Basis of Presentation and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2024

Basis of Presentation and Summary of Significant Accounting Policies


	As of December 31,
	2024		2023
Raw materials	$	175	$	175
Finished goods		5,745		15,540
Inventory reserve		(62)		(655)
Inventory	$	5,858	$	15,060

Schedule of property and equipment and accumulated depreciation


	As of December 31,				Estimated
	2024		2023		Useful Lives

	(in thousands)				(in years)
Land	$	90	$	90	—
Capitalized software and information technology equipment		668		2,690	3
Buildings and improvements		51,078		37,297	2 – 30
Equipment		519		791	3 – 15
Furniture and fixtures		130		80	5
Vehicles		476		484	8
Construction in process		25		8,069	—
Property and equipment, gross	$	52,986	$	49,501
Accumulated depreciation		(24,555)		(12,051)
Property and equipment, net	$	28,431	$	37,450

Schedule of components of film costs

The following table represents the components of film costs (in thousands):


	As of December 31,
	2024		2023
Released and completed film costs	$	2,469	$	48,395
Not released, in production film costs		14,680		44,737
In development or preproduction film costs		153		4,262
Film costs, gross		17,302		97,394
Accumulated amortization		(569)		(30,385)
Film costs, net of amortization	$	16,733	$	67,009

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 December 31, 2024 are as follows (in thousands):


Years Ending December 31:	Amount
2025	$	627
2026		611
2027		616
2028		45
2029		—
Total	$	1,899

Schedule of intangible assets

The Company historically had trademarks and copyrights for The Chosen that were amortized over an economic life of 10 years. As of December 31, 2024, the Company no longer had trademarks and copyrights. Intangible assets consisted of the following (in thousands):


	As of December 31,
	2024		2023
Trademark ⁽¹⁾	$	—	$	63
Copyright ⁽¹⁾		—		10
Accumulated amortization ⁽¹⁾		—		(11)
Net carrying value	$	—	$	62

(1)	Included in Other assets in the Consolidated Balance Sheets.

Schedule of other current assets

As of December 31, 2024 and 2023 respectively, other current assets consisted of the following (in thousands):


	As of December 31,
	2024		2023
Contract Asset – Short Term	$	1,143	$	—
Deposits		871		940
Other		599		319
Total other current assets	$	2,613	$	1,259

Schedule of revenue disaggregated by licensed content and merchandise revenues as well as contribution revenues

The following table presents the Company’s disaggregated revenues (in thousands):


	Year Ended December 31,
	2024		2023
Licensed content	$	29,705	$	24,180
Merchandise		28,538		26,895
Other		2,256		869
Licensed content and merchandise revenues		60,499		51,944
Production services revenues		98,837		—
Contribution revenues		—		28,985
Total Revenues	$	159,336	$	80,929

The following table presents revenue recognized for goods transferred at a point in time and services transferred over time on the Consolidated Statement of Operations (in thousands):


	Year Ended December 31,
	2024		2023
Point in time	$	60,499	$	80,929
Over time		98,837		—
Total Revenues	$	159,336	$	80,929

Schedule of contract liabilities included on the consolidated balance sheets

The following table presents contract liabilities included in the following on the Consolidated Balance Sheets (in thousands):


	As of December 31,
	2024		2023
Deferred revenue, current	$	62,112	$	1,142
Deferred revenue		—		1,928
Total	$	62,112	$	3,070

Schedule of accrued expenses and other current liabilities

As of December 31, 2024 and 2023 respectively, accrued expenses and other current liabilities consisted of the following (in thousands):


	As of December 31,
	2024		2023
CAS royalties	$	3,606	$	—
Income tax payable		3,123		405
Accrued participant royalties		1,139		2,564
Credit card liabilities		268		1,489
Accrued inventory purchases		167		1,020
Accrued compensation		61		1,527
Other		2,409		760
Accrued expenses and other current liabilities	$	10,773	$	7,765

Schedule of components of provision (benefit) for income taxes

The provision (benefit) for income taxes consisted of the following (in thousands):


	Year Ended December 31,
	2024		2023
Deferred provision for income tax	$	(17,840)	$	(2,534)
Current income taxes		14,920		405
Provision (benefit) for income taxes	$	(2,920)	$	(2,129)

Schedule of reconciliation of the provision (benefit) for income taxes

A reconciliation of the provision (benefit) for income taxes, with the amount computed by applying the statutory Federal income tax rate to income before income taxes is as follows (in thousands):


	Year Ended December 31,
	2024			2023
Expected tax expense (benefit) at US Federal statutory rates	$	(4,599)		$	(2,328)
State income taxes (benefit), net of Federal income tax effect		212			(147)
Non-controlling interest		1,277			1,278
Statutory rate change		(403)			(250)
Nondeductible interest		1,547			—
Charitable contributions		(1,537)			—
Other		583			(682)
Provision (benefit) for income taxes	$	(2,920)		$	(2,129)
Effective tax (benefit) rate		13	%		19	%

Schedule of components of deferred tax liability

Significant components of the Company’s deferred tax liability consisted of the following (in thousands):


	As of December 31,
	2024		2023
Film costs	$	—	$	15,900
Cash basis adjustments		1,162		(5)
Net operating loss carryforwards		(1,510)		(15,500)
Right of use assets		140		211
Lease liabilities		(140)		(172)
Property and equipment		1,678		2,690
Section 174 capitalization		(1,362)		(196)
Deferred revenue		(14,376)		—
Other		(862)		(358)
Deferred tax liability/(asset), net	$	(15,270)	$	2,570

Schedule of changes in unrecognized tax benefits and uncertain tax positions

Changes in unrecognized tax benefits and uncertain tax positions from January 1 through December 31 are set forth below (in thousands):


	Year ended December 31,
	2024		2023
Balance, beginning of year	$	349	$	—
Increases in tax positions for prior years		—		349
Increases in tax positions for current years		—		—
Decreases in tax positions for prior years		—		—
Decreases in tax positions for current years		—		—
Decreases related to settlements with taxing authorities		—		—
Balance, end of year	$	349	$	349

5&2 Studios, Inc. 10-K