk The Company maintains its cash in bank deposit accounts which, at times, exceed federally insured limits. As of September 30, 2023 and December 31, 2022, the bank balance exceeded the federally insured limit by $15,491 thousand and $124,293 thousand, respectively. A major customer is considered to be one that comprises more than 10% of the Company’s accounts receivable or annual revenues. During the three months and nine months ended September 30, 2023, 56.6% and 73.6%, respectively, of the Company’s revenues were collectively with major customers: Lions Gate Television, Inc. (“Lions Gate”),Angel Studios and the Come and See Foundation, Inc. (“CAS”). During the three months and nine months ended September 30, 2022, 95.4% and 94.3%, respectively, of the Company’s revenues were with Angel Studios. As of September 30, 2023, 50.6% of the Company’s accounts receivable was due from Lions Gate. As of December 31, 2022, 92.0% of the Company’s accounts receivable was due from Angel Studios, and CAS. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2023 | |
Revenue Recognition | |
Revenue Recognition | Note 2 - Revenue Recognition The Company primarily earns its revenue from licensing its intellectual property rights related to the Series. Licensed content revenues are primarily earned from royalties based on (i) existing and emerging digital home entertainment platforms, including but not limited to Netflix, Hulu, and most VOD streaming platforms, as well as (ii) physical media, including DVD and Blu-ray Discs, (iii) linear television, (iv) theatrical distribution of certain episodes or other content (v) books, and (vi) merchandise. Additionally, merchandise revenue is generated from online store and wholesale sales of The Chosen The Company also generates revenues from funds received under a non-reciprocal agreement with CAS for donation proceeds received by CAS through The Chosen App to be used in furtherance of the charitable purposes of CAS, which include the production of the Series. Contributions received from voluntary donations pursuant to the agreement with CAS are reported as Contribution revenues in the Consolidated Statements of Operations in accordance with ASC Topic 958, Not-for-Profit Entities The following table presents the Company’s revenue disaggregated by licensed content and merchandise revenues as well as contribution revenues (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Licensed content $ 4,814 $ 4,908 $ 18,084 $ 12,841 Merchandise 3,694 354 18,887 354 Licensed content and merchandise revenues $ 8,508 $ 5,262 $ 36,971 $ 13,195 Contribution revenues 5,978 — 28,963 — Revenues $ 14,486 $ 5,262 $ 65,934 $ 13,195 Contract Assets and Liabilities A contract asset is recorded when revenue is recognized in advance of the Company’s right to bill and receive consideration and that right is conditioned upon something other than the passage of time. The Company did not have any contract assets as of September 30, 2023 and December 31,2022. Contract liabilities are recorded when consideration is received from a customer prior to fully satisfying a performance obligation in a contract. The Company’s contract liabilities consist of deferred revenue for cash received related to licensed content arrangements under which a payment has been received and the content has not yet been made available to the customer and cash received related to merchandise arrangements under which a payment has been received and the order is unfulfilled. These contract liabilities will be recognized as revenues when control of the related product or service is transferred to the customer. The following table presents contract liabilities included on the Condensed Consolidated Balance Sheets (in thousands): As of September 30, December 31, 2023 2022 Accrued expenses and other current liabilities $ 1,277 $ 165 Other noncurrent liabilities (1) 1,928 2,571 Total $ 3,205 $ 2,736 (1) This amount reflects the cash payment received from the CAS transaction for performance obligations that were not satisfied as of September 30, 2023. Revenue recognized during the three and nine months ended September 30, 2023, from amounts included in total contract liabilities as of December 31, 2022, was $0 and $165 thousand, respectively. There was no revenue recognized from amounts included in total contract liabilities for three and nine months ended September 30, 2022. |
Earnings (loss) per share
Earnings (loss) per share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings (loss) per share | |
Earnings (loss) per share | Note 3 – Earnings (loss) per share Earnings (loss) per share (“EPS”) is calculated using the two-class method, which requires the allocation of earnings to each class of common stock outstanding and to participating securities with rights to earnings that would otherwise have been available to common stockholders. Except with respect to the number of votes per share, Series A Common Stock and Series B Common Stock have the same rights and preferences, including equal rights to participation in the dividends and other distributions of the Company (see Note 6). Accordingly, basic and diluted earnings per share is the same for both classes and EPS for the three months and nine months ended September 30, 2023 have been presented as a single class of common stock. All Series A Preferred Stock were previously reflected as converted into Class B Common Stock for basic EPS as of December 31, 2022 following the declaration of the Dividend to Series A Preferred Stockholders (See Note 6 and the Company’s Annual Report for the year ended December 31, 2022 included in the amended Form 10). Diluted weighted average common stock outstanding for the three and nine months ended September 30, 2022 does not include the effects of the conversion of the participating Series A Preferred Stock as the inclusion of these instruments would have been anti-dilutive. As of September 30, 2023, the Company does not have any potentially dilutive instruments outstanding. |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Sep. 30, 2023 | |
Balance Sheet Components | |
Balance Sheet Components | Note 4 – Balance Sheet Components Inventory As of September 30, 2023 and December 31, 2022, inventory consisted of the following (in thousands): As of September 30, December 31, 2023 2022 Raw materials $ 985 $ 985 Finished goods 9,194 5,125 Inventory $ 10,179 $ 6,110 Property and Equipment Property and Equipment and accumulated depreciation consisted of the following: As of September 30, December 31, Estimated 2023 2022 Useful Lives (in thousands) (in years) Land $ 90 $ 90 Buildings and improvements 37,100 36,495 4 – 30 Equipment 781 290 3 – 15 Furniture and fixtures 74 16 5 Vehicles 484 758 8 Construction in process 5,546 — PPE, gross 44,075 37,649 Accumulated depreciation (9,725) (3,223) PPE, net $ 34,350 $ 34,426 No impairment of property and equipment was recorded during the three months and nine months ended September 30, 2023 and 2022. Film Costs The following table represents the components of film costs (in thousands): As of September 30, December 31, 2023 2022 Released and completed film costs $ 47,612 $ 47,362 Not released, in production film costs 43,591 2,250 In development or preproduction film costs 989 759 Film costs, gross 92,192 50,371 Accumulated amortization (28,379) (17,095) Film costs, net of amortization $ 63,813 $ 33,276 Amortization expense for film costs during the three months ended September 30, 2023 and 2022 was $2,608 thousand and $667 thousand, respectively. Amortization expense for film costs during the nine months ended September 30, 2023 and 2022 was $11,284 thousand and $2,056 thousand, respectively. The future aggregate amounts of amortization expense expected to be recognized over the next five years related to released and completed film costs as of September 30, 2023 are as follows (in thousands): Years Ending December 31: Amount Remainder of 2023 $ 2,703 2024 7,158 2025 6,773 2026 2,129 2027 470 Total $ 19,233 Leases The Company has operating and finance leases for some of the Company’s operating and office facilities and vehicles. The leases expire at various dates through 2027 and provide for renewal options ranging from one month to four terms of ten-years. In the normal course of business, it is expected that these leases will be renewed or replaced by leases on other properties. The Company’s operating and finance right-of-use assets and lease liabilities consisted of the following (in thousands): September 30, 2023 December 31, 2022 Right-of-use assets (1) Operating leases $ 1,069 $ 889 Finance leases — 86 Total right-of-use assets $ 1,069 $ 975 Short-term lease liabilities (2) Operating leases $ 336 $ 533 Finance leases — 19 $ 336 $ 552 Long-term lease liabilities (3) Operating leases $ 534 $ 338 Finance leases — 68 $ 534 $ 406 Total lease liabilities $ 870 $ 958 (1) Included in Other assets in the Condensed Consolidated Balance Sheets. (2) Included in Current portion of long-term debt and lease liabilities in the Condensed Consolidated Balance Sheets. (3) Included in Long-term debt and lease liabilities in the Condensed Consolidated Balance Sheets. The components of lease costs consisted of the following (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Lease costs Finance lease cost Amortization of right-of-use assets $ 5 $ 96 $ 15 $ 99 Interest on lease liabilities 1 9 3 10 Operating lease cost 201 504 562 567 Variable and short-term lease cost 1,710 517 2,524 834 Total lease cost $ 1,917 $ 1,126 $ 3,104 $ 1,510 Cash paid during the period for amounts included in the measurement of lease liabilities consisted of the following (in thousands): Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for finance leases $ 3 $ 9 Operating cash flows for operating leases 516 24 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 507 $ 567 Finance leases — 99 Supplemental balance sheet information related to leases consisted of the following (in thousands): September 30, 2023 December 31, 2022 Weighted average remaining lease term (in years): Operating leases 2.76 years 2.44 years Finance leases — 4.33 years Weighted average discount rate: Operating leases 5.60 % 4.71 % Finance leases — % 4.26 % Maturities of lease liabilities as of September 30, 2023 were as follows (in thousands): Operating Leases Finance Leases Remainder of 2023 $ 156 $ — 2024 286 — 2025 277 — 2026 217 — 2027 — — Thereafter — — Total lease payments 936 — Imputed interest (66) — Total lease liability $ 870 $ — Accrued expenses and other current liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): As of September 30, December 31, 2023 2022 Accrued participant royalties $ 3,223 $ 1,383 Accrued compensation 2,642 273 Deferred revenues 1,277 165 Accrued inventory purchases 835 — Credit card liabilities 853 — Dividends payable — 10,417 Other 593 589 Accrued expenses and other current liabilities $ 9,423 $ 12,827 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt | |
Debt | Note 5 - Debt On November 29, 2022, the Company entered into a financing agreement with CAS with an aggregate principal of $145,500 thousand. This loan has no maturity date with no fixed repayment schedule and is non-interest bearing for the first seven years, after which the loan accrues interest at the then-current applicable federal rate. The Company is required to repay the loan quarterly, based on a specified percentage of 5% applied to the proceeds received from certain of the Company’s licensed content and merchandise revenues, which continues to be paid to CAS after the aggregate principal balance is repaid. The loan is recorded applying the effective interest method based on the expected repayments and estimated timing and amount due upon a potential liquidity event. This financing agreement was subsequently amended on October 31, 2023. Refer to Note 10 - Subsequent Events In addition, upon the occurrence of certain events, the Company’s repayment of the outstanding principal balance may be accelerated or be declared immediately due. Such events include voluntary or involuntary bankruptcy, change of control, corporate arrangement, or other customary events of default. The loan is secured by the intellectual property rights owned by the Company, whereby CAS receives a first-priority continuing senior security interest. The following table presents debt on the Condensed Consolidated Balance Sheets (in thousands): As of September 30, December 31, 2023 2022 Long-term debt (1) $ 142,897 $ 143,659 Current portion of long-term debt (2) 2,236 1,911 Total long-term debt $ 145,133 $ 145,570 (1) Included in Long-term debt and lease liabilities, net in the Condensed Consolidated Balance Sheets. (2) Included in Current portion of long-term debt and lease liabilities in the Condensed Consolidated Balance Sheets. Long-term debt is net of unamortized debt issuance costs of $587 thousand and $688 thousand as of September 30, 2023 and December 31, 2022, respectively. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2023 | |
Equity | |
Equity | Note 6 - Equity A dividend of $2.40 for each outstanding share of Series A Preferred Stock totaling $13,428 was declared on November 30, 2022, and the Company initiated the payment to stockholders on December 2, 2022. Upon receipt of payment of the dividend, each share of Series A Preferred Stock is converted into one share of Series B Common Stock. As of December 31, 2022, 1,254,391 shares of Series A Preferred Stock had been converted into Series B Common Stock. In March 2023, the Company paid the remaining dividend to holders of Series A Preferred Stock $10,417 thousand or $2.40 to all remaining Series A Preferred Stockholders. As such, all Series A Preferred Stock have been converted to Series B Common Stock and as of September 30, 2023. Each share of Series A Common Stock is entitled to ten votes per share, and each share of Series B Common Stock is entitled to one vote per share. Except with respect to the number of votes per share, Series A Common Stock and Series B Common Stock have the same rights and preferences, including equal rights to participation in the dividends and other distributions of the Company. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Income Taxes | Note 7 - Income Taxes Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Deferred provision (benefit) for income tax $ (1,850) $ 207 $ 1,290 $ 820 Current income taxes (1) 3 — (275) Provision (benefit) for income taxes $ (1,851) $ 210 $ 1,290 $ 545 Effective tax rate 31 % 618 % 23 % 42 % The effective tax rates for the three months and nine months ended September 30, 2023 and 2022 differed from the federal statutory rate primarily due to the impact from the net loss attributable to noncontrolling interest (“NCI”). The decrease in the effective tax rate of 587% for the three months ended September 30, 2023 as compared to 2022 was primarily due to the impact from the net loss attributable to NCI of $694 thousand. The decrease in the effective tax rate of 19% for the nine months ended September 30, 2023 as compared to 2022 was primarily due to the impact from the net loss attributable to NCI of $3,223 thousand. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions | |
Related Party Transactions | Note 8 - Related Party Transactions In 2018, the Company entered into an exclusive VOD and subscription licensing agreement with Angel Studios, which was a member of the Company, for distribution of the Company’s television series. This agreement was amended in November 2019 and September 2020 to refine certain terms (collectively, the “2018 Angel Studios License Agreement”). On October 18, 2022, the Company entered into a new agreement with Angel Studios which replaced the 2018 Angel Studios License Agreement and grants Angel Studios the right to a limited, non-exclusive and non-sublicensable license to distribute the Company’s television series solely on the Angel App. Any existing sublicensing rights that were granted to Angel Studios under the 2018 Angel Studios License Agreement shall be set to expire, and all rights thereafter shall be exclusively retained by the Company. In October 2022 the Company repurchased the Common Units previously held by Angel Studios and is no longer considered a related party. The Company recognized revenue from transactions with related parties of $0 thousand and $5,071 thousand during the three months ended September 30, 2023 and 2022, respectively. The Company recognized revenue from transactions with related parties of $0 thousand and $12,488 thousand during the nine months ended September 30, 2023, and 2022, respectively. As of September 30, 2023 and December 31, 2022 there were no related party receivable balances. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 9 - Commitments and Contingencies Commitments Under the Company’s current license agreement with Angel Studios, the Company is required to remit payments to Angel Studios, in perpetuity, based on a specified percentage of certain of the Company’s revenues derived from Refer to Note 4 Balance Sheet Components – Leases Debt Litigation The Company is involved in legal proceedings from time to time arising in the normal course of business. Management, after consultation with legal counsel, believes that the outcome of these proceedings will not have a material impact on the Company’s financial position, results of operations, or liquidity. For further information on legal proceedings involving the Company, refer to Part II, Item 1 Legal Proceedings |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events | |
Subsequent Events | Note 10 - Subsequent Events Management has evaluated events and transactions for potential recognition or disclosure through November 14, 2023, the date the consolidated financial statements were available to be issued. Angel Studios - Come and See Foundation, Inc. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Revision of Previously Issued Financial Statements | Revision of Previously Issued Financial Statements In connection with the preparation of the Company’s condensed consolidated financial statements, certain prior period adjustments in previously issued interim financial statements were identified. The prior period misstatement related to estimates for and recognition of accrued compensation costs and capitalization of film costs as of and for the three months ended June 30, 2023. The Company evaluated the errors, both qualitatively and quantitatively, and concluded that the corrections did not have a material impact on, nor require amendment of, any previously issued financial statements. The correction of this misstatement resulted in an increase to Film costs, net of $1,790 thousand, and an increase to Accrued expenses and other current liabilities of $399 thousand in the Condensed Consolidated Balance Sheets as of June 30, 2023, a decrease to Cost of revenues of $1,391 thousand in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and an increase to Retained earnings of $1,391 thousand in the Condensed Consolidated Balance Sheets as of June 30, 2023 and in the Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2023. This correction increased Net income (loss) by $1,391 thousand and increased Earnings (loss) per Common Stock/Common Units, basic and diluted by $0.11 for the three and six months ended June 30, 2023. The Company retrospectively corrected the misstatements and revised the Condensed Consolidated Balance Sheets as of June 30, 2023 and the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Equity as of and for the three and six months ended June 30, 2023. There is no impact to Cash flows provided by (used in) operating, investing, or financing activities in the in the Condensed Consolidated Statements of Cash Flow. |
Accounts Receivable | Accounts Receivable Accounts receivable are carried at the original invoice amount less an allowance for doubtful accounts. Management determines the allowance for doubtful accounts by identifying accounts and by using historical experience applied to an aging of accounts. Accounts receivable are written off when deemed uncollectible. Even though management determines the allowance for doubtful accounts by identifying accounts and using historical experience applied to an aging of accounts, the Company remains committed to pursuing the balances. Recoveries of receivables previously written off are recorded when received. The Company does not charge interest on past due balances or require collateral on its accounts receivable. As of September 30, 2023 and December 31, 2022, the allowance for doubtful accounts was $1,682 and $0, respectively. As of September 30, 2023 the Company recognized a reserve of $1,639 thousand for accounts receivables from Angel Studios, Inc. (“Angel Studios”) due to the Company’s delivery of a Notice of Termination, effective on October 20, 2023, of the Content License Agreement between Angel Studios and the Company. Although the Company reserved for the Angel Studios Receivable, the Company intends to continue to pursue collection. Refer to Note 10 - Subsequent Events |
Internal-Use Software | Internal-Use Software The Company capitalizes costs incurred to develop or obtain internal-use software and website development costs during the application development stage. Capitalization of software development costs occurs after the preliminary project stage is complete, management authorizes the project, it is probable that the project will be completed, and the software will be used for the function intended. The Company expenses costs incurred for training, data conversion, and maintenance, and in the post-implementation stage. A subsequent addition, modification or upgrade to internal-use software is capitalized only to the extent that it enables the software to perform a task it previously could not perform. The internal-use software is included in Software under Property and equipment, net in the Condensed Consolidated Balance Sheets once the software development is completed. The internal-use software is included in Construction in process under Property and equipment, net in the Condensed Consolidated Balance Sheets when the software is still in development. The Company amortizes internal-use software over its estimated useful life on a straight-line basis. |
Concentrations of Credit Risk | Concentrations of Credit Risk The Company maintains its cash in bank deposit accounts which, at times, exceed federally insured limits. As of September 30, 2023 and December 31, 2022, the bank balance exceeded the federally insured limit by $15,491 thousand and $124,293 thousand, respectively. A major customer is considered to be one that comprises more than 10% of the Company’s accounts receivable or annual revenues. During the three months and nine months ended September 30, 2023, 56.6% and 73.6%, respectively, of the Company’s revenues were collectively with major customers: Lions Gate Television, Inc. (“Lions Gate”),Angel Studios and the Come and See Foundation, Inc. (“CAS”). During the three months and nine months ended September 30, 2022, 95.4% and 94.3%, respectively, of the Company’s revenues were with Angel Studios. As of September 30, 2023, 50.6% of the Company’s accounts receivable was due from Lions Gate. As of December 31, 2022, 92.0% of the Company’s accounts receivable was due from Angel Studios, and CAS. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue Recognition | |
Schedule of revenue disaggregated by licensed content and merchandise revenues as well as contribution revenues | The following table presents the Company’s revenue disaggregated by licensed content and merchandise revenues as well as contribution revenues (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Licensed content $ 4,814 $ 4,908 $ 18,084 $ 12,841 Merchandise 3,694 354 18,887 354 Licensed content and merchandise revenues $ 8,508 $ 5,262 $ 36,971 $ 13,195 Contribution revenues 5,978 — 28,963 — Revenues $ 14,486 $ 5,262 $ 65,934 $ 13,195 |
Schedule of contract liabilities included on the Condensed Consolidated Balance Sheets | The following table presents contract liabilities included on the Condensed Consolidated Balance Sheets (in thousands): As of September 30, December 31, 2023 2022 Accrued expenses and other current liabilities $ 1,277 $ 165 Other noncurrent liabilities (1) 1,928 2,571 Total $ 3,205 $ 2,736 (1) This amount reflects the cash payment received from the CAS transaction for performance obligations that were not satisfied as of September 30, 2023. |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Balance Sheet Components | |
Schedule of inventory | As of September 30, 2023 and December 31, 2022, inventory consisted of the following (in thousands): As of September 30, December 31, 2023 2022 Raw materials $ 985 $ 985 Finished goods 9,194 5,125 Inventory $ 10,179 $ 6,110 |
Schedule of property and equipment and accumulated depreciation | As of September 30, December 31, Estimated 2023 2022 Useful Lives (in thousands) (in years) Land $ 90 $ 90 Buildings and improvements 37,100 36,495 4 – 30 Equipment 781 290 3 – 15 Furniture and fixtures 74 16 5 Vehicles 484 758 8 Construction in process 5,546 — PPE, gross 44,075 37,649 Accumulated depreciation (9,725) (3,223) PPE, net $ 34,350 $ 34,426 |
Schedule of components of film costs | The following table represents the components of film costs (in thousands): As of September 30, December 31, 2023 2022 Released and completed film costs $ 47,612 $ 47,362 Not released, in production film costs 43,591 2,250 In development or preproduction film costs 989 759 Film costs, gross 92,192 50,371 Accumulated amortization (28,379) (17,095) Film costs, net of amortization $ 63,813 $ 33,276 |
Schedule of future aggregate amounts of amortization expense expected to be recognized over the next five years related to released and completed film costs | The future aggregate amounts of amortization expense expected to be recognized over the next five years related to released and completed film costs as of September 30, 2023 are as follows (in thousands): Years Ending December 31: Amount Remainder of 2023 $ 2,703 2024 7,158 2025 6,773 2026 2,129 2027 470 Total $ 19,233 |
Schedule of operating and finance right-of-use assets and lease liabilities | The Company’s operating and finance right-of-use assets and lease liabilities consisted of the following (in thousands): September 30, 2023 December 31, 2022 Right-of-use assets (1) Operating leases $ 1,069 $ 889 Finance leases — 86 Total right-of-use assets $ 1,069 $ 975 Short-term lease liabilities (2) Operating leases $ 336 $ 533 Finance leases — 19 $ 336 $ 552 Long-term lease liabilities (3) Operating leases $ 534 $ 338 Finance leases — 68 $ 534 $ 406 Total lease liabilities $ 870 $ 958 (1) Included in Other assets in the Condensed Consolidated Balance Sheets. (2) Included in Current portion of long-term debt and lease liabilities in the Condensed Consolidated Balance Sheets. (3) Included in Long-term debt and lease liabilities in the Condensed Consolidated Balance Sheets. |
Schedule of components of lease costs | The components of lease costs consisted of the following (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Lease costs Finance lease cost Amortization of right-of-use assets $ 5 $ 96 $ 15 $ 99 Interest on lease liabilities 1 9 3 10 Operating lease cost 201 504 562 567 Variable and short-term lease cost 1,710 517 2,524 834 Total lease cost $ 1,917 $ 1,126 $ 3,104 $ 1,510 Cash paid during the period for amounts included in the measurement of lease liabilities consisted of the following (in thousands): Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for finance leases $ 3 $ 9 Operating cash flows for operating leases 516 24 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 507 $ 567 Finance leases — 99 Supplemental balance sheet information related to leases consisted of the following (in thousands): September 30, 2023 December 31, 2022 Weighted average remaining lease term (in years): Operating leases 2.76 years 2.44 years Finance leases — 4.33 years Weighted average discount rate: Operating leases 5.60 % 4.71 % Finance leases — % 4.26 % |
Schedule of maturities of lease liabilities | Maturities of lease liabilities as of September 30, 2023 were as follows (in thousands): Operating Leases Finance Leases Remainder of 2023 $ 156 $ — 2024 286 — 2025 277 — 2026 217 — 2027 — — Thereafter — — Total lease payments 936 — Imputed interest (66) — Total lease liability $ 870 $ — |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following (in thousands): As of September 30, December 31, 2023 2022 Accrued participant royalties $ 3,223 $ 1,383 Accrued compensation 2,642 273 Deferred revenues 1,277 165 Accrued inventory purchases 835 — Credit card liabilities 853 — Dividends payable — 10,417 Other 593 589 Accrued expenses and other current liabilities $ 9,423 $ 12,827 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt | |
Schedule of debt on the Condensed Consolidated Balance Sheets | The following table presents debt on the Condensed Consolidated Balance Sheets (in thousands): As of September 30, December 31, 2023 2022 Long-term debt (1) $ 142,897 $ 143,659 Current portion of long-term debt (2) 2,236 1,911 Total long-term debt $ 145,133 $ 145,570 (1) Included in Long-term debt and lease liabilities, net in the Condensed Consolidated Balance Sheets. (2) Included in Current portion of long-term debt and lease liabilities in the Condensed Consolidated Balance Sheets. |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Schedule of income taxes | Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Deferred provision (benefit) for income tax $ (1,850) $ 207 $ 1,290 $ 820 Current income taxes (1) 3 — (275) Provision (benefit) for income taxes $ (1,851) $ 210 $ 1,290 $ 545 Effective tax rate 31 % 618 % 23 % 42 % |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2023 | Jun. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |||
Concentrations of Credit Risk | |||||||||
Film costs, net | $ 63,813 | $ 63,813 | $ 33,276 | ||||||
Accrued expenses and other current liabilities | 9,423 | 9,423 | 12,827 | ||||||
Cost of revenues | (4,279) | $ (301) | (14,317) | $ (950) | |||||
Retained earnings | 26,373 | 26,373 | 18,004 | ||||||
Net income (loss) | $ (2,696) | $ 536 | $ 8,369 | $ 1,551 | |||||
Earnings (loss) per Common Stock/Common Units, Basic | $ (0.21) | [1] | $ 0.11 | $ 0.11 | $ 0.67 | [1] | |||
Earnings (loss) per Common Stock/Common Units, Diluted | $ (0.21) | $ 0.11 | $ 0.11 | $ 0.67 | |||||
Allowance for doubtful accounts | $ 1,682 | $ 1,682 | 0 | ||||||
Amount of bank balance exceeded the federally insured limit | 15,491 | 15,491 | $ 124,293 | ||||||
Angel Studios | Termination on Content License Agreement | |||||||||
Concentrations of Credit Risk | |||||||||
Reserve for accounts receivable | $ 1,639 | $ 1,639 | |||||||
Revision of prior period error correction adjustment | |||||||||
Concentrations of Credit Risk | |||||||||
Film costs, net | $ 1,790 | $ 1,790 | |||||||
Accrued expenses and other current liabilities | 399 | 399 | |||||||
Cost of revenues | 1,391 | 1,391 | |||||||
Retained earnings | 1,391 | 1,391 | |||||||
Net income (loss) | $ 1,391 | $ 1,391 | |||||||
Revenue | Customer | Customer one | |||||||||
Concentrations of Credit Risk | |||||||||
Concentration risk (in percent) | 10% | ||||||||
Sales Revenue | Customer | Customer one | |||||||||
Concentrations of Credit Risk | |||||||||
Concentration risk (in percent) | 56.60% | 95.40% | 73.60% | 94.30% | |||||
Accounts receivable | Customer | Customer one | |||||||||
Concentrations of Credit Risk | |||||||||
Concentration risk (in percent) | 50.60% | 92% | |||||||
[1]Represents earnings (loss) per share and weighted average issued and outstanding Series A Common Stock and Series B Common Stock for the period after the change in share structure as result of the Company’s conversion on November 29, 2022 (see Note 3 and Note 6). |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue Recognition | ||||
Total revenues | $ 14,486 | $ 5,262 | $ 65,934 | $ 13,195 |
Licensed content and merchandise revenues | ||||
Revenue Recognition | ||||
Total revenues | 8,508 | 5,262 | 36,971 | 13,195 |
Licensed content | ||||
Revenue Recognition | ||||
Total revenues | 4,814 | 4,908 | 18,084 | 12,841 |
Merchandise | ||||
Revenue Recognition | ||||
Total revenues | 3,694 | $ 354 | 18,887 | $ 354 |
Contribution revenues | ||||
Revenue Recognition | ||||
Total revenues | $ 5,978 | $ 28,963 |
Revenue Recognition - Contract
Revenue Recognition - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Revenue Recognition | |||||
Accrued expenses and other current liabilities | $ 1,277 | $ 1,277 | $ 165 | ||
Other noncurrent liabilities | 1,928 | 1,928 | 2,571 | ||
Total contract liabilities | 3,205 | 3,205 | 2,736 | ||
Revenue recognized | $ 0 | $ 0 | $ 0 | $ 0 | $ 165 |
Balance Sheet Components - Inve
Balance Sheet Components - Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Balance Sheet Components | ||
Raw materials | $ 985 | $ 985 |
Finished goods | 9,194 | 5,125 |
Inventory | $ 10,179 | $ 6,110 |
Balance Sheet Components - Prop
Balance Sheet Components - Property and Equipment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Property and Equipment | |||||
Property and equipment, gross | $ 44,075,000 | $ 44,075,000 | $ 37,649,000 | ||
Accumulated depreciation | (9,725,000) | (9,725,000) | (3,223,000) | ||
Property and equipment, net | 34,350,000 | 34,350,000 | 34,426,000 | ||
Impairment of property and equipment | 0 | $ 0 | 0 | $ 0 | |
Land | |||||
Property and Equipment | |||||
Property and equipment, gross | 90,000 | 90,000 | 90,000 | ||
Buildings and improvements | |||||
Property and Equipment | |||||
Property and equipment, gross | $ 37,100,000 | $ 37,100,000 | $ 36,495,000 | ||
Buildings and improvements | Minimum | |||||
Property and Equipment | |||||
Estimated Useful Lives (in years) | 4 years | 4 years | 4 years | ||
Buildings and improvements | Maximum | |||||
Property and Equipment | |||||
Estimated Useful Lives (in years) | 30 years | 30 years | 30 years | ||
Equipment | |||||
Property and Equipment | |||||
Property and equipment, gross | $ 781,000 | $ 781,000 | $ 290,000 | ||
Equipment | Minimum | |||||
Property and Equipment | |||||
Estimated Useful Lives (in years) | 3 years | 3 years | 3 years | ||
Equipment | Maximum | |||||
Property and Equipment | |||||
Estimated Useful Lives (in years) | 15 years | 15 years | 15 years | ||
Furniture and fixtures | |||||
Property and Equipment | |||||
Property and equipment, gross | $ 74,000 | $ 74,000 | $ 16,000 | ||
Estimated Useful Lives (in years) | 5 years | 5 years | 5 years | ||
Vehicles | |||||
Property and Equipment | |||||
Property and equipment, gross | $ 484,000 | $ 484,000 | $ 758,000 | ||
Estimated Useful Lives (in years) | 8 years | 8 years | 8 years | ||
Construction in process | |||||
Property and Equipment | |||||
Property and equipment, gross | $ 5,546,000 | $ 5,546,000 |
Balance Sheet Components - Film
Balance Sheet Components - Film Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Balance Sheet Components | |||||
Released and completed film costs | $ 47,612 | $ 47,612 | $ 47,362 | ||
Not released, in production film costs | 43,591 | 43,591 | 2,250 | ||
In development or preproduction film costs | 989 | 989 | 759 | ||
Film costs, gross | 92,192 | 92,192 | 50,371 | ||
Accumulated amortization | (28,379) | (28,379) | (17,095) | ||
Film costs, net of amortization | 63,813 | 63,813 | $ 33,276 | ||
Amortization of film costs | 2,608 | $ 667 | 11,284 | $ 2,056 | |
Years Ending December 31: | |||||
Remainder of 2023 | 2,703 | 2,703 | |||
2024 | 7,158 | 7,158 | |||
2025 | 6,773 | 6,773 | |||
2026 | 2,129 | 2,129 | |||
2027 | 470 | 470 | |||
Film costs, net of amortization | $ 19,233 | $ 19,233 |
Balance Sheet Components - Leas
Balance Sheet Components - Leases (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) item | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Leases | |||||
Number of lease renewal options | item | 4 | ||||
Right-of-use assets | |||||
Operating leases | $ 1,069 | $ 1,069 | $ 889 | ||
Finance leases | 86 | ||||
Total right-of-use assets | 1,069 | 1,069 | 975 | ||
Short-term lease liabilities | |||||
Operating leases | 336 | 336 | 533 | ||
Finance leases | 19 | ||||
Short-term lease liabilities | 336 | 336 | 552 | ||
Long-term lease liabilities | |||||
Operating leases | 534 | 534 | 338 | ||
Finance leases | 68 | ||||
Long-term lease liabilities | 534 | 534 | 406 | ||
Total lease liabilities | 870 | 870 | $ 958 | ||
Finance lease cost | |||||
Amortization of right-of-use assets | 5 | $ 96 | 15 | $ 99 | |
Interest on lease liabilities | 1 | 9 | 3 | 10 | |
Operating lease cost | 201 | 504 | 562 | 567 | |
Variable and short-term lease cost | 1,710 | 517 | 2,524 | 834 | |
Total lease cost | $ 1,917 | $ 1,126 | 3,104 | 1,510 | |
Cash paid for amounts included in the measurement of lease liabilities: | |||||
Operating cash flows for finance leases | 3 | 9 | |||
Operating cash flows for operating leases | 516 | 24 | |||
Right-of-use assets obtained in exchange for lease obligations: | |||||
Operating leases | $ 507 | 567 | |||
Finance leases | $ 99 | ||||
Weighted average remaining lease term (in years): | |||||
Operating leases | 2 years 9 months 3 days | 2 years 5 months 8 days | 2 years 9 months 3 days | 2 years 5 months 8 days | |
Finance leases | 4 years 3 months 29 days | ||||
Operating Leases | |||||
Remainder of 2023 | $ 156 | $ 156 | |||
2024 | 286 | 286 | |||
2025 | 277 | 277 | |||
2026 | 217 | 217 | |||
Total lease payments | 936 | 936 | |||
Imputed interest | (66) | (66) | |||
Total lease liability | $ 870 | $ 870 | |||
Weighted average discount rate: | |||||
Operating leases | 5.60% | 5.60% | 4.71% | ||
Finance leases | 4.26% | ||||
Minimum | |||||
Leases | |||||
Renewal term (in years) | 1 month | ||||
Maximum | |||||
Leases | |||||
Renewal term (in years) | 10 years |
Balance Sheet Components (Detai
Balance Sheet Components (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Accrued expenses and other current liabilities | ||
Accrued participant royalties | $ 3,223 | $ 1,383 |
Accrued compensation | 2,642 | 273 |
Deferred revenues | 1,277 | 165 |
Accrued inventory purchases | 835 | |
Credit card liabilities | 853 | |
Dividends payable | 10,417 | |
Other | 593 | 589 |
Accrued expenses and other current liabilities | $ 9,423 | $ 12,827 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Nov. 29, 2022 | Sep. 30, 2023 | Dec. 31, 2022 |
Debt on the Condensed Consolidated Balance Sheets | |||
Long-term debt | $ 142,897 | $ 143,659 | |
Current portion of long-term debt | 2,236 | 1,911 | |
Total long-term debt | 145,133 | 145,570 | |
Unamortized debt issuance costs | $ 587 | $ 688 | |
CAS | |||
Debt | |||
Aggregate principal amount of financing agreement with CAS | $ 145,500 | ||
Period for which no interest accrues on the loan | 7 years | ||
Repay of loan (in Percentage ) | 5% |
Equity (Details)
Equity (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Nov. 30, 2022 USD ($) $ / shares | Mar. 31, 2023 USD ($) $ / shares | Dec. 31, 2022 shares | Sep. 30, 2023 Vote | |
Series A Preferred Stock | ||||
Equity | ||||
Preferred stock, dividend per share declared | $ / shares | $ 2.40 | |||
Preferred stock, total dividends declared | $ | $ 13,428 | |||
Preferred stock, dividends paid | $ | $ 10,417 | |||
Preferred stock, dividend per share paid | $ / shares | $ 2.40 | |||
Series A Common Stock | ||||
Equity | ||||
Number of votes per share | Vote | 10 | |||
Series B Common Stock | ||||
Equity | ||||
Number of common shares that each share of Series A Preferred Stock is convertible into | 1 | |||
Number of preferred stock shares converted | shares | 1,254,391 | |||
Number of votes per share | Vote | 1 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Taxes | ||||
Deferred provision (benefit) for income tax | $ (1,850) | $ 207 | $ 1,290 | $ 820 |
Current income taxes | (1) | 3 | (275) | |
Provision (benefit) for income taxes | $ (1,851) | $ 210 | $ 1,290 | $ 545 |
Effective tax rate | 31% | 618% | 23% | 42% |
Decrease in effective tax rate | 587% | 19% | ||
Income tax impact from net loss attributable | $ (694) | $ (3,223) |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Related Party Transactions | |||||
Revenue from transactions with related parties | $ 0 | $ 5,071 | $ 0 | $ 12,488 | |
Revenue, Related Party, Type [Extensible Enumeration] | Related Party [Member] | Related Party [Member] | Related Party [Member] | Related Party [Member] | |
Related party payable | $ 0 | $ 0 | $ 0 | ||
Other Liability, Related Party, Type [Extensible Enumeration] | Related Party [Member] | Related Party [Member] | Related Party [Member] |
Subsequent Events (Details)
Subsequent Events (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Termination of contract license | Angel Studios | |
Subsequent Events | |
Reserve for accounts receivable | $ 1,639 |