UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)


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

For the fiscal year ended December 31, ~~2023~~2024



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

For the transition period from to

Commission File Number: 000-55029

~~THE~~5&2 ~~CHOSEN~~STUDIOS, INC.

(Exact name of registrant as specified in its charter)


Delaware		82-3246222
(State or other jurisdiction ofincorporation or organization)		(I.R.S. EmployerIdentification No.)

4 S 2600 W, Suite 5Hurricane, Utah, 84737		(435) 767-1338(Registrant’s telephone number, including area code)
8291 Baucum RoadMidlothian, TX 76065		(833) 924-6736(Registrant’s telephone number, including area code)
(Address of principal executive offices, including zip code)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None.	N/A	N/A

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

Series B Common Stock, $0.001 par value

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

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

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

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


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

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive oﬃcers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

As of June 30, ~~2023~~2024, the last business day of the registrant’s most recently completed second fiscal quarter, the registrant’s securities were not publicly traded. Therefore, the aggregate market value of voting stock held by non-affiliates of the registrant was $0.

At March 2928, ~~2024~~2025, 6,950,000 shares of the registrant’s Series A Common Stock, $0.001 par value per share, were issued and outstanding and 5,~~595~~591,~~015~~274 shares of the registrant’s Series B Common Stock, $0.001 par value per share, were issued and outstanding.

Document Incorporated by Reference

None.

Table of Contents

TABLE OF CONTENTS

		Page No.

PART I		31
Item 1.	Business	3

Item 1A.	Risk Factors	9
Item 1.	Business	1
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	18
Item 1C.	Cybersecurity	18
Item 2.	Properties	1920
Item 3.	Legal Proceedings	1920
Item 4.	Mine Safety Disclosures.	1920

PART II		20

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	20
Item 6.	Reserved	2021
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2022
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	2631
Item 8.	Financial Statements and Supplementary Data	2631
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.	2631
Item 9A.	Controls and Procedures	2631
Item 9B.	Other Information	2632
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	2632
PART III		27

Item 10.	Directors, Executive Officers and Corporate Governance	27
PART III		32
Item 11.	Executive Compensation	30

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	31
Item 10.	Directors, Executive Officers and Corporate Governance Management	32
Item 13.	Certain Relationships and Related Transactions, and Director Independence	32
Item 11.	Executive Compensation	35
Item 14.	Principal Account Fees and Services	33
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	38
PART IV		33
Item 13.	Certain Relationships and Related Transactions, and Director Independence	39
Item 15.	Exhibits	33
Item 14.	Principal Account Fees and Services	40
Item 16.	Form 10-K Summary	33

PART IV		40

Item 15.	Exhibits	40
Item 16.	Form 10-K Summary	41

Table of Contents

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

THIS ANNUAL REPORT ON FORM 10-K (THIS “ANNUAL REPORT”) MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE THIS FILING, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARDLOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

PART I

Item 1. Business

General

~~The~~5&2 ~~Chosen~~Studios, Inc., a Delaware corporation, was originally formed on October 24, 2017 as a Utah limited liability company under the name “The Chosen, LLC.” On November 29, 2022, The Chosen, LLC converted into a Delaware corporation (the “conversion”) and changed its name to The Chosen, Inc. On September 25, 2024, The Chosen, Inc. changed its corporate name from The Chosen, Inc. to 5&2 Studios, Inc. (as ~~converted~~so renamed, the “Company”). The Company has ~~three~~five wholly-owned subsidiaries, The Chosen Texas, LLC, TCI Animation, LLC, ~~and~~ The Chosen House, LLC, Dream Weaver Stories, LLC, and Pit to Palace, LLC, and one subsidiary of which the Company owns 100% voting interest and none of the non-voting interest, Impossible Math, LLC, whose activity has been consolidated into the Company with all significant intercompany balances and transactions being eliminated.

The Company develops and produces an episodic television series entitled The Chosen (the “Series”) and other productions and content. The Series is the first-ever multi-season TV series about the life of Christ and those He touched. ~~The~~While ~~Company~~5&2 ~~produces~~Studios, ~~markets~~Inc. is primarily focused on producing, marketing, and ~~distributes~~distributing the remaining three seasons of the Series , it continues to aevaluate ~~worldwide~~opportunities ~~market~~to diversify its content through ~~various~~other ~~means~~Biblical based productions. In September 2024, the Company announced a number of new productions, including a series based on the life of Moses, a series based on the life of Joseph, a series based on the book of Acts of the Apostles, an animated series based on The Chosen called The Chosen Adventures, and ~~methods~~an asunscripted ~~further~~show ~~described~~featuring ~~below~~The Chosen cast and adventure enthusiast Bear Grylls called The Chosen in the Wild. The Company has released the first ~~four~~five seasons of the Series, consisting of eight episodes each, along with a Christmas special in theaters, and has commenced preparation for the production of the ~~fifth~~sixth season.

Delaware Conversion

At the effective time of conversion (the “Effective Time”): (a) the 13,900,000 common units (the “Common Units”) of the members of The Chosen, LLC that were outstanding immediately prior to the Effective Time were converted into 6,950,000 shares of Common Stock of the Company, with $0.001 par value per share (the “Common Stock”), on a one-to-one-half basis, designated as Series A Common Stock; and (b) the 11,190,030 Class A Preferred Units that were outstanding immediately prior to the Effective Time were converted into 5,595,015 shares of Series A Preferred Stock of the Company, with $0.001 par value per share (the “Series A Preferred Stock”), on a one-to-one-half basis, designated as Series A Preferred Stock.

Each share of Series A Preferred Stock iswas entitled to a dividend at the rate of up to 120% of the original issue price of $2.00 (the “Dividend”), and upon payment of the Dividend, such share ~~will~~ automatically ~~convert~~converted, without any action on the part of the Company’s stockholders, into a share of the Company’s Series B Common Stock, with $0.001 par value per share, on a one-to-one basis, and shall be entitled to any further distributions pro rata with Series A Common Stock.

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, the two classes of Common Stock have the same rights and preferences.1

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Table of Contents

OnEach ~~any~~share ~~matter presented exclusively to the holders~~ of Series A ~~Preferred~~Common Stock ~~pursuant~~is entitled to ~~the~~ten ~~Company’s~~votes ~~Certificate~~per ofshare, ~~Incorporation~~and ~~for~~each ~~their~~share ~~action~~of orSeries ~~consideration~~B atCommon ~~any~~stock ~~meeting~~is ofentitled ~~the~~to ~~Company’s~~one ~~stockholders~~vote ~~(or~~per byshare. ~~written~~Except ~~consent~~with ofrespect ~~stockholders~~to inthe ~~lieu~~number of avotes ~~meeting)~~per share, ~~each~~the ~~holder~~two ofclasses ~~outstanding shares~~ of ~~Series A~~Common ~~Preferred~~ Stock ~~will~~have bethe ~~entitled~~same torights ~~one~~and ~~vote per share~~preferences.

A dividend of $2.40 for each outstanding share of Series A Preferred Stock, totaling $13,428,036, was declared on November 30, 2022, and the Company initiated the payment to stockholders on December 2, 2022. Upon payment of the Dividend, each share of Series A Preferred Stock was 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 December 31, ~~2023~~2024, no Series A Preferred Stock is outstanding. As of December 31, ~~2023~~2024, 5,595,015 shares of Series A Preferred Stock had been converted into Series B Common Stock.

CAS Transactions

On November 29, 2022, the Company entered into a series of transactions (with the non-profit entity Come and See Foundation, Inc. (“CAS ~~Transactions~~”), whereby CAS (a) acquired from the Company substantially all of the intellectual property assets comprising the television series, The Chosen, including the first four existing seasons in distribution at such time and all unproduced seasons of episodes, plus derivatives (collectively with the Series, the “Programs”); (b) agreed to make a series of financial contributions to the Company for the Company’s use in the development, production, distribution, marketing and delivery of the Series pursuant to a Contribution and Funding Production Agreement (as amended, the “Existing Contribution Agreement”); and (c) exclusively and irrevocably licensed back to the Company, pursuant to a License Agreement (the “Existing License Agreement”), in perpetuity, all of the commercial rights in and to the Series and the Programs (collectively, the “Licensed Rights”), for development, production, distribution and licensing by the Company excluding certain rights retained by CAS in and to the Series, comprised of: (a) exclusive rights to distribute the Series (in all languages) to non-profit ~~entity~~entities ~~Come~~and institutions (e.g., non-profit public and ~~See~~private ~~Foundation~~educational institutions, ~~Inc.~~ ministries, churches, religious organizations and NGOs, government-religion organizations and public/private partnerships, educational institutions and schools affiliated with religious or ministerial organizations); (b) exclusive rights to solicit charitable donations in connection with such non-profit sector distribution of, and in support of the further distribution of, the Series; (c) certain royalty rights to the Series and the right to receive a special payment if certain defined liquidity events occur (if at all); (d) non-exclusive rights to stream the Series on CAS’ non-profit Video-on-Demand (“VOD”) app (the “The Chosen App”) and other related non-profit VOD media; and (e) certain approval and other administrative rights respecting the production and distribution of the Series (collectively, the “CAS Reserved Rights”), in each case, as more specifically set forth in the Existing License Agreement.

~~The~~On ~~CAS~~May ~~Transactions are set forth in the Contribution Funding and Production Agreement (as amended by that certain First Amendment to the Contribution Agreement~~13, ~~dated December 19~~2024, ~~2022, by and between~~ the Company ~~and~~entered ~~CAS,~~into ~~and~~an ~~the~~Asset ~~Second~~Purchase ~~Amendment (as defined below), the “Contribution~~ Agreement~~”),~~ ~~the Intellectual Property Assignment and Limited Assumption Agreement~~ (the “~~IP Assignment Agreement~~APA”) ~~and the License Agreement (the “License Agreement”, and together~~ with ~~the Contribution Agreement and the IP Assignment Agreement, the “~~CAS ~~Agreements”)~~. ~~Pursuant~~Contemporaneously totherewith, the ~~terms~~Company ~~of,~~issued ~~and~~a aspromissory ~~more~~note ~~specifically set forth~~ in, ~~the~~favor ~~CAS~~of ~~Agreements~~CAS, ~~CAS~~in ~~(a) acquired from~~ the ~~Company~~principal ~~substantially~~amount ~~all~~ of ~~the~~approximately ~~intellectual~~$11.7 ~~property~~million ~~assets~~ (the “~~Assigned~~Bridge ~~Rights~~Note”) ~~comprising the television series~~, ~~The Chosen, including the first three existing seasons~~ in ~~distribution~~exchange atfor ~~such~~CAS’s ~~time~~making ~~and all unproduced seasons of episodes, plus derivatives (collectively with the Series, the “Programs”) (the “IP Purchase”); (b) agreed to make~~ a ~~series~~short-term ofloan ~~financial contributions over time~~ to the Company infor ~~the~~such ~~aggregate~~same amount. ofThe ~~$150,000,000~~transactions ~~(the~~contemplated ~~“Contribution~~by ~~Commitment”) for~~ the ~~Company’s~~APA ~~use~~re-defined in the ~~development,~~terms ~~production, distribution and marketing~~ of the ~~Series and~~business torelationship ~~provide~~between the Company ~~with operating~~ and ~~working capital~~CAS, ~~and~~pursuant ~~including the Company’s and its principals’ agreement~~ to ~~continue~~which ~~developing,~~(i) ~~producing~~CAS ~~and~~owns ~~delivering~~ the ~~Series,~~intellectual ~~and~~property asrights ~~consideration~~to ~~for~~ the ~~IP Purchase~~Programs; ~~and~~ (cii) ~~exclusively~~ ~~and~~CAS ~~irrevocably~~licenses ~~licensed~~the ~~back~~right to ~~the~~ ~~Company~~develop, ~~in perpetuity~~produce, ~~all~~distribute ~~of the commercial rights in~~ and tomarket the ~~Series and the~~ Programs (collectively, the “~~Licensed~~Commercial Rights”), ~~for~~to ~~development,~~the ~~production~~Company on an exclusive basis, ~~distribution~~subject ~~and~~to ~~licensing~~CAS’s byretention of the ~~Company.~~CAS ~~The~~Reserved ~~full~~Rights ~~amount~~and of(iii) the ~~Contribution~~Company ~~Commitment~~currently ~~has~~develops, ~~been~~produces, ~~received~~distributes, byand markets the ~~Company~~Programs with funding from CAS.

AsThe ~~part~~APA ofprovided ~~the CAS Transactions~~for, ~~CAS~~subject ~~retained~~to certain ~~rights~~terms inand ~~the Series~~conditions, ~~comprised of: (a) exclusive rights to distribute~~ the ~~Series (in~~entry ~~all~~into ~~languages~~(i) toan ~~non-profit~~Amended ~~entities~~ and ~~institutions~~Restated ~~(e.g.,~~Distribution ~~non-profit~~License ~~public~~ and ~~private~~Marketing ~~educational~~Services ~~institutions,~~Agreement ~~ministries,~~(the ~~churches,~~“DMA”) ~~religious~~between ~~organizations~~CAS and ~~NGOs,~~Company ~~government-religion organizations~~ and ~~public/private~~(ii) ~~partnerships,~~a ~~educational~~Production ~~institutions~~Services and ~~schools~~Funding ~~affiliated~~Agreement ~~with religious or ministerial organizations);~~ (~~b) exclusive~~the ~~rights~~“PSFA”, toand, ~~solicit~~together ~~charitable donations in connection~~ with ~~such~~the ~~non-profit~~DMA ~~sector distribution of,~~ and ~~in support of~~ the ~~further distribution of~~APA, the ~~Series;~~“CAS ~~(c) certain~~Agreements” ~~royalty rights to the Series~~ and the ~~right~~transactions tocontemplated ~~receive~~thereby, acollectively, ~~special~~the ~~payment~~“CAS ifTransaction”) ~~certain~~between ~~defined~~CAS ~~liquidity~~and ~~events~~The ~~occur~~Chosen ~~(if~~Texas, atLLC ~~all);~~ (d“TCT”) ~~non-exclusive~~. ~~rights~~On toJune ~~stream~~13, ~~the~~2024, ~~Series on CAS’ non-profit Video-on-Demand~~ (~~“VOD”~~i) ~~app (~~the ~~“The~~Company ~~Chosen App”)~~ and ~~other~~CAS ~~related~~entered ~~non-profit~~into ~~VOD~~the ~~media;~~DMA, ~~and~~which ~~(e) certain~~amended ~~approval~~ and ~~other~~restated ~~administrative~~the ~~rights~~Existing ~~respecting~~License ~~the~~Agreement, ~~production~~ and ~~distribution of the Series~~ (~~the “CAS Reserved Rights”~~ii), inTCT ~~each~~and ~~case,~~CAS asentered ~~more~~into ~~specifically set forth in~~ the ~~License Agreement~~PSFA.

InUnder the terms of the CAS ~~Transactions~~Agreements, athe ~~portion~~Company ofagreed to (i) transfer the ~~funds~~Commercial ~~contributed~~Rights byand certain other assets to CAS, ~~equal~~(ii) re-license the Commercial Rights from CAS and distribute and market the Programs on an exclusive basis subject to ~~$4.5~~royalty ~~million~~and other terms set forth in the DMA, (iii) provide for the ~~“Purchase~~cancellation ~~Price”~~of the existing indebtedness owed by the Company to CAS and (iv) ~~represents~~implement the ~~amount~~PSFA, ~~for~~pursuant to which the IPCompany ~~Purchase.~~will Abe ~~portion~~engaged to provide production services to CAS in respect of the ~~initial~~Programs ~~funding~~and ~~remitted~~CAS will continue to fund the Company’s ~~was~~activities ~~used~~in torespect ~~pay~~of the ~~Dividend~~Programs.

~~Pursuant~~The toconsideration ~~the~~payable ~~terms~~to ~~of, and as more specifically set forth in,~~ the ~~CAS Transactions: (a) the~~ Company ~~will~~under ~~receive 90% of~~ the ~~donation~~APA ~~net~~consisted ~~proceeds received by CAS (in furtherance~~ of: ~~CAS’s tax-exempt activities) through The Chosen App~~ (~~“Contribution Revenue”~~i); ~~and~~the ~~(b) CAS~~cancellation ~~will~~of ~~receive~~all aof ~~defined royalty participation (~~the ~~“Royalty”)~~existing inindebtedness ~~certain~~owed ~~revenue generated~~ by the Company’s ~~exhibition~~to ~~and distribution of the Programs~~CAS, which ~~Royalty~~includes ~~will~~approximately ~~be equal to~~ $145.5% million of ~~such~~existing ~~defined~~indebtedness ~~revenue~~owed ~~and~~by ~~which Royalty will be payable to CAS on a calendar quarterly basis for~~ the ~~initial~~Company ~~two years following the initial commercial release or broadcast of each Program and on a calendar semi-annual basis thereafter for so long as such Royalty is payable~~ to CAS.

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Table of Contents

~~The~~under ~~Contribution Agreement (which was subsequently amended pursuant to~~ the ~~Second~~Existing ~~Amendment~~Contribution asAgreement, ~~noted~~and ~~below)~~approximately ~~originally~~$11.7 ~~provided~~million ~~that~~of ~~the~~indebtedness ~~funds~~under ~~contributed would have accrued interest only after seven years from~~ the ~~closing~~Bridge ofNote, ~~the CAS Transactions~~ and ~~would~~any ~~have~~accrued ~~been~~but beunpaid ~~repayable~~interest tothereon; ~~CAS, less (i) the Purchase Price~~ and (ii) ~~all~~ ~~amounts~~up ~~of the Royalty previously paid~~ to ~~CAS,~~approximately ~~only~~$85 onmillion ~~the occurrence~~ of certain ~~defined~~milestone ~~liquidity events~~payments, which ~~include~~may anbe ~~acquisition,~~paid ~~merger,~~following ~~sale~~the ofClosing ~~all~~to orthe ~~substantially~~extent ~~all~~earned ~~assets,~~upon ~~bankruptcy,~~the ~~insolvency~~completion and~~/or~~ ~~any~~delivery ~~incurrence~~ of ~~debt~~seasons or5, ~~equity~~6, ~~financing~~and in7, ~~the~~respectively, ~~amount~~ of ~~$98.5 million or more (but excluding~~ the ~~CAS Transactions)~~Series.

As ~~part~~The ofDMA ~~the~~provides ~~CAS~~for, ~~Transactions~~among other things, CAS granting to the Company: ~~holds~~(i) aan ~~security~~exclusive ~~interest~~worldwide license to exploit the commercial exploitation rights in all media and languages (excluding the ~~Licensed~~CAS Reserved Rights. which were retained by CAS), ~~holds~~ancillary rights, licensed trademark rights and marketing servicing rights (collectively, the “Distribution Rights”) with respect to the intellectual property assets comprising Programs, for a ~~security~~period ~~interest~~of inten (10) years (subject to: (a) a 5-year extension if certain other potential projects are produced under the ~~Licensed~~PSFA and (b) automatic annual extensions if certain conditions are satisfied) and (ii) subject to the satisfaction of certain conditions, the right (the “TM Royalty Rights”) to ~~secure~~use “The Chosen” brand in connection with the Company’s and/or its affiliates’ production of other biblical universe projects (each, a “Chosen-Branded Production”). The Company is required to pay CAS: certain percentages of the gross receipts from Company’s exploitation of (i) the Distribution Rights; (ii) certain ancillary rights; and ~~entitlements~~(iii) ~~pursuant~~the TM Royalty Rights for each Chosen-Branded Production. All other gross receipts with respect to the ~~Contribution~~Distribution ~~Agreement~~Rights, ancillary rights and TM Royalty Rights are retained by Company.

OnAs ~~October 31,~~part ~~2023,~~of the ~~Company~~DMA, ~~entered into the Second Amendment to the Contribution Agreement with~~ CAS, ~~(the~~holds ~~“Second~~a ~~Amendment”),~~security ~~which~~interest ~~further~~in ~~amended certain terms of (i)~~ the ~~Contribution~~Licensed ~~Agreement~~Rights ~~and~~to ~~(ii) the~~secure ~~License~~CAS’ ~~Agreement,~~rights and ~~any~~entitlements ~~agreements~~pursuant ~~delivered~~to inthe ~~connection~~CAS ~~therewith~~Agreements.

~~The~~On ~~Second~~September ~~Amendment~~30, ~~among other things~~2024, ~~sets forth (1) certain payment terms as agreed between the~~ Company and CAS, ~~including,~~entered ~~but~~into ~~not~~an ~~limited~~amendment to, the ~~interest~~DMA ~~on,~~(the ~~and~~“DMA ~~repayment~~First ~~obligations~~Amendment”) ~~with~~which ~~respect~~provides tofor, ~~the~~among ~~amounts~~other ~~funded~~things, by(i) CAS toreimbursing ~~the~~ Company ~~pursuant~~for topreviously ~~the~~incurred ~~Contribution~~costs and ~~Production~~expenses ~~Funding~~for ~~Agreement, (2)~~ the ~~payment~~development ~~terms~~of ~~for~~marketing ~~CAS’~~and ~~non-profit~~technology ~~rights~~respecting inThe ~~the~~Chosen ~~Series,~~ App; (3ii) ~~cooperative~~ ~~terms~~CAS’ ~~with~~obligations ~~respect~~ to ~~certain~~reimburse ~~tax~~Company ~~matters,~~for ~~(4) a~~certain ~~discontinuation~~marketing ofexpenses ~~the~~in ~~right~~lieu of ~~CAS~~Company torecouping ~~receive~~such aexpenses ~~royalty~~ from ~~the~~gross ~~Company~~receipts ~~with~~from ~~respect~~Company’s toexploitation ~~certain~~of ~~commercial revenue generated by~~ the ~~Series,~~Distribution Rights; (5iii) a ~~modification~~changes ofto ~~certain~~the ~~defined~~percentages ~~liquidity~~of ~~events~~the ~~that~~allocation ~~would~~of ~~require~~gross areceipts ~~payment~~ from the Company’s toexploitation ~~CAS~~of the Distribution Rights; and (6iv) ~~procedures~~ toproviding ~~clarify~~for ~~the~~Company’s ~~obligations~~right ofto ~~either~~recoup ~~party~~certain ~~owed~~expenses toincurred ~~the~~in ~~other~~connection onwith atheatrical ~~go-forward~~exploitation ~~basis~~from ~~with~~the ~~respect~~gross toreceipts ~~producing,~~derived ~~delivering~~from ~~and~~such ~~financing~~theatrical ~~the Series~~exploitation.

The ~~Company~~PSFA ~~expects~~provides for, among other things, (i) CAS engaging TCT to ~~begin~~render ~~principal~~all ~~photography~~development onand production services in order to fully deliver the ~~fifth~~future ~~season~~episodes of the Series in(through ~~April~~Season ~~2024~~7), ~~which~~plus ~~will~~potential ~~require~~additional aprogramming ~~significant~~related ~~amount~~to ofthe ~~capital. While~~Series; (ii) CAS providing the ~~Second~~production ~~Amendment~~costs ~~modified~~of ~~and~~the ~~revised~~future ~~various~~episodes ~~commercial~~of ~~terms~~the Series (through Season 7), itplus ~~also~~potential ~~eliminated~~additional programming related to the ~~obligation~~Series; of(iii) CAS toowning ~~continue~~all rights in and to ~~provide~~the ~~Contribution~~Series ~~Revenue~~on a work-made-for-hire basis; (iv) CAS paying to ~~the~~TCT ~~Company. As~~a ~~such,~~market-rate noproduction ~~additional~~services ~~Contribution~~fee ~~Revenue~~based ~~was~~upon ~~received~~the byagreed budgeted amounts, for the ~~Company~~actual development, production and post-production services for ~~reporting~~a ~~periods~~season ~~subsequent~~(or tomotion ~~the~~picture) ~~signing~~through and including complete delivery of the ~~Second~~Series; ~~Amendment. However,~~and ~~The~~(v) ~~Company~~CAS ishaving ~~currently~~a inright ~~discussions~~of ~~with~~first negotiation to acquire the CAS ~~with~~Reserved ~~respect~~Rights toregarding ~~potential~~projects ~~modifications~~based upon the Bible or related Biblical stories that TCT, Company and/or ~~amendments~~their respective affiliates elect to produce, co-develop, co-produce, finance or co-finance for the ~~current~~longer ~~terms~~of the term of the ~~CAS~~PSFA ~~Transactions~~and the DMA. ~~Such~~TCT ~~potential~~acting ~~amendments~~through orDallas ~~agreements~~Jenkins ~~would,~~(the ~~among~~“Key ~~other~~Man”) ~~things,~~(and ~~provide~~conditioned upon the Key Man being engaged by TCT or Company ~~with~~as ~~funding~~the ~~for~~principal showrunner of Seasons 5-7 of the ~~fifth~~Series, ~~sixth~~to render creative writing and ~~seventh~~directing ~~seasons~~services on a first-priority basis and on an exclusive basis during principal photography of each episode of the Series) ~~and~~has ~~other~~customary ~~related~~creative ~~programs~~control and ~~reduce~~creative discretion respecting the ~~indebtedness~~artistic ~~held~~and bycreative elements of the ~~Company~~Series (the “Key Man Affiliation”). ~~While~~The Key Man has agreed with the Company ~~cannot~~certain beexclusivity ~~certain~~and first priority restrictions upon his providing of creative services to persons and projects other than the ~~outcome~~Series, which are generally applicable throughout the production and delivery of Season 7 of the ~~ongoing~~Series. ~~discussions~~Such ~~with~~exclusivity ~~CAS,~~provisions of the ~~Company~~Key ~~expects~~Man toare ~~enter~~memorialized ~~into~~in ~~new~~certain agreements ~~with~~between ~~CAS~~the inKey ~~sufficient~~Man ~~time~~and tothe ~~allow~~Company, ~~for~~and in the ~~continued~~CAS ~~production~~Agreements. ofSubject to the ~~fifth~~Key Man Affiliation, ~~sixth~~TCT will have control over ordinary course, day-to-day business and ~~seventh~~production ~~seasons~~matters of the Series.

Business Overview

The Series

The Series is based on the story concepts and ideas of Dallas Jenkins and on the gospels of the Bible and tells the story of the life of Jesus Christ primarily through the perspectives of those who met him throughout his life, as the stories of his many miracles were exposed primarily through the word of those who witnessed them. Over the course of multiple seasons, the viewer meets Jesus, his followers, the Romans occupying Jewish territory and the religious leaders who resisted him. Season 1 begins with the gathering of Jesus’ followers and follows the progression of the disciples from their calling to their preparation for Jesus’ ministry. The remaining seasons cover portions of Jesus’s ministry including many of his miracles, concluding ultimately with his death and resurrection. The Company has produced a total of ~~four~~five seasons thus far and plans to produce another ~~three~~two seasons, at the rate of about one season per ~~year,~~ with the final season planned to be released sometime in 2027. While most viewers consume the content through popular streaming services (including the proprietary CAS Chosen App), the Company also, from time to time, will release episodes in limited theatrical releases. For example, the Company released Season 3 as two separate limited theatrical releases (episodes 1 and 2 as a first release and episodes 7 and 8 as a second release). Combined, the two releases generated over $20 million in gross box office receipts. Beginning in February 2024, the Company released the entire 4th Season in three separate theatrical releases, generating over $30 million in gross box office receipts to date. In addition to the main series, the Company, from time to time, produces additional film content related to the Series. In December 2021, The Company theatrically released a Christmas Special titled: “Christmas with the Chosen: The Messengers” generating over $13 million in gross box office receipts in a limited theatrical release. In December of 2023, the Company theatrically released a second Christmas Special titled: “Christmas with the Chosen: Holy Night” with a much shorter release window generating over $5 million in gross box office receipts. Additionally, the Company has produced two documentaries

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year, with the final season planned to be released sometime in 2028. While most viewers consume the content through popular streaming services (including the proprietary CAS Chosen App), the Company also, from time to time, will release episodes in limited theatrical releases. For example, the Company released Season 3 as two separate limited theatrical releases (episodes 1 and 2 as a first release and episodes 7 and 8 as a second release). Combined, the two releases generated over $20 million in gross box office receipts. Beginning in February 2024, the Company released the entire 4th Season in three separate theatrical releases, generating over $30 million in gross box office receipts to date. In addition to the main series, the Company, from time to time, produces additional film content related to the Series. In December 2021, The Company theatrically released a Christmas Special titled “Christmas with the Chosen: The Messengers, generating over $13 million in gross box office receipts in a limited theatrical release. In December 2023, the Company theatrically released a second Christmas Special titled: Christmas with the Chosen: Holy Night with a much shorter release window generating over $5 million in gross box office receipts. Additionally, the Company has produced two documentaries titled Unfiltered: Gen Z reacts to the Chosen” and “Jonathan and Jesus”, the latter of which has been licensed to Amazon for exhibition on their streaming platform.

Other Content

While 5&2 Studios, Inc. is primarily focused on producing, marketing, and distributing the remaining three seasons of the Series, it continues to evaluate opportunities to diversify its content through other Biblical based productions. In September 2024, the Company announced a number of new productions, including a series based on the life of Moses, a series based on the life of Joseph, a series based on the book of Acts, an animated series based on The Chosen called The Chosen Adventures, and an unscripted show featuring The Chosen cast and adventure enthusiast Bear Grylls called The Chosen in the Wild. The Chosen Adventures and The Chosen in the Wild are currently being produced and expect to be released sometime in 2025 or 2026. Joseph is in development, but production has not yet started. Moses and The Way are planned but not currently under active development.

Production

During 2018 and 2019, the Company’s The Chosen marketing campaign became the most crowdfunded TV project of all time as of the end of 2019, raising just over $11,000,000. Pursuant to those offerings, the Company received net proceeds of $10,049,559. The funds were used to cover offering expenses and the completion of production of Seasons 1 and 2 which were released by November 2019 and July 2021, respectively. With the release of the first and second seasons of the Series, the Company began to generate revenue. In addition to the production costs for the first four seasons, the Company incurred significant marketing costs related to the various releases. The marketing of the first four seasons consisted of social media posts and promotions, including, but not limited to Facebook, Instagram, and YouTube, along with periodically producing and releasing supplemental original content such as the 2021 Christmas special or the documentary “Unfiltered: Gen Z Reacts to the Chosen”, as well as email campaigns and interviews with various media outlets.

~~The~~As ~~Company~~of ~~has~~the ~~already~~issuance ~~produced~~of ~~four~~this ~~seasons~~report, ~~and plans to use~~ the ~~Contribution~~Company ~~Commitment~~has ~~from~~already ~~CAS~~produced asfive ~~well~~seasons ~~as revenues derived from the exploitation~~ of the Series to ~~produce~~and ~~future~~currently ~~seasons. As of the issuance of this report, the Company~~ has been focused on the release of Season 45 and the development of Season 56.

In 2021, the Company began construction of a film set and film campus in Midlothian, Texas, which serves as the primary filming location for the Series. The film set includes a re-creation of the first century village of Capernaum, where Jesus ministered. The film campus contains a state-of-the-art sound stage and accompanying buildings for cast and crew. Both projects were substantially completed by the end of 2022 and will ensure The Chosen has uninterrupted access to filming facilities throughout the Series reducing production timelines and budgets. In late 2023, the Company began construction of a second stage on the same property in order to build additional sound stage capacity and reduce the need to film in other locations. The second soundstage was completed in March 2024 and iswas ~~available~~used for ~~use for~~ Season 5 filming.

Distribution and Marketing

~~The~~On ~~Series is~~October ~~distributed via limited engagement theatrical premiere events~~18, ~~mobile streaming apps~~2022, ~~online~~Company ~~video~~entered ~~streaming~~into ~~services,~~that ~~home~~certain ~~video~~Content ~~and~~License ~~other~~Agreement ~~home~~(the ~~entertainment~~“Content ~~media~~License ~~worldwide.~~Agreement”) ~~The Company’s prior exclusive license agreement~~ with Angel Studios, Inc. (“Angel” ~~or “Angel Studios”~~) ~~has been superseded and replaced by a non-exclusive license agreement~~ pursuant to which the Company ~~has~~ granted Angel a limited, non-exclusive license to, among other things, exploit the Series on Angel’s video-on-demand streaming app in exchange for a defined share of Angel’s revenues from such exploitation. On April 4, 2023, ~~the~~and ~~Company delivered to Angel Studios, Inc. (“Angel Studios”) a Notice of Termination (the “First Notice of Termination”) of the Content License Agreement, dated~~ October ~~18,~~ ~~2022~~15, ~~between Angel Studios and the Company due to Angel Studios’ previously noticed and uncured material breach~~2023, ~~which the Company elected initially to hold in abeyance pending arbitration of such termination. Pursuant to the Content License Agreement~~respectively, the Company ~~grants Angel Studios a limited, non-exclusive license to, among other things, distribute the Series. On October 15, 2023, the Company~~ delivered to Angel ~~Studios~~two aseparate ~~second~~Notices ~~Notice~~ of Termination (the “~~Second Notice of~~ Termination Notices”) of the Content License Agreement ~~for~~due ~~material~~to ~~breach of contract for~~ Angel ~~Studios~~’s ~~continued~~material breach of the Content License Agreement. ~~due~~The ~~to, among other things, its impermissible use of the Company’s trademarks and copyrights, with such~~ termination of the Content License Agreement towas be effective on October 20, 2023. ~~The~~pursuant ~~Company~~to ~~and~~a ~~Angel~~private ~~Studios are currently engaged in~~ binding arbitration toinitiated ~~resolve~~by ~~the dispute.~~

~~On May~~ 4, 2023, the Company executed that certain License Agreement with Lionsgate Entertainment Company (“Lionsgate”) pursuant to which Lionsgate became the worldwide distribution partner for the Series. The Come and See Foundation retains and manages licensing rights for all activities within the non-profit sector pursuant to the CAS Agreements as described above, including via The Chosen App to the fans and audience of the Series.

The Company expects to negotiate additional licensing and distribution deals with partners both in the domestic United States (“U.S.”) market and internationally not only for the purpose of generating additional revenues but also to broaden the reach of the franchise to unreached audiences.

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the Company to resolve the dispute. See Item 3, “Legal Proceedings” and Note 7 of the Company’s consolidated financial statements for additional information concerning the termination of the Content License Agreement.

On May 4, 2023, the Company executed that certain License Agreement with Lions Gate Television Inc. (“Lionsgate”), pursuant to which Lionsgate became the worldwide distribution partner for the Series. The Come and See Foundation retains and manages the CAS Reserved Rights pursuant to the CAS Agreements as described above, including via The Chosen App to the fans and audience of the Series.

The Company’s Products and Services

The Company’s principal products and services include the creation of audio-visual and other content, including without limitation the Series, which the Company licenses for distribution and exploitation via (1) digital media which is streamed via VOD and Subscription Video-on-Demand (“SVOD”), (2) further licensing and distribution arrangements for the Series and other content, which are negotiated on a current and ongoing basis by the Company, (3) physical media sales of Blu-Ray discs, DVD’s, books, and related printed materials to end users, (4) physical book sales, including devotional books, children’s books, and study guides, of which the maintenance and distribution of the inventory products is managed by the Company’s publishers and licensees which and with respect to which Company is entitled to receive revenue participations, and (5) merchandise sales, consisting mainly of The Chosen branded and themed apparel and household goods such as tee-shirts, sweatshirts, and coffee mugs, among other things. The Company generates revenue directly from the sale of merchandise to end consumers through sales made on ~~www~~https://gifts.~~TheChosenGifts~~thechosen.~~com~~tv/ and also sells merchandise on a wholesale basis to various customers and licensees.

Competition

The market for television series, streaming content, motion picture and home entertainment is intensely competitive and subject to rapid change. The Company faces competition from other content producers, streaming platforms, service providers and channels, independent distribution companies, major motion picture studios and broadcast and internet outlets in vying for an audience to view and engage with the Series and related content that the Company has and will continue to produce and exploit.

The Company also faces competition from alternative forms of leisure entertainment, including video games, the internet and other computer-related activities. Consumers can choose from a large supply of competing entertainment content from other suppliers. The success of the Series and the Company’s other content depends upon audience acceptance of the Series in relation to consumer tastes and cultural trends as well as the other titles released into the marketplace at or around the same time. Many, if not all, of these competitors are larger than the Company.

Sales of digital downloading, streaming, VOD and other broadcast formats are largely driven by what is visually available to the consumer, which can be supported by additional placement fees or previous sales success. Programming is available online, delivered to smartphones, tablets, laptops, personal computers, or direct to the consumers’ TV through multiple internet-ready devices, cable or satellite VOD and other subscription-based digital channels.

The Company’s ability to continue to successfully compete in these markets is largely dependent upon the Company’s ability to sustain the development and production of appealing content such as the Series, and to anticipate and respond to various competitive factors affecting the industry, including new or changing program formats, changes in consumer preferences, regional and local economic conditions and competitors’ promotional activities.

As the industry continues to evolve, the Company will continue to face strong competition in every aspect of its business. The Company competes against much larger companies that have resources and brand recognition that pose significant competitive challenges, although the Series is distinct in many aspects. The Company’s success depends on its ability to differentiate how it identifies, funds, and distributes the Series and other original content.

~~Governmental or Regulatory Approval and Compliance~~5

The Company is not subject to any industry specific governmental or regulatory approval or compliance. However, we are currently subject to numerous federal and state privacy laws and regulations in the U.S., including state data breach notification laws, state privacy laws and federal and state consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), that govern the collection, use, disclosure and protection of personal information that could apply to our operations. In addition, we are subject the CCPA as recently enacted in California, which became effective on January 1, 2020. The CCPA, among other things, requires new disclosures to California consumers and affords such consumers new abilities to access and delete their personal information, opt-out of certain sales of personal information and receive detailed information about how their personal information is used. Furthermore, we may be subject to the General Data Protection Regulation (GDPR) for any collection of personal data from data subjects as defined under such data protection laws. We endeavor to comply with our published policies, documentation, and procedures to ensure our compliance with current laws, rules and regulations.

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Privacy and Other Government, Regulatory, and Compliance Requirements

The Company is not subject to any industry specific governmental or regulatory approval or compliance. However, we are currently subject to numerous federal and state privacy laws and regulations in the U.S., including state data breach notification laws, state privacy laws, federal privacy laws (e.g., the Children’s Online Privacy Protection Act (“COPPA”) and the Video Privacy Protection Act (“VPPA”)), and federal and state consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), that govern the collection, use, disclosure and protection of personal information that could apply to our operations. For example, we are subject to the California Consumer Privacy Act, as amended (the “CCPA”), which, among other things, requires specific disclosures to California consumers and affords such consumers rights to access, correct and delete their personal information, opt-out of certain sales of personal information and receive information about how their personal information is used. Furthermore, we are subject to the General Data Protection Regulation (the “GDPR”) in the European Union and as retained in UK law, for any collection of personal data from EU/UK data subjects, as defined under such data protection laws. In addition, we may be subject to the data protection legislation of the other jurisdictions in or to which we offer or target our services. Any failure to comply with the privacy and data protection legislation to which we are subject may result in increased regulatory scrutiny, enforcement action, complaints to government authorities, or other legal liability, or cause reputational harm, any of which may materially affect our business and operations.

Intellectual Property

WeCAS ~~have~~has, or ~~have~~has applied for, U.S. and/or foreign trademark protection for ~~our~~ trademarks, including THE CHOSEN®, BINGE JESUS®, COME AND SEE® and GET USED TO DIFFERENT® that CAS licenses to us for our business. As of December 31, ~~2023~~2024, weCAS had 38approximately 30 pending or approved U.S. and foreign trademark applications. AsPursuant ~~part of the CAS Agreements, the Company assigned all rights in and~~ to ~~The Chosen registered trademarks and copyrights to CAS pursuant to~~ the ~~IP Assignment Agreement. Also as part of the CAS Agreements~~DMA, ~~and specifically, pursuant to the License Agreement,~~ CAS has, ~~in turn,~~ granted the Company the exclusive and irrevocable, worldwide license (the “License”) to all rights of every kind and nature whatsoever in and to The Chosen, including all The Chosen registered trademarks and all copyrights in and to or relating to the Series , including, without limitation, all commercial distribution, exhibition, exploitation, broadcast, performance, and transmission rights with respect to the Series in any and all media, whether now known or hereafter devised., ~~The~~subject ~~License~~ to ~~the~~and ~~Company~~excluding ~~is subject to~~ the CAS Reserved Rights. We also have applied or will apply for U.S. and/or foreign trademark protection for our trademarks, including CAST YOUR NETS and 5&2 STUDIOS. As of December 31, 2024, we have 3 pending U.S. trademark applications.

We regard ~~our~~the trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, proprietary technologies and similar intellectual property that we own or license as important to our success. We use a combination of trademark, copyright and trade secret laws and confidentiality agreements to protect our proprietary intellectual property. Our intellectual property rights extend to our technology, business processes and the content we produce and distribute. We use the intellectual property of third parties in creating some of our content, merchandising our products and marketing our service. Our ability to provide our customers with content they can license, distribute or watch depends on studios, content providers and other rights holders licensing rights, including distribution rights, to such content and certain related elements thereof, such as the public performance of music contained within the content we distribute. The license periods and the terms and conditions of such licenses vary. Our ability to protect and enforce our intellectual property rights is subject to certain risks and from time to time we encounter disputes over rights and obligations concerning intellectual property. We cannot provide assurance that we will prevail in any intellectual property disputes.

Management Teams

Dallas Jenkins and Derral Eves serve as our Chief Creative Officer and Chief Strategic Officer, respectively, and they also serve as members of our board of directors. Mr. Jenkins and Mr. Eves provide overall creative and strategic direction to the Company.

Brad Pelo serves as our President and Executive Producer and oversees all operational aspects of our business.

JD Larsen serves as our ~~CFO~~Chief Financial Officer and Senior Vice President, and principal financial and accounting officer.

Two additional executive officers oversee specific areas of our business including Kyle Young, ~~EVP~~Executive ofVice ~~Distribution~~President and ~~International and~~ David Stidham, VPSenior ofVice ~~Business~~President, ~~Affairs &~~ General Counsel.

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Employees

As of December 31, ~~2023~~2024, the Company had 6180 full-time employees and no part-time employees. We believe we maintain a good working relationship with our employees, and we have not experienced any labor disputes.

Available Information

The address of our principal executive offices is 48291 ~~South~~Baucum ~~2600 West~~Road, ~~Suite 5~~Midlothian, ~~Hurricane,~~TX UT76065 ~~84737~~ and our telephone number at that location is ~~435~~(833) 924-~~767-1338~~6736. Our website is new.thechosen.tv.

Available Information and Reports to Security Holders

We file annual reports on Form 10-K, quarterly reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, information statements, and other information typical of reporting companies. Our SEC filings are and will continue to be available to the public from commercial document retrieval services and at the website maintained by the SEC at http://www.sec.gov.

Our website address is ~~new.~~thechosen.tv. Information contained on the website does not constitute part of this Form 10-K. We have included our website address in this Form 10-K solely as an inactive textual reference. Electronic copies of the materials we file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, the Section 16 reports filed by our executive officers, directors and 10% stockholders and amendments to those reports are available through a link to the SEC’s website.

-Recent ~~8 -~~Developments

On March 28, 2025, the Company entered into an employment agreement with Mr. Jenkins, effective as of January 1, 2025, which provides for a fixed employment term through December 31, 2031 (the “Employment Term”). In connection with entering into the employment agreement, Mr. Jenkins received a $1,000,000 signing bonus. It specifies an initial annual base salary for Mr. Jenkins of $1,000,000, subject to automatic annual increases of 5% on each January 1st and also provides for episodic fees for his services as show runner ($125,000 per episode), writer ($41,579 per episode) and director ($35,596 per episode) on certain projects, as well as an episodic executive producer fee for projects where he is not providing services as the show runner ($50,000 per episode). Each of the episodic fees is subject to automatic annual increases of 5% on each January 1st. In addition, the employment agreement provides that he is eligible to receive a one time performance bonus based upon the net proceeds received by the Company in excess of projections with respect to seasons six and seven of The Chosen up to a maximum of $1,000,000 and a separate one-time bonus based upon net merchandising proceeds received by the Company in excess of projections, also up to a maximum of $1,000,000. Pursuant to his employment agreement, Mr. Jenkins is eligible to participate in all employee benefit plans maintained by the Company as in effect from time to time and applicable to similarly situated employees of the Company and is also entitled to utilize a Company-leased residence in Los Angeles, or following completion of the seventh season of The Chosen, may elect to receive $20,000 per month in lieu of utilizing the Company-leased residence. If Mr. Jenkins’s employment is terminated by the Company for Cause (as defined in his employment agreement), Mr. Jenkins is entitled to receive any accrued but unpaid base salary and any earned but unpaid annual bonus with respect to the completed fiscal year immediately preceding such termination date (collectively, the “Accrued Amounts”). If his employment is terminated by the Company without Cause, Mr. Jenkins is entitled to receive the Accrued Amounts and, subject to his execution of a general release of claims, (i) continued payment of his base salary for the remainder of the Employment Term, (ii) continuation of group health plan benefits, until the end of the Employment Term, until he ceases to be eligible for continuation of benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 or until he becomes covered by a new health insurance plan from another employer, whichever date is sooner and (iii) continued payment of the $20,000 housing stipend through the remainder of the Employment Term. If Mr. Jenkins’s employment terminates on account of his death or Disability (as defined in his employment agreement), he is entitled to receive the Accrued Amounts and a payment equal to the annual bonus, if any, that he would have earned for the fiscal year in which such termination date occurs.

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reports filed by our executive officers, directors and 10% stockholders and amendments to those reports are available through a link to the SEC’s website.

Item 1A. Risk Factors

An investment in our securities is highly speculative and involves a high degree of risk. In determining whether to purchase our securities, an investor should carefully consider all of the material risks described below, together with the other information contained in this report. An investor should only purchase our securities if he or she can afford to suffer the loss of his or her entire investment.

Risks Related to the Company’s Business and Industry

History of Operations — The Company has limited operating history upon which an ~~Investor~~investor can base an investment decision.

The Company is an early-stage television and film development and production company in which investors may lose their entire investment. The Company was formed on October 24, 2017 for a single purpose, to develop and produce a television series entitled The Chosen. The Company has produced ~~four~~five seasons of the Series and due to its limited operating history, the Company is unable to provide investors with significant data upon which an evaluation can be made of the Company’s prospects and an investment in its securities.

The Company cannot be certain that its business plan or the remainder of the Series will develop or that production and distribution of the Series will be successful. As an early-stage company, the Company will be particularly susceptible to the risks and uncertainties described in these risk factors and will be more likely to incur expenses associated with addressing them.

The Company cannot assure investors that it will be able to achieve any of its objectives, generate sufficient revenues to achieve or sustain profitability or compete successfully in the television and film production industry.

Actual Operating Results May Differ from Estimates — The Company’s actual operating results may differ from its initial estimates.

The Company’s operating results depend on production costs, public tastes, and promotion success. The Company expects to continue to generate its revenues from the distribution and exploitation of the Series and the rights therein. The ability of the Company to continue generating revenues depends on the continued successful distribution of Seasons 1, 2, 3, 4, and 45, upon the timing and the level of market acceptance of Season 45, as well as upon the ultimate cost to produce, distribute and promote it. The revenues derived from the continued distribution of the Series depend primarily on its acceptance by the distributors and then by the public, which cannot be predicted and does not necessarily bear a direct correlation to the production costs incurred. The commercial success of the Series also depends upon terms and condition of its distribution, promotion and marketing and certain other factors. Accordingly, the Company’s revenues are, and will continue to be, difficult to forecast.

Revenues — There is no guarantee revenues will remain consistent over time.

It is likely that revenues generated from the Series will not remain consistent over time. Even if the Company is successful in creating, distributing, and marketing the Series, revenues from previous seasons will likely decrease over time as subsequent seasons of the Series are released. Further, once production, distribution and marketing of the entire Series is complete, revenues from the Series are likely to decrease over time.

Fluctuations in Operations — The Company’s operating results may fluctuate significantly.

The Company expects that its future operating results will fluctuate significantly as a result of, among other factors:

●

The timing of domestic and international releases of the Series;

●

The success of the Series;

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●

The release of competitors’ television series and film productions into the market at or near the same time the Seasons of the Series are released;

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●

The costs to distribute and promote the Series;

●

The success of attracting influential distributors and the success of such distributors in marketing and exploiting the Series;

●

The timing of receipt of proceeds generated by the Series by distributors;

●

The timing and magnitude of operating expenses and capital expenditures;

●

The level of production costs in excess of budgeted maximum amounts;

●

The demand for, and costs of manufacturing of, merchandise related to the Series; and

●

General economic conditions, including continued slowdown in advertiser spending.

As a result, the Company believes that its results of operations may fluctuate significantly, and it is possible that the Company’s operating results could be below the expectations of investors.

Dependence on External Factors — The Company’s success depends on external factors in the television and film production industry.

Operating in the television and film production industry involves a substantial degree of risk. Each production is an individual artistic work, and unpredictable audience reactions primarily determine commercial success. The commercial success of a production also depends upon the quality and acceptance of other competing productions released into the marketplace at or near the same time, critical reviews, the availability of alternative forms of entertainment and leisure activities, general economic conditions and other tangible and intangible factors, all of which are subject to change and cannot be predicted with certainty. The Company’s success will depend on the experience and judgment of its management in producing the Series. There can be no assurance that future seasons of the Series will reach the marketplace or that they will obtain favorable audience reactions or reviews.

Diversification — The Company’s success depends ~~entirely~~significantly on one television series.

The most common way to diversify risk in the television and film production industry is by producing groups of productions, as done by major production companies. This diversification reduces the impact of a single production’s commercial success or failure on a company’s overall financial health. While the Company is primarily focused on producing the remaining three seasons of the Series, it continues to evaluate opportunities to diversify its content through other Biblical based productions. The Company’s long-term success will depend on its ability to diversify content beyond the original Series. In September 2024, the Company announced a number of new productions, including a series based on the life of Moses, a series based on the life of Joseph, a series currently entitled The Way, an animated series based on The Chosen currently entitled The Chosen Adventures, and an unscripted show featuring The Chosen cast and adventure enthusiast Bear Grylls entitled The Chosen in the Wild. There can be no assurance that the Company’s new content will reach the marketplace or that it will obtain favorable audience reactions or reviews.

Budget Overruns — Budget overruns may adversely affect the Company’s business.

Actual production costs may exceed their budget, sometimes significantly. Risks, such as labor disputes, death or disability of star performers, rapid high technology changes relating to special effects, or other aspects of production, such as shortages of necessary equipment, damage to or loss of digital assets, master files and recordings, or adverse weather conditions, may cause cost overruns and delay or frustrate completion of a production season. If a season of the Series incurs substantial budget overruns, the Company may have to seek additional financing from outside sources to complete production of that season or a subsequent season. No assurance can be given as to the availability of such financing on terms acceptable to the Company. In addition, if a production season incurs substantial budget overruns, there can be no assurance that such costs will be recouped, which could have a significant adverse impact on the Company’s business, results of operations or financial results.

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Capital – Our business requires a substantial investment of capital, and we may have limited working capital and limited access to financing.

The production and distribution of programming require a significant amount of capital. Our cash requirements, at times, may exceed the level of cash generated by operations. Accordingly, we may have limited working capital. Capital available for these purposes will be reduced to the extent that we are required to use funds otherwise budgeted for capital investment to fund our operations. Curtailed content investment over a sustained period could have a material adverse effect on future operating results and cash flows. Further, a significant amount of time may elapse between our expenditure of funds and the receipt of revenues from our television programs or motion pictures. This time lapse requires us to fund a significant portion of our capital requirements from our operating cash flow and from other financing sources. We cannot assure you that we will not be subject to substantial financial risks relating to the production, completion and release of new television programs and motion pictures. In addition, if we increase (through internal growth or acquisition) our production slate or our production budgets, we may be required to increase overhead and/or make larger up-front payments to talent and, consequently, bear greater financial risks.

Our ability to obtain adequate additional financing on satisfactory terms may be limited. With respect to equity financing, our ability to sell our equity securities depends on general market conditions, including the demand for our common stock. We may be unable to raise capital through the sale of equity securities, and if we were able to sell equity, our existing stockholders could experience substantial dilution. If adequate financing is not available at all or is unavailable on acceptable terms, we may find we are unable to fund expansion, continue offering products and services, take advantage of acquisition opportunities, develop or enhance services or products, or respond to competitive pressures in the industry. Any of the foregoing could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Production Facilities – Our business relies on suitable and available production facilities.

The film production industry is heavily reliant on highly specialized production sets and filming facilities. The Company has invested a substantial amount of capital in a film set and film campus in Midlothian, Texas in order to ensure access to and availability of adequate production facilities. Both the set and film campus are built on land owned by the Salvation Army, which has allowed the Company to use the property for filming, production, and operational purposes. The Company has an executed five-year lease for the film campus, which expires inon ~~October~~ November 15, 2026. ~~(with~~If 180 days prior to the expiration of the five-year lease the Company has not received a written notice of termination and intent not to renew, the lease will automatically renew for a 10-year renewal term for up to four automatic 10 -year renewal terms. ~~upon~~During ~~expiration)~~any of the four 10-year terms, the lease can be terminated with a 90-day written notice to the Company. If such termination notice is received, the Company has to right to continue operations for one additional year. On March 1, ~~2024~~2023, the Company executed an amendment to its existing lease with the Salvation Army to include the Capernaum Village film set, which was previously covered under a separate temporary film use agreement. By covering both the film set and film campus under a single lease with the potential for automatic ten-year renewals, the Company has a higher level of assurance that the facilities will be available for future seasons. In the event that the lease is not renewed, the Company may incur substantial costs to relocate to an alternative facility and such relocation may delay filming of future seasons, which would adversely affect the Company’s revenues.

Production and Distribution – We face risks, such as unforeseen costs and potential liability in connection with content we produce and distribute.

As the producer and distributor of the Series, we face potential liability for negligence, copyright and trademark infringement, or other claims based on the nature and content of materials that we produce and distribute. We also may face potential liability for content used in promoting our content, including marketing materials. We also take on risks associated with production, such as completion and key talent risk~~, which risks have been heightened during the COVID-19 pandemic~~. Further, negotiations or renewals related to entertainment industry collective bargaining agreements could negatively impact timing and costs associated with our productions. We contract with third parties related to the development, production, marketing and distribution of the Series. We may face potential liability or may suffer significant losses in connection with these arrangements, including but not limited to if such third parties violate applicable law, become insolvent or engage in fraudulent behavior. To the extent we create and sell physical or digital merchandise relating to our programming, and/or license such rights to third parties, we could become subject to product liability, intellectual property or other claims related to such merchandise.

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Additional Distributors — There can be no assurance that the Company will attract any distributors in addition to CAS and Lionsgate for the Series.

There can be no assurance that any distributors in addition to Lionsgate and CAS will contract with the Company to distribute the Series either based on the Series itself or on other considerations such as the materials already being distributed by such distributor.

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Further, decisions regarding the timing of release and promotional support of episodic series and streaming content are important in determining the success of the episodic series and streaming content. Although any distributor the Company uses may have a financial interest in the success of the Series, any decision by its distributors not to distribute or promote the Series or to promote a competitor’s productions to a greater extent than it promotes the Company’s, could have a material adverse effect on the Company’s business, results of operations or financial condition.

Strategic Relationship – Inability to maintain our strategic relationship with CAS would materially adversely affect our business.

The Company and CAS have entered into a number of agreements through the CAS Transaction. These contractual arrangements may terminate or be terminated under certain circumstances and there can be no assurance that this strategic relationship will continue in the future, including on the same or similar terms, and if not, that we would be able to find a suitable replacement or another strategic partnership on favorable terms if at all. As a result, we rely on our strategic partnership with CAS and any inability to maintain our strategic relationship with CAS would materially adversely affect our business.

Competition — There can be no assurance that the Company will be able to compete in the television production industry and its lack of diversification may make it vulnerable to oversupply in the market.

There are numerous other production companies that develop and produce television series. The Company’s lack of diversification may make it vulnerable to oversupply in the market. Most of the major U.S production studios are part of large diversified corporate groups with a variety of other operations, including television networks and cable channels, which can provide means of distributing their products. The number of productions released by the Company’s competitors, particularly the major U.S. production studios, in any given period may create an oversupply of product in the market and may make it more difficult for the Company to succeed.

Reliance on Personnel — The Company depends heavily on creative and production personnel to produce the Series.

The production of the Series requires many highly skilled creative and production personnel, including cinematographers, editors, costume designers, set designers, sound technicians, lighting technicians and actors. Although the Company expects to find high quality candidates to fill these positions, there can be no assurance the Company will find the necessary personnel to complete production or that such personnel will cooperate and participate through completion of production. We are particularly dependent on the efforts of Dallas Jenkins, who is the Writer, Director and Producer of the Series. Mr. Jenkins has an employment agreement which expires on December 31, 2026. A loss of Mr. Jenkins’ services could adversely affect our operations and could be negatively perceived by the market resulting in a decrease in our financial outlook. Finding or replacing key personnel could delay production or reduce the quality of the Series, which may impair the Company’s revenue.

To accomplish our objectives, we require a strong management team with expertise in the film industry. Although we have entered into employment agreements with certain of our executive officers, each of them is employed “at will” and may terminate his employment with us at any time. We do not maintain “key person” insurance for any of our executives or other employees. We may not be able to attract and retain these personnel on acceptable terms given the competition for personnel with similar qualifications. The loss of the services of any of our executive officers could impede the continued production of the Series.

Reliance on Charitable Donations — and the Ongoing Contractual Relationship with CAS - A reduction in the growth or amount of charitable giving due to deteriorating general economic conditions, a recession, changes in tax rules applicable to charitable contribution deductions, or otherwise could adversely affect our operating results and financial condition.

The Company expects to begin principal photography on the ~~fifth~~sixth season of the Series in April ~~2024~~2025, which will require a significant amount of capital. The Company is currently in discussions with CAS with respect to potential modifications and amendments to the current terms of the CAS Transactions. Such potential amendments or agreements would, among other things, provide the Company with funding for the fifth, sixth and seventh seasons of the Series and other related programs and reduce the indebtedness held by the Company. While the Company cannot be 100 percent certain of the outcome of the ongoing discussions with CAS, the Company expects to enter into new agreements with CAS in sufficient time to allow for the continued production of the fifth, sixth, and seventh seasons.

If the Company is unable to negotiate a new agreement with CAS for the funding future seasons, the production and distribution of future seasons may be delayed, impacting the Company’s ability to continue to generate revenue from the series. Additionally, even if a new agreement is reached, if charitable giving, including online giving, does not continue to grow or declines, it could limit our ability to continue the production and marketing of the Series, which could adversely affect our operating results and financial condition.11

In addition, changes in federal and state regulatory and fiscal policies aimed at incentivizing charitable giving may also negatively affect potential donors’ ability or desire to donate to the Series. A reduction in the growth of, or a decline in, charitable giving, whether due to deteriorating general economic conditions, the impact of future changes in tax rules applicable to charitable contribution

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~~deductions~~ If charitable giving, including online giving, does not continue to grow or ~~otherwise~~declines, it could ~~negatively~~limit ~~impact~~our ability to continue the ~~volume~~production and ~~size~~marketing of the ~~donations~~Series, wewhich ~~receive~~could ~~and thereby~~ adversely affect our operating results and financial condition.

~~Indebtedness –~~In ~~The~~addition, ~~Company~~changes ~~has~~in federal and state regulatory and fiscal policies aimed at incentivizing charitable giving may also negatively affect potential donors’ ability or desire to donate to the Series. A reduction in the growth of, or a ~~significant~~decline ~~amount~~in, charitable giving, whether due to deteriorating general economic conditions, the impact of ~~debt~~future changes in tax rules applicable to charitable contribution deductions, ~~which~~or otherwise, could negatively impact the volume and size of the donations we receive and thereby adversely affect ~~its~~our ~~business~~operating results and financial condition.

AsIndebtedness of– ~~December 31,~~Indebtedness 2023, the Company had approximately $145,500 thousand of outstanding indebtedness on a consolidated basis. Approximately $145,500 thousand of such indebtedness is owed to CAS in connection with the CAS Transactions. Since this constitutes a high level of debt for the Company, a substantial portion of cash flow from operations are used to make payments on this debt. This level of indebtedness and related security could ~~result~~adversely inaffect ~~other~~our ~~consequences to the Company and its investors, including:~~business.

●As ~~making~~a itresult ~~more~~of ~~difficult~~the CAS Transaction, the Company and CAS agreed to ~~satisfy~~(i) the forgiveness of the outstanding principal of the Company’s loan from CAS of $145,500 thousand, and any accrued but unpaid interest thereon, and (ii) CAS provided the Company the Bridge Loan Promissory Note at signing of the APA on May 23, 2024 in the amount of $11,684 thousand bearing interest at a rate equal to 7% per annum, for which the outstanding principal balance and accrued but unpaid interest as of the Closing was forgiven. On June 13, 2024, the CAS Transaction closed, resulting in forgiveness of the outstanding principal balances and accrued interest of $159,444 thousand and derecognition of the associated unamortized debt ~~service~~issuance costs and ~~other~~debt ~~obligations;~~discount of $7,368 thousand.

●The ~~increasing~~Company ~~vulnerability~~currently has no long-term indebtedness. While we currently anticipate that our available funds will be sufficient to ~~general~~meet ~~adverse~~our ~~economic~~cash needs for at least the next 12 months, we may need or elect to seek, additional financing at any time. To the extent the Company incurs material indebtedness in the future, it could impact the Company’s ability to operate and ~~industry~~result ~~conditions;~~in other consequences to the Company and its investors. Additionally, in such an event, its actual cash requirements in the future may be greater than expected. Accordingly, Company cash flows may be insufficient to repay at maturity all of the outstanding debt as it becomes due and, in such an event, the Company may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms or at all to refinance its debt as it becomes due.

● reducing the availability of cash flow to fund other corporate purposes and grow the business;

● limiting flexibility in planning for, or reacting to, changes in the Company’s business and the industry; and

● limiting the Company’s ability to borrow additional funds as needed.

The Company is currently in discussions with CAS with respect to potential modifications and amendments to the current terms of the CAS Transactions. Such potential amendments or agreements would, among other things, provide the Company with funding for the fifth, sixth and seventh seasons of the Series and other related programs and reduce the indebtedness held by the Company.

If the Company is unsuccessful in its negations with CAS, and to the extent the Company becomes more leveraged, the risks described above could increase. Additionally, in such an event, its actual cash requirements in the future may be greater than expected. Accordingly, Company cash flows may be insufficient to repay at maturity all of the outstanding debt as it becomes due and, in such any event, the Company may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms or at all to refinance its debt as it becomes due.

If the Company’s mitigation strategies are unsuccessful and the Company is unable to pay amounts due and payable under the agreements governing its indebtedness, CAS, the Company’s lender, could proceed against the collateral granted to them to secure that indebtedness. The Company may then not be able to agree with CAS on the terms of any waivers or modifications to the terms of our existing indebtedness.

Union Activity — We could be adversely affected by strikes or other union job actions.

We are directly or indirectly dependent upon highly specialized union members who are essential to the production of ~~motion pictures and~~ television content. A strike by, or a lockout of, one or more of the unions that provide personnel essential to the production of ~~motion pictures or~~ television content could delay or halt our ongoing production activities, or could cause a delay or interruption in our release of new ~~motion pictures and~~ television content. A strike may result in increased costs and decreased revenue, which could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

Video Piracy — Piracy of video content may harm our business.

Video content piracy is extensive in many parts of the world, and is made easier by technological advances and the conversion of video content into digital formats. This trend facilitates the creation, transmission and sharing of high-quality unauthorized copies of video content on DVDs, Blu-ray discs, from pay-per-view through set-top boxes and other devices and through unlicensed broadcasts on free television and the internet. The proliferation of unauthorized copies of our video content could have an adverse effect on our business, by reducing the revenues we receive from the distribution of our content.

-Artificial 13Intelligence - We could be adversely affected by artificial intelligence (“AI”).

Increased adoption of AI and government regulation could create additional costs. Failure to keep up with the potential increased use of AI by competitors could have adverse effects on our competitiveness in the markets that we operate, and heightened government scrutiny and regulation surrounding AI, including generative AI, could lead to increased or added compliance and regulatory costs. In particular, the EU has adopted the EU AI Act, which governs the development and deployment of AI systems and models, with additional restrictions on “high-risk” AI systems. Colorado has also enacted a law requiring, among other things, certain disclosures about AI systems and impact assessments concerning AI systems. Many states have also passed or are considering legislation related to the use of digital replicas (i.e., “deepfakes”). In addition, elements of intellectual property law with respect to AI remain unsettled, which may pose risks to our ability to assert and protect our intellectual property rights in certain contexts related to our use or adoption of AI technologies.

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~~Artificial~~Natural ~~Intelligence —~~disasters, Wegeopolitical ~~could~~conflicts, beor ~~adversely~~other ~~affected~~natural byor ~~artificial~~man‐made ~~intelligence~~catastrophic events could disrupt and impact our business.

~~Increased~~Occurrence ~~adoption~~ of ~~artificial~~any ~~intelligence~~catastrophic ~~and~~event, ~~government~~including ~~regulation~~an ~~could~~earthquake, ~~create~~flood, ~~additional~~tsunami, ~~costs.~~or ~~Failure~~other toweather ~~keep~~event, uppower ~~with~~loss, ~~the~~internet ~~potential~~failure, ~~increased~~software ~~use~~or hardware malfunctions, cybersecurity attack, war or foreign invasion, such as the Russian invasion of AIUkraine byand ~~competitors~~the ~~could~~unrest ~~have~~in ~~adverse~~the ~~effects~~Middle onEast, ~~our~~terrorist ~~competitiveness~~attack and other geopolitical conflicts, such as Yemen’s Houthi attacks in the ~~markets~~Red ~~that~~Sea, wemedical ~~operate~~epidemic or pandemic, ~~and~~such ~~heightened~~as ~~government~~the ~~scrutiny~~COVID‐19 ~~and~~pandemic, ~~regulation~~government ~~surrounding~~shutdown AIorders, ~~including~~other ~~generative~~man‐made AIdisasters, or other catastrophic events could ~~lead~~disrupt toour ~~increased~~and our distributors’ operations or ~~added~~result ~~compliance~~in disruptions in the broader global economic environment. Any of these business disruptions could require substantial expenditures and ~~regulatory~~recovery ~~costs~~time in order to fully resume operations.

~~Pandemic –~~In Aaddition, ~~resurgence~~our ofoffices ~~COVID-19~~and orfacilities, aand ~~new~~those ~~pandemic~~of our distributors, could ~~materially~~be vulnerable to the effects of climate change, including sea level rise, drought, flooding, wildfires, and ~~adversely~~increased ~~impact~~storm orseverity that could disrupt our ~~ability~~business operations. For example, in California, increasing intensity of drought and annual periods of wildfire danger increase the probability of planned power outages. Further, acts of terrorism could cause disruptions to ~~produce~~the internet or the ~~Series~~economy as a whole.

~~The~~If ~~COVID-19~~our ~~pandemic~~streaming ~~had~~platform ~~significant~~was ~~negative~~to ~~short-term~~fail ~~economic~~or ~~impacts.~~be ~~The~~negatively ~~long-term~~impacted ~~impact~~as a result of ~~COVID-19~~a onnatural ~~the~~disaster ~~U.S.~~or ~~and~~other ~~world~~event, ~~economies~~our ~~remains~~ability ~~uncertain~~to deliver streaming content to our users would be impaired. InDisruptions ~~connection~~in ~~with~~the operations of our distributors as a result of a disaster or other catastrophic event could delay the ~~pandemic~~manufacture and shipment of our products, ~~the~~which ~~Screen~~could ~~Actors~~impact ~~Guild~~our ~~set~~business. ~~strict~~If ~~guidelines~~we are unable to develop adequate plans to ensure that weour ~~implemented.~~business ~~These~~functions ~~protective~~continue ~~measures~~to operate during and ~~had~~after a ~~significant~~natural ~~impact~~disaster onor ~~the~~other ~~cost~~catastrophic ofevent ~~producing~~and ~~the~~to ~~Series and~~execute ~~increased~~successfully on those plans in the ~~amount~~event of ~~time~~a ~~needed~~disaster toor ~~produce~~catastrophic ~~Season~~event, 3our business would be harmed.

New restrictions due to a resurgence of COVID-19 or a similar pandemic, including social distancing guidelines, could restrict our ability to produce the Series in the future. Additionally, should such a resurgence or new pandemic occur, it could result in an extended world-wide economic downturn, the demand for our product may be reduced, which may adversely affect our business.

Supply Chain Disruptions — Changes in relationships with the Company’s vendor base and supply chain disruptions may adversely affect its business operations.

The Company generates revenue directly from the sale of merchandise to end consumers through sales made on ~~www~~https://gifts.~~TheChosenGifts~~thechosen.~~com~~tv/ and also sells merchandise on a wholesale basis to various customers and licensees. The Company generally does not have long-term written contracts with its major suppliers that would require them to continue supplying merchandise. Recent supply chain disruptions, including labor availability, raw material shortages, and rising costs have placed constraints which may increase the Company’s costs of manufacturing merchandise and decrease product availability, which could negatively impact sales and profitability. To date, the Company has experienced only minor supply chain disruptions resulting in temporary delays in a limited number of products that have not materially impacted the overall financial results. However, in future, changes in relationships with the Company’s vendor base and supply chain disruptions may adversely affect its business operations.

Tariffs – Changes in U.S. trade policies, including the imposition of tariffs and retaliatory tariffs, may adversely impact our business, financial condition, and results of operations.

The U.S. government has indicated its intent to adopt a new approach to trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. It has initiated or is considering the imposition of tariffs on certain foreign goods. Changes in U.S. trade policy could result in one or more U.S. trading partners adopting responsive trade policies making it more difficult or costly for us to export our products to those countries. As an example, on February 1, 2025, the U.S. government announced a 25% tariff on product imports from certain countries, including Mexico and Canada, and 10% tariffs on product imports from certain countries, including China. Our business operations, financial condition, and results of operations could be significantly affected by these measures and the potential expansion of existing tariffs or implementation of new tariffs, trade restrictions, or retaliatory measures by China, Mexico, or Canada that could disrupt our established supply chain, increase costs of goods sold into the United States and this in turn could require us to increase prices to our customers which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on products sold.

We cannot predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business. The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the U.S. economy, which in turn could adversely impact our business, financial condition and results of operations.

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Antitakeover Provisions — Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.

Our charter documents in their current form may discourage, delay or prevent a merger or acquisition that a stockholder may consider favorable because, among other things:

●

The Board is authorized to issue capital stock;

●

Members of the Board may be removed at any time only, with or without cause, by the affirmative vote of the holders of at least a majority of the voting power of the issued and outstanding shares then entitled to vote at an election of directors, voting together as a single class; and

●

No cumulative voting.

As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions. Under Delaware law, a corporation may not engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the Board has approved the transaction. The Board could rely on Delaware law to prevent or delay an acquisition of us.

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Technological Advances — Technological advances may reduce demand for television series.

The entertainment industry in general continues to undergo significant changes, primarily due to technological developments. Because of this rapid growth of technology, shifting consumer tastes and the popularity and availability of other forms of entertainment, it is impossible to predict the overall effect these factors will have on the potential revenue from and profitability of an episodic television series.

Limited Protection of Intellectual Property and Proprietary Rights — The Company’s success depends on protecting its intellectual property.

The Company’s success will depend, in part, on its ability to protect its exclusive commercial rights in the Series. The Company has secured its intellectual property rights with respect to the Series pursuant to the CAS Agreements and other agreements. The Company will rely primarily on a combination of copyright laws and other methods to protect its respective rights in the Series. However, there can be no assurance that such measures will protect the Company’s proprietary information, or that its competitors will not develop screenplays for feature films and/or television series otherwise similar to the Company’s, or that the Company will be able to prevent competitors from developing a similar television series for production. The Company believes that its exclusive commercial rights will not infringe on the proprietary rights of third parties. However, there can be no assurance that third parties will not assert infringement claims against the Company in the future with respect to the Series. Such assertion may require the Company to incur substantial legal fees and costs in order to protect its rights, or possibly enter into arrangements on terms unfavorable to it in order to settle such claims. To the extent that the Company fails to adequately protect its intellectual property rights in the Series, or if the financial burden of enforcing its rights becomes too cost-prohibitive, the Company may be unable to continue to implement its business strategy, which would have a material adverse effect on the Company’s business, prospects, financial condition, and results of operations.

Cybersecurity – - Any significant disruption in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from ~~cyber-~~cybersecurity incidents or attacks, could result in a loss or degradation of service, unauthorized disclosure of data, including corporate information, or theft of intellectual property, including digital content assets, which could adversely impact our business.

Our reputation is dependent upon the reliable performance and security of our computer systems and those of third parties that we utilize or on which we rely in our operations. These systems may be subject to damage or interruption from, among other things, earthquakes, adverse weather conditions, other natural disasters, terrorist attacks, rogue employees, power loss, telecommunications failures, software or hardware degradation, and cybersecurity risks. Interruptions in or loss of availability of these systems, or with the internet in general, could hinder our ability to produce and distribute the Series.

Our computer systems and those of third parties we use in our operations are subject to cybersecurity threats, including cyber-attacks such as computer viruses, denial of service attacks, physical or electronic break-ins and similar disruptions. These systems may experience directed attacks intended to lead to interruptions and delays in our service and operations as well as loss, misuse or theft of personal information (of third parties, employees, and our members) and other data, confidential information or intellectual property. Additionally, outside parties may attempt to induce employees, vendors, partners, or users to disclose sensitive or confidential information in order to gain access to data. Any attempt by hackers to obtain our data (including member and corporate information) or intellectual property (including digital content assets), or otherwise access our systems, or those of third parties we use, if successful, could harm our business, be expensive to remedy and damage our reputation.14

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Our computer systems and those of third parties we use in our operations are subject to cybersecurity threats, including cyber-attacks such as computer viruses, denial of service attacks, physical or electronic break-ins, power outages, hardware or software malfunction, defects or degradation, lack of proper maintenance, human error or misuse, and similar disruptions. These systems may experience directed attacks intended to lead to interruptions and delays in our service and operations as well as loss, misuse or theft of personal information (of business contacts and affiliates, employees, customers, and other third parties) and other business data, confidential information or intellectual property. Additionally, outside parties may attempt to induce employees, vendors, partners, or users to disclose sensitive or confidential information, including via social engineering techniques, in order to gain access to data. Any attempt by hackers to obtain our data (including member and corporate information) or intellectual property (including digital content assets), or otherwise access our systems, or those of third parties we use, if successful, could harm our business, adversely impact our operations, be expensive to remedy and damage our reputation. Globally, the frequency, severity and sophistication of cybersecurity incidents has increased, and these trends may continue. Efforts to minimize the risk of cyber incidents and to protect information technology may be insufficient to prevent material break-ins, attacks, fraud, security breaches or other unauthorized access to our systems and systems of our vendors, including as a result of software code that contains vulnerabilities that are unknown, which may increase the potential of cybersecurity incidents or unauthorized access. Such incidents may not be timely detected. There is no assurance that our security measures or any of our vendors’ security measures, including information security policies, administrative, technical and physical controls and other actions designed as preventative, will provide fully effective protection from such events.

Moreover, we invest time and resources towards ensuring that the capacity and reliability of our information technology systems, and those of third parties on which our operations rely, are sufficient and appropriate to support our business. Costs associated with maintaining, upgrading, or replacing such information technology, including legacy systems, could exceed our expectations or we may be required to dedicate additional resources. Maintaining legacy systems, including ensuring such systems meet our evolving technical and regulatory requirements, may become impracticable or cost prohibitive. Planned system upgrades may not be successful or operate as intended, may take longer than anticipated or budgeted for, or create or exacerbate previously unknown security vulnerabilities. Any of these outcomes could have a materially adverse impact on our business, operations, and financial condition.

Conflicts of Interest — The Company’s directors and officers may have conflicts of interest in conducting their duties.

It is common in the television and film production industry to produce television series through single purpose companies. However, this strategy creates numerous inherent conflicts of interest. For instance, the Company’s management team may be contracting with distributors, cast members and others that they have had arrangements with in the past and will likely have arrangements within the future that are unrelated to the business of the Company. Further, our directors and officers are involved in other businesses, including other television and film production businesses. Our Certificate of Incorporation permits our directors and officers to have outside business activities, including those that compete with our business. We believe our directors and officers have the capacity to discharge their responsibilities to our Company notwithstanding participation in other projects.

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In addition, The Chosen Productions, LLC has significant influence over us and may have conflicts of interest with us or the holders of our securities. The Chosen Productions, LLC currently owns approximately 55% of our outstanding securities and has the ability to exercise significant influence over the election and removal of our directors and our corporate and management policies, including potential mergers or acquisitions, payment of dividends, asset sales, the amendment of our articles of incorporation or bylaws and other significant corporate transactions. This concentration of our ownership may delay or deter possible changes in control of our company, which may reduce the value of an investment in our securities. The interests of The Chosen Productions, LLC may not coincide with our interests or the interests of other holders of our common stock.

Derral Eves, our Chief Strategy Officer, is the managing member of The Chosen Productions, LLC. Mr. Eves has fiduciary duties to us and in addition has duties to The Chosen Productions, LLC. In addition to Mr. Eves, Dallas Jenkins, our Chief Creative Officer, is also a member of The Chosen Productions, LLC. As a result, there may be real or apparent conflicts of interest with respect to matters affecting both us and The Chosen Productions, LLC, whose interests, in some circumstances, may be adverse to the interests of our shareholders. See “Item 713. — Certain Relationships and Related Transactions, and Director Independence” for more information.

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Corporate Governance — Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our shareholders have limited protections against interested director transactions, conflicts of interest and similar matters.

The ~~Sarbanes-Oxley Act of 2002,~~ ~~as well as~~ rule changes proposed and enacted by the SEC, the New York Stock Exchange and the Nasdaq Stock Market, as a result of the Sarbanes-Oxley, ~~requires~~Act of 2002 require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and securities markets and apply to securities which are listed on those exchanges. Because we are not presently required to comply with many of the corporate governance provisions, we have not yet adopted these measures. Until we comply with such corporate governance measures, the absence of such standards of corporate governance may leave our shareholders without protections against interested director transactions, conflicts of interest and similar matters, and investors may be reluctant to provide us with funds necessary to expand our operations.

In order to minimize any actual or perceived conflicts of interest with our directors, officers or employees, we have adopted a conflict -of -interest policy to address specifically some of the conflicts relating to our activities. Other than this policy, however, we have not adopted and may not adopt additional formal procedures for the review and approval of conflict -of -interest transactions generally. Although under our conflict -of -interest policy the approval of a majority of our disinterested directors is required to approve any transaction, agreement or relationship in which any of our directors, officers, or employees have an interest, there is no assurance that this policy will be adequate to address all of the conflicts that may arise. In addition, the transactions and agreements we entered into prior to the conversion of the Company into a Delaware corporation have not been approved by any independent or disinterested persons.

Financing — We may seek additional capital that may result in stockholder dilution or that may have rights senior to those of our common stockholders.

From time to time, we may seek to obtain additional capital, either through equity, equity-linked or debt securities. The decision to obtain additional capital will depend on, among other things, our business plans, operating performance and condition of the capital markets. Any disruption in the capital markets could make it more difficult and expensive for us to raise additional capital or refinance our existing indebtedness. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our common stock, and our stockholders may experience dilution.

Smaller Reporting Company — We are a “smaller reporting company” and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies will make our securities less attractive to investors.

We are a “smaller reporting company,” as defined in Rule 12b-2 under the Exchange Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including “emerging growth companies” such as, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Our status as a smaller reporting company is determined on an annual basis. We cannot predict if investors will find our securities less attractive or our Company less comparable to certain other public companies because we will rely on these exemptions. For example, if we do not adopt a new or revised accounting standard, our future financial results may not be as comparable to the financial results of certain other companies in our industry that adopted such standards.

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will rely on these exemptions. For example, if we do not adopt a new or revised accounting standard, our future financial results may not be as comparable to the financial results of certain other companies in our industry that adopted such standards.

Public Company Requirements — The requirements of being a reporting public company may strain our resources, divert management’s attention and affect our ability to attract and retain additional executive management and qualified board members.

As a reporting public company, we ~~will~~are be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the Dodd-Frank Act, and other applicable securities rules and regulations. Compliance with these rules and regulations ~~will~~may increase our legal and financial compliance costs, make some activities more difficult, time-consuming, or costly and increase demand on our systems and resources, particularly after we are no longer a “smaller reporting company.” The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and results of operations. As a “smaller reporting company,” we receive certain reporting exemptions under the Sarbanes-Oxley Act.

Changing laws, regulations and standards relating to corporate governance and public disclosure create uncertainty for public companies, increase legal and financial compliance costs and increase time expenditures for internal personnel. These laws, regulations and standards are subject to interpretation, in many cases due to their lack of specificity, and their application in practice may evolve over time as regulators and governing bodies provide new guidance. These changes may result in continued uncertainty regarding compliance matters and may necessitate higher costs due to ongoing revisions to filings, disclosures and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate regulatory or legal proceedings against us and our business may be adversely affected.

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and standards are subject to interpretation, in many cases due to their lack of specificity, and their application in practice may evolve over time as regulators and governing bodies provide new guidance. These changes may result in continued uncertainty regarding compliance matters and may necessitate higher costs due to ongoing revisions to filings, disclosures and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate regulatory or legal proceedings against us and our business may be adversely affected.

As a public company under these rules and regulations, we expect that it may make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified directors and officers.

Not Listed on a Securities Exchange—There is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities.

There is currently no market for our securities. Prospective and current stockholders therefore have no access to information about prior market history on which to base their investment decision. An active trading market for our securities may never develop or, if developed, it may not be sustained. Our shareholders may be unable to sell their securities unless a market is established and sustained.

Shareholder Approval — Our controlling shareholder owns all of our Series A Common Stock, which represent approximately 55% of the voting power of the Company’s issued share capital, and as a result, controls all matters requiring shareholder approval.

The Chosen Productions, LLC, our controlling shareholder, controls the Company through the ownership of all of our Series A Common Stock and, therefore, approximately 55% of the Company’s outstanding common stock. In addition, our Series A Common Stock are entitled to 10 votes per share and our Series B Common Stock are entitled to one vote per share, resulting in The Chosen Productions, LLC controlling 92.5% of our voting power. As a result, our controlling shareholder will control the outcome of all decisions at the Company’s shareholder meetings, and will be able to elect a majority of the members of our board of directors. The Chosen Productions, LLC is able to direct our actions in areas such as business strategy, financing, distributions, acquisitions and dispositions of assets or businesses. For example, our controlling shareholder may cause us to make acquisitions that increase the amount of our indebtedness or outstanding shares of Series B Common Stock, or inhibit change of control transactions that may benefit other shareholders. The decisions of our controlling shareholder on these matters may be contrary to your expectations or preferences, and they may take actions that could be contrary to your interests. So long as our controlling shareholder beneficially owns a sufficient number of our Series A Common Stock, even if they beneficially own significantly less than 50% of our outstanding share capital, they will be able to effectively control our decisions.

Privacy Risks - 17Unauthorized disclosure of personal information, payment card information, or similar violations of applicable data privacy laws, whether through a security breach of our computer systems, our third-party processor’s computer systems or otherwise, or through our unauthorized use or transmission of personal information could subjects us to costly fines, penalties, and legal claims.

We collect, store, and/or use identifiable personal information about employees, business partners and affiliates, customers, website visitors, and other third parties. This personal information includes, for example, names, addresses, payment card information, and account numbers. We rely on third-party processors and certain other technology partners to process and store payment card information, among other things. We also rely on third party advertising, marketing, social media, and analytics providers to market and distribute our content and optimize our digital services. As a result, we, as well as our third-party processors, and certain of our other technology providers, are required to comply with various foreign, federal, and state privacy statutes and regulations and binding industry standards such as the Payment Card Industry Data Security Standard, as well as implement information security controls designed to safeguard the confidentiality, integrity, or availability of payment card information. Compliance with these regulations and requirements, which are subject to change from time to time, is often complex and costly, and our failure, or the failure of these other third parties, to comply with these regulations may result in significant fines or civil penalties, regulatory enforcement action, civil or criminal claims, liability to our sponsor bank, and termination of our agreements with our customers, each of which could have a material adverse effect on our business, financial condition, operations, or cash flows. If our computer systems or those of our third-party processor or other technology providers suffer unauthorized or fraudulent access, human errors, cyberattacks or other security breaches or incidents, or we (or our third-party processors or other technology providers) fail to comply with laws and/or binding industry standards that relate to

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~~Unauthorized~~privacy, ~~disclosure~~information ofsecurity, ~~cardholder~~ and ~~patron data~~ /or ~~similar~~required ~~violations~~notifications of ~~applicable~~a ~~data~~breach ~~privacy~~or ~~laws~~security incident, ~~whether~~we ~~through~~may abe ~~security~~subject ~~breach~~to ofliability, ~~our~~including ~~computer~~claims ~~systems,~~for ~~our~~unauthorized ~~third-party~~transactions ~~processor’s~~with ~~computer~~misappropriated ~~systems~~bank orcard ~~otherwise~~information, impersonation, or ~~through~~similar ~~our~~fraud ~~unauthorized~~claims, ~~use~~and orthese ~~transmission~~claims ofcould ~~such~~result ~~data~~in ~~could~~protracted ~~subjects~~and uscostly tolitigation ~~costly~~and/or ~~fines~~enforcement actions, penalties, or sanctions, and ~~legal~~damage ~~claims~~to our reputation, which could adversely impact our financial results.

WeGlobally, ~~collect~~the ~~and~~frequency, ~~store~~severity ~~personally~~and ~~identifiable~~sophistication ~~information~~of ~~about~~cybersecurity ~~patrons~~incidents, including ~~names,~~incidents ~~addresses,~~involving ~~and~~payment ~~account~~card ~~numbers~~information, ~~and~~has weincreased, ~~maintain~~and athese ~~database~~trends ofmay ~~patron data~~continue. WeEfforts ~~also rely on our third-party processor and certain other technology partners~~ to ~~process~~minimize ~~and~~the ~~store~~risk ~~patron~~of ~~data.~~cyber Asincidents ~~a result, we, as well as our third-party processor,~~ and ~~certain~~to ofprotect ~~our~~information ~~other~~ technology ~~providers,~~may ~~are~~be ~~required~~insufficient to ~~comply~~prevent ~~with~~material ~~various~~break-ins, ~~foreign~~attacks, ~~federal~~fraud, ~~and~~security ~~state~~breaches ~~privacy~~or ~~statutes~~other ~~and~~unauthorized ~~regulations.~~access ~~Compliance with these regulations and requirements, which are subject~~ to ~~change~~our atsystems ~~any time, is often difficult~~ and ~~costly,~~systems ~~and~~of our ~~failure~~vendors, orincluding ~~the~~as ~~failure~~a ~~of these other third parties, to comply may~~ result inof ~~significant~~software ~~fines~~code orthat ~~civil~~contains ~~penalties,~~vulnerabilities ~~regulatory~~that ~~enforcement~~are ~~action~~unknown, ~~liability~~which tothat ~~our~~may ~~sponsor~~increase ~~bank,~~the ~~and~~potential ~~termination~~ of ~~our~~cybersecurity ~~agreements~~incidents ~~with~~or ~~our~~unauthorized ~~customers,~~access. ~~each~~Such ofincidents ~~which~~may ~~could~~not ~~have~~be atimely ~~material~~detected. ~~adverse~~There ~~effect~~is onno ~~our~~assurance ~~business,~~that ~~financial condition, operations, or cash flows. If~~ our ~~computer~~security ~~systems~~measures or ~~those~~any of our ~~third-party~~vendors’ ~~processor or other technology providers suffer a~~ security ~~breach~~measures, ~~we may be subject to liability,~~ including ~~claims for unauthorized transactions with misappropriated bank card~~ information, ~~impersonation,~~security ~~or similar fraud claims~~policies, ~~as well as for any failure to comply with laws governing required notifications of such a breach~~administrative, technical and ~~these~~physical ~~claims~~controls ~~could result in protracted~~ and ~~costly~~other ~~litigation,~~actions ~~penalties,~~designed oras ~~sanctions~~preventative, ~~and~~will ~~damage~~provide tofully ~~our~~effective ~~reputation,~~protection ~~which~~from ~~could~~such ~~adversely impact our financial results~~events.

Material Weakness - In prior periods we identified certain material weaknesses in our internal controls over financial reporting. If our internal controls are not effective, we may not be able to accurately report our financial results or prevent fraud.

While our internal controls over financial reporting are currently effective, we identified material weaknesses in our financial reporting in prior periods resulting from (i) an inability to segregate incompatible duties due to having a small finance group, and (ii) the failure to conduct an analysis relating to the consolidation of an acquired entity. In connection with these prior material weaknesses, we implemented remediation measures including the hiring of a Chief Financial Officer, Controller and accounting consultants, and the training of accounting personnel, as well as hiring additional personnel with experience in the ongoing identification, design and implementation of internal control over financial reporting.

Notwithstanding our attempt to remediate prior material weaknesses, if we identify new material weaknesses in our internal control over financial reporting, we may be late with the filing of our periodic reports, investors may lose confidence in the accuracy and completeness of our financial reports and we may not be able to prevent fraud. As a result of such failures, we could also become subject to investigations by the SEC or other regulatory authorities, and become subject to litigation from investors and stockholders, which could harm our reputation, financial condition or divert financial and management resources from our core business, and would have a material adverse effect on our business, financial condition and results of operations.

Item 1B. Unresolved Staff Comments

None.

Item 1C. Cybersecurity

~~We understand the importance of preventing, assessing, identifying, and managing material risks associated with cybersecurity threats.~~ Cybersecurity ~~processes~~Management ~~to assess, identify~~ and manage risks from cybersecurity threats have been incorporated as a part of our overall risk assessment process and have been embedded in our operating procedures, internal controls, and information systems. On a regular basis, we implement into our operations these cybersecurity processes, technologies, and controls to assess, identify and manage material risks. We also maintain a third-party security program to identify, prioritize, assess, mitigate and remediate third party risks. However, we rely on the third parties we use to implement security programs commensurate with their risk, and we cannot ensure in all circumstances that their efforts will be successful.Strategy

ToOur ~~manage~~business operations depend on the availability, integrity, and secure processing, storage, and transmission of confidential and sensitive information, including personal information, digitally and through interconnected systems, including those of our vendors, service providers, and other third parties on which we rely. We understand the importance of preventing, assessing, identifying, and managing material risks ~~from~~associated with cybersecurity threats, and as such, have implemented and maintain a cybersecurity risk management program to ~~protect~~assess, ~~against~~identify and manage risks from cybersecurity threats. This program is integrated into our overall enterprise risk management process, ~~detect~~and is embedded in our operating procedures, internal controls, and ~~prepare~~information systems. We also maintain a third-party security program to ~~respond~~identify, prioritize, assess, mitigate and remediate third-party risks involving our vendors and service providers. However, we rely on the third parties to ~~cybersecurity~~implement ~~incidents~~security programs commensurate with their risk, and we: cannot ensure in all circumstances that their efforts will be successful.

To manage our material risks from cybersecurity threats and to protect against, detect, and respond to cybersecurity incidents, we:

●

Conduct periodic vulnerability assessments and mitigate vulnerabilities for our systems and processes that include sensitive data;

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● Conduct regular security awareness trainings and phishing simulation attacks for our employees;

● ~~Carry~~Maintain cybersecurity risk insurance that provides an aggregate insurance policy coverage amount for protection against ~~the~~covered ~~potential~~ losses arising from a cybersecurity incident; ~~and~~

● Perform periodic gap analyses to review our cybersecurity controls for gaps and implement the closure actions.;

~~Our~~● ~~incident~~Regularly ~~response~~review ~~plan~~and ~~coordinates~~update ~~the~~at ~~activities~~least ~~that~~annually ~~we and~~ our ~~third-party~~standard ~~cybersecurity~~policies ~~providers~~and ~~take~~procedures torelated ~~prepare~~ to ~~respond~~information technology and ~~recover~~analyze ~~from~~those ~~cybersecurity~~policies ~~incidents,~~against ~~which~~the ~~include~~standards ~~processes~~and tocontrols ~~triage,~~set ~~assess~~by ~~severity,~~organizations ~~investigate,~~such ~~escalate, contain, and remediate an incident,~~ as ~~well~~the asNational toInstitute ~~comply~~of ~~with~~Standards ~~potentially~~and ~~applicable~~Technology ~~legal~~cybersecurity ~~obligations~~framework and ~~mitigate~~the ~~brand~~International ~~and~~Organization ~~reputational~~for ~~damage.~~Standardization;

To● ~~date,~~Maintain wea ~~have~~dedicated ~~not experienced any~~ cybersecurity ~~incidents~~team ~~that~~under ~~have~~the ~~had~~direction ~~a material impact on our service, systems, business, financial condition, or results~~ of ~~operations. Any significant disruption to~~ our ~~service~~Chief orInformation ~~access~~Security toOfficer ~~our~~(the ~~systems could adversely affect our business~~“CISO”), ~~results~~each of ~~operation~~whom ~~and~~has ~~reputation.~~expertise ~~Further,~~related ~~a penetration of our systems or a third-party’s systems or other misappropriation or misuse of personal information could subject us~~ to ~~business,~~data ~~regulatory, litigation~~ and ~~reputation~~network ~~risk~~security, which could have a negative effect on our business, financial condition, and results of operations. See “Risk Factors – Cybersecurity – Any significant disruption in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyber-attacks, could result in a loss or degradation of service, unauthorized disclosure of data, ~~including~~governance corporation information, or theft of intellectual property, including digital content assets, which could adversely impact our business.” Management has implemented risk management structures, policies, and ~~procedures, and manages our~~ risk exposure on a day-to-day basis. We have a cybersecurity organization within our operations department that focuses on current and emerging cybersecurity matters and leverages cybersecurity consultants and third-party cybersecurity firms.management;

●

Maintain, and we require our third-party service providers to maintain, security controls designed to ensure the confidentiality, integrity, and availability of our information systems and the confidential and sensitive information we maintain and process, or which is processed on our behalf;

●

Maintain policies that require the escalation of any suspected or actual material cybersecurity incidents to our Board of Directors, and

●

Have prepared and regularly review and test our business continuity, disaster recovery and other back-up plans, including as they relate to cybersecurity incidents.

Our incident response plan coordinates the activities that we take to prepare to respond and recover from cybersecurity incidents, which include processes to triage, assess severity, investigate, escalate, contain, and remediate an incident, as well as to comply with potentially applicable legal obligations and mitigate brand and reputational damage.

While we, our business partners and affiliates, and our vendors and service providers are regularly exposed to malicious technology-related events and threats, none of these threats or incidents, either individually or in the aggregate of related occurrences, have had a material impact on our service, systems, business, financial condition, or results of operation of our business in the period covered by this report. In determining materiality, cybersecurity incidents are reviewed not only for potential financial impacts, which could include potential legal and regulatory penalties, stolen assets or funds, system damage, forensic and remediation costs, lost client revenue or litigation costs, but also the breadth and sensitivity of data exposure, data exfiltration, impacts on the ability to operate our business or provide our services, client dissatisfaction, and loss of investor confidence. Any significant disruption to our service or access to our systems could adversely affect our business, results of operation and reputation. Further, a penetration of our systems or a third-party’s systems or other misappropriation or misuse of personal information or other sensitive information could subject us to business, regulatory, litigation and reputation risk, which could have a negative effect on our business, financial condition, and results of operations. See “Risk Factors – Cybersecurity.” Any significant disruption or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cybersecurity incidents or attacks, could result in a loss or degradation of service, unauthorized disclosure of data, including corporation information, or theft of intellectual property, including digital content assets, which could adversely impact our business.”

Governance

Management has implemented risk management structures, policies, and procedures, and manages our risk exposure on a day-to-day basis. We have a cybersecurity organization within our operations department that focuses on current and emerging cybersecurity matters, which is overseen by our CISO. Senior management, including our CISO, regularly report to our Board, which actively oversees our risk management activities, including those related to cybersecurity. Our CISO is well qualified in the field of cybersecurity. These qualifications include years of experience in the IT and cybersecurity industry. The CISO works closely with key stakeholders, including internal committees such as the Finance and Audit Committee of the Board, in order to manage cybersecurity and information security risk. Our internal team, supplemented by outside cybersecurity advisors, is responsible for the testing and audit of our information-technology internal controls. In addition, leaders from our finance, legal and operations teams participate in incident response training

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designed to enhance our ability to respond to cybersecurity incidents quickly, efficiently and with the appropriate degree of urgency. The Finance and Audit Committee provides oversight relative to senior management’s handling of cybersecurity risks.

Our Board actively oversees our risk management activities both directly and through its committees and considers various risk topics throughout the year, including cybersecurity and information security risk management and controls. As part of its oversight function, the Board oversees the Company’s risk assessment and risk management policies, including related to cybersecurity and the data protection program, and performs reviews and assessments of the primary operational and regulatory risks facing the Company, their relative magnitude and management’s plan for mitigating these risks. At least annually, our CISO reports to the full Board with a comprehensive report addressing a broad range of topics, including significant cybersecurity incidents that have occurred since the last update, the status of projects and initiatives to update our cybersecurity policies and practices, and ongoing efforts to prevent, detect, and respond to internal and external critical threats.

Item 2. Properties

We a have a lease agreement for our office space at 1525 Pine Street, Suite 106, Redding, California 96001. Impossible Math also has a lease agreement for the film campus land in Midlothian, Texas. We have also built a film set, Capernaum, and film campus in Midlothian, Texas. Both the film set and film campus are built on land owned by the Salvation Army, which has allowed the Company to use the property for filming, production, and operational purposes. The Company has a five-year lease for the film campus, which expires in October 2026 (with four automatic 10 -year renewal terms upon expiration). On March 1, ~~2024~~2023, the Company executed an amendment to its existing lease with the Salvation Army to include the Capernaum Village film set, which was previously covered under a separate temporary film use agreement. By covering both the film set and film campus under a single lease with automatic ten-year renewals, the Company has a higher level of assurance that the facilities will be available for future seasons. We believe that our facilities are adequate for our current operations.

Item 3. Legal Proceedings

From time to time we may be involved in various disputes and litigation matters that arise in the ordinary course of business. Other than as set forth below, we are currently not a party to any material legal proceeding.

As disclosed in the Company’s Form 10-K filed with the SEC on April 1, 2024, the Company’s Form 10-Q filed with the SEC on May 15, 2024, August 14, 2024 and November 14, ~~2023~~2024, respectively, and the Company’s Current Reports on Form 8-K filed with the SEC on April 10, 2023, ~~and~~ October 19, 2023, May 28, 2024, May 31, 2024 and October 1, 2024, respectively, the Company delivered to Angel ~~Studios~~ two separate ~~Notices of~~ Termination ~~(the “Termination~~ Notices”) of the Content License Agreement. The Company delivered the Termination Notices due to Angel ~~Studios~~’s material breach of the Content License Agreement. Such termination was effective on October 20, 2023. ~~See~~The ~~Note 2~~termination of the Content License Agreement was the subject of a private binding arbitration initiated by the Company’s ~~consolidated~~to ~~financial~~resolve ~~statements~~the ~~for~~dispute. ~~additional~~On ~~information~~May ~~concerning~~28, 2024, the arbitrator of the dispute issued an interim arbitration award in favor of the Company which, among other things, found multiple material breaches had been committed by Angel and upheld the Company’s termination of the Content License Agreement. ~~The~~On August 16, 2024, Angel filed a complaint against the Company isin ~~currently~~the ~~engaged~~Fourth Judicial District of Utah. That complaint and record are classified as private under Utah law. As described in ~~binding~~the Form 8-K filed on October 1, 2024, the arbitrator of the dispute issued the final arbitration ~~with~~award in favor of the Company on September 25, 2024, which includes an award of $5,097,206.03 in attorneys’ fees and recoverable costs payable by Angel ~~Studios~~to the Company. Angel filed a notice of appeal of the final arbitration award with the American Arbitration Association on October 25, 2024 pursuant to ~~resolve~~the appellate procedures provided for in the ~~dispute~~Content License Agreement. See Note 7 of the Company’s consolidated financial statements for additional information concerning the termination of the Content License Agreement.

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II

There is no established public trading market for the Series B Common Stock.

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Holders

As of March 29 28, ~~2024~~2025, there were (i) 5,~~595~~591,~~015~~274 shares of Series B Common Stock issued and outstanding, which were held by approximately 16,000 stockholders of record and (ii) 6,950,000 shares of Series A Common Stock issued and outstanding, which were held in entirety by The Chosen Productions, LLC, a partnership owned by the four founding partners of the Company.

Dividends

A dividend of $2.40 for each outstanding share of Series A Preferred Stock totaling $13,428 thousand 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, the Company paid $3,011 thousand of the declared dividend, representing 1,254,391 shares. In March 2023, the Company paid the remaining dividend to holders of Series A Preferred Stock totaling $10,417 thousand or $2.40 per share to all remaining Series A Preferred Stockholders. As such, as of December 31, 2023 all Series A Preferred Stock have been converted to Series B Common Stock.

The payment of any dividends in the future, and the timing and amount thereof, to the Company stockholders will fall within the sole discretion of the Board and will depend on many factors, such as our financial condition, earnings, capital requirements, potential obligations in planned financings, industry practice, legal requirements, Delaware corporate surplus requirements and other factors that the Board deems relevant. The Company’s ability to pay dividends will depend on its ongoing ability to generate cash from operations and on the Company’s access to the capital markets. The Company cannot guarantee that it will pay a dividend in the future or continue to pay any dividends if the Company commences paying dividends.

Equity Compensation Plans

~~The~~On May 5, 2024, our board of directors approved and adopted the Company’s ~~currently~~2024 ~~has~~Executive noInterests ~~compensation~~Plan ~~plans~~(the ~~under~~“Plan”). ~~which~~Under the terms of the Plan, our board of directors may grant to the Company’s ~~equity~~employees, ~~securities~~consultants ~~are~~or ~~authorized~~bona fide service providers awards of economic interests entitling grantees the right to receive a cash payment equal to the fair market value of an equal number of shares of our Series B Common Stock upon the applicable vesting date. The vesting of economic interests is subject to such vesting conditions as our board of directors may specify in a recipient’s award agreement. In the event of a termination of service prior to the applicable vesting date, unvested economic interests will be forfeited. Recipients of economic interests shall not by virtue of their receipt of economic interests have any ownership rights in shares of our Series B Common Stock. The Plan shall continue for ~~issuance~~a period of ten years, after which no further economic interests may be awarded (although any economic interests awarded prior to the expiration of such ten-year period shall be unaffected by the termination of the Plan).

On May 5, 2024, awards for 1,624,000 economic interests were granted to our employees, and on January 29, 2025, awards for 453,000 economic interests were granted to our non-employee directors. Each such grant of economic interests vests with respect to 100% of the economic interests subject thereto on a Qualifying Sale Date (as defined in the Plan), subject to the recipient’s continuous service through such date.

The vesting conditions for all Phantom Units granted under the plans include a performance condition contingent upon a qualifying sale event, as defined in the respective agreements. The units may only be settled through cash payment. Cash payment to certain Phantom Units granted are subject to the occurrence of a qualifying sale event, at which time a specified percentage of the unit’s right to payment becomes immediately vested, based on a years of service formula as of the qualifying sale date, while the remaining portion shall vest in two equal annual installments following the qualifying sale date anniversary, subject to continuous employment with the Company through each date. Additionally, certain Phantom units granted for which cash payment fully vest upon the qualifying sale event and shall be entitled to the cash payment at the qualifying sale event plus a sale bonus percentage, as specified in the award agreement.

The awards are liability-classified as they may only be settled in cash and are therefore subject to remeasurement based on changes in the estimated fair value of the Phantom Units at each reporting date through date of settlement. The fair value of the units was determined by considering a number of objective and subjective factors including the following: the Company’s operating and financial forecasts with the consideration to the valuation of comparable companies, the discount for lack of marketability of common stock, and other general and industry specific economic factors. As all Phantom Units are contingent upon the performance vesting condition of a qualifying sale, expense is only recognized once the event becomes probable, which shall be upon the occurrence of the qualifying sale event. Therefore, as the qualifying sale event is not considered probable, no expense has been recognized for these awards. As such, no compensation expense or liability was recognized as of December 31, 2024 related to these awards.

Item 6. Reserved

~~Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~21

~~Management’s~~Table ~~Discussion and Analysis~~ of ~~Financial Condition and Results of Operations~~Contents

~~Forward-Looking~~Item ~~Statements~~7. Management’s Discussion and ~~Other~~Analysis of Financial ~~Information~~Condition and Results of Operations.

~~For~~Forward-Looking ~~purposes~~Statements ~~of this discussion, the use of the words “we,” “us,” “Company,” or “our” refers to The Chosen, Inc.)~~ and ~~its~~Other ~~subsidiaries,~~Financial ~~except where the context otherwise requires.~~Information

~~The~~For ~~following~~purposes ~~discussion and analysis~~ of ~~our~~this ~~financial~~discussion, ~~condition~~the ~~and~~use ~~results~~ of ~~operations should be read in conjunction with~~ the ~~audited~~words ~~consolidated~~“we,” ~~financial~~“us,” ~~statements~~“Company,” ~~and~~or ~~the~~“our” ~~related~~refers ~~notes~~to ~~included~~5&2 ~~elsewhere~~Studios, ~~herein~~Inc. ~~Our historical results do not necessarily reflect what our historical financial position and results of operations would have been had we been~~ (f/k/a ~~stand-alone~~The ~~public~~Chosen, ~~company during the years presented~~Inc. In) ~~addition,~~and ~~our~~its ~~historical results are not necessarily indicative of the results to be expected for any future period~~subsidiaries, ~~and~~except ~~results~~where ~~for any interim period are not necessarily indicative of~~ the ~~results~~context tootherwise ~~be expected for the full year~~requires.

InThe ~~addition~~following todiscussion and analysis of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements, and the ~~following~~related ~~discussion~~notes ~~contains~~included ~~forward-looking~~elsewhere ~~statements~~herein. ~~that~~Our historical results do not necessarily reflect what our ~~plans,~~historical ~~estimates~~financial position and ~~beliefs.~~results ~~Our~~of ~~actual~~operations ~~results~~would ~~could~~have ~~differ~~been ~~materially~~had ~~from~~we ~~those~~been ~~discussed~~a instand-alone public company during the ~~forward-looking~~years ~~statements~~presented. In ~~See~~addition, ~~“Cautionary~~our ~~Statement~~historical ~~Concerning~~results ~~Forward-Looking~~are ~~Statements”~~not ~~and~~necessarily ~~“Item~~indicative ~~1A.~~of ~~Risk~~the ~~Factors”~~results to be expected for aany ~~discussion~~future period, and results for any interim period are not necessarily indicative of the ~~uncertainties,~~results ~~risks~~to ~~and~~be ~~assumptions~~expected ~~associated~~for ~~with~~the ~~these~~full ~~statements~~year.

In addition to our consolidated financial statements, the following discussion contains forward-looking 20statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. See “Cautionary Statement Concerning Forward-Looking Statements” and “Item 1A. Risk Factors” for a discussion of the uncertainties, risks and assumptions associated with these statements.

~~Table~~This section of ~~Contents~~this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 & 2023. Discussions of year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Company’s Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 1, 2024 for the fiscal year ended December 31, 2023.

~~This~~Results ~~section~~ of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Financial Information” in Item 2 of the Company’s amended registration statement on Form 10 filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 23, 2023, for the fiscal year ended December 31, 2022.Operations

~~Results of Operations~~Overview

~~Overview~~On September 25, 2024, the Company changed its corporate name from The Chosen, Inc. to 5&2 Studios, Inc., a Delaware corporation. 5&2 Studios, Inc. is an independent studio and film production company, which was created to develop and produce an episodic television series entitled The Chosen (the “Series”). The Series is based on the gospels of the Bible and tells the story of the life of Jesus Christ primarily through the perspectives of those who met him throughout his life. While 5&2 Studios, Inc. is primarily focused on producing, marketing, and distributing the remaining three seasons of the Series, it continues to evaluate opportunities to diversify its content through other Biblical based productions. In September 2024, the Company announced a number of new productions, including a series based on the life of Moses, a series based on the life of Joseph, a series based on the book of Acts, an animated series based on The Chosen called The Chosen Adventures, and an unscripted show featuring The Chosen cast and adventure enthusiast Bear Grylls called Chosen in the Wild.

The Company’s isrevenue anmodel ~~entertainment~~primarily ~~company,~~includes ~~which~~production ~~develops,~~services ~~produces,~~related ~~and~~to ~~licenses~~the ~~for distribution~~Series, ~~domestically~~royalties ~~and~~received ~~internationally,~~from anthe ~~episodic~~licensing ~~television~~of ~~series entitled~~ The Chosen. ~~The~~as ~~Company~~well ~~collaborates~~as ~~with~~online ~~partners~~store ~~to market, source, curate~~ and ~~distribute~~wholesale ~~the~~sales ~~Series~~of toThe ~~targeted~~Chosen ~~audiences through (i) existing~~ and ~~emerging~~5&2 ~~digital home entertainment platforms~~Studios, ~~including~~Inc. ~~but~~branded ~~not~~physical ~~limited~~media ~~to Netflix~~products, ~~Hulu, Prime Video,~~ and ~~most~~merchandise. ~~VOD~~Our ~~streaming~~marketing ~~platforms,~~efforts asinclude ~~well~~limited ~~as (ii) physical media, including DVD~~ and ~~Blu-ray~~strategically ~~Discs,~~focused ~~(iii) linear television, (iv) theatrical~~ distribution ofand ~~certain~~marketing ~~episodes~~campaigns orthrough ~~other~~targeted ~~content~~TV, ~~(v) books~~streaming, and ~~(vi)~~social ~~merchandise~~media campaigns.

~~The~~We ~~Company’s~~operate ~~revenue~~in ~~model~~five ~~primarily~~business ~~includes~~segments: ~~royalties~~Theatrical, ~~received~~Television ~~from the licensing of The Chosen as well as online store~~ and ~~wholesale~~Streaming, ~~sales of The Chosen physical media products~~Merchandise, ~~merchandise~~Events/Other, and ~~contributions~~Production Services. ~~Our~~We ~~marketing~~organize ~~efforts~~our ~~include~~business ~~limited~~segments ~~and~~based ~~strategically~~on ~~focused~~the ~~distribution~~nature ~~and~~of ~~marketing~~the ~~campaigns~~products ~~through targeted TV, streaming,~~ and ~~social~~services ~~media campaigns~~offered.

~~Comparison of the Years Ended December 31, 2023 and 2022~~Theatrical

The ~~following~~Theatrical ~~summary~~segment offocuses ~~our~~on ~~consolidated~~the ~~results~~periodic theatrical exhibition of ~~operations~~the ~~should~~Series beas ~~read~~well inas ~~conjunction~~other original content such as the 2021 film “Christmas with ~~our~~the ~~audited~~Chosen: ~~consolidated~~The ~~financial~~Messengers” ~~statements~~and the 2023 film “Christmas with the Chosen: Holy Night”. In 2023, with the release of season 3, The Chosen became one of the only episodic television series to release episodes theatrically. We debuted season 3 with a theatrical release of episodes 1 and ~~related~~2 ~~notes~~and later concluded the season with a theatrical release of episodes 7 and 8. In 2024, ~~included~~with ~~herein~~the release of season 4, The Chosen again set precedent by being one of the only episodic television shows to release all eight episodes theatrically. The Theatrical segment includes activities such as managing relationships with distribution partners and exhibitors,


	Year Ended December 31,				Change
	2023		2022		2023 vs. 2022
	(in thousands, except percentages)
Revenues:
Licensed content and merchandise revenues	$	51,944	$	27,891	$	24,053	86	%
Contribution revenues		28,985		2,641		26,344	998	%
Total revenues		80,929		30,532		50,397	165	%

Cost of revenues		22,056		7,603		14,453	190	%
Distribution and marketing		21,778		5,772		16,006	277	%
Amortization of film costs		13,290		5,144		8,146	158	%
Depreciation and amortization		8,897		3,218		5,679	176	%
General and administrative		25,330		11,611		13,719	118	%
Net operating income (loss)		(10,422)		(2,816)		(7,606)	270	%
Interest income		2,799		153		2,646	1,729	%
Interest expense		(3,279)		(178)		(3,101)	1,742	%
Other income (expense)		(184)		—		(184)	100	%
Net income (loss) before income taxes		(11,086)		(2,841)		(8,245)	290	%
Benefit (provision) for income taxes		2,129		246		1,883	765	%
Net income (loss)	$	(8,957)	$	(2,595)	$	(6,362)	245	%

Table of Contents

~~Licensed~~marketing ~~Content~~theatrical events, and ~~Merchandise~~ensuring ~~Revenues~~broad distribution of content to as many theaters as possible. Theatrical releases are not only viewed as revenue generating activities but also as marketing opportunities and brand awareness events.

~~Licensed~~Television ~~content~~& and merchandise revenues include payments received, principally via royalties, from our licensing agreements and merchandise sales. Licensed content and merchandise revenues for the year ended December 31, 2023 increased $24,053 thousand, or 86%, as compared to the year ended December 31, 2022, primarily due to the Company’s shift from managing licensing, distribution, and merchandise sales through our licensing agreement with Angel Studios to managing these functions internally as of October 2022, and the subsequent addition of new distribution channels, with an increase in merchandise sales of $20,917 thousand and an increase in Licensed content revenue of $2,267 thousand.Streaming

-The 21Television -& Streaming segment engages primarily in the distribution, licensing, exhibition, and marketing of the Series and other content to television networks and streaming platforms. Activities for this segment include negotiated and approving domestic and international licensing deals with various television networks and streaming platforms and managing the delivery of content assets to those licensees.

~~Table of Contents~~Merchandise

~~Contribution~~The ~~Revenues~~Merchandise segment specializes in the design, manufacture, and sale of branded merchandise. This includes products such as clothing, toys, collectibles, and other consumer goods related to our entertainment properties. Also included in the Merchandise Segment is the physical production, distribution, and sale of DVD’s and Blu-Ray discs. Merchandise, or “Gifts” as we refer to them with our audience, are critical to our strategy of engaging with our audience and providing our fans a way to share the Series and other content with those around them.

Contribution revenues are comprised of contributions received under the agreement with the Come and See Foundation, Inc. (“CAS”) for donation proceeds received by CAS through The Chosen App and other fundraising campaigns conducted by CAS. Such agreement specifies that the Company utilize the contributions consistent with purposes of the donations, including the production of the Series. Contribution revenues for the year ended December 31, 2023 increased $26,344 thousand, or 998%, as compared to the year ended December 31, 2022, primarily due to the timing of the agreement entered into with CAS in November 2022. On October 31, 2023, the Company entered into the Second Amendment to the Contribution Agreement with CAS, (the “Second Amendment”). While the Second Amendment modified and revised various commercial terms, it also eliminated the obligation of CAS to continue to provide Contribution Revenue to the Company. As such, no additional Contribution Revenue was received by the Company for reporting periods subsequent to the signing of the Second Amendment. In future periods, the Company expects that Contribution Revenue will be replaced by production funding through a new agreement with CAS for the fifth, sixth, and seventh season (see CAS Transactions above).Events/Other

~~Cost~~The Events/Other segment organizes and manages live events, exhibitions, and other entertainment-related activities. For example, in 2023 and 2024, the Company hosted thousands of ~~Revenues~~fans at a live event branded as “ChosenCon”. This segment also includes other ancillary revenue streams not attributable to one of the other identified segments such as sponsorships, “pay-it-forward”, and contribution revenues.

~~Cost~~Production of revenues primarily include the costs of products, third party expenses to fulfill merchandise sales orders, costs associated with events related to The Chosen, and participation and residual costs owed to writers, producers, actors and other film participants. Cost of revenues for the year ended December 31, 2023 increased $14,453 thousand, or 190%, as compared to the year ended December 31, 2022, primarily due to the Company’s shift from managing merchandise sales through our licensing agreement with Angel Studios to managing and selling our own merchandise as of October 2022, an increase in cost of sales related to merchandise of $11,281 thousand, costs associated with events of $2,019 thousand and increased actor and residual costs of $1,264 thousand as a result of the extended worldwide distribution of the first three seasons.Services

~~Distribution~~The Production Services segment provides television and ~~marketing~~film production services for third-party clients. This includes offering expertise to produce films, TV shows, commercials, and other media content.

Distribution and marketing include costs to promote the Series and primarily includes marketing on social and digital platforms to promote the Series as well as costs for producing marketing and managing the exploitation of the licensed content of the Series to both domestic and international audiences. Distribution and marketing expense for the year ended December 31, 2023 increased $16,006 thousand, or 277%, as compared to the year ended December 31, 2022, which is mostly attributable to increased marketing costs related to the Company’s shift from managing the majority of our marketing through our licensing agreement with Angel Studios to managing these functions internally as of October 2022 as well as increased costs to promote the fourth season and extended worldwide distribution of the previously released Seasons.23

~~Amortization~~Table of ~~Film Costs~~Contents

~~Costs~~Comparison of ~~producing~~ the ~~Series~~Years ~~are~~Ended ~~amortized~~December ~~using the individual-film-forecast method~~31, ~~based~~2024 onand ~~the ratio of the current period’s revenues to the Company’s estimated ultimate revenue.~~2023

~~Amortization~~The offollowing ~~film~~summary ~~costs for the year ended December 31, 2023 increased $8,146 thousand, or 158%, as compared to the year ended December 31, 2022, primarily due to the additional amortization~~ of ~~film~~our ~~costs~~consolidated ~~due~~results ~~to the timing~~ of ~~the~~operations ~~release~~should ofbe ~~the~~read ~~third season~~ in ~~the~~conjunction ~~fourth~~with ~~quarter~~our ofaudited ~~2022~~consolidated ~~and~~financial ~~first quarter of 2023 in the amount of $7~~statements,~~023~~ ~~thousand, the release of the Christmas Special in the amount of $783 thousand,~~ and anrelated ~~increase of overall revenues for all released seasons in the amount of $40~~notes,~~854~~ ~~thousand~~included herein.

Depreciation and Amortization


	Year Ended December 31,				Change
	2024		2023		2024 vs. 2023

	(in thousands, except percentages)
Revenues:
Licensed content and merchandise revenues	$	60,499	$	51,944	$	8,555	16	%
Production services revenues		98,837		—		98,837	100	%
Contribution revenues		—		28,985		(28,985)	100	%
Total revenues		159,336		80,929		78,407	97	%

Cost of licensed content and merchandise revenues		34,690		22,056		12,634	57	%
Cost of production services revenues		57,169		—		57,169	100	%
Distribution and marketing		28,460		21,778		6,682	31	%
Amortization of film costs		14,556		13,290		1,266	10	%
Depreciation and amortization		13,450		8,897		4,553	51	%
General and administrative		33,737		25,330		8,407	33	%
Operating expenses		182,062		91,351		90,711	99	%
Gain (loss) on sale of assets		13,214		(60)		13,274	(22,123)	%
Net operating loss		(9,512)		(10,482)		970	(9)	%
Interest income		617		2,799		(2,182)	(78)	%
Interest expense		(5,434)		(3,279)		(2,155)	66	%
Other expense, net		(7,551)		(124)		(7,427)	5,990	%
Net loss before income taxes		(21,880)		(11,086)		(10,794)	97	%
Benefit (provision) for income taxes		2,920		2,129		791	37	%
Net loss	$	(18,960)	$	(8,957)	$	(10,003)	112	%

Depreciation and amortization for the year ended December 31, 2023 increased $5,679 thousand, or 176%, as compared to the year ended December 31, 2022, primarily due to the Company’s increase in acquired property and equipment, the majority of which related to the permanent set and film campus placed in service during the third and fourth quarters of 2022 and the second quarter of 2023.

-Licensed 22Content -and Merchandise Revenues

~~Table~~Licensed content and merchandise revenues include consideration received, principally via royalties, from our licensing agreements and sales of ~~Contents~~merchandise. Revenues for the year ended December 31, 2024 increased $8,555 thousand, or 16%, as compared to the year ended December 31, 2023, primarily driven by income of $4,267 thousand, resulting from increased license revenue from the release of season 4 on various streaming platforms, in addition to an increase of $11,227 thousand attributable to the theatrical release of all eight episodes of season 4 in 2024 compared to the theatrical release of only two episodes of season 3 in 2023. Additionally, these increases were offset by $9,933 thousand representing a decrease in pay-it-forward revenues directly attributable to the cancellation of the Angel license agreement in October 2023.

~~General~~Production ~~and~~Services ~~Administrative~~Revenues

~~General~~Production ~~and~~services ~~administrative~~revenues ~~expenses~~are ~~for~~generated ~~the~~by ~~year~~providing ~~ended~~production ~~December~~services ~~31,~~on ~~2023~~a ~~increased~~work-for-hire ~~$13,719~~basis ~~thousand,~~for orthe ~~118%~~development, asproduction, ~~compared~~and todelivery of the ~~year~~remaining ~~ended~~seasons ~~December~~of ~~31,~~the ~~2022,~~Series ~~primarily~~and ~~due~~other toprojects. ~~$7,151~~Production ~~thousand~~services ofrevenues increased ~~legal,~~for ~~accounting,~~the ~~and~~year ~~professional~~ended ~~fees~~December ~~and $2~~31,~~651~~ ~~thousand~~2024 ofas ~~increased~~the ~~payroll~~Company ~~related~~did ~~expenses~~not asperform aproduction ~~result~~services ofon ~~the~~a ~~increase~~work-for-hire inbasis ~~headcount~~prior asto the ~~Company~~series ~~continues~~of totransactions ~~grow.~~(the ~~The~~“CAS ~~Company~~Transaction”) ~~also~~becoming ~~incurred~~effective ~~additional~~during ~~office~~the ~~and~~year ITended ~~related~~December ~~expenses of $2~~31,~~117~~ ~~thousand and credit losses of $952 thousand~~2024.

~~Income~~Contribution ~~Taxes~~Revenues

~~Income~~Contribution ~~tax~~revenues ~~benefit~~are comprised of contributions received revenues under a non - reciprocal agreement with CAS for donation proceeds received by CAS through The Chosen App to help fund the future production of the Series. Contribution revenues for the year ended December 31, 2023 ~~increased~~were $128,~~883~~985 thousand,. orWhile ~~765%,~~the asSecond ~~compared~~Amendment toexecuted ~~December~~in ~~31,~~October ~~2022,~~2023 ~~primarily~~modified ~~due~~and torevised ~~the~~various ~~impact~~commercial ofterms, it also eliminated the ~~Company’s~~obligation ~~expected~~of ~~tax~~CAS ~~benefit~~to atcontinue ~~U.S.~~to ~~Federal~~provide ~~statutory~~Contribution ~~rates~~Revenue ofto ~~$2,328~~the ~~thousand~~Company.

The effective tax rate for the year ended December 31, 2023 increased 10% as compared to the year ended December 31, 2022, primarily due to the impact from the net loss attributable to non-controlling interest of $(5,388) thousand.24

~~Liquidity~~Table ~~and~~of ~~Capital Resources~~Contents

~~Comparison~~As ofsuch, ~~December~~no ~~31,~~additional ~~2023~~Contribution ~~and~~Revenue ~~December~~was ~~31,~~received ~~2022~~by the Company for reporting periods subsequent to the signing of the Second Amendment.


	As of December 31,
	2023		2022		Change
	(in thousands)
Cash and cash equivalents	$	65,179	$	124,790	$	(59,611)
Long-term debt		138,387		145,840		(7,453)

Cost of Licensed Content and Merchandise Revenues

Cost of licensed content and merchandise revenues primarily includes the costs of products, third party expenses to fulfill third party merchandise sales orders, costs associated with events related to The Chosen and 5&2 Studios, Inc., and participation and residual costs owed to writers, producers, actors and other film participants. Cost of licensed content and merchandise revenues for the year ended December 31, 2024 increased $12,634 thousand, or 57%, as compared to the year ended December 31, 2023, primarily due to an increase in costs of sales related to royalties of $4,253 thousand due pursuant to the CAS Transaction, licensed content of $4,631 thousand mainly related to theatrical release bonuses, and an increase of $1,672 thousand primarily in connection with events.

~~The~~Cost ~~Company’s primary sources~~ of ~~liquidity~~Production ~~are~~Services from cash flows generated from operations and financing activities. As of December 31, 2023 and 2022, the Company had cash and cash equivalents of $65,179 thousand and $124,790 thousand, respectively. As of December 31, 2023 and 2022, the Company had long-term debt of $138,387 thousand and $145,840 thousand, respectively.Revenues

~~The~~Cost ~~Company’s~~of ~~primary~~production ~~uses~~services ofrevenues ~~cash~~is ~~generally~~associated ~~relate~~with toproviding ~~film~~production ~~costs.~~services ~~The~~on ~~decrease~~a inwork-for-hire ~~cash~~basis, ~~and~~focusing ~~cash~~on ~~equivalents~~the ofdevelopment, ~~$59~~production,~~611~~ ~~thousand~~and ~~was~~delivery ~~primarily~~of ~~attributable~~the toremaining anseasons ~~increase~~ of ~~$42,814~~the ~~thousand~~Series ofand ~~film~~other ~~costs~~projects. Costs related to production services revenue increased for the ~~fourth~~year ~~season~~ended December 31, 2024, as the Company did not perform production services on a ~~payment~~work-for-hire ofbasis ~~$10~~prior to the CAS Transaction becoming effective during the year ended December 31,~~417~~ ~~thousand~~2024. ~~related~~Prior to ~~dividends~~the ~~and~~CAS Transaction, in which the ~~acquisition~~Company ofsold ~~property~~the ~~and~~commercial ~~equipment~~rights ofto ~~$13,784~~the ~~thousand~~Series, ~~partially~~the ~~offset~~Company bycapitalized ~~$6,950~~production ~~thousand~~costs ofrelated ~~net~~to ~~income~~the owned Series as Film costs, ~~exclusive~~to ofbe ~~non-cash~~subsequently ~~items~~amortized ofbased ~~$13,312~~on ~~thousand~~the estimated ultimate revenues from the Series.

~~The~~Distribution ~~Company’s long-term debt relates to the agreement with CAS, whereby CAS provided $145,500 thousand for the Company’s use in the development, production, distribution,~~ and marketing of the Series and to provide the Company with operating and working capital. See the consolidated financial statements included herein and starting on page F-1 for further detail regarding the CAS transactions.Marketing

~~Going~~Distribution ~~Concern~~and marketing include costs to promote the Series and exploitation of the licensed content and theatrical releases for both domestic and international audiences as well as promotion of the merchandise sales. This primarily includes marketing on social and digital platforms as well as creative costs for producing marketing.

WeDistribution ~~evaluate~~and ~~whether~~marketing ~~there~~expense ~~are~~for ~~conditions~~the ~~and~~year ~~events,~~ended ~~considered~~December ~~in aggregate~~31, ~~which~~2024 ~~raise~~increased ~~substantial~~$6,682 ~~doubt~~thousand, ~~about~~or ~~our~~31%, ~~ability~~as compared to ~~continue~~the asyear aended ~~going~~December ~~concern~~31, ~~within~~2023, ~~one~~which ~~year~~is ~~after~~primarily ~~the~~attributable ~~date~~to ~~that~~an ~~the~~increase ~~financial~~of ~~statements~~$16,826 ~~are~~in ~~issued.~~marketing ~~The~~costs ~~evaluation~~to ~~involves~~promote ~~analyzing~~the ~~prospective~~premiere ~~operating~~and ~~budgets,~~theatrical ~~forecasts~~release of ~~our~~Season ~~cash~~4 ~~flows~~ and ~~implemented~~extended ~~mitigating~~worldwide ~~plans~~distribution as of the ~~date~~previously ~~these~~released ~~financial~~seasons ~~statements~~offset ~~are~~by ~~issued~~marketing toreimbursements ~~consider~~of ~~whether~~$10,144 wethousand ~~have~~from ~~sufficient~~CAS ~~resources to meet our obligations~~ for ~~twelve~~qualifying ~~months~~marketing ~~following the issue date of the financial statements~~costs. IfAlso ~~substantial~~contributing ~~doubt exists that we do not have sufficient resources~~ to ~~meet~~the ~~our~~increase ~~obligations,~~in we2024 ~~must~~was ~~determine~~the ~~whether~~cancellation itof isthe ~~probable~~Angel ~~that~~licensing ~~plans~~agreement ~~will be implemented~~ and ~~will~~related ~~alleviate~~transition ~~the~~of ~~conditions~~certain ~~and~~marketing ~~events~~activities ~~that~~from ~~raise~~Angel ~~substantial~~Studios ~~doubt of our ability~~ to ~~continue~~the ~~as a going concern~~Company.

AsBeginning ofin ~~December~~July 312024, ~~2023,~~the weCompany ~~had~~was ~~cash~~entitled ~~and~~to ~~cash~~reimbursement ~~equivalents~~from ofCAS ~~$65,179~~for ~~thousand.~~certain ~~For~~qualifying ~~the~~marketing ~~year~~costs ~~ended~~to ~~December~~market ~~31,~~or ~~2023,~~sell weCAS’s ~~had~~products apursuant ~~Net loss attributable~~ to ~~The~~the ~~Chosen,~~CAS ~~Inc~~Transaction. ofDuring ~~$3,569 thousand, cash outflows from operating activities and investing activities of $32,935 thousand and $13,602 thousand, respectively, for~~ the year ended December 31, ~~2023.~~2024 Wethere have ~~historically~~ been ~~dependent~~marketing ~~upon~~reimbursements ~~funds~~of ~~from investors~~$10,144 ~~debt~~thousand ~~agreements,~~from ~~including the contribution funding agreement with~~ CAS, ~~donation-based~~for ~~revenues~~qualifying asmarketing ~~well as generating revenues from the distribution, licensing and exploitation of the Series to fund the production of the Series and general~~ costs.

-Amortization 23of -Film Costs

~~Table~~Costs of ~~Contents~~producing the Series are amortized using the individual-film-forecast method, based on the ratio of the current period’s revenues to the Company’s estimated ultimate revenue.

~~operating~~Amortization ~~activities.~~of Wefilm ~~are~~costs ~~dependent~~for ~~upon~~year ~~these~~ended ~~cash~~December ~~inflows~~31, as2024 ~~well~~increased $1,266 thousand, or 10%, as ~~additional~~compared ~~cash~~to ~~infusions~~the year ended December 31, 2023, primarily due to ~~support~~the ~~various~~additional ~~aspects~~amortization of ~~our~~film ~~operations,~~costs ~~principally~~as ~~production~~a result of the release of Season 4 in the first quarter of 2024 of $11,693 ~~advertising~~thousand offset by less amortization of Seasons 1, 2 and ~~distribution~~3 ~~activities~~of asthe ~~well~~Series of $10,328 thousand. There was no film costs incurred related to the Series after June 30, 2024 as ~~our~~a ~~interest~~result ~~payment~~of ~~obligations~~the onCompany’s ~~outstanding~~sale ~~debt.~~of the commercial rights to the Series pursuant to the CAS transaction.

WeDepreciation expect to begin principal photography on the fifth season of the Series in April 2024, which will require a significant amount of capital. On October 31, 2023, the Company entered into the Second Amendment to the Contribution Agreement with CAS. While the Second Amendment modified and revised various commercial terms, it also eliminated the obligation of CAS to continue to provide Contribution Revenue, for which we had previously relied upon as the primary source for the funding of the fifth, sixth, and seventh seasons of the Series. However, we are currently in discussions with CAS with respect to modifications and amendments to the current terms of the CAS Transactions. Such potential amendments or agreements would, among other things, provide the Company with funding for the fifth, sixth and seventh seasons of the Series and other related programs and reduce the indebtedness held by the Company. The Company’s continued ability to produce and distribute the Series will be adversely impacted in the unlikely event that the CAS Transactions are not modified and amended.Amortization

~~While~~Depreciation weand ~~cannot~~amortization befor ~~100~~the ~~percent~~year ~~certain~~ended ofDecember ~~the~~31, ~~outcome~~2024 ofincreased ~~the~~$4,553 ~~ongoing~~thousand, ~~discussions~~or ~~with CAS~~51%, weas ~~expect~~compared to ~~enter~~the ~~into~~year ~~new~~ended ~~agreements~~December ~~with~~31, ~~CAS~~2023, inprimarily ~~sufficient~~due ~~time~~ to ~~allow for~~ the ~~continued~~Company ~~production~~completing ofconstruction ~~the~~on ~~fifth,~~a ~~sixth,~~second ~~and~~soundstage ~~seventh~~late ~~seasons.~~in Wethe ~~believe~~first ~~that~~quarter ~~our~~of ~~plans~~2024 ~~are~~and ~~probable~~the toCompany becompleting ~~implemented~~construction ~~and~~on ~~that~~an ~~they~~additional ~~alleviate~~building on the ~~substantial~~film ~~doubt~~campus ~~about~~in the ~~Company's~~second ~~ability~~quarter toof ~~continue as a going concern~~2024.

The accompanying consolidated financial statements have been prepared on a going concern basis, assuming the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities in the ordinary course of operations. The financial statements do not reflect any adjustments that would be necessary if the Company were unable to continue as a going concern or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.25

~~Comparison~~Table of ~~the Years Ended December 31, 2023 and December 31, 2022~~Contents

~~Our~~General ~~cash~~and ~~flow activities were as follows for the periods presented:~~Administrative

General and administrative expenses for the year ended December 31, 2024 increased $8,407 thousand, or 33%, as compared to the year ended December 31, 2023, primarily due to $2,508 thousand of increased IT related expenses as well as $1,015 thousand of increased payroll related expenses mostly attributable to increased headcount. The Company also incurred additional nonrecurring legal, accounting, and professional fees of $6,908 thousand during the year ended December 31, 2024, primarily related to the Angel Studios, Inc. litigation and the CAS Transaction.


	Year Ended December 31,
	2023		2022		Change
		(in thousands)
Net cash flows provided by (used in) operating activities	$	(32,935)	$	(19,007)	$	(13,928)
Net cash flows provided by (used in) investing activities		(13,602)		(25,857)		12,255
Net cash flows provided by (used in) financing activities		(13,074)		153,722		(166,796)

Gain (Loss) on Sale of Assets

Gain (loss) on sale of assets for the year ended December 31, 2024 is primarily related to the sale of the commercial rights to the series as a result of the CAS Transaction.

~~Operating~~Other ~~activities~~expense, net

~~Net~~Other ~~cash flows used in operating activities was $32~~expense,~~935~~ ~~thousand~~net ~~and $19,007 thousand~~ for the ~~years~~year ended December 31, ~~2023 and 2022~~2024, ~~respectively.~~primarily ~~The~~reflects ~~increase~~the ofCompany’s ~~net~~recognition ~~cash flows used in operating activities~~ of ~~$13,928~~donation ~~thousand~~expense ~~was primarily driven by an increase~~ of $148,~~439~~111 thousand inrelated ~~film~~to ~~costs,~~one-time astrategic ~~decrease~~inventory ofreduction ~~$5,182~~initiative ~~thousand~~whereby inexcess ~~collections~~product ofinventory ~~accounts~~was ~~receivable,~~donated anto ~~increase~~various ofcharitable ~~$3,007~~organizations ~~thousand~~ in ~~prepaid~~order ~~and~~to ~~current~~normalize ~~assets,~~inventory ~~and~~levels ~~an increase of $6,950 thousand of net income exclusive of non-cash items, partially offset by the increased change of $3,761 thousand in accrued expenses~~ and ~~other~~reduce ~~current~~taxable ~~liabilities~~income.

~~Investing~~Income ~~activities~~Taxes

~~Net~~Income ~~cash~~tax ~~flows~~benefit ~~used~~(provision) ~~in investing activities was $13,602 thousand and $25,857 thousand~~ for the ~~years~~year ended December 31, ~~2023~~2024 ~~and~~decreased ~~2022, respectively. The decrease of~~ $~~12,255~~791 thousand, ~~was~~or ~~primarily~~37%, ~~driven~~as bycompared to the ~~decrease~~year inended ~~acquisition~~December of31, ~~property~~2023, ~~and~~primarily ~~equipment~~ due to the ~~substantial~~impact ~~investments~~of inthe ~~and~~Company’s ~~completion~~expected oftax ~~significant~~benefit ~~film~~at ~~campus~~U.S. ~~capital~~Federal ~~improvement~~statutory ~~projects~~rates inof ~~2022~~$4,599 thousand.

~~Financing~~The ~~activities~~effective tax rate for the year ended December 31, 2024 decreased 6%, as compared to the year ended December 31, 2023, primarily due to the impact from the net loss attributable to NCI of $6,083 thousand.

~~Net~~Liquidity cash flows used in financing activities of $13,074 thousand for the year ended December 31, 2023 primarily included contributions from noncontrolling interest member of $5,023 thousand offset by dividend payments of $10,417 thousand and ~~payments~~Capital ~~of lender fees of $7,217 thousand. The financing activities of $153,722 thousand for the year ended December 31, 2022 was primarily~~ Resources

-Comparison 24of -December 31, 2024 and December 31, 2023

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	As of December 31,
	2024		2023		Change

	(in thousands)
Cash and cash equivalents	$	6,466	$	65,179		(58,713)
Long-term debt and lease liabilities, net		870		138,387		(137,517)

due to the $145,500 thousand of proceeds provided by CAS in November 2022, and an increase of $11,940 thousand in noncontrolling interest member contributions, partially offset by $3,011 thousand in dividends paid.

~~Critical~~The ~~Accounting~~Company’s ~~Estimates~~primary sources of liquidity are from cash flows generated from operations and financing activities. As of December 31, 2024 and 2023, the Company had cash of $6,466 thousand and $65,179 thousand, respectively. As of December 31, 2024 and 2023, the Company had long-term debt of $870 thousand and $138,387 thousand, respectively.

The ~~preparation~~Company’s ofprimary ~~consolidated~~uses ~~financial~~of ~~statements~~cash ~~in conformity with accounting principles~~ generally ~~accepted~~relate ~~in the United States of America (“US GAAP”) requires management~~ to ~~make~~film ~~estimates~~costs ~~and~~associated ~~assumptions~~with ~~that affect~~ the ~~reported~~production ~~amounts~~ of ~~assets and liabilities, disclosures of contingent assets and liabilities at~~ the ~~date~~Series ~~of the financial statements,~~ and ~~the~~other ~~reported amounts of revenues and expenses during the reported periods~~content. The ~~SEC~~decrease ~~has~~in ~~defined~~cash aand ~~company’s~~cash ~~critical~~equivalents ~~accounting~~was ~~policies~~primarily asattributable to the ~~ones~~production ~~that~~expenses ~~are~~related ~~most important~~ to the ~~portrayal of a company~~Company’s ~~financial~~new ~~condition~~animated ~~and~~series, ~~results~~The ofChosen ~~operations~~Adventures, ~~and~~of ~~which~~$14,679 ~~require~~thousand, acash ~~company~~paid tofor ~~make~~income ~~its~~taxes ~~most~~of ~~difficult and subjective judgments. Based on this definition~~$12,032 ~~the~~thousand ~~Company has identified the critical accounting policies~~ and ~~judgments~~marketing ~~addressed~~spend ~~below.~~associated ~~Estimates~~with ~~are~~the ~~based~~release ~~on historical experience~~ and ondistribution ~~various~~of ~~other~~Season ~~assumptions that the Company believes to be reasonable under the circumstances~~4, ~~the~~net ~~results~~ of ~~which~~amounts ~~form~~recoupable ~~the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent~~ from ~~other~~CAS, ~~sources.~~partially ~~Actual~~offset ~~results~~by ~~may~~cash ~~differ~~provided ~~from~~by ~~these~~financing ~~estimates~~activities ~~under~~of ~~different~~$11,684 ~~assumptions or conditions~~thousand.

~~Film~~The ~~Costs~~Company’s long-term debt historically related to the agreement with CAS, whereby CAS provided $145,500 thousand for the Company’s use in the development, production, distribution and marketing of the Series and to provide the Company with operating and working capital. As of December 31, 2024, this amount was forgiven in connection with the closing of the CAS Transaction. See the consolidated financial statements included herein and starting on page F-1 for further detail regarding the historic financing arrangement with CAS. In addition, as a result of the CAS Transaction, the Company is entitled to receive cash receipts for its production

Costs of producing the Series are amortized, and residual and participation costs are accrued, using the individual-film-forecast method, based on the ratio of the current period’s revenues to the Company’s estimated remaining ultimate revenue per each episodic block. The initial estimate of ultimate revenue includes estimates of revenues through various distribution channels such as theatrical, home entertainment and other distribution platforms and are based on historical experience for past seasons. The Company regularly monitors the performance of each season, and evaluate whether impairment indicators are present (i.e., low ratings), and based upon our review, the Company revises the estimates as needed.26

~~Due~~Table ~~to the inherent uncertainties involved in making such estimates~~ of ultimate revenues and expenses, these estimates have differed in the past from actual results and are likely to differ to some extent in the future from actual results. In addition, in the normal course of our business, some seasons are more successful or less successful than anticipated. Management regularly reviews and revises, when necessary, its ultimate revenue and cost estimates, which may result in a change in the rate of amortization of film costs and participations and residuals and/or a write-down of all or a portion of the unamortized costs of the film or television program to its estimated fair value.Contents

Anservices ~~increase~~based inon the ~~estimate~~budgets offor ~~ultimate~~future ~~revenue~~seasons, ~~will~~along ~~generally~~with ~~result~~production infees ~~a lower amortization rate~~ and, ~~therefore,~~milestone ~~lesser~~payments ~~film~~due ~~amortization~~upon ~~expense, while a decrease in~~ the ~~estimate~~completion of ~~ultimate~~each ~~revenue will generally result in a higher amortization rate and, therefore, higher film amortization expense~~season.

The ~~amortization of film costs is on an accelerated basis, as the~~ Company ~~typically~~believes ~~expects~~its ~~more~~existing ~~upfront~~cash ~~viewing.~~and Onexpected ~~average,~~cash ~~over~~flows ~~50%~~from ofoperations ~~the~~will ~~film~~be ~~costs~~sufficient ~~related~~ to meet our ~~produced~~working ~~content~~capital, iscapital ~~expected to be amortized within one year after its month of first availability. The Company reviews factors that may impact the amortization of film costs on a monthly basis~~expenditures, ~~such~~and asexpected ~~prospective~~cash ~~licensing~~requirements ~~arrangements,~~from ~~monitoring~~known ~~the~~contractual ~~popularity~~obligations offor the ~~show,~~next astwelve ~~well~~months ~~as market~~ and ~~consumer trends~~beyond. ~~Our estimates related to these factors require considerable management judgment.~~

~~Other~~Comparison ~~Estimates~~of the Years Ended December 31, 2024 and December 31, 2023

~~See~~Our ~~Note~~cash 1flow toactivities ~~the~~were ~~accompanying~~as ~~audited~~follows ~~consolidated financial statements included herein and starting on page F-1~~ for ~~further~~the ~~discussion.~~periods presented:

~~Off-Balance Sheet Arrangements~~

As of December 31, 2023 and 2022, the Company had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, results of operations, liquidity, capital expenditures or capital resources that is material to investors.


	Year Ended December 31,
	2024		2023		Change

		(in thousands)
Net cash flows used in operating activities	$	(62,718)	$	(32,935)	$	(29,783)
Net cash flows used in investing activities		(7,679)		(13,602)		5,923
Net cash flows provided by (used in) financing activities		11,684		(13,074)		24,758

~~- 25 -~~

~~Table~~Operating ~~of Contents~~activities

~~Recently~~Net ~~Issued~~cash flows used in operating activities was $62,718 thousand and ~~Adopted~~$32,935 ~~Accounting~~thousand ~~Pronouncements~~for the years ended December 31, 2024 and 2023, respectively. The increase of net cash flows used in operating activities of $29,783 thousand was primarily driven by a decrease of $32,099 thousand in deferred revenue, driven by the production services revenue recognized from the deferred consideration from forgiveness of long-term debt in the CAS transaction, the increase in net loss, exclusive of non-cash items of $26,481 thousand, and an increase of $4,779 thousand in accounts receivable, partially offset by a decrease of $29,701 thousand in film costs and a decrease of $8,718 thousand in inventory.

~~See~~Investing ~~Note 1 to the accompanying audited consolidated financial statements included herein and starting on page F-1 for further discussion.~~activities

Net cash flows used in investing activities was $7,679 thousand and $13,602 thousand for the years ended December 31, 2024 and 2023, respectively. The decrease of net cash flows used in investing activities of $5,923 thousand was primarily driven by the decrease in acquisition of property and equipment. There were no other significant cash investing activities during the year ended December 31, 2024 compared to the year ended December 31, 2023.

Financing activities

Net cash flows provided by financing activities of $11,684 thousand for the year ended December 31, 2024 included proceeds from issuance of debt of $11,684 thousand, which was forgiven as a component of consideration in the CAS transaction. Net cash flows used in financing activities of $13,074 thousand for the year ended December 31, 2023 primarily included dividend payments of $10,417 thousand and payments of lender fees of $7,217 thousand, partially offset by contributions from noncontrolling interest member of $5,023 thousand.

Segment Reporting

The Company operates in five operating and reportable segments: Theatrical, Television & Streaming, Merchandise, Events/Other, and Production Services. The segments are based on the nature of products and services offered, as well as how the chief operating decision maker (“CODM”), who is the Company’s President and Chief Financial Officer together, reviews financial results for evaluating segment performance and allocating resources. The CODM uses segment adjusted operating income / (loss) to assess financial performance and allocate resources. Segment information is based on the “management” approach, which designates the internal reporting used by management for making decisions and assessing performance of the segments.

Segment adjusted operating income / (loss) results include the revenues and cost of revenues, distribution and marketing, and general and administrative expenses which are directly attributable to each segment. Segment adjusted operating income / (loss) excludes income and expenses which are not directly related to the operations of the segment or management believes are not relevant to management’s assessment of the operating performance of the segments to make resource allocations. These excluded costs include

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amortization of film costs, depreciation and amortization, unallocated indirect distribution and marketing and general and administrative costs, which costs are corporate or company-wide in nature, as well as nonrecurring items and non-operating income and expenses.

See Note 8 - Information on Business Segments in the accompanying audited consolidated financial statements for further detail, including a reconciliation of segment adjusted operating income / (loss) to consolidated net income / (loss).

Comparison of the Years Ended December 31, 2024 and December 31, 2023

Our segment revenues were as follows for the periods presented:


	Year Ended December 31,
	2024		2023		Change

	(in thousands)
Theatrical	$	15,345	$	4,118	$	11,227
Television & Streaming		12,701		8,434		4,267
Merchandise		28,538		26,850		1,688
Events/Other		3,915		41,527		(37,612)
Production Services		98,837		—		98,837
Total Revenues	$	159,336	$	80,929	$	78,407

Our segment adjusted operating incomes were as follows for the periods presented:


	Year Ended December 31,
	2024		2023		Change

	(in thousands)
Theatrical	$	181	$	2,377	$	(2,196)
Television & Streaming		9,290		7,811		1,479
Merchandise		2,472		3,748		(1,276)
Events/Other		224		39,508		(39,284)
Production Services		38,917		—		38,917
Total segment adjusted operating income	$	51,084	$	53,444	$	(2,360)

Theatrical

Theatrical revenues for the years ended December 31, 2024, and 2023, were $15,345 thousand and $4,118 thousand, respectively. Theatrical revenue increased $11,227 thousand for the year ended December 31, 2024, as compared to the year ended December 31, 2023, which is primarily attributable to the theatrical release of all episodes of Season 4, compared to the limited release of Season 3 episodes in 2023.

Theatrical segment adjusted operating income for the years ended December 31, 2024, and 2023, were $181 thousand and $2,377 thousand, respectively. Theatrical segment adjusted operating income decreased $2,196 thousand for the year ended December 31, 2024, as compared to the year ended December 31, 2023, which is primarily attributable to additional costs incurred related to the increase in theatrical revenue as well as increased distribution and marketing costs associated with the release of Season 4 compared to Season 3 in 2023, most notably the Company expanded international theatrical releases and hosted international premiers in five different countries.

Television & Streaming

Television & Streaming revenues for the years ended December 31, 2024 and 2023 were $12,701 thousand and $8,434 thousand, respectively. Television & Streaming revenues increased $4,267 thousand for the year ended December 31, 2024, as compared to the year ended December 31, 2023, which is primarily attributable to increased licensed fees associated with the release of Season 4 as compared to Season 3 in 2023.

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Television & Streaming segment adjusted operating income for the years ended December 31, 2024, and 2023, were $9,290 thousand and $7,811 thousand, respectively. Television & Streaming segment adjusted operating income increased $1,479 thousand for the year ended December 31, 2024, as compared to the year ended December 31, 2023, which is primarily attributable to increased incense fees associated with the release of Season 4 as compared to the Season 3 in 2023.

Merchandise

Merchandise revenues for the years ended December 31, 2024 and 2023 were $28,538 thousand and $26,850 thousand, respectively. Merchandise revenue increased $1,688 thousand for the year ended December 31, 2024, as compared to the year ended December 31, 2023, which is primarily attributable to increased Season 4 DVD sales in 2024 compared to Season 3 DVD sales in 2023.

Merchandise segment adjusted operating income for the years ended December 31, 2024 and 2023 were $2,472 thousand and $3,748 thousand, respectively. Merchandise segment adjusted operating income decreased $1,276 thousand for the year ended December 31, 2024, as compared to the year ended December 31, 2023, which is primarily attributable to an increase in merchandise fulfillment costs combined with increased royalties paid to CAS as a result of the CAS transaction.

Events/Other

Events/Other revenues for the years ended December 31, 2024 and 2023 were $3,915 thousand and $41,527 thousand, respectively. Events/Other revenue decreased $37,612 thousand for the year ended December 31, 2024, as compared to the year ended December 31, 2023, which is primarily attributable to the execution of the Second Amendment with CAS in October 2023, which eliminated the obligation of CAS to continue to provide Contribution Revenue to the Company.

Events/Other segment adjusted operating income for the years ended December 31, 2024 and 2023 were $224 thousand and $39,508 thousand, respectively. Events/Other segment adjusted operating income decreased $39,284 thousand for the year ended December 31, 2024, as compared to the year ended December 31, 2023, which is primarily attributable to the execution of the Second Amendment with CAS in October 2023, which eliminated the obligation of CAS to continue to provide Contribution Revenue to the Company.

Production Services

Production Services segment revenues increased for the year ended December 31, 2024 as compared to the year ended December 31, 2023, as the Company did not perform production services on a work-for-hire basis prior to the CAS Transaction becoming effective during the year ended December 31, 2024.

Production Services segment adjusted operating income increased for the year ended December 31, 2024 as compared to the year ended December 31, 2023, as the Company did not perform production services on a work-for-hire basis prior to the CAS Transaction becoming effective during the year ended December 31, 2024

Critical Accounting Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and results of operations, and which require a company to make its most difficult and subjective judgments. Based on this definition, the Company has identified the critical accounting policies and judgments addressed below. Estimates are based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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Film Costs

Costs of producing the Company’s owned film projects are amortized, and residual and participation costs are accrued, using the individual-film forecast method, based on the ratio of the current period’s revenues to the Company’s estimated remaining ultimate revenue per each episodic block. The initial estimate of ultimate revenue includes estimates of revenues through various distribution channels such as theatrical, home entertainment and other distribution platforms and are based on historical experience for past seasons. The Company regularly monitors the performance of each project, and evaluates whether impairment indicators are present (i.e., low ratings), and based upon our review, the Company revises the estimates as needed.

Due to the inherent uncertainties involved in making such estimates of ultimate revenues and expenses, these estimates have differed in the past from actual results and are likely to differ to some extent in the future from actual results. In addition, in the normal course of our business, some projects are more successful or less successful than anticipated. Management regularly reviews and revises, when necessary, its ultimate revenue and cost estimates, which may result in a change in the rate of amortization of film costs and participations and residuals and/or a write-down of all or a portion of the unamortized costs of the project to its estimated fair value.

An increase in the estimate of ultimate revenue will generally result in a lower amortization rate and, therefore, lesser film amortization expense, while a decrease in the estimate of ultimate revenue will generally result in a higher amortization rate and, therefore, higher film amortization expense.

The amortization of film costs is on an accelerated basis, as the Company typically expects more upfront viewing. On average, over 50% of the film costs related to our produced content is expected to be amortized within one year after its month of first availability. The Company reviews factors that may impact the amortization of film costs on a monthly basis, such as prospective licensing arrangements, monitoring the popularity of the content, as well as market and consumer trends. Our estimates related to these factors require considerable management judgment.

Revenue Recognition

Production Services Revenue

Revenue is recognized when control of goods or services is transferred to customers, in amounts that reflect the consideration the Company expects to be entitled to in exchange for those goods or services, based on its performance obligation. For revenue from production services, the customer controls the output throughout the production process. Revenue and the associated costs of such contracts are recognized over time on an input method, applying a cost-to-cost estimation basis. The revenue recognized applying the cost-to-cost method is calculated based upon the proportion of actual costs incurred, cumulatively relative to an estimate, of total expected cost to complete and deliver the project.

The initial estimate of production costs includes estimates of project budgets that are based on historical experience for past productions as well as future expectations. The Company regularly monitors the performance of each project and revises the estimates of remaining costs to complete the project, as needed. Due to the inherent uncertainties involved in making such estimates of production costs and expenses, these initial estimates are likely to differ, to some extent, from actual results. Changes in revenue recognized as a result of adjustments to total expected costs are recognized on a prospective basis.

Other Estimates

See Note 1 to the accompanying audited consolidated financial statements included herein and starting on page F-1 for further discussion.

Off-Balance Sheet Arrangements

As of December 31, 2024 and 2023, the Company had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

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Recently Issued and Adopted Accounting Pronouncements

See Note 1 to the accompanying audited consolidated financial statements included herein and starting on page F-1 for further discussion.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and qualitative disclosures about market risks have been omitted as permitted under rules applicable to smaller reporting companies.

Item 8. Financial Statements and Supplementary Data

Our financial statements and the notes thereto begin on page F-1.

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures

Evaluation of disclosure controls and procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), we evaluated, under the supervision and with the participation of our management, including our President and our Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K.

Based on the foregoing evaluation, our President and our Chief Financial Officer concluded that, as of December 31, ~~2023~~2024, our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level that we would meet our disclosure obligations.

Management’s report on internal control over financial reporting

The Company’s management is responsible for establishing and maintaining adequate and effective internal control over financial reporting in order to provide reasonable assurance of the reliability of the Company’s financial reporting and preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting involves policies and procedure that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of assets of the issuer; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made in accordance with authorizations of management and directors of the issuer; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer Company assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.

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Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) of the Exchange Act) that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

~~None~~During the year ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

- 26 -

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PART III

Item 10. Directors, Executive Officers and Corporate Governance Management

Management

The individuals listed below are our executive officers and directors:


Name	Position	Term of Office	Age
Derral Eves	Chief Strategy Officer and Director	February 2018‑Present	4950
Dallas Jenkins	Chief Creative Officer and Director	February 2018 - Present	4849
JD Larsen	Chief ~~Finance~~Financial Officer	November 2022 - Present	4849
Bradley Pelo	President	December 2021 - Present	6162
Kyle Young	Executive Vice President ~~of Distribution and International~~	July 2022 - Present	4546
David Stidham	Senior Vice President, ~~of Business Affairs and~~ General Counsel.	June 2023 - Present	3637
James A. Bisenius	Director	December 1, 2022 – Present	72
Cris Doornbos	Director	December 28, 2022 – Present	68
Cris Doornbos	Director	December 28, 2022 – Present	67
Matt Rearden	Director	December 28, 2022 – Present	49
Matt Rearden	Director	December 28, 2022 – Present	48
Brooke Asiatico	Director	December 28, 2022 – Present	58
Brooke Asiatico	Director	December 28, 2022 – Present	57
David Bagheri	Director	December 28, 2022 – Present	40
David Bagheri	Director	December 28, 2022 – Present	39

Biographical information regarding our directors and executive officers is set forth below.

Derral Eves

Derral Eves is our Chief Strategy Officer and a member of our board of directors. Since January 2006, Mr. Eves has served as the Chief Executive Officer of Creatus, LLC. Mr. Eves is the creator of VidSummit, the leading professional conference for social media creators. Mr. Eves is one of the world’s top YouTube and online video marketing experts. The content on Mr. Eves’ distribution channels have received over 24 billion video views on YouTube and over 9 billion views on Facebook. Mr. Eves is also the mentor of some of the biggest and most impactful YouTube and social media stars. He has been featured on Good Morning America, The Today Show, NBC, ABC, CBS, FOX, ESPN, FORBES, AdWeek, Christians Today, World Religion News, and several other media outlets. He was recently featured in an article published by Forbes as #4 on the list of “20 Must Watch YouTube Channels That Will Change Your Business.” Mr. Eves graduated from Southern Utah University with a bachelor’s degree in Communications and Public Relations and a minor in Spanish.

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Dallas Jenkins

Dallas Jenkins is our Chief Creative Officer and a member of our board of directors. Since 2000, Mr. Jenkins has served as the president of Jenkins Entertainment and is primarily responsible for the oversight of the production of all films and videos produced by Jenkins Entertainment. Mr. Jenkins is also a film writer who has worked in Hollywood for nearly two decades, creating films for Warner Brothers, Lionsgate, Hallmark Channel, PureFlix and Universal. Mr. Jenkins has created several faith-based films, such as Midnight Clear, What If…, Though None Go With Me and The Resurrection of Gavin Stone. Mr. Jenkins is the son of celebrated Christian author Jerry B. Jenkins (the creator of The Left Behind Series and The Jesus Chronicles Series). Mr. Jenkins graduated from Northwestern College with a bachelor’s degree in Bible and Communications.

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Brad Pelo

Brad Pelo serves as the President of the Company. Mr. Pelo is a seasoned business executive having served as co-founder, president or CEO of Ancestry.com, Folio (Microsoft), NextPage (Proofpoint), I.TV (DirecTV) and Radiant Studios. Prior to his appointment as President of the Company, Mr. Pelo served as an Executive Producer of The Chosen since June 2020. Previously, Mr. Pelo was Chief Distribution Officer at Angel ~~Studios~~ from October 2020 to September 2021. From May 2018 to February 2020, Mr. Pelo was President of Radiant Digital, a portfolio of web properties and apps that engage daily with faith and family-based audiences totaling over 147 million users. In the film and television world he was executive producer of The Legend of Johnny Lingo (MGM), Outlaw Trail and Forever Strong as well as an annual telecast for the Pentagon Channel, Stadium of Fire. He serves on charitable boards that support the arts and leadership development.

JD Larsen

JD Larsen is our Chief ~~Finance~~Financial Officer. Mr. Larsen has a broad range of experience working with organizations from technology start-ups to fortune 500 companies both private and public, most recently, from November 2021 to November 2022, as VP of Finance and Operations for Driven Technologies, a start-up focused on cyber security and network modernization. Prior to that, Mr. Larsen spent 10 years, from January 2012 to November 2021, at Presidio Networked Solutions, a $4 billion dollar technology company, where he held various executive level positions throughout his tenure, most notably Division CFO for Presidio’s largest division. Prior to that, Mr. Larsen spent six years at Marriott Vacations Worldwide and assisted in the successful tax-free spin-off from Marriott International as independently traded company. Prior to that, Mr. Larsen worked for the Walt Disney Company as a key leader in Disney’s highly selective Management Audit Organization as well as other finance roles where he worked with numerous operating segments, including Studio Entertainment, to optimize financial operations both domestically and internationally. He started his career working for PricewaterhouseCoopers in Pittsburgh, PA as a Certified Public Accountant assisting clients through various public offerings and SEC reporting issues. He holds a bachelor’s of science degree in accounting from Grove City College.

Kyle Young

Kyle Young is our Executive Vice President ~~of Distribution and International~~. He leads distribution and international for the Company across platform partnerships, global expansion, and international audience connection. From August 2012 to July 2022, Mr. Young worked at a firm he founded and led called Tiny Horse, an award-winning entertainment production and marketing company that sold to Team Whistle in 2020, overseeing partnerships and network growth from Charlotte NC. Mr. Young previously led the launch and growth of Halogen TV, a millennial-focused cable network subsequently sold to Participant Media in 2012. Prior to this, Mr. Young led INSP’s development of their international cable network across 80 countries. Having worked with media companies across the U.S. and EMEA, Mr. Young has extensive experience in entertainment, marketing, and corporate finance.

~~David Stidham~~33

David Stidham serves as the Vice President of Business Affairs and General Counsel. Prior to working for The Chosen, he served at RightNow Media, which is a B2B faith-based streaming platform that serves churches, businesses, schools, and non-profit ministries around the world, from October 2017 to June 2023 as the General Counsel & Director of Licensing. During his time at RightNow Media, he negotiated and closed well over 1,000 licensing deals and served on the Executive Leadership Team. Prior to joining RightNow Media, Mr. Stidham spent from January 2016 to October 2017 serving as an Assistant District Attorney in Dallas, TX, which, at the time, was the 8th largest DA’s office in the country. He prosecuted and oversaw a wide range of cases in the misdemeanor and felony divisions. Mr. Stidham holds a BBA and MBA from Harding University, a JD from New England Law Boston, and graduate certificate in Negotiation Mastery from the Harvard Business School Online.

James A. Bisenius

James Bisenius is a member of our board of directors. Since 2015, Mr. Bisenius has served as Chief Executive Officer of Strong Refuge, LLC, and Strong Refuge Charitable Trust, and is active in investment management. In 1991, Mr. Bisenius founded Common Sense Investment Management, LLC, the general partner of a multiple manager fund, which reached peak assets of $4.5 billion dollars under management. Mr. Bisenius served as Chief Executive Officer and Chief Investment Officer of Common Sense Investment Management, LLC until 2014. From 1994 to 1998, Mr. Bisenius also served as a Managing Director of The Leuthold Group, an institutional research firm. Previously, Mr. Bisenius was a Vice President of Dain Bosworth Incorporated, a registered investment

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~~advisory~~David and brokerage firm. During his tenure at Dain Bosworth Incorporated, from 1986 to 1991, Mr. Bisenius was the original founder of Dain Bosworth’s Investment Management Consulting Department. In 1982, Mr. Bisenius opened Denver, Colorado based Boettcher & Company’s, Portland, Oregon office, where he was Senior Vice President and a member of the executive committee. He began his career as a Registered Representative with Foster & Marshall, a registered investment brokerage firm based in Seattle, WA. Mr. Bisenius earned his Bachelor of Science degree in Communications from Oregon State University in 1973.Stidham

David Stidham serves as the Senior Vice President, General Counsel. Prior to working for 5&2 Studios, he served at RightNow Media, which is a B2B faith-based streaming platform that serves churches, businesses, schools, and non-profit ministries around the world, from October 2017 to June 2023 as the General Counsel & Director of Licensing. During his time at RightNow Media, he negotiated and closed well over 1,000 licensing deals and served on the Executive Leadership Team. Prior to joining RightNow Media, Mr. Stidham spent from January 2016 to October 2017 serving as an Assistant District Attorney in Dallas, TX, which, at the time, was the 8th largest DA’s office in the country. He prosecuted and oversaw a wide range of cases in the misdemeanor and felony divisions. Mr. Stidham holds a BBA and MBA from Harding University, a JD from New England Law Boston, and graduate certificate in Negotiation Mastery from the Harvard Business School Online.

Cris Doornbos

Cris Doornbos is a member of our board of directors. Since February 2022, Mr. Doornbos has served as Chief Executive Officer and founder of Leadership Shaping LLC, a company focused on helping CEOs improve performance by transforming their organization’s culture, leadership, and governance. Mr. Doornbos is a 39-year veteran in the publishing, media, and educational spaces of music, books and curriculum. From September 2005 to August 2021, Mr. Doornbos was CEO of David C. Cook, a nonprofit Christian publisher based in Colorado Springs, Colorado, successfully re-imagining, re-investing and re-inventing the company’s three different business units of music, books, and curriculum on a global scale. From 1997 to 2005, Mr. Doornbos was Executive Vice President at Zondervan Publishing, an international Christian media and publishing company located in Grand Rapids, Michigan, where he developed global strategies for growth. He has also served as Board Chairman for Evangelical Christian Publishers Association (ECPA), President of the Church Music Publishers Association (CMPA), and as Board Chair for Fellowship of Christian Athletes (FCA) for the Southern Colorado region, as well as a member of the FCA State Board of Colorado. Mr. Doornbos previously served as a committee member of The Advisory Committee for the Economic Development in Colorado Springs. He holds a Bachelor of Arts in Organizational Leadership from Calvin University.

Matt Rearden

Matt Rearden is a member of our board of directors. He is an experienced attorney and Chief Operations Executive. Mr. Rearden ~~has~~is currently the CEO of MAR Group, which operates several home service businesses and manages a portfolio of real estate and serves as the managing member of Winding Creek Holdings. He previously served as Chief Operating Officer for Maxwell Leadership, Inc, a global provider of leadership training and development, since October 2021. From January 2018 to October 2022, Mr. Rearden served as Chief Operating Officer for Four Star Homes, a real estate sales and brokerage company. From 2010 to 2018, Mr. Rearden held various positions with SeaWorld Parks and Entertainment, Inc., including Sr. Business Development Officer, VP of Business Affairs, and Assistant General Counsel. Between 2001 and 2010, Mr. Rearden held several positions with International Speedway Corporation, including Managing Associate General Counsel and Corporate Counsel. He holds a Juris Doctorate from Florida State University and a Bachelor of Science in finance from Oral Roberts University, where he also serves on the Board of Trustees.

Brooke Asiatico

Brooke Asiatico is a member of our board of directors. She is a practicing attorney with significant expertise in the not-for-profit, tax-exempt organizations sector. Ms. Asiatico currently serves as Managing Partner for Asiatico & Associates, PLLC, a firm she founded in 2006. Ms. Asiatico and her firm serve as General or Special Counsel to organizations of all sizes, including many of the largest non-profit, tax-exempt corporations in the United States, and their interests throughout the world. Formerly, she was a Partner at Brewer, Sr., Asiatico & Associates, LLP from 2004 - 2006. She holds a Juris Doctorate from the University of Texas School of Law (2003) and a Bachelor of Science in Government and Politics from The University of Texas at Dallas (2000).

David Bagheri

David Bagheri is a member of our board of directors. Mr. Bagheri is a social and business entrepreneur. He currently serves as Chief Executive Officer Anotherland Ventures LLC, a music services company providing artists and writers with label, publishing and marketing support. Since November 2019, Mr. Bagheri also serves as a non-executive Director of Lind Motor Group, a family owned and operated automotive retailer since 1992. Between 2020 - 2023, Mr . Bagheri was CEO of Hillsong Music and Invorto LLC, the largest music export from Australia in the Christian Music Industry, with over 25 years of releasing albums resulting in 10 that have gone platinum and a Grammy Award in 2018. From September 2017 to June 2019, Mr. Bagheri was Chief Executive Officer and Co-founder of Precision Tech, Inc. a Workforce Management Platform was launched in 2018 as a one-system approach to back-office technology. From May 2013 to June 2019, Mr. Bagheri held several positions with Precision Global Consulting, including Managing Director and Director of International Business. From 2010-2013, Mr. Bagheri was the National Development Manager for Many Rivers Microfinance, a social enterprise in Australia providing microenterprise support to Indigenous and other Australians. From 2005-2010 Mr. Bagheri was a Centre Manager at Hillsong CityCare, a social welfare organization working in Sydney.

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gone platinum and a Grammy Award in 2018. From September 2017 to June 2019, Mr. Bagheri was Chief Executive Officer and Co-founder of Precision Tech, Inc. a Workforce Management Platform was launched in 2018 as a one-system approach to back-office technology. From May 2013 to June 2019, Mr. Bagheri held several positions with Precision Global Consulting, including Managing Director and Director of International Business. From 2010-2013, Mr. Bagheri was the National Development Manager for Many Rivers Microfinance, a social enterprise in Australia providing microenterprise support to Indigenous and other Australians. From 2005-2010 Mr. Bagheri was a Centre Manager at Hillsong CityCare, a social welfare organization working in Sydney.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our directors, executive officers and any persons beneficially holding more than 10% of our common stock to report their initial ownership of our common stock and any subsequent changes in that ownership to the SEC. Our executive officers, directors and greater than 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

Specific due dates for these reports have been established and we are required to identify those persons who failed to timely file these reports. Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors and owners holding greater than 10% of our common stock have ~~not~~ filed the required reports in a timely manner during the fiscal year ended December 31, ~~2023~~2024, except as follows: late Form 4s were filed for each of Brad Pelo, JD Larsen, David Stidham and Kyle Young on March 27, 2025, each relating to the grant of economic interests on May 5, 2024.

Code of Ethics

We have ~~recently~~ adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer, controller, or persons performing similar functions. A current copy of the code is posted on the Investor Relations section of our website, which is located at https://gifts.thechosen.tv/pages/investor-overview. ~~The Company intends to satisfy any disclosure obligations under Item 5.05 of Form 8-K by posting information on the Company’s website at the address given above.~~

Item 11. Executive Compensation

The following discussion and analysis of compensation arrangements should be read with the compensation tables and related disclosures set forth below. This discussion contains forward looking statements that are based on our current plans and expectations regarding future compensation programs. The actual compensation programs that we adopt may differ materially from the programs summarized in this discussion.

This section describes the material elements of the compensation awarded to, earned by, or paid to our President, Brad Pelo, and our two other most highly compensated executive officers, for the years ended December 31, 2023 and ~~2022~~2024.


							Stock		~~Nonqualified~~	All other
		Salary			Bonus	~~Stock~~	~~Option~~awards		~~deferred~~	compensation	~~All other~~
		Salary		Bonus		awards	awards		compensation		compensation
Name and principal position	Year	($)			($)(1)		($)(2)			($)		Total ($)
Name and principal position	Year	($)		($)		($)	($)		earnings ($)		($)		Total ($)
Brad Pelo, President	2023	$	477,083		$	375,000		—		—		$	852,083
Derral Eves, Chief Strategy Officer	2022	350,000		350,000		—	—		—		—		700,000
	2024	$	500,000		$	500,000	$	8,078,500		—		$	9,078,500
	2023	400,000		250,000		—	—		—		—		650,000
Kyle Young, EVP	2023	$	286,458		$	200,313		—		—		$	486,771
Dallas Jenkins, Chief Creative Officer (1)	2022	400,000		440,000		—	—		—		269,178	(1)	1,109,178
	2024	$	350,000		$	200,000	$	1,615,700		—		$	2,165,700
	2023	600,000		450,000		—	—		—		514,474	(1)	1,564,474
JD Larsen, CFO	2023	$	310,417		$	155,000		—		—		$	465,417
Brad Pelo, President	2022	350,000		306,250		—	—		—		—		656,250
	2024	$	325,000		$	200,000	$	1,615,700		—		$	2,140,700
	2023	500,000		375,000		—	—		—		—		875,000

(1) ~~Included~~This incolumn ~~all~~reflects ~~other~~discretionary ~~compensation~~annual ~~are~~bonuses ~~payments~~paid ~~made~~in torespect ~~companies~~of ~~owned by Dallas Jenkins and his spouse for various agreements to write various books related to~~ the ~~series~~applicable year. See “—Annual ~~Certain Relationships and Related Transactions, and Director Independence~~Bonuses” below for additional information.

~~Principal~~(2) ~~Elements~~This column reflects the aggregate grant date fair value of ~~Compensation~~economic interests granted in 2024 calculated in accordance with FASB ASC 718. Assumptions used in the calculations for such amounts are set forth in Note 7 to our consolidated financial statements included in this Form 10-K. The awards are liability-classified as they may only be settled in cash and are therefore subject to remeasurement based on changes in the estimated fair value of the Phantom Units at each reporting date through date of settlement. The fair value of the units was determined by considering a number of objective and subjective factors including the following: the

The compensation of the company’s executive officers comprises of the following major elements: (a) base salary; and (b) an annual, discretionary cash bonus. These principal elements of compensation are described below.35

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Company’s operating and financial forecasts with the consideration to the valuation of comparable companies, the discount for lack of marketability of common stock, and other general and industry specific economic factors. As all Phantom Units are contingent upon the performance vesting condition of a qualifying sale, expense is only recognized once the event becomes probable, which shall be upon the occurrence of the qualifying sale event. Therefore, as the qualifying sale event is not considered probable, no expense has been recognized for these awards. As such, no compensation expense or liability was recognized as of December 31, 2024 related to these awards.

Principal Elements of Compensation

The compensation of the company’s executive officers comprises of the following major elements: (a) base salary; (b) an annual, discretionary cash bonus; and/or (c) the grant of economic interests under the Plan, as applicable. These principal elements of compensation are described below.

Base Salaries

Base salary is provided as a fixed source of compensation for our executive officers. Adjustments to base salaries will be reviewed annually and as warranted throughout the year to reflect promotions or other changes in the scope of breadth of an executive officer’s role or responsibilities, as well as to maintain market competitiveness.

Annual Bonuses

Annual bonuses may be awarded based on qualitative and quantitative performance standards and will reward performance of our executive officers individually. The determination of an executive officer’s performance may vary from year to year depending on economic conditions and may be based on measures such as the meeting of financial targets against budget as well as certain other quantitative and qualitative measures such as worldwide distribution objectives in support of the Company’s stated objective to reach a worldwide audience.

2024 Executive Interests Plan

On May 5, 2024, Mr. Pelo was granted 755,000 economic interests under the Plan. See “Equity Compensation Plans” above. Also on May 5, 2024, Mr. Larsen and Mr. Young were each granted 151,000 economic interests under the Plan. See “Equity Compensation Plans” above.

Employment Agreements

The Company entered into an employment agreement with Mr. Pelo, effective as of December 23, 2024, which specifies an annual base salary for Mr. Pelo, which is currently equal to $750,000, and provides that he is eligible to receive a discretionary annual bonus up to 100% of this then-current annual base salary. Pursuant to his employment agreement, Mr. Pelo is eligible to participate in all employee benefit plans maintained by the Company as in effect from time to time and applicable to similarly situated employees of the Company. Mr. Pelo must give the Company at least 12 months’ notice of any planned resignation or retirement. If Mr. Pelo’s employment is terminated by the Company for Cause (as defined in his employment agreement), or if he resigns without Good Reason (as defined in his employment agreement), Mr. Pelo is entitled to receive any accrued but unpaid base salary and any earned but unpaid annual bonus with respect to the completed fiscal year immediately preceding such termination date (collectively, the “Accrued Amounts”). If his employment is terminated by the Company without Cause or if he resigns for Good Reason, Mr. Pelo is entitled to receive the Accrued Amounts and, subject to his execution of a general release of claims, (i) continued payment of his base salary for 12 months following such termination date, (ii) a payment equal to the annual bonus, if any, that he would have earned for the fiscal year in which such termination date occurs and (iii) continuation of group health plan benefits, with the cost of the regular premium for such benefits shared in the same relative proportion by the Company and the named executive officer as in effect on the date of termination, for up to 12 months or until he becomes covered by a new health insurance plan from another employer, whichever date is sooner. If Mr. Pelo’s employment terminates on account of his death or Disability (as defined in his employment agreement), he is entitled to receive the Accrued Amounts and a payment equal to the annual bonus, if any, that he would have earned for the fiscal year in which such termination date occurs.

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The Company entered into an employment agreement with Mr. Young, effective as of January 11, 2025, which specifies an annual base salary for Young, which is currently equal to $400,000, and provides that he is eligible to receive a discretionary annual bonus up to $200,000. Pursuant to his employment agreement, Mr. Young is eligible to participate in all employee benefit plans maintained by the Company as in effect from time to time and applicable to similarly situated employees of the Company. Mr. Young must give the Company at least 3 months’ notice of any planned resignation or retirement. If Mr. Young’s employment is terminated by the Company for Cause (as defined in his employment agreement), or if he resigns without Good Reason (as defined in his employment agreement), Mr. Young is entitled to receive any accrued but unpaid base salary and any earned but unpaid annual bonus with respect to the completed fiscal year immediately preceding such termination date (collectively, the “Accrued Amounts”). If his employment is terminated by the Company without Cause or if he resigns for Good Reason, Mr. Young is entitled to receive the Accrued Amounts and, subject to his execution of a general release of claims, (i) continued payment of his base salary for 9 months following such termination date, (ii) a payment equal to the annual bonus, if any, that he would have earned for the fiscal year in which such termination date occurs and (iii) continuation of group health plan benefits, with the cost of the regular premium for such benefits shared in the same relative proportion by the Company and the named executive officer as in effect on the date of termination, for up to 9 months or until he becomes covered by a new health insurance plan from another employer, whichever date is sooner. If Mr. Young’s employment terminates on account of his death or Disability (as defined in his employment agreement), he is entitled to receive the Accrued Amounts and a payment equal to the annual bonus, if any, that he would have earned for the fiscal year in which such termination date occurs.

The Company entered into an employment agreement with Mr. Larsen, effective as of January 11, 2025, which specifies an annual base salary for Mr. Larsen, which is currently equal to $450,000, and provides that he is eligible to receive a discretionary annual bonus up to $200,000. Pursuant to his employment agreement, Mr. Larsen is eligible to participate in all employee benefit plans maintained by the Company as in effect from time to time and applicable to similarly situated employees of the Company. Mr. Larsen must give the Company at least 3 months’ notice of any planned resignation or retirement. If Mr. Larsen’s employment is terminated by the Company for Cause (as defined in his employment agreement), or if he resigns without Good Reason (as defined in his employment agreement), Mr. Larsen is entitled to receive any accrued but unpaid base salary and any earned but unpaid annual bonus with respect to the completed fiscal year immediately preceding such termination date (collectively, the “Accrued Amounts”). If his employment is terminated by the Company without Cause or if he resigns for Good Reason, Mr. Larsen is entitled to receive the Accrued Amounts and, subject to his execution of a general release of claims, (i) continued payment of his base salary for 9 months following such termination date, (ii) a payment equal to the annual bonus, if any, that he would have earned for the fiscal year in which such termination date occurs and (iii) continuation of group health plan benefits, with the cost of the regular premium for such benefits shared in the same relative proportion by the Company and the named executive officer as in effect on the date of termination, for up to 9 months or until he becomes covered by a new health insurance plan from another employer, whichever date is sooner. If Mr. Larsen’s employment terminates on account of his death or Disability (as defined in his employment agreement), he is entitled to receive the Accrued Amounts and a payment equal to the annual bonus, if any, that he would have earned for the fiscal year in which such termination date occurs.

Non-Qualified Plans and Retirement Benefits

We do not currently sponsor or maintain any non-qualified defined contribution or other non-qualified deferred compensation plans for employees. In addition, there are no arrangements or plans in which we provide pension, retirement or similar benefits.

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Outstanding Equity Awards at Fiscal Year-End

~~There~~The ~~are~~following notable shows information regarding outstanding ~~equity~~economic ~~awards.~~interests under the Plan at December 31, 2024, for our named executive officers:

Long-Term Incentive Plans


						Equity Incentive
						Plan Awards:
				Equity Incentive		Market or
				Plan Awards:		Payout Value of
			Market Value	Number of		Unearned
		Number of	of Shares or	Unearned Shares,		Shares, Units or
		Shares or Units	Units of Stock	Units or Other		Other Rights
		of Stock That	That Have Not	Rights That Have		That Have Not
Name	Grant Date	Have Not Vested (#)	Vested ($)(1)	Not Vested (#)		Vested ($)(1)
Brad Pelo	5/5/2024	—	—	755,000	⁽²⁾	$	8,969,400
Kyle Young	5/5/2024	—	—	151,000	⁽²⁾	$	1,793,880
JD Larsen	5/5/2024	—	—	151,000	⁽²⁾	$	1,793,880

~~There~~(1) ~~are~~The nomarket ~~arrangements~~value orof ~~plans~~the ineconomic interest awards represents the product of the value of our Series B Common Stock as of December 31, 2024, which wewas ~~provide~~$11.88, ~~pension~~and the number of shares underlying each such award and, ~~retirement~~with orrespect ~~similar~~to ~~benefits~~performance-based awards, assumes satisfaction of the applicable performance criteria.

(2)	This economic interest award vests with respect to 100% of the economic interests subject thereto on a Qualifying Sale Date, subject to continuous service through such date.

Director Compensation Table

The following table shows the compensation for each person who served as a non-employee member of our board of directors during the year ended December 31, 2024.

We do not provide separate compensation to our directors who are also our employees.


	Fees Earned or		Stock Awards(1)(2)
Name	Paid in Cash ($)		($)	Total ($)
Cris Doornbos	$	197,917	—	$	197,917
Matt Rearden	$	143,750	—	$	143,750
Brooke Asiatico	$	150,000	—	$	150,000
David Bagheri	$	143,750	—	$	143,750

On January 29, 2025, each of our non-employee directors received a grant of 113,250 economic interests under the Plan. See “Equity Compensation Plans” above.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets out certain information with respect to the beneficial ownership of the voting securities of the company, as of December 31, ~~2023~~2024, for:

·● Each person who we know beneficially owns more than five percent of any class of our voting securities.

·● Each of our director and director nominees.

·● Each of our executive officers.

·● All of our directors, director nominees and executive officers as a group.

As of December 31, 2023, we had 6,950,000 shares of Series A Common Stock and 5,595,015 shares of Series B Common Stock issued and outstanding. We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have 38

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As of December 31, 2024, we had 6,950,000 shares of Series A Common Stock and 5,591,274 shares of Series B Common Stock issued and outstanding. We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all securities that they beneficially own, subject to applicable community property laws.


	Number of	Percentage
	Shares	of
	Beneficially	Outstanding
Name and Address of Beneficial Owner(1)	Owned	Shares
Directors and Officers
Derral Eves(2)	6,950,000	55	%
Dallas Jenkins	—	—	%
JD Larsen	—	—	%
Bradley Pelo	—	—	%
David Stidham	—	—
Kyle Young	—	—
James A. Bisenius	—	—
Cris Doornbos	—	—
Matt Rearden	—	—
Brooke Asiatico	—	—
David Bagheri	—	—

All officers and directors as a group	6,950,000	55	%
(14 individuals)
Greater than 5% Holders
The Chosen Productions, LLC(2)(3)	6,950,000	55	%

*	Less than one percent.

(1) Unless otherwise indicated, the business address of each of the following entities or individuals is c/o ~~The~~5&2 ~~Chosen~~Studios, Inc., 48291 SBaucum ~~2600 W~~Road, ~~Suite 5~~Midlothian, ~~Hurricane,~~TX ~~Utah 84737~~76065.

(2)

The Chosen Productions, LLC is the record holder of the securities reported herein. Derral Eves, our Chief Strategy Officer, is the managing member of The Chosen Productions, LLC. By virtue of this relationship, Mr. Eves may be deemed to share beneficial ownership of the securities held of record by The Chosen Productions, LLC. Mr. Eves disclaims any such beneficial ownership except to the extent of his pecuniary interest.

(3)

Derral Eves, our Chief Strategy Officer, and Dallas Jenkins, our Chief Creative Officer, are members of The Chosen Productions, LLC and, as such, have an indirect interest in the securities held by The Chosen Productions, LLC to the extent of their respective membership interests in The Chosen Productions, LLC. Each of Mr. Eves and Mr. Jenkins disclaims any beneficial ownership of any securities held by The Chosen Productions, LLC.

Certain Relationships and Related Transactions

From time to time the Company may engage in transactions with related persons. Related persons are defined as any director or officer of the Company; any person who is the beneficial owner of 10% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power; any promotor of the Company; any immediate family member of any of the foregoing persons or an entity controlled by any such person or persons.

We have entered into various agreements with Dallas Jenkins and his spouse to write various books related to the Series. They receive a percentage of sales for each book. In total, the amount paid and accrued for writer fees and book royalties was $~~514~~228,~~474~~744 as of December 31, ~~2023~~2024.

~~Conflict of Interest Policy~~39

The board of directors has adopted a conflict of interest policy applicable to all directors, officers, and employees of our company and our subsidiaries. The conflict of interest policy provides that a committee of independent members of the board of directors

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~~may, among other things, cause any officer or director who has a direct or indirect interest in a transaction to recuse him or herself from the consideration~~ Conflict of such transaction and, to the extent necessary, the committee may retain appropriately qualified, non-conflicted personnel to advise the Company in connection with such transaction. Additionally, the conflict of interest policy requires that each director and executive officer annually sign a statement which affirms that such person has agreed to comply with the policy. Interest Policy

The board of directors has adopted a conflict-of-interest policy applicable to all directors, officers, and employees of our company and our subsidiaries. The conflict-of-interest policy provides that a committee of independent members of the board of directors may, among other things, cause any officer or director who has a direct or indirect interest in a transaction to recuse him or herself from the consideration of such transaction and, to the extent necessary, the committee may retain appropriately qualified, non-conflicted personnel to advise the Company in connection with such transaction. Additionally, the conflict-of-interest policy requires that each director and executive officer annually sign a statement which affirms that such person has agreed to comply with the policy.

Director Independence

Our Board of Directors currently consists of ~~seven~~six members. Our board of directors has determined 54 members of the Board, ~~James A. Bisenius,~~ Cris Doornbos, Matt Rearden, Brooke Asiatico and David Bagheri, are “independent directors” as defined in the listing standards of the Nasdaq Stock Market LLC and applicable SEC rules. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. In making the determinations as to the independence of our directors, our Board of Directors reviewed and discussed information provided by the directors and the Company with regard to each director’s relationships as they may relate to the Company and its management.

Item 14. Principal Account Fees and Services

Tanner LLC (“Tanner”) was the Company’s registered independent accounting firm for the fiscal years ended December 31, ~~2023~~2024 and ~~2022~~2023.


	2024	~~2023~~	2023	~~2022~~
Audit fees	$	~~300~~274,~~820~~309	$	92320,~~252~~820
Audit-related fees		—		—
Tax fees		—		—
All other fees		—		—

The Audit Committee pre-approves all audit and permitted non-audit services performed by our independent registered public accountants to ensure that the provision of such services does not impair the public accountants’ independence. ~~independence.~~ All fees paid to Tanner for our fiscal years ended December 31, ~~2023~~2024 and ~~2022~~2023 were pre-approved by our Audit Committee.

PART IV

Item 15. Exhibits

The following documents are filed as part of this report:

1. Financial Statements

The financial statements are listed in the Index to Consolidated Financial Statements, Notes and Schedules on page F-1.

2. Financial Statement Schedules

The financial statement schedules are listed in the Index to Consolidated Financial Statements, Notes and Schedules on page F-1.

3. Exhibits

The exhibits are listed in the Exhibit Index which begins on page 3940.

~~Item 16. Form 10-K Summary~~40

~~None.~~Table of Contents

Item 16 Form 10-K ~~33 -~~Summary

~~Table of Contents~~None.

Exhibit Index


ExhibitNumber		Exhibit Description
2.1		Plan of Conversion of The Chosen, LLC into a Delaware corporation to be known as “The Chosen, Inc.” (4)
3.1		Certificate of Incorporation dated November 29, 2022 (4)
3.2		Bylaws of The Chosen, Inc. (6)

4.1		Description of Securities

10.1		Exclusive Video-On-Demand and Subscription Video-On-Demand Licensing Agreement by and between The Chosen, LLC and VidAngel, Inc. (3)
10.2		Writer Work-for-Hire Agreement dated October 29, 2019 by and between the Company and Dallas Jenkins (3)
10.3		Writer Work-for-Hire Agreement dated October 20, 2019 by and between the Company and Ryan Swanson. (3)
10.4		Writer Work-for-Hire Agreement dated October 20, 2019 by and between the Company and Tyler Thompson (3)

10.5	Consulting and Coordination Agreement dated August 11, 2020 by and between the Company and VidAngel, Inc. (2)
10.6	Employment Agreement dated July 12, 2020 by and between the Company and Colin McLeod (2)
10.7	Employment Agreement dated July 15, 2020 by and between the Company and Adam Swerdlow (2)
10.8	Employment Agreement dated August 1, 2020 by and between the Company and Derral Eves (2)
10.9	Employment Agreement dated August 1, 2020 by and between the Company and Dallas Jenkins (2)
10.10	Contribution Funding and Production Agreement, dated November 29, 2022, by and between The Chosen LLC, The Chosen, Inc. and Come and See Foundation, Inc. (4)
10.11	First Amendment to Contribution Funding and Production Agreement, dated December 19, 2022, by and between The Chosen, Inc. and Come and See Foundation, Inc. (5)
10.12	IP Assignment Agreement, dated November 29, 2022, by and between The Chosen LLC, The Chosen, Inc. and Come and See Foundation, Inc. (4)
10.13	License Agreement, dated November 29, 2022, by and between The Chosen LLC, The Chosen, Inc. and Come and See Foundation, Inc. (4)
10.14	Short Term Lease Agreement, dated October 1, 2022, by and between the Company and The Salvation Army (7)
10.15	Location Agreement, dated August 4, 2022, by and between the Company and The Salvation Army (7)

(Note Regarding Reliance on Statements in Our Contracts: In reviewing the agreements included as exhibits to this Annual Report on Form 10-K, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about 5&2 Studios, Inc., its subsidiaries or affiliates, or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and (i) should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; (iii) may apply standards of materiality in a way that is different from what may be viewed as material to investors; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about 5&2 Studios, Inc., its subsidiaries and affiliates may be found elsewhere in this Annual Report on Form 10-K and 5&2 Studios, Inc.’s other public filings, which are available without charge through the U.S. Securities and Exchange Commission website at https://www.sec.gov.)

~~- 34 -~~

Table of Contents


		Incorporated By Reference
Exhibit No.	Description	Form	File Number	Exhibit	Filing Date	Filed or Furnished Herewith

2.1	Plan of Conversion of The Chosen, LLC into a Delaware corporation to be known as “The Chosen, Inc.”	1-U	24R-00162	2.1	December 2, 2022

3.1	Certificate of Incorporation dated November 29, 2022	1-U	24R-00162	2.2	December 2, 2022

3.2	Certificate of Amendment to the Certificate of Incorporation, effective September 25, 2024	8-K	000-56519	3.1	September 30, 2024

3.3	Bylaws of The Chosen, Inc.	10-12G	000-56519	3.2	February 2, 2023

4.1	Description of Securities					X

10.1	Employment Agreement dated August 1, 2020 by and between the Company and Derral Eves	1-A	024-11312	6(h)	September 3, 2020

10.2	Employment Agreement dated March 28, 2025 by and between the Company and Dallas Jenkins					X

10.3	Employment Agreement, dated January 9, 2025, by and between Brad Pelo and 5&2 Studios, Inc.	8-K	000-56519	10.1	January 15, 2025

10.16			Ground Lease Agreement, dated November 16, 2021, by and between the Company and The Salvation Army (7)

10.17			First Amendment to Ground Lease Agreement, dated March 1, 2023 by and between the Company and the Salvation Army.

10.18			Second Amendment to Contribution Funding and Production Agreement, dated October 31, 2023, by and between The Chosen, Inc. and Come and See Foundation, Inc. (8)

21			Subsidiaries of the Registrant (7)

31.1			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2022

31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2022

32.1			Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2022

32.2			Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2022

*Table ~~Previously~~of ~~filed.~~Contents

(1) Filed as an exhibit to the Company’s Regulation A Offering Statement on Form 1-A (Commission File No. 024-10814) filed with the SEC on May 25, 2018.


		Incorporated By Reference
Exhibit No.	Description	Form	File Number	Exhibit	Filing Date	Filed or Furnished Herewith

10.4	Employment Agreement, dated January 11, 2025, by and between Jonathan Larsen and 5&2 Studios, Inc.	8-K	000-56519	10.2	January 15, 2025

10.5	Employment Agreement, dated January 11, 2025, by and between David Stidham and 5&2 Studios, Inc.					X

10.6	Employment Agreement, dated January 11, 2025, by and between Kyle Young and 5&2 Studios, Inc.					X

10.7	Ground Lease Agreement, dated November 16, 2021, by and between the Company and The Salvation Army	10-12G/A	000-56519	10.16	April 3, 2023

10.8	First Amendment to Ground Lease Agreement, dated March 1, 2023 by and between the Company and the Salvation Army.	10-K	000-56519	10.17	April 1, 2024

10.9	Asset Purchase Agreement, dated May 13, 2024, by and between The Chosen, Inc. and Come and See Foundation, Inc.	8-K	000-56519	10.1	May 15, 2024

10.10	Amended and Restated Distribution License and Marketing Services Agreement, dated June 13, 2024, by and between the Chosen, Inc. and Come and See Foundation, Inc.	8-K	000-56519	10.1	June 20, 2024

10.11	Production Funding and Services Agreement, dated June 13, 2024, by and between The Chosen Texas, LLC and Come and See Foundation, Inc.	8-K	000-56519	10.2	June 20, 2024

10.12	Amendment to Amended and Restated Distribution License and Marketing Services Agreement, dated September 30, 2024, by and between the 5&2 Studios, Inc. and Come and See Foundation, Inc.	8-K	000-56519	10.1	December 6, 2024

10.13	Form of Amended and Restated 2024 Contributor Interests Plan	10-Q	000-56519	10.21	August 14, 2024

10.14	2024 Executive Interests Plan	10-Q	000-56519	10.22	August 14, 2024

10.15	2024 Writer & Producer Interests Plan	10-Q	000-56519	10.23	August 14, 2024

21	Subsidiaries of the Registrant	10-12G/A	000-56519	21	April 3, 2023

~~(2) Filed as an exhibit to the Company’s Regulation A Offering Statement on Form 1-A (Commission File No. 024-11312) filed with the SEC on September 3, 2020.~~42

~~(3)~~Table ~~Filed~~of ~~as an exhibit to the Company’s Regulation A Offering Statement on Form 1-K (Commission File No. 24R-00162) filed with the SEC on June 12, 2020.~~Contents

(4) Filed as an exhibit to the Company’s Current Report on Form 1-U filed with the SEC on December 2, 2022.


		Incorporated By Reference
Exhibit No.	Description	Form	File Number	Exhibit	Filing Date	Filed or Furnished Herewith

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X

32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X

32.2	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X

101.SCH	Inline XBRL Taxonomy Extension Schema Document.					X

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.					X

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.					X

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.					X

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.					X

101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.					X

104	Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).					X

~~(5) Filed as an exhibit to the Company’s Current Report on Form 1-U filed with the SEC on December 23, 2022.~~

~~(6) Filed as an exhibit to the Company’s Registration Statement on Form 10-12G filed with the SEC on February 2, 2023.~~

~~(7) Filed as an exhibit to the Company’s Registration Statement on Form 10-12G/A filed with the SEC on April 3, 2023.~~

~~(8) Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on November 6, 2023.~~

-Table 35of -Contents

~~Table of Contents~~SIGNATURES

~~SIGNATURES~~Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.


	5&2 STUDIOS, INC.

Date: March 31, 2025	By:	/s/ Bradley Pelo
		Name: Bradley Pelo
		Title: President

	By:	/s/ JD Larsen
		Name: JD Larsen
		Title: Chief Financial Officer


	THE CHOSEN, INC.

Date: April 1, 2024	By:	/s/ Bradley Pelo
		Name: Bradley Pelo
		Title: President

	By:	/s/ JD Larsen
		Name: JD Larsen
		Title: Chief Financial Officer

-Table 36of -Contents

~~Table of Contents~~SIGNATURES

~~SIGNATURES~~Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


Signature	Title	Date

/s/ Derral Eves	Director	March 31, 2025
Derral Eves

/s/ Dallas Jenkins	Director	March 31, 2025
Dallas Jenkins

/s/ Cris Doornbos	Director	March 31, 2025
Cris Doornbos

/s/ Matt Rearden	Director	March 31, 2025
Matt Rearden

/s/ Brooke Asiatico	Director	March 31, 2025
Brooke Asiatico

/s/ David Bagheri	Director	March 31, 2025
David Bagheri

Signature	Title	Date

/s/ Derral Eves	Director	April 1, 2024
Derral Eves

/s/ Dallas Jenkins	Director	April 1, 2024
Dallas Jenkins

/s/ James A. Bisenius	Director	April 1, 2024
James A. Bisenius

/s/ Cris Doornbos	Director	April 1, 2024
Cris Doornbos

/s/ Matt Rearden	Director	April 1, 2024
Matt Rearden

/s/ Brooke Asiatico	Director	April 1, 2024
Brooke Asiatico

/s/ David Bagheri	Director	April 1, 2024
David Bagheri

-Table 37of -Contents

~~Table~~INDEX ofTO ~~Contents~~FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS


Financial Statements (Audited)
As of and For the Years Ended December 31, 2024 and 2023
Report of Independent Registered Public Accounting Firm (PCAOB ID 270)		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Equity		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7

Financial Statements (Audited)
As of and for the Years Ended December 31, 2023 and 2022
Report of Independent Registered Public Accounting Firm (PCAOB ID 270)		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Equity		F-5
Consolidated Statements of Cash Flows		F-6
Notes to the Consolidated Financial Statements		F-7

F-1

Table of Contents

~~F-1~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

~~Table~~To the Board of ~~Contents~~Directors and Stockholders of 5&2 Studios, Inc.

Opinion on the Consolidated Financial Statements

~~REPORT~~We OFhave ~~INDEPENDENT~~audited ~~REGISTERED~~the ~~PUBLIC~~accompanying ~~ACCOUNTING~~consolidated ~~FIRM~~balance sheets of 5&2 Studios, Inc. and subsidiaries (collectively, the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations, equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

ToBasis ~~the~~for ~~Board of Directors and Stockholders of The Chosen, Inc.~~ Opinion

~~Opinion~~These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the ~~Consolidated~~Company’s ~~Financial~~financial ~~Statements~~statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We ~~have~~conducted ~~audited~~our ~~the~~audits ~~accompanying~~in ~~consolidated~~accordance ~~balance~~with ~~sheets~~the standards of ~~The~~the ~~Chosen,~~PCAOB ~~Inc.~~ and ~~subsidiaries~~with ~~(collectively,~~auditing ~~the~~standards ~~Company)~~generally asaccepted ofin ~~December~~the ~~31,~~United ~~2023~~States ~~and~~of ~~2022,~~America. ~~and~~Those ~~the~~standards ~~related~~require ~~consolidated~~that ~~statements~~we ofplan ~~operations, equity,~~ and ~~cash~~perform ~~flows~~the ~~for~~audit ~~each~~to ofobtain ~~the~~reasonable ~~years~~assurance inabout whether the ~~two-year~~financial ~~period~~statements ~~ended~~are ~~December~~free ~~31,~~of ~~2023~~material misstatement, ~~and~~whether ~~the~~due ~~related~~to ~~notes~~error ~~(collectively~~or ~~referred~~fraud. toThe asCompany ~~the~~is ~~consolidated~~not ~~financial~~required ~~statements). In~~to ~~our opinion~~have, ~~the~~nor ~~consolidated~~were ~~financial~~we ~~statements~~engaged ~~present~~to ~~fairly~~perform, inan ~~all~~audit ~~material~~of ~~respects,~~its ~~the~~internal ~~financial~~control ~~position~~over offinancial ~~the~~reporting. ~~Company~~As aspart of ~~December~~our 31audits, ~~2023~~we ~~and~~are ~~2022,~~required ~~and~~to ~~the~~obtain ~~results~~an understanding of ~~its~~internal ~~operations~~control ~~and~~over ~~its~~financial ~~cash~~reporting, ~~flows~~but not for ~~each of~~ the ~~years~~purpose inof ~~the~~expressing ~~two-year~~an ~~period~~opinion ~~ended~~on ~~December~~the ~~31,~~effectiveness ~~2023,~~of inthe ~~conformity~~Company’s ~~with~~internal ~~accounting~~control ~~principles~~over ~~generally~~financial ~~accepted~~reporting. inAccordingly, ~~the~~we ~~United~~express ~~States~~no ofsuch ~~America~~opinion.

~~Basis~~Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for ~~Opinion~~our opinion.

~~These~~We ~~financial~~have ~~statements~~served ~~are~~as the ~~responsibility of the~~ Company’s ~~management.~~auditor ~~Our~~since ~~responsibility is to express an opinion on the Company’s financial statements based on our audits~~2017. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’/s/ ~~internal control over financial reporting. Accordingly~~Tanner, ~~we express no such opinion.~~LLC

~~Our~~Salt ~~audits~~Lake ~~included performing procedures to assess the risks of material misstatement of the financial statements~~City, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.UT

WeMarch ~~have~~31, ~~served as the Company’s auditor since 2017.~~2025

~~/s/ Tanner LLC~~

~~Salt Lake City, UT~~

~~April 1, 2024~~F-2

Table of Contents

5&2 Studios, Inc.

~~F-2~~Consolidated Balance Sheets

~~Table~~(in ~~of Contents~~thousands)


	Year Ended December 31,
	2024		2023

Assets
Cash and cash equivalents	$	6,466	$	65,179
Accounts receivable, net of allowances of $22 and $855 at December 31, 2024 and December 31, 2023, respectively		13,474		8,325
Inventory		5,858		15,060
Prepaid assets		3,299		2,867
Other current assets		2,613		1,259
Total current assets		31,710		92,690
Property and equipment, net		28,431		37,450
Film costs, net		16,733		67,009
Other assets		2,696		1,056
Deferred tax asset, net		15,270		—
Total assets	$	94,840	$	198,205
Liabilities and Equity
Accounts payable	$	2,753	$	10,843
Accrued expenses and other current liabilities		10,773		7,765
Current portion of deferred revenue		62,112		1,142
Current portion of long - term debt and lease liabilities		659		359
Total current liabilities		76,297		20,109
Long-term debt and lease liabilities, net of current portion		211		138,028
Deferred revenue, net of current portion		—		1,928
Other noncurrent liabilities		2,341		1,150
Deferred tax liability, net		—		2,570
Total liabilities		78,849		163,785
Commitments and contingencies (Note 7)		—		—
Series A Common Stock, $0.001 par value; 10,900 shares authorized; 6,950 issued and outstanding at December 31, 2024 and December 31, 2023, respectively		7		7
Series B Common Stock, $0.001 par value; 25,000 shares authorized; 5,591 and 5,595 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively		6		6
Additional paid-in capital		10,237		10,237
Retained earnings		1,558		14,435
Noncontrolling interest		4,183		9,735
Total equity		15,991		34,420
Total liabilities and equity	$	94,840	$	198,205

~~The Chosen, Inc.~~

~~Consolidated~~See ~~Balance~~accompanying ~~Sheets~~notes to the consolidated financial statements.

~~(in thousands)~~


	As of December 31,
	2023		2022

Assets
Cash and cash equivalents	$	65,179	$	124,790
Accounts receivable, net of allowances of $855 and $0 at December 31, 2023 and December 31, 2022, respectively		8,325		8,983
Inventory		15,060		6,110
Prepaid assets		2,867		754
Other current assets		1,259		864
Total current assets		92,690		141,501
Property and equipment, net		37,450		34,426
Film costs, net		67,009		33,276
Other assets		1,056		1,042
Total assets	$	198,205	$	210,245
Liabilities and Equity
Accounts payable	$	10,843	$	5,549
Accrued expenses and other current liabilities		8,907		12,827
Current portion of long-term debt and lease liabilities		359		2,463
Total current liabilities		20,109		20,839
Long-term debt and lease liabilities, net		138,028		143,377
Other noncurrent liabilities		3,078		2,571
Deferred tax liability, net		2,570		5,104
Total liabilities		163,785		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 December 31, 2023 and December 31, 2022, respectively		—		5
Series A Common Stock, $0.001 par value; 10,900 shares authorized; 6,950 issued and outstanding at December 31, 2023 and December 31, 2022, respectively		7		7
Series B Common Stock, $0.001 par value; 25,000 shares authorized; 5,595 and 1,254 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively		6		1
Additional paid-in capital		10,237		10,237
Retained earnings		14,435		18,004
Noncontrolling interest		9,735		10,100
Total equity		34,420		38,354
Total liabilities and equity	$	198,205	$	210,245

F-3

Table of Contents

~~See~~5&2 ~~accompanying~~Studios, ~~notes to the consolidated financial statements~~Inc.

Consolidated Statements of Operations

~~F-3~~(in thousands, except per share data)

Table of Contents


	Year Ended December 31,
	2024		2023
Revenues:
Licensed content and merchandise revenues	$	60,499	$	51,944
Production services revenues		98,837		—
Contribution revenues		—		28,985
Total revenues		159,336		80,929

Cost of licensed content and merchandise revenues		34,690		22,056
Cost of production services revenues		57,169		—
Distribution and marketing		28,460		21,778
Amortization of film costs		14,556		13,290
Depreciation and amortization		13,450		8,897
General and administrative		33,737		25,330
Operating expenses		182,062		91,351
Gain (loss) on sale of assets		13,214		(60)
Net operating loss		(9,512)		(10,482)
Interest income		617		2,799
Interest expense		(5,434)		(3,279)
Other expense, net		(7,551)		(124)
Net loss before income taxes		(21,880)		(11,086)
Benefit (provision) for income taxes		2,920		2,129
Net loss		(18,960)		(8,957)
Net loss attributable to noncontrolling interest		6,083		5,388
Net loss attributable to 5&2 Studios, Inc	$	(12,877)	$	(3,569)
Net loss attributable to Common Stock/Common Units	$	(12,877)	$	(3,569)
Loss per Common Stock/Common Units, basic and diluted ⁽¹⁾	$	(1.03)	$	(0.28)
Weighted average Common Stock/Common Units outstanding, basic, and diluted⁽¹⁾		12,541		12,545

~~The~~(1) ~~Chosen,~~Represents ~~Inc~~loss per share and weighted average issued and outstanding Series A Common Stock and Series B Common Stock (see Note 1 and Note 4).

~~Consolidated~~See ~~Statements~~accompanying ofnotes ~~Operations~~to the consolidated financial statements.

~~(in thousands, except per share data)~~


	Year Ended December 31,
	2023		2022
Revenues:
Licensed content and merchandise revenues	$	51,944	$	27,891
Contribution revenues		28,985		2,641
Total revenues		80,929		30,532

Cost of revenues		22,056		7,603
Distribution and marketing		21,778		5,772
Amortization of film costs		13,290		5,144
Depreciation and amortization		8,897		3,218
General and administrative		25,330		11,611
Net operating income (loss)		(10,422)		(2,816)
Interest income		2,799		153
Interest expense		(3,279)		(178)
Other income (expense)		(184)		—
Net income (loss) before income taxes		(11,086)		(2,841)
Benefit (provision) for income taxes		2,129		246
Net income (loss)		(8,957)		(2,595)
Net loss attributable to noncontrolling interest		5,388		1,812
Net income (loss) attributable to The Chosen, Inc.	$	(3,569)	$	(783)
Less:
Dividends declared to Series A Preferred Stockholders		—		13,428
Net income (loss) attributable to Common Stock/Common Units	$	(3,569)	$	(14,211)
Earnings (loss) per Common Stock/Common Units, basic and diluted(1)	$	(0.28)	$	(1.86)
Weighted average Common Stock/Common Units outstanding, basic, and diluted(1)		12,545		7,629

F-4

~~(1)~~Table ~~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 1 and Note 5).~~Contents

~~See~~5&2 ~~accompanying~~Studios, ~~notes to the consolidated financial statements~~Inc.

Consolidated Statements of Equity

~~F-4~~(in thousands)

Table of Contents


	Stockholder’s Equity
	Series A			Series B			Series A			Additional				Non-
	Common Stock			Common Stock			Preferred Stock			Paid-In		Retained		controlling		Total
	Shares	Amount		Shares	Amount		Shares	Amount		Capital		earnings		Interest		Equity
Balance as of December 31, 2022	6,950	$	7	1,254	$	1	4,341	$	5	$	10,237	$	18,004	$	10,100	$	38,354
Conversion to Series B Common Stock	—		—	4,341		5	(4,341)		(5)		—		—		—		—
Contributions from noncontrolling interest	—		—	—		—	—		—		—		—		5,023		5,023
Net loss	—		—	—		—	—		—		—		(3,569)		(5,388)		(8,957)
Balance as of December 31, 2023	6,950	$	7	5,595	$	6	—	$	—	$	10,237	$	14,435	$	9,735	$	34,420
Contributions from noncontrolling interest	—		—	—		—	—		—		—		—		531		531
Retirement of common stock	—		—	(4)		(0)	—		—		—		—		—		(0)
Net loss	—		—	—		—	—		—		—		(12,877)		(6,083)		(18,960)
Balance as of December 31, 2024	6,950	$	7	5,591	$	6	—	$	—	$	10,237	$	1,558	$	4,183	$	15,991

~~The Chosen, Inc.~~

~~Consolidated~~See ~~Statements~~accompanying ofnotes ~~Equity~~to the consolidated financial statements.

~~(in thousands)~~


	Members’ Equity				Stockholders’ Equity

		Class A			Series A			Series B			Series A				Additional			Non
	Common	Preferred Units			Common Stock			Common Stock			Preferred Stock				Paid-In		Retained	controlling			Total
	Units	Units		Amount	Shares	Amount		Shares		Amount	Shares		Amount		Capital		earnings	Interest			Equity
Balance as of December 31, 2021	14,380	11,190	$	11,190	—	$	—	—	$	—	—	$	—	$	(940)	$	32,215	$	1,914	$	44,379
Retirement of common units	(480)	—		—	—		—	—		—	—		—		—		—		—		—
Corporate conversion to Series A Common stock	(13,900)	—		—	6,950		7	—		—	—		—		(7)		—		—		—
Corporate conversion to Series A Preferred Stock	—	(11,190)		(11,190)	—		—	—		—	5,595		6		11,184		—		—		—
Dividends declared at $2.40 per share of Series A Preferred Stock	—	—		—	—		—	—		—	—		—		—		(13,428)		—		(13,428)
Corporate conversion to Series B Common Stock	—	—		—	—		—	1,254		1	(1,254)		(1)		—		—		—		—
Contributions from noncontrolling interest	—	—		—	—		—	—		—	—		—		—		—		9,998		9,998
Net loss	—	—		—	—		—	—		—	—		—		—		(783)		(1,812)		(2,595)
Balance as of December 31, 2022	—	—	$	—	6,950	$	7	1,254	$	1	4,341	$	5	$	10,237	$	18,004	$	10,100	$	38,354
Conversion to Series B Common Stock	—	—		—	—		—	4,341		5	(4,341)		(5)		—		—		—		—
Contributions from noncontrolling interest	—	—		—	—		—	—		—	—		—		—		—		5,023		5,023
Net income (loss)	—	—		—	—		—	—		—	—		—		—		(3,569)		(5,388)		(8,957)
Balance as of December 31, 2023	—	—	$	—	6,950	$	7	5,595	$	6	—	$	—	$	10,237	$	14,435	$	9,735	$	34,420

F-5

Table of Contents

~~See~~5&2 ~~accompanying~~Studios, ~~notes to the consolidated financial statements~~Inc.

Consolidated Statements of Cash Flows

~~F-5~~(in thousands)

Table of Contents


	Year Ended December 31,
	2024		2023
Cash flows from operating activities
Net loss	$	(18,960)	$	(8,957)
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization expense		13,450		8,897
Amortization of film costs		14,556		13,290
Deferred income tax (benefit) provision		(17,840)		(2,534)
Accretion of debt discount and issuance costs		473		285
Non-cash imputed interest expense		—		161
Non-cash lease expense		50		83
Non-cash inventory reserve		(347)		655
Non-cash inventory donation expense		8,111		—
Loss (gain) on sale of assets		(13,214)		39
Allowance for (recovery) for credit losses		111		952
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(5,177)		(398)
(Increase) decrease in inventory		2,275		(6,443)
(Increase) decrease in prepaids and other current assets		(1,794)		(2,508)
(Increase) decrease in film costs		(13,113)		(42,814)
Increase (decrease) in accounts payable		(5,698)		2,002
Increase (decrease) in accrued expenses and other current liabilities		4,417		4,107
Increase (decrease) in deferred revenue		(31,209)		890
Increase (decrease) in other noncurrent liabilities		1,191		(642)
Net cash flows provided by (used in) operating activities		(62,718)		(32,935)
Cash flows from investing activities
Acquisition of property & equipment		(7,680)		(13,784)
Acquisition of trademark		—		(2)
Proceeds from sale of property & equipment		1		184
Net cash flows provided by (used in) investing activities		(7,679)		(13,602)
Cash flows from financing activities
Contributions from noncontrolling interest member		(0)		5,023
Principal paid on finance lease		—		(12)
Proceeds from issuance of debt		11,684		—
Payments of lender fees		—		(7,217)
Principal paid on debt		—		(451)
Dividends paid		—		(10,417)
Net cash flows provided by (used in) financing activities		11,684		(13,074)
Net change in cash and cash equivalents		(58,713)		(59,611)
Cash and cash equivalents, beginning of period		65,179		124,790
Cash and cash equivalents, end of period	$	6,466	$	65,179
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	12,032	$	—
Cash paid for interest		2,697		2,696
Cash received for interest	$	617	$	2,733
Supplemental disclosure of non-cash investing and financing information:
Purchase of property and equipment with accounts payable	$	1,349	$	1,658
Discount on long-term debt		—		221
Forgiveness of debt in CAS Transaction		157,184		—
Contribution of property and equipment from noncontrolling interest member		531		—

~~The Chosen, Inc.~~

~~Consolidated~~See ~~Statements~~accompanying ofnotes ~~Cash~~to ~~Flows~~the consolidated financial statements.

~~(in thousands)~~


	Year Ended
	December 31,
	2023		2022
Cash flows from operating activities
Net income (loss)	$	(8,957)	$	(2,595)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization expense		8,897		3,218
Amortization of film costs		13,290		5,144
Deferred income tax (benefit) provision		(2,534)		30
Accretion of debt discount and issuance costs		285		4
Non-cash imputed interest expense		161		73
Non-cash lease expense		83		47
Non-cash inventory reserve		655		—
Allowance for credit losses		952		—
Gain/loss on sale of assets		39		—
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(398)		4,784
(Increase) decrease in inventory		(6,443)		(6,110)
(Increase) decrease in prepaids and other current assets		(2,508)		499
(Increase) decrease in film costs		(42,814)		(28,375)
Increase (decrease) in accounts payable		2,002		390
Increase (decrease) in accrued expenses and other current liabilities		4,997		1,236
Increase (decrease) in other noncurrent liabilities		(642)		2,648
Net cash flows provided by (used in) operating activities		(32,935)		(19,007)
Cash flows from investing activities
Acquisition of property & equipment		(13,784)		(25,795)
Acquisition of trademark		(2)		(62)
Proceeds from sale of property/equipment		184		—
Net cash flows provided by (used in) investing activities		(13,602)		(25,857)
Cash flows from financing activities
Contributions from noncontrolling interest member		5,023		11,940
Principal paid on finance lease		(12)		(12)
Proceeds from issuance of debt		—		145,500
Payments of debt issuance costs		—		(695)
Payments of lender fees		(7,217)		—
Principal paid on debt		(451)		—
Dividends paid		(10,417)		(3,011)
Proceeds from line of credit		—		25,000
Repayment of line of credit		—		(25,000)
Net cash flows provided by (used in) financing activities		(13,074)		153,722
Net change in cash and cash equivalents		(59,611)		108,858
Cash and cash equivalents, beginning of period		124,790		15,932
Cash and cash equivalents, end of period	$	65,179	$	124,790
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	—	$	—
Cash paid for interest		2,696		423
Cash received for interest	$	2,733	$	153
Supplemental disclosure of non-cash investing and financing information:
Purchase of property and equipment with accounts payable	$	1,658	$	3,019
Accrual of dividend payable to Series A Preferred Stockholders		—		10,417
Accounts payable and accrued expenses and other current liabilities related to film costs, net		(3,289)		—
Discount on long-term debt		221		—

F-6

~~See~~Table ~~accompanying~~of ~~notes to the consolidated financial statements.~~Contents

5&2 Studios, Inc.

Notes to the Consolidated Financial Statements

~~F-6~~Note 1 – Basis of Presentation and Summary of Significant Accounting Policies

~~Table~~Organization ofand ~~Contents~~Consolidation

On September 25, 2024, the Company changed its corporate name from The Chosen, Inc. to 5&2 Studios, Inc., a Delaware corporation. 5&2 Studios, Inc. is an independent studio and film production company, which was created to develop and produce an episodic television series entitled The Chosen (the “Series”). The Series is based on the gospels of the Bible and tells the story of the life of Jesus Christ primarily through the perspectives of those who met him throughout his life. While 5&2 Studios, Inc. is primarily focused on producing and distributing the remaining three seasons of the Series, it continues to evaluate opportunities to diversify its content through other Biblical based productions. In September 2024, the Company announced a number of new productions, including a series based on the life of Moses, a series based on the life of Joseph, a series based on the book of Acts, an animated series based on The Chosen called The Chosen Adventures, and an unscripted show featuring The Chosen cast and adventure enthusiast Bear Grylls called Chosen in the Wild.

~~Notes~~The toconsolidated financial statements include the ~~Consolidated~~accounts ~~Financial~~of ~~Statements~~5&2 Studios, Inc., its wholly owned subsidiaries The Chosen Texas, LLC, TCI Animation, LLC, The Chosen House, LLC, and Dream Weaver Stories, LLC and its variable controlling interest in Impossible Math, LLC (collectively, the “Company”), and the statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions have been eliminated in consolidation.

~~Note~~The 1Chosen –Texas, ~~Basis~~LLC ~~of Presentation~~ and ~~Summary~~TCI ofAnimation, ~~Significant Accounting Policies~~LLC

~~Organization~~The Chosen Texas, LLC and ~~Consolidation~~TCI Animation, LLC were formed on September 6, 2018 and December 22, 2022, respectively. Both entities are wholly owned subsidiaries of 5&2 Studios, Inc. and were formed for the development, filming, and production of current and future content related to the Series.

The Chosen, ~~Inc.~~House, ~~a Delaware corporation, was originally formed on October 24, 2017 as a Utah limited liability company under the name “The Chosen,~~ LLC.” On November 29, 2022, The Chosen, LLC converted into a Delaware corporation (the “conversion”) and changed its name to The Chosen, Inc. (as converted, the “Company”). The Company, an independent television and film production company, was created to develop and produce an episodic television series entitled The Chosen (the “Series”). The Series is based on the gospels of the Bible and tells the story of the life of Jesus Christ primarily through the perspectives of those who met him throughout his life. While the Company is primarily focused on producing the remaining three seasons of the Series, it continues to evaluate opportunities to diversify its content through other Biblical based productions.

The ~~consolidated financial statements include the accounts of The~~ Chosen, ~~Inc.~~House, ~~its~~LLC ~~wholly~~was ~~owned~~formed ~~subsidiaries~~on ~~The~~May ~~Chosen Texas~~26, ~~LLC~~2021, ~~TCI~~and ~~Animation,~~owns ~~LLC,~~real ~~and~~estate ~~The~~located ~~Chosen~~in ~~House~~Midlothian, ~~LLC,~~Texas. ~~and~~The ~~its~~property ~~variable~~is ~~controlling~~used ~~interest~~as inlodging ~~Impossible~~for ~~Math~~employees, ~~LLC (collectively~~contractors, ~~the “Company”),~~ and ~~the~~actors ~~statements~~to ~~have~~stay ~~been~~while ~~prepared~~performing inservices ~~conformity~~for ~~with accounting principles generally accepted in~~ the ~~United States (“U~~Company.~~S. GAAP”). All significant intercompany balances and transactions have been eliminated in consolidation.~~

~~The~~Impossible ~~Chosen Texas~~Math, LLC ~~and TCI Animation, LLC~~

~~The~~Impossible ~~Chosen Texas~~Math, LLC was formed on May 7, 2021, to own and ~~TCI~~manage ~~Animation~~a sound stage for the filming of the productions. 5&2 Studios, Inc. owns a controlling voting interest in Impossible Math, LLC, ~~were~~with ~~formed~~100% onof the voting units. In September 62024, ~~2018~~5&2 ~~and~~Studios, ~~December~~Inc. 22increased its economic interest in Impossible Math, ~~2022~~LLC to 49.9% from 4.0%. The Company determined that Impossible Math, ~~respectively~~LLC is a variable interest entity. ~~Both~~This ~~entities~~is ~~are~~because ~~wholly~~the ~~owned~~entity ~~subsidiaries~~was ofinitially ~~The~~thinly ~~Chosen~~capitalized, and while 5&2 Studios, Inc. ~~and~~does ~~were~~not ~~formed~~have ~~for~~a ~~the~~majority ~~development~~equity interest compared to other owners, ~~filming~~5&2 Studios, ~~and~~Inc. ~~production~~controls Impossible Math as it holds 100% of ~~current~~the ~~and~~voting ~~future~~interest. ~~content~~Further, ~~related~~the Company concluded it is the primary beneficiary through its power to make decisions and its significant variable interest in the ~~Series~~funds.

~~The~~Dream ~~Chosen~~Weaver ~~House~~Stories, LLC

~~The~~Dreamweaver ~~Chosen House~~Stories, LLC was formed on ~~May~~June 2611, ~~2021~~2024, ~~and~~primarily itto ~~owns~~facilitate ~~real~~payments ~~estate~~for ~~located~~writing inservices ~~Midlothian,~~performed ~~Texas.~~under ~~The~~agreements ~~property~~governed isby ~~used~~the asWriters ~~lodging~~Guild ~~for~~of ~~employees,~~America ~~contractors,~~(“WGA”) ~~and~~signatory ~~actors to stay while performing services for the Company~~contracts.

~~Impossible~~CAS ~~Math, LLC~~Transactions

~~Impossible~~On ~~Math, LLC was formed on~~ May 713, ~~2021~~2024, tothe ~~own~~Company ~~and~~entered ~~manage~~into aan ~~sound~~Asset ~~stage~~Purchase ~~for~~Agreement (the ~~filming~~“APA”) ofproviding ~~the~~for ~~productions. The Chosen, Inc. owns~~ a ~~controlling~~series ~~voting~~of ~~interest~~transactions in(the ~~Impossible~~“CAS ~~Math,~~Transaction”) ~~LLC,~~ with ~~100% of~~ the ~~voting~~non-profit ~~units,~~entity ~~while~~Come ~~its economic interest is 4.0%~~ and ~~5.7%~~See ~~as of December 31~~Foundation, ~~2023~~Inc. ~~and 2022, respectively~~(“CAS”). The ~~Company~~CAS ~~determined~~Transaction ~~that Impossible Math, LLC~~ is aset ~~variable~~forth ~~interest~~in ~~entity.~~(i) ~~This is because~~ the ~~entity~~APA ~~was~~by ~~initially~~and ~~thinly~~between ~~capitalized,~~CAS and ~~while The Chosen~~Company, ~~Inc.~~(ii) ~~does not have a majority equity interest compared to other owners, The Chosen, Inc. controls Impossible Math as it holds 100% of~~ the ~~voting~~Production ~~interest.~~Services ~~Further,~~and ~~the~~Funding ~~Company~~Agreement ~~concluded it is~~ (the ~~primary~~“PSFA”) ~~beneficiary~~between ~~through~~CAS ~~its power to make decisions~~ and ~~its significant variable interest in~~ the ~~funds.~~

~~CAS Transactions~~F-7

OnTable ~~November 29, 2022, the Company entered into a series~~ of agreements (the “CAS Transactions”) with the non-profit entity Come and See Foundation, Inc. (“CAS”). The Company and CAS mutually agreed to renegotiate certain terms of the CAS Transactions, executing an amendment on October 31, 2023 (the “Second Amendment”), with retroactive effect as of the date of the CAS Transactions. Contents

~~The Second Amendment redefined the terms of the financing amount of $145~~Company,~~500~~ ~~thousand~~and ~~per~~(iii) the ~~CAS~~Amended ~~Transactions,~~and ~~restating~~Restated ~~that~~Distribution ~~the~~License ~~principal~~and ~~balance~~Marketing ofServices ~~$145,500~~Agreement ~~thousand will accrue interest on the outstanding principal at rate per annum~~ (~~“Interest Rate”) equal to~~ the ~~median secured overnight financing rate (~~“~~SOFR~~DMA”~~) published by the Federal Reserve~~, ~~plus~~and ~~two~~together ~~percent~~with ~~(2%),~~the ~~due~~PSFA and ~~payable quarterly. Additionally~~APA, the ~~Second~~“CAS ~~Amendment~~Agreements”) ~~discontinued~~between ~~the right of~~ CAS toand ~~receive a royalty from~~ the Company ~~with respect to certain commercial revenue generated by the Series~~. AsOn ~~the~~June ~~Second Amendment is deemed to be effective as of November 29~~13, ~~2022,~~2024 the ~~Company was also required to pay~~ CAS anTransaction ~~amount~~closed ~~equal~~and tobecame ~~accrued~~effective ~~interest from November 29, 2022 through~~ (the ~~Second Amendment date of October 31, 2023~~“Closing”). ~~The Company accounts for the restructuring of its debt agreements in accordance with the~~

~~F-7~~Pursuant to the terms of the CAS Agreements, CAS and the Company agreed to:

~~Table~~(a) restructure the existing transactions with the Company with respect to the intellectual property assets comprising the Series and The Chosen brand, including the first four existing seasons in distribution and all unproduced seasons of ~~Contents~~episodes, plus derivatives, with the exception of the excluded assets and excluded liabilities, as defined in the APA, for The Chosen, defined as the (collectively “The Chosen IP”).

~~accounting~~(b) ~~standard~~the ~~applicable~~forgiveness ~~debt~~of ~~modification~~the ~~and~~outstanding ~~debt~~principal ~~extinguishment,~~of ~~which~~the ~~resulted~~Company’s inloan afrom ~~debt~~CAS ~~modification~~of ~~pursuant~~$145,500 tothousand, ~~ASC~~and ~~470,~~any ~~Debt~~accrued but unpaid interest thereon (the “~~ASC~~CAS ~~470~~Loan”). ~~Refer~~and toprovide ~~Note~~the 4Company ~~Debt~~a loan in the amount of $11,684 thousand at signing of the CAS Transaction, for ~~further~~which ~~details~~the outstanding principal balance and accrued but unpaid interest as of the Closing was forgiven (the “Bridge Loan Promissory Note”).

The Second Amendment also modified certain payment terms related to the non-profit rights to the Series. The Company agreed to vacate its right, with retroactive effect as of the date of the CAS Transactions, to receive Biblical-based series funding of 90% of voluntary donation proceeds received by CAS, in furtherance of CAS’s tax-exempt purposes, through The CAS Chosen App (~~“the NP App Donations”~~c), ~~which~~provide ~~the Company previously accounted~~ for ~~as a non-exchange transaction in accordance with ASC 958~~$85,000 ~~Not-for-Profit~~thousand ~~Entities (“ASC 958”). In addition, CAS agreed to exchange incremental purchase consideration~~ of ~~$32,142~~total ~~thousand~~future ~~related~~payments to ~~the~~be ~~assigned~~made ~~right~~ to ~~use license of functional intellectual property~~ the Company ~~granted~~payable toin ~~CAS~~installments ~~pursuant~~ to the ~~CAS~~extent ~~transactions~~earned ~~for~~upon the ~~use~~completion and ~~exploitation~~delivery of ~~the~~content ~~intellectual~~and ~~property~~rights of the ~~Series in and for not-for-profit markets~~fifth, ~~which is accounted for in accordance with ASC 606~~sixth, ~~Revenue~~and ~~from~~seventh ~~Contracts~~seasons ~~with Customers (“ASC 606”). The incremental purchase consideration~~ of ~~$32,142 thousand~~ the ~~Company was entitled to, was an equal offset of the previously received NP App Donation amounts the Company agreed to vacate~~Series. ~~Therefore, the result was no change to transaction price assigned to the functional intellectual property license.~~

~~Going~~(d) ~~Concern~~the Company to render all development and production services, on a work-made-for-hire basis, for the development, production and delivery of The Chosen to CAS (the “Production Services”) with CAS agreeing to pay the Company agreed upon amounts over time, based on expected production budgets, to fund production of the fifth, sixth, and seventh seasons of the Series (“Production Funding”) and a specified a market-rate production services fee based upon the budgeted amounts to be agreed to for each season of the Series.

~~At each reporting period, in accordance with Accounting Standard Codification~~ (~~“ASC”~~e) ~~205-40,~~grant the Company ~~evaluates~~certain ~~whether~~rights ~~there~~through ~~are~~an ~~conditions~~exclusive ~~and~~worldwide ~~events,~~license ~~considered in aggregate, which raise substantial doubt about the Company’s ability~~ to ~~continue~~exploit ~~as a going concern within one year after~~ the ~~date~~commercial ~~that~~exploitation ~~the~~rights ~~financial~~in ~~statements~~all ~~are~~media ~~issued.~~and ~~The~~languages, ~~evaluation~~ancillary ~~involves analyzing prospective operating budgets~~rights, ~~forecasts~~licensed oftrademark ~~the~~rights ~~Company’s cash flows~~ and ~~mitigating~~marketing ~~plans~~servicing torights ~~consider~~(collectively, ~~whether~~ the ~~Company~~“Distribution ~~has~~Rights”) ~~sufficient~~with ~~resources~~respect to ~~meet~~The ~~its~~Chosen ~~obligations for twelve months following the issue date of the financial statements~~Programs. IfIn ~~substantial~~exchange, ~~doubt exists that~~ the Company ~~does~~is ~~not~~required ~~have sufficient resources~~ to ~~meet~~pay ~~its~~CAS ~~obligations,~~certain ~~the~~royalty-based ~~Company~~fees ~~must~~applying ~~determine~~specified ~~whether~~percentages itthe isgross ~~probable~~receipts ~~that~~from ~~plans~~Company’s ~~will~~exploitation beof ~~implemented and will alleviate~~ the ~~conditions~~rights ~~and~~granted ~~events~~to ~~that raise substantial doubt of~~ the Company’s, ~~ability~~after torecoupment ~~continue~~of ascertain amarketing ~~going concern~~expenses.

AsThe ~~of December 31, 2023, the~~ Company ~~had~~determined ~~cash~~that ~~and cash equivalents of $65,179 thousand. For~~ the ~~year~~agreements ~~ended~~between ~~December 31, 2023,~~ the Company ~~had a Net loss attributable to The Chosen, Inc. of $3,569 thousand, cash outflows from operating activities~~ and ~~investing activities of $32~~CAS,~~935~~ ~~thousand~~which ~~and~~comprise ~~$13,602 thousand, respectively, for~~ the ~~year~~CAS ~~ended December 31~~Transaction, ~~2023.~~should ~~The~~be ~~Company~~combined ~~has~~and ~~historically~~viewed ~~been~~in ~~dependent~~conjunction ~~upon~~with ~~funds~~one ~~from~~another ~~investors,~~which ~~debt~~form ~~agreements,~~a ~~including~~singular ~~the~~transaction ~~contribution~~for ~~funding~~accounting ~~agreement with CAS~~purposes, ~~donation-based~~principally ~~revenues~~ as ~~well as generating revenues from~~ the ~~distribution,~~agreements ~~licensing~~were ~~and~~negotiated ~~exploitation~~as ofa ~~the~~package ~~Series~~ to ~~fund~~achieve ~~the~~a ~~production~~collective ofcommercial ~~the Series and general operating activities~~objective. The Company isdetermined ~~dependent~~the ~~upon~~units ~~these cash inflows, as well as additional cash infusions to support various aspects~~ of ~~its~~account ~~operations,~~in ~~principally production, advertising, and distribution activities, as well as~~ the ~~Company’s~~CAS ~~interest~~Transaction ~~payment~~are ~~obligations~~principally ~~on outstanding debt.~~the:

~~The~~(i) ~~Company~~sale ~~expects to begin principal photography on the fifth season~~ of ~~the~~The ~~Series~~Chosen inIP ~~April~~pursuant ~~2024,~~to ~~which~~ASC ~~will require a significant amount of capital. On October 31~~610-20, ~~2023,~~Gains ~~the~~and ~~Company~~Losses ~~entered~~from ~~into~~ the ~~Second~~Derecognition ~~Amendment~~of toNonfinancial ~~the~~Assets ~~Contribution Agreement with CAS~~ (~~the~~ “~~Second~~ASC ~~Amendment~~610-20”)~~. While the Second Amendment modified and revised various commercial terms~~, itgives ~~also~~control ~~eliminated~~over the ~~obligation~~produced ofand ~~CAS~~completed toseasons ~~continue~~of ~~to provide Contribution Revenue to~~ the ~~Company. As such~~Series, noas ~~additional~~well ~~Contribution~~as ~~Revenue~~“The ~~was~~Chosen” ~~received~~brand bytransfers ~~the Company for reporting periods subsequent~~ to ~~the signing of the Second Amendment. However, the Company is currently in discussions with~~ CAS ~~with~~at ~~respect to potential modifications and amendments to~~ the ~~current~~Closing ~~terms~~as ~~of the~~ CAS ~~Transactions.~~obtains ~~Such potential amendments or agreements would, among other things, provide~~ the ~~Company~~rights ~~with funding for the fifth, sixth~~ and ~~seventh~~privileges ~~seasons~~necessary ofto ~~the~~direct ~~Series and other related programs and reduce~~ the ~~indebtedness~~use ~~held~~of ~~by the Company.~~ The ~~Company’s~~Chosen ~~continued~~IP ~~ability to produce~~ and ~~distribute~~obtain ~~the~~substantially ~~Series~~all ~~will be adversely impacted in~~ the ~~unlikely~~remaining ~~event~~economic ~~that CAS Transactions are not modified and amended.~~benefits,

(ii) Production Services arrangement with CAS pursuant to ASC 606, Revenue from Contracts with Customers (“ASC 606”) which involves multiple performance obligations for the performance of work-for-hire production services, on behalf of and at the direction of CAS, for the yet to be produced and completed seasons of the Series which shall be recognized over the period of time the Company satisfies its performance obligations to develop, produce and deliver the rights and completed content for each season of the Series (see Note 1 for further details on the Company’s revenue recognition policy), and

~~While~~(iii) ~~the~~receipt ~~Company cannot be 100 percent certain~~ of the ~~outcome~~exclusive ofrights ~~the~~to ~~ongoing~~use ~~discussions~~The ~~with~~Chosen ~~CAS,~~IP ~~the~~for ~~Company~~commercial ~~expects~~exploitation tothrough ~~enter~~the ~~into~~in-license ~~new~~granted ~~agreements~~by ~~with~~ CAS in ~~sufficient~~exchange ~~time to allow~~ for ~~the~~defined ~~continued~~royalty-based ~~production~~costs ofpayable ~~the fifth, sixth, and seventh seasons. The Company believes that its plans~~ to ~~enter into a new agreement with~~ CAS ~~are~~determined ~~probable~~on tothe beCompany’s ~~implemented~~receipts ~~and~~from ~~that~~such ~~they~~exploitation ~~alleviate~~of the ~~substantial~~granted ~~doubt~~rights ~~about~~pursuant ~~the~~to ~~Company's~~ASC ~~ability~~705, toCost ~~continue~~of asSales aand ~~going~~Services ~~concern~~(“ASC 705”).

The ~~accompanying~~sale ~~consolidated~~of ~~financial statements have been prepared on a going concern basis, assuming~~ the ~~Company~~intellectual ~~will~~property ~~continue~~rights inof ~~operation for~~ the ~~foreseeable~~existing ~~future~~produced and becompleted ~~able~~seasons toof ~~realize~~the ~~its~~Series ~~assets~~ and ~~discharge~~“The ~~its~~Chosen” ~~liabilities~~brand intransferred at the ~~ordinary~~Closing ~~course~~ of ~~operations.~~the ~~The~~CAS ~~financial~~Transaction ~~statements~~are doaccounted ~~not~~for ~~reflect~~pursuant ~~any adjustments that would be necessary if the Company were unable~~ to ~~continue~~ASC as610-20, awhich ~~going~~are ~~concern~~separate ~~or the amounts and classification of liabilities that might result~~ from the ~~outcome of the uncertainties described above.~~

F-8

Table of Contents

~~Reclassification~~Company’s obligation to transfer the unproduced seasons of the Series to be transferred in ~~Previously~~the ~~Issued~~future, ~~Financial~~which ~~Statements~~are part of the Company’s Production Services performance obligations to develop, produce and deliver the rights and completed content of the fifth, sixth, and seventh seasons of The Chosen to be accounted for pursuant to ASC 606. Therefore, the consideration exchanged in the CAS Transaction of $246,373 thousand, comprised of the forgiveness of indebtedness and other existing liabilities to CAS and the future milestone payments is allocated to each asset transferred, or performance obligation, on a relative standalone selling price basis.

InThe ~~connection~~Company ~~with~~recognized ~~the~~a ~~preparation~~Gain on sale of ~~the~~$13,022 ~~Company’s~~thousand ~~consolidated~~in ~~financial~~accordance ~~statements,~~with ~~the~~ASC ~~Company~~610-20 ~~changed~~reflected in the ~~presentation~~Consolidated Statements of ~~operating~~Operations ~~expenses~~from ~~related~~the tosale ~~distribution~~of ~~activities.~~The ~~Distribution~~Chosen ~~related~~IP, ~~expenses~~resulting ~~were reclassified~~ from ~~General~~the ~~and~~consideration ~~administrative~~allocated ~~costs~~ to ~~Distribution~~the ~~and~~sale ~~marketing~~of ~~costs~~The toChosen ~~provide~~IP ~~more~~of ~~relevant~~$69,194 ~~presentation~~thousand, ~~within~~net ~~the~~of ~~Company’s~~costs ~~financial~~to ~~statements.~~sell ~~The~~and ~~Company~~derecognition ~~also~~of ~~identified~~assets ~~certain~~of ~~prior~~$56,172 ~~period~~thousand. ~~misclassifications~~Refer into ~~previously~~Note ~~issued~~1, ~~financial~~Film ~~statements~~Costs, ~~related~~and toNote ~~the~~3, ~~presentation~~Debt ~~and~~for ~~classification~~further details of ~~payroll~~the ~~related~~assets ~~marketing~~sold ~~expenses between Distribution~~ and ~~marketing~~liabilities ~~costs~~forgiven. ~~and~~The ~~General~~remaining ~~and~~consideration ~~administrative~~has ~~costs~~been ~~incurred~~allocated ~~for~~to the ~~year~~Company’s ~~ended~~obligation ~~December~~to ~~31,~~produce ~~2022.~~and ~~The~~transfer ~~Company~~the ~~evaluated~~rights ~~the~~and ~~reclassifications,~~completed ~~both~~content ~~qualitatively~~of ~~and~~the ~~quantitatively~~unproduced fifth, sixth, and ~~concluded~~seventh ~~that~~seasons ~~the~~of ~~classification~~The ~~did~~Chosen. ~~not~~(see ~~have~~Note a1, ~~material~~Revenue ~~impact~~Recognition ~~on,~~for ~~nor~~further ~~require~~details ~~amendment~~on ~~of,~~the ~~any~~company’s ~~previously~~performance ~~issued~~obligations ~~financial~~and ~~statements~~revenue recognition).

~~The~~Going change in presentation and classification resulted in an increase to Distribution and marketing costs of $3,312 thousand, and a decrease to General and administrative costs of $3,312 thousand in the Consolidated Statements of Operations for the year ended December 31, 2022. The reclassifications had no impact on net income for any previous or current periods and there is no impact to the Company’s Consolidated Balance Sheets, Consolidated Statements of Equity, and Consolidated Statements of Cash Flows for any of the periods presented.Concern

~~Recent~~In ~~Accounting~~the ~~Pronouncements~~consolidated financial statements for the year ending December 31, 2023, the Company had previously disclosed substantial doubts about its ability to continue as a going concern, which the Company determined the Company’s plans were probable to be implemented and that they alleviate the substantial doubt about the Company’s ability to continue as a going concern. On May 13, 2024, the Company and CAS signed the APA, which provided for a series of transactions by and among the Company and CAS, following which the Company believes it has enough financial resources to fund its operations, meet its capital requirements, and fulfill its anticipated obligations in the next twelve months. Therefore, the Company has determined that the conditions and events that raised these substantial doubts no longer exist, and the condensed consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern.

InRecent ~~December~~Accounting ~~2023,~~Pronouncements the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-09. Adopted

~~Use~~In ofNovember ~~Estimates~~2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07 (“ASU 2023-07”), Improvements to Reportable Segment Disclosures. The guidance primarily will require enhanced disclosures about significant segment expenses. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted, and are to be applied on a retrospective basis. The Company adopted the new standard effective December 31, 2024. See Note 8 Segments in the accompanying notes to the consolidated financial statements for further detail.

~~The~~Recent ~~preparation~~Accounting ofPronouncements ~~consolidated~~Not ~~financial~~Yet statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. The Securities and Exchange Commission (“SEC”) has defined a company’s critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and results of operations, and which require a company to make its most difficult and subjective judgments. Based on this definition, the Company has identified the critical accounting policies and judgments addressed below. Estimates are based on historical experience and on various other assumptions that the Company believe to be reasonable under the circumstances. Actual results may differ from these estimates.Adopted

~~Concentrations~~In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public entities, on an annual basis, to provide disclosure of ~~Credit~~specific ~~Risk~~categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-09.

~~The~~In ~~Company~~November ~~maintains~~2024, ~~its~~the ~~cash~~FASB inissued ~~bank~~ASU ~~deposit~~No. ~~accounts which~~2024-03, atIncome ~~times,~~Statement ~~exceed~~– ~~federally~~Reporting ~~insured~~Comprehensive ~~limits.~~Income As– Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). This ASU requires new financial statement disclosures disaggregating prescribed expense categories within relevant income statement expense captions. ASU 2024-03 will be effective for fiscal years beginning after December 3115, ~~2023~~2026, and ~~2022~~interim periods beginning after December 15, ~~the~~2027. ~~bank~~Early ~~balance~~adoption ~~exceeded~~is permitted. The Company is currently evaluating the ~~federally~~impact ~~insured~~

Filing Compare · 5&2 Studios, Inc.