Playboy, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Basis of Presentation and Summary of Significant Accounting Policies

Description of Business

Playboy, Inc. (formerly known as PLBY Group, Inc. from February 10, 2021 through June 24, 2025, the “Company”, “we”, “our” or “us”), together with its subsidiaries through which it conducts business, is a global consumer lifestyle company marketing the Playboy brand through a wide range of direct-to-consumer products, Playboy magazine, licensing initiatives, digital subscriptions and content, and online and location-based entertainment, in addition to the sale of direct-to-consumer products through its Honey Birdette brand.

In the fourth quarter of 2024, our wholly-owned subsidiary, Playboy Enterprises, Inc. (“PEI”), entered into a License & Management Agreement (the “LMA”) with Byborg Enterprises SA (“Byborg”), pursuant to which Byborg agreed, that as of January 1, 2025, Byborg would operate our Playboy Plus, Playboy TV (online and linear) and Playboy Club digital businesses and license the right to use certain Playboy trademarks and other intellectual property for related businesses and certain other categories. Such digital operations were previously part of our Digital Subscriptions and Content operating and reportable segment. As a result, effective January 1, 2025, we havetwo reportable segments: Direct-to-Consumer and Licensing. Refer to Note 17, Segments.

Basis of Presentation

The interim condensed consolidated financial statements and accompanying notes were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

Principles of Consolidation

The interim condensed consolidated financial statements include our accounts and all majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

The Company follows a monthly reporting calendar, with its fiscal year ending on December 31.

Unaudited Interim Condensed Consolidated Financial Statements

The interim condensed consolidated balance sheet as of September 30, 2025, and the interim condensed consolidated statements of operations, comprehensive income (loss), cash flows, and mezzanine equity and stockholders’ equity (deficit) for the three and nine months ended September 30, 2025 and 2024 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair statement of our financial position as of September 30, 2025 and our results of operations and cash flows for the three and nine months ended September 30, 2025 and 2024. The financial data and other financial information disclosed in these notes to the interim condensed consolidated financial statements related to the three and nine-month periods are also unaudited. The interim condensed consolidated results of operations for the nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any future annual or interim period. The interim condensed consolidated balance sheet as of December 31, 2024 included herein was derived from the audited financial statements as of that date. These interim condensed consolidated financial statements should be read in conjunction with our audited financial statements included in the Annual Report on Form 10-K as filed by us with the U.S. Securities and Exchange Commission (the “SEC”) on March 13, 2025.

Reclassifications

Certain prior period amounts in our condensed consolidated statements of operations and condensed consolidated statements of cash flows have been reclassified to conform with the current period presentation.

In the fourth quarter of 2024, we decided to retain our Honey Birdette business and to not pursue strategic alternatives for it following recent improvements in our financial position. Honey Birdette’s assets and liabilities did not meet the criteria, discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, to be classified as assets and liabilities held for sale in the consolidated balance sheet as of December 31, 2024 in our Annual Report on Form 10-K, filed with the SEC on March 13, 2025 and in subsequent quarterly filings. Honey Birdette’s operations were included in our continuing operations in our consolidated statement of operations for all periods presented in the Annual Report on Form 10-K, filed with the SEC on March 13, 2025, and in all subsequent quarterly filings. Our prior year comparative period financials for the three and nine months ended September 30, 2024 recast such operations to conform to our current period presentation for comparative purposes.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

We regularly assess these estimates, including, but not limited to, valuation of our trademarks and trade names; valuation of our contingent consideration liabilities; valuation of our income taxes; valuation of any authorized and issued preferred stock; pay-per-view and video-on-demand buys, and monthly subscriptions to our television and digital content (prior to the LMA); the adequacy of reserves associated with accounts receivable and inventory; unredeemed gift cards and store credits; licensing commission accruals; and stock-based compensation expense. We base these estimates on historical experience and on various other market-specific and relevant assumptions that we believe to be reasonable under the circumstances. Actual results could differ from these estimates and such differences could be material to the financial position and results of operations.

Concentrations of Business and Credit Risk

We maintain certain cash balances in excess of Federal Deposit Insurance Corporation insured limits. We periodically evaluate the credit worthiness of the financial institutions with which we maintain cash deposits. We have not experienced any losses in such accounts and do not believe that there is any material credit risk to our cash. Concentration of credit risk with respect to accounts receivable is limited due to the wide variety of customers to whom our products are sold and/or licensed.

There were no receivables from any individual customer of ours exceeding 10% of our total receivables as of September 30, 2025 and December 31, 2024.

The following table represents revenue from our customers exceeding 10% of our total revenue for the three and nine months ended September 30, 2025 and 2024:

Restricted Cash

At September 30, 2025 and December 31, 2024, restricted cash was primarily related to a cash collateralized letter of credit we maintained in connection with the lease of our Los Angeles headquarters, a cash collateralized letter of credit in relation to the lease of office space in Miami Beach, and Honey Birdette’s term deposit in relation to its Sydney office lease.

Liquidity Assessment and Management’s Plans

The macroeconomic factors that have adversely impacted our business since the second quarter of 2022 have begun to subside in 2025, and our financial performance has improved as we become a more capital-light enterprise. Our net revenues for the three and nine months ended September 30, 2025 decreased by $0.4 million and increased by $3.4 million, compared to the three and nine months ended September 30, 2024, respectively. For the three and nine months ended September 30, 2025, we reported net operating income (loss) of $1.4 million and $(10.8) million, respectively, and negative operating cash flows of $1.4 million for the nine months ended September 30, 2025. As of September 30, 2025, we had approximately $27.5 million in unrestricted cash and cash equivalents. We expect our capital expenditures and working capital requirements in 2025 to be largely consistent with 2024.

As of September 30, 2025, we were in compliance with the covenants under our senior secured credit agreement (the “A&R Credit Agreement”), and there is no testing of our Total Net Leverage Ratio (as defined in the A&R Credit Agreement) until the quarter ending June 30, 2026. However, due to ongoing negative macroeconomic factors and their uncertain impacts on our business, results of operations and cash flows, we could experience material decreases to net sales and operating cash flows and materially higher operating losses, and we could then experience difficulty remaining in compliance with such covenants. Refer to Note 8, Debt, for further details regarding the terms of our A&R Credit Agreement and the term loans thereunder.

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Although consequences of ongoing macroeconomic uncertainty could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors, such as those discussed above, we believe our existing sources of liquidity will be sufficient to meet our obligations as they become due under the A&R Credit Agreement and our other obligations for at least one year following the date of the filing of this Quarterly Report on Form 10-Q. We may seek additional equity or debt financing in the future to satisfy capital requirements, respond to adverse changes in our circumstances or unforeseen events, or fund growth opportunities. However, in the event that additional financing is required from third-party sources, we may not be able to raise it on acceptable terms or at all.

Advertising Costs

We expense advertising costs as incurred. Advertising expenses were $1.2 million and $1.1 million for the three months ended September 30, 2025 and 2024, respectively, and $3.4 million and $3.2 million for the nine months ended September 30, 2025 and 2024, respectively.

Gift Card Liabilities

We account for gift cards sold to customers by recording a liability in other current liabilities and accrued expenses in our consolidated balance sheets at the time of sale, which is recognized as revenue when redeemed or when we have determined the likelihood of redemption to be remote, which is referred to as gift card breakage. Depending on the jurisdiction in which we operate, gift cards sold to customers have expiration dates ranging from three tofive years from the date of sale, or they do not expire and may be subject to escheatment rights. Our gift card liability totaled $1.6 million, $1.7 million and $1.6 million as of September 30, 2025, December 31, 2024 and December 31, 2023, respectively. Revenues recognized from gift card liabilities at the beginning of the period were $0.5 million for the nine months ended September 30, 2025 and 2024.

Assets Held for Sale

We classify assets and liabilities as held for sale, collectively referred to as a “disposal group”, when management commits to a formal plan to actively market the assets for sale at a price reasonable in relation to fair value, it is unlikely that significant changes will be made to the plan, the assets are available for immediate sale in their present condition, an active program to locate a buyer and other actions required to complete the sale have been initiated, and the sale of the assets is expected to be completed within one year. A disposal group that is classified as held for sale is initially measured at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a disposal group until the date of sale. The fair value of a disposal group less any costs to sell is assessed each reporting period it remains classified as held for sale and any subsequent changes are reported as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale. Assets are not depreciated or amortized while they are classified as held for sale.

We recorded $0.2 million of impairment charges related to our artwork held for sale during the three months ended September 30, 2025, and there wereno such impairment charges in the prior year comparative period. Impairment charges related to our artwork held for sale for the nine months ended September 30, 2025 and 2024 were $0.5 million and $2.4 million, respectively.

Long-Lived Assets, Indefinite-lived Intangible Assets and Goodwill

The carrying amounts of long-lived assets, including property and equipment, stores, acquired definite-lived intangible assets and right-of-use operating lease assets are periodically reviewed for indicators of impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated.

During the nine months ended September 30, 2025, we recorded impairment charges of $1.5 million on our right-of-use assets related to our corporate leases and wrote off certain of our property, plant and equipment items in the amount of $0.4 million as a result of our decision to sublease certain of our corporate office space. During the nine months ended September 30, 2024, we recognized $0.6 million of impairment charges on right-of-use assets pertaining to our corporate leases. There wereno impairment charges on our right-of-use assets and property, plant and equipment during the three months ended September 30, 2025 and 2024.

In the third quarter of 2024, we had impairment indicators to our creator digital platform onplayboy.com associated with a decrease in its revenue projections and determined that its carrying value was not recoverable as of September 30, 2024. As a result, we recorded $4.7 million of impairment charges related to the write-off of its internally developed software during the three and nine months ended September 30, 2024. There wereno such impairment charges during the three and nine months ended September 30, 2025.

We perform annual impairment testing on goodwill in the fourth quarter of each fiscal year or when events occur or circumstances change that would, more likely than not, reduce the fair value of a reporting unit below its carrying value. We may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine it is more likely than not that the fair value of the reporting unit is greater than its carrying amount, an impairment test is unnecessary. If an impairment test is necessary, we will estimate the fair value of a related reporting unit. If the carrying value of a reporting unit exceeds its fair value, the goodwill of that reporting unit is determined to be impaired, and we will proceed with recording an impairment charge equal to the excess of the carrying value over the related fair value. If we determine it is more likely than not that goodwill is not impaired, a quantitative test is not necessary.

In the third quarter of 2024, we had declines in our future projected cash flows for our former Digital Subscriptions and Content segment, causing us to test our goodwill for impairment as of September 30, 2024. Utilizing the income approach, we performed a quantitative impairment test on goodwill using a discounted cash flow analysis, which determined that the fair value of certain of our reporting units was less than their carrying value. As a result, we recorded $17.0 million of impairment charges to our goodwill during the three and nine months ended September 30, 2024. There wereno impairment charges on our goodwill during the three and nine months September 30, 2025.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net loss and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net income (loss). Our other comprehensive income represents foreign currency translation adjustments attributable to Honey Birdette’s operations. Refer to the Condensed Consolidated Statements of Comprehensive Income (Loss). Total foreign currency transaction gains, net were $0.4 million and $1.3 million for the three and nine months ended September 30, 2025, respectively. Total foreign currency transaction losses, net were $1.6 million and $1.2 million for the three and nine months ended September 30, 2024, respectively.

Net Income (Loss) Per Share

We calculate basic and diluted income (loss) per share using the two-class method, given that our Series B Convertible Preferred Stock is considered a participating security, as it contractually entitles its holders to participate in our earnings. Under the two-class method, income (loss) is allocated to common stock and participating securities according to their participation rights in dividends and undistributed income. The income (loss) available to each class of stock is divided by the weighted average number of outstanding shares for the period in each class. Diluted income (loss) per share assumes the issuance of common stock for all potentially dilutive share equivalents outstanding.

Net income available to common stockholders is computed as: net income attributable to controlling interests, less any accumulated dividends and any earnings allocable to our Series B Convertible Preferred Stock during the reporting period. Basic income per share is calculated by dividing net income available to common stockholders by the weighted average common stock outstanding. Diluted income per share is calculated similarly, except that it is computed based upon the most dilutive of the two-class method or the if-converted method, which includes the effects of the assumed conversion of our Series B Convertible Preferred Stock and the effect of shares issuable under our stock-based incentive plans, if such effect is dilutive.

The effect of dilutive securities is computed using the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of restricted stock, reduced by the repurchase of shares with the proceeds from the assumed exercises and unrecognized compensation expense for outstanding awards.

For periods in which we report net losses, diluted net loss per share is the same as basic net loss per share because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which addresses the accounting and disclosure requirements for certain crypto assets. This ASU requires entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. The ASU’s amendments are effective for all entities holding assets that meet certain scope criteria for fiscal years beginning after December 15, 2024, including interim periods within those years. Early adoption is permitted for both interim and annual periods. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. We adopted this ASU in the first quarter of 2025. This ASU did not have a material impact on our disclosures or our condensed consolidated financial statements, as recognized losses related to the fair value remeasurement of our crypto assets during the three and nine months ended September 30, 2025 were immaterial, and the fair value of our crypto assets was immaterial as of September 30, 2025 and December 31, 2024.

Accounting Pronouncements Issued but Not Yet Adopted

In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Under this ASU, public entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). This ASU’s amendments are effective for all entities that are subject to Topic 740, Income Taxes, for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the anticipated impact of this pronouncement on our disclosures.

In November 2024, FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to disaggregate any relevant expense caption presented on the face of the income statement within continuing operations into the following required natural expense categories, as applicable: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities or other depletion expenses. An entity’s share of earnings or losses from investments accounted for under the equity method is not a relevant expense caption that requires disaggregation. Such ASU’s amendments are effective for all public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. In January 2025, FASB issued ASU 2025-01, which revises the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. We are currently evaluating the anticipated impact of this pronouncement on our disclosures and our condensed consolidated financial statements.

In July 2025, FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides simplified guidance on measuring credit losses for current accounts receivable and contract assets. It offers a practical expedient for all entities and an accounting policy election for non-public business entities to ease the process of estimating expected credit losses under ASC 326-20. The amendments are effective for annual periods beginning after December 15, 2025, with early adoption permitted. We are currently evaluating the anticipated impact of this pronouncement on our disclosures and our condensed consolidated financial statements.

In September 2025, FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal‑Use Software (Subtopic 350‑40): Targeted Improvements to the Accounting for Internal‑Use Software. The ASU is intended to modernize and clarify the accounting for internal-use software, including updates to the capitalization guidance that removes references to project stages and replaces them with the concept of a probable-to-complete recognition threshold. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and early adoption is permitted as of the beginning of an annual period. We are currently evaluating the anticipated impact of this pronouncement on our disclosures and our condensed consolidated financial statements.

2. Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 inputs: Based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 inputs: Based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 inputs: Based on unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities, and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

For cash equivalents, receivables and certain other current assets and liabilities at September 30, 2025 and December 31, 2024, the amounts reported approximate fair value (Level 1) due to their short-term nature. For debt, based upon the refinancing of our senior secured debt in May 2021, its restatement in 2023 and subsequent amendments in 2023, 2024 and 2025, we believe that its carrying value at September 30, 2025 and December 31, 2024 approximates fair value, as our debt is variable-rate debt that reprices to current market rates frequently. Refer to Note 8, Debt, for additional disclosures about our debt. Our debt is classified within Level 2 of the valuation hierarchy.

Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The following table summarizes the fair value of our financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

There were no transfers of financial instruments between Level 1, Level 2, and Level 3 during the periods presented.

Contingent consideration liability relates to the contingent consideration recorded in connection with our 2021 acquisition of GlowUp Digital Inc. (“GlowUp”), which was originally acquired to build our creator platform, and represents the fair value for shares which may still be issued and cash which may be paid to the GlowUp sellers, subject to certain indemnification obligations that remained unsettled as of September 30, 2025 and December 31, 2024. The fair value of such shares is remeasured each reporting date using the Company’s stock price as of each reporting date. Fair value change as a result of contingent liabilities fair value remeasurement during the three and nine months ended September 30, 2025 and 2024 was immaterial. We classified financial liabilities associated with the contingent consideration as Level 3 due to the lack of relevant observable inputs. Changes in assumptions described above could have an impact on the payout of contingent consideration.

The following table provides a roll-forward of the fair value of the liabilities categorized as Level 3 for the nine months ended September 30, 2025 (in thousands):

The increase in the fair value of the contingent consideration for the nine months ended September 30, 2025 was primarily due to the increase in the price per share of our common stock.

Fair value of our digital assets held, comprised of the cryptocurrency “Ethereum”, is based on Level 1 inputs. Recognized losses related to the fair value remeasurement of our digital assets during the three and nine months ended September 30, 2025 were immaterial, and the fair value of our digital assets was immaterial as of September 30, 2025 and December 31, 2024. Periods prior to September 30, 2025 include digital assets at cost, net of impairment losses incurred since their acquisition, which were immaterial for the three and nine months ended September 30, 2024.

Assets Measured and Recorded at Fair Value on a Nonrecurring Basis

In addition to liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis. Generally, our non-financial instruments, which primarily consist of goodwill, intangible assets, right-of-use assets, and property and equipment, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis, whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), non-financial instruments are assessed for impairment and, if applicable, written-down to and recorded at fair value, considering market participant assumptions.

During the nine months ended September 30, 2025, we recorded impairment charges of $1.5 million on our right-of-use assets related to our corporate leases and wrote off certain of our property, plant and equipment items in the amount of $0.4 million as a result of our decision to sublease certain of our corporate office space. During the nine months ended September 30, 2024, we recognized $0.6 million of impairment charges on right-of-use assets pertaining to our corporate leases. There wereno impairment charges on our right-of-use assets and property, plant and equipment during the three months ended September 30, 2025 and 2024.

In the third quarter of 2024, we had declines in our future projected cash flows for our former Digital Subscriptions and Content segment, causing us to test our goodwill for impairment as of September 30, 2024. Utilizing the income approach, we performed a quantitative impairment test on goodwill using a discounted cash flow analysis, which determined that the fair value of certain of our reporting units was less than their carrying value. As a result, we recorded $17.0 million of impairment charges to our goodwill during the three and nine months ended September 30, 2024. There wereno impairment charges on our goodwill during the three and nine months September 30, 2025.

In the third quarter of 2024, we had impairment indicators with respect to our creator digital platform onplayboy.com associated with a decrease in its revenue projections and determined that its carrying value was not recoverable as of September 30, 2024. As a result, we recorded $4.7 million of impairment charges related to the write-off of its internally developed software during the three and nine months ended September 30, 2024. There wereno such impairment charges during the three and nine months ended September 30, 2025.

Assets Held for Sale

We began the sale of artwork assets in the fourth quarter of 2023, but they were not fully disposed of as of September 30, 2025 and December 31, 2024, and as such continued to be classified as current assets held for sale in our condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024.

The assumptions used in measuring fair value of our artwork held for sale are considered Level 2 inputs, which include market prices obtained from recent auctions of similar works of art, or management’s judgment as to their salable value. We recorded $0.2 million of impairment charges related to our artwork held for sale during the three months ended September 30, 2025, and there wereno such impairment charges in the prior year comparative period. Impairment charges related to our artwork held for sale for the nine months ended September 30, 2025 and 2024 were $0.5 million and $2.4 million, respectively.

Series B Convertible Preferred Stock

The fair value of our only currently authorized (but no longer issued or outstanding as of September 30, 2025) preferred stock (our “Series B Convertible Preferred Stock”), initially measured as of November 13, 2024 (the initial issuance date), was estimated using a binomial lattice model in a risk-neutral framework (a special case of the income approach). Considering the conversion feature was out-of-the-money as of the issuance date and the Series B Convertible Preferred Stock is redeemable by us without penalty, we valued the Series B Convertible Preferred Stock as a non-convertible callable note. Specifically, our future yield is modeled using the Black-Derman-Toy interest rate model in a risk-neutral framework. For each modeled future yield, the value of the Series B Convertible Preferred Stock was calculated incorporating any optimal early prepayment/redemption. The value of the Series B Convertible Preferred Stock was then calculated as the probability-weighted present value over all future modeled payoffs.

Our Series B Convertible Preferred Stock was classified as mezzanine equity in our condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024. No subsequent fair value remeasurement is required. We classified our Series B Convertible Preferred Stock as Level 3 due to the lack of relevant observable inputs. Refer to Note 10, Convertible Preferred Stock, for further information on our Series B Convertible Preferred Stock and its conversion resulting in the elimination of all outstanding shares of our Series B Convertible Preferred Stock as of August 22, 2025.

3. Revenue Recognition

Contract Balances

Our contract assets relate to our trademark licensing revenue stream, which arrangements are typically long-term and non-cancelable. Contract assets are reclassified to accounts receivable when the right to bill becomes unconditional. Our contract liabilities consist of billings or payments received in advance of revenue recognition and are recognized as revenue when transfer of control to customers has occurred. Contract assets and contract liabilities are netted on a contract-by-contract basis. Contract liabilities are classified as deferred revenue in the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024.

In the third quarter of 2025, we received $15.0 million in royalty prepayments from Byborg, which were comprised of $5.0 million paid in advance for the fourth quarter of 2025 and $10.0 million paid in advance for the second half of year 15 of the initial term of the LMA.

The following table summarizes our contract assets and certain contract liabilities (in thousands):

The following tables provide a roll-forward of our netted contract assets and contract liabilities (in thousands):

Future Performance Obligations

As of September 30, 2025, unrecognized revenue attributable to unsatisfied and partially unsatisfied performance obligations under our long-term contracts was $354.2 million, of which $350.5 million related to trademark licensing, including minimum guaranteed royalties from licensed digital operations per the LMA, $2.8 million pertained to December 31, 2024 deferred revenue balances from our legacy digital subscriptions and products operations and $0.9 million related to direct-to-consumer products.

Unrecognized revenue of the trademark licensing revenue stream is expected to be recognized over the next 15 years, of which 46% is expected to be recognized in the first five years. Such unrecognized revenue does not include variable consideration determined based on the customer’s subsequent sale or usage. Unrecognized revenue of our prior digital subscriptions and products operations, which pertains to related deferred revenue balances as of December 31, 2024, will be recognized over the next five years, of which 51% is expected to be recognized in the first year. Effective January 1, 2025, revenues from the licensed digital operations are remitted to Byborg per the terms of the LMA.

Disaggregation of Revenue

The following table disaggregates revenue by type (in thousands):

The following table disaggregates revenue by point in time versus over time (in thousands):

4. Inventories, Net

The following table sets forth inventories, net, which are stated at the lower of cost (specific cost and first-in, first-out) and net realizable value (in thousands):

At September 30, 2025 and December 31, 2024, reserves for slow-moving and obsolete inventory amounted to $3.3 million and $4.2 million, respectively.

5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

6. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

The aggregate depreciation expense related to property and equipment, net was $0.3 million and $1.5 million for the three months ended September 30, 2025 and 2024, respectively, and $1.2 million and $5.1 million for the nine months ended September 30, 2025 and 2024, respectively.

7. Other Current Liabilities and Accrued Expenses

Other current liabilities and accrued expenses consisted of the following (in thousands):

The licensing arrangement with Byborg that was entered into during the fourth quarter of 2024 became effective January 1, 2025. There is a transition period under which we will continue to operate the licensed Playboy Plus, Playboy TV (online and linear) and Playboy Club digital businesses according to the terms of a Transition Service Agreement (the “TSA”) while Byborg works to take full operational control. The first $5.0 million of operating expenses incurred in relation to such licensed businesses is our responsibility to bear. Any operating expenses paid by us with respect to such licensed businesses above the $5.0 million threshold will be reimbursed to us by Byborg. Byborg is entitled to cash collected by us while operating the licensed businesses during the transition period, and we are obligated to remit the funds to Byborg quarterly. The cash is remitted on a net basis to Byborg, such that any operating expenses incurred beyond the $5.0 million expense threshold were deducted from amounts we have collected for Byborg. As of September 30, 2025, the remittances payable to Byborg totaled $2.9 million, the majority of which will be paid to Byborg in the fourth quarter of 2025. In the second quarter of 2025, we reached the $5.0 million threshold of expenses related to the licensed businesses for which we were responsible under the LMA.

8. Debt

The following table sets forth our debt (in thousands):

Term Loan

Refer to Note 10, Debt, within the notes to our audited consolidated financial statements set forth in our Annual Report on Form 10-K, filed with the SEC on March 13, 2025, for details regarding our A&R Credit Agreement for periods prior to the second quarter of 2024.

On November 11, 2024, we entered into Amendment No. 3 to the A&R Credit Agreement (the “A&R Third Amendment”).

The A&R Third Amendment provides for, among other things:

•reducing the outstanding aggregate term loan amounts under the facility from approximately $218.4 million to approximately $153.1 million in exchange for $28.0 million of Series B Convertible Preferred Stock, to be issued pursuant to an Exchange Agreement, dated November 11, 2024 (the “Exchange Agreement”), between the Company and the lenders party to the A&R Third Amendment;

•resetting the interest rate margin for both tranche A term loans under the A&R Credit Agreement (“Tranche A”) and tranche B term loans under the A&R Credit Agreement (“Tranche B”, and together with Tranche A, the “A&R Term Loans”) to the same applicable U.S Federal Reserve Secured Overnight Financing Rate, plus a 0.10% credit spread adjustment, plus 6.25% (with corresponding changes necessary so that all but 1.00% of the interest rate margin can be paid in-kind); and

•applying amortization of 1% per year to all loans, which is to be paid quarterly starting in the fourth quarter of 2025.

The other terms of the A&R Credit Agreement prior to the A&R Third Amendment remained substantially unchanged, and the new terms went into effect upon the closing of the Exchange Agreement and the issuance of the Series B Convertible Preferred Stock, which occurred on November 13, 2024. The Series B Convertible Preferred Stock was established pursuant to the filing of a Certificate of Designation with the state of Delaware, which certificate set forth the terms of the Series B Convertible Preferred Stock. Upon the filing of such certificate, we issued to the Lenders an aggregate of 28,000.00001 shares of Series B Convertible Preferred Stock with a stated value of $28.0 million. The Series B Convertible Preferred Stock includes a 12% annual dividend rate, which commenced accruing six months after the issuance date, which was payable in cash or in-kind, solely at our discretion. We had the right to redeem for cash (at any time) or convert the Series B Convertible Preferred Stock at any time, provided that thefive-day volume-weighted average price of our common stock is $1.50 or above, with a conversion price floor of $1.50 and a cap of $4.50. As a result of conversions of the Series B Convertible Preferred Stock in January and August of 2025, all outstanding shares of the Series B Convertible Preferred Stock were converted to common stock and we no longer had any shares of preferred stock outstanding as of August 22, 2025. Refer to Note 10, Convertible Preferred Stock, for further information on our Series B Convertible Preferred Stock and its conversion resulting in the elimination of all outstanding shares of our Series B Convertible Preferred Stock as of August 22, 2025.

On March 12, 2025, we entered into Amendment No. 4 to the A&R Credit Agreement (the “A&R Fourth Amendment”). The A&R Fourth Amendment sets the total net leverage ratio levels applicable under the A&R Credit Agreement, once net leverage testing is resumed as of the quarter ending June 30, 2026. For the quarter ending June 30, 2026, the total net leverage ratio will be initially set at 9.00:1.00, reducing over time until the ratio reaches 7.75:1.00 for the quarter ending June 30, 2027 and any subsequent quarter. In the event we prepay at least $15 million of the principal debt under the A&R Credit Agreement, the total net leverage ratio levels are reduced such that they would be initially set at 7.75:1.00 for the quarter ending June 30, 2026, and would reduce over time until the ratio reaches 6.50:1.00 for the quarter ending June 30, 2027 and any subsequent quarter.

On August 11, 2025, we entered into Amendment No. 5 to the A&R Credit Agreement (the “A&R Fifth Amendment”). The A&R Fifth Amendment revises the definition of Consolidated EBITDA in the A&R Credit Agreement to allow for $2.4 million of non-cash rent expense related to our Miami Beach office lease to be added back when calculating such Consolidated EBITDA for applicable periods. The other terms of the A&R Credit Agreement prior to the A&R Fifth Amendment remain substantively unchanged.

The stated interest rate of each of Tranche A and Tranche B of the A&R Term Loans as of September 30, 2025 was 10.49%. The stated interest rate of each of Tranche A and Tranche B of the A&R Term Loans as of December 31, 2024 was 11.01%. The effective interest rate of Tranche A and Tranche B of the A&R Term Loans as of September 30, 2025 was 0.59% and 4.44%, respectively. The effective interest rate of Tranche A and Tranche B of the A&R Term Loans as of December 31, 2024 was 1.05% and 4.93%, respectively.

We were in compliance with applicable financial covenants under the terms of the A&R Credit Agreement and its amendments as of September 30, 2025 and December 31, 2024.

The following table sets forth maturities of the principal amount of our A&R Term Loans as of September 30, 2025 (in thousands):

9. Stockholders’ Equity

Common Stock

On June 16, 2025, the stockholders of the Company authorized an increase in the number of authorized shares of common stock of the Company from 150,000,000 to 400,000,000. The increase in authorized shares of common stock of the Company did not impact its number of issued or outstanding shares of common stock. Common stock of the Company reserved for future issuance consisted of the following as of the dates indicated:

In the third quarter of 2025, we sold shares of our common stock pursuant to our previously registered and announced at-the-market (“ATM”) offering, selling a total of 191,260 shares for net proceeds of $0.3 million which were paid to us in the third quarter of 2025. As of September 30, 2025, we had $14.7 million of remaining capacity under the ATM.

10. Convertible Preferred Stock

The Company has authorized 5,000,000 shares of preferred stock, with a par value of $0.0001 per share. Of the 5,000,000 authorized preferred shares,28,001 shares are designated as “Series B Convertible Preferred Stock”.

On November 13, 2024, pursuant to the Exchange Agreement, we issued an aggregate of 28,000.00001 shares of the Series B Convertible Preferred Stock, as consideration in exchange for approximately $6.4 million of Tranche A loans and approximately $58.9 million of Tranche B loans under that certain A&R Credit Agreement. For a more detailed summary of the terms of the Series B Convertible Preferred Stock, refer to Note 13, Preferred Stock, within the notes to our audited consolidated financial statements set forth in our Annual Report on Form 10-K filed with the SEC on March 13, 2025.

On January 29, 2025, we completed the conversion of 7,000 shares of the 28,000.00001 outstanding shares of Series B Convertible Preferred Stock into 3,784,688 shares of the Company’s common stock, at a conversion price of $1.84956 per share (the “Conversion”), in accordance with the terms of the Series B Convertible Preferred Stock. As a result of the Conversion, we reduced the number of shares of Series B Convertible Preferred Stock outstanding to 21,000.00001 shares. Holders of the Series B Convertible Preferred Stock had their shares converted to common stock on a pro rata basis.

On August 22, 2025, we completed the conversion of all remaining 21,000.00001 outstanding shares of Series B Convertible Preferred Stock into 12,439,730 shares of the Company’s common stock, at a conversion price of $1.74448 per share (the “Second Conversion”), in accordance with the terms of the Series B Convertible Preferred Stock. As a result of the Second Conversion, we no longer have any shares of preferred stock outstanding. Holders of the Series B Convertible Preferred Stock had their shares converted to common stock on a pro rata basis.

11. Stock-Based Compensation

As of September 30, 2025,14,331,506 shares of our common stock had been authorized for issuance under our 2021 Equity and Incentive Compensation Plan and 6,287,687 shares of our common stock were originally reserved for issuance under our 2018 Equity Incentive Plan.

Stock Option Activity

There was no stock options activity during the three and nine months ended September 30, 2025.

Restricted Stock Unit Activity

A summary of restricted stock unit (“RSU”) activity under our equity incentive plans is as follows:

There wereno RSUs that vested during the three months ended September 30, 2025. The total fair value of RSUs that vested during the three months ended September 30, 2024 was approximately $0.1 million. The total fair value of RSUs that vested during the nine months ended September 30, 2025 and 2024 was approximately $4.8 million and $1.5 million, respectively. We had 1,846,766 outstanding and fully vested RSUs that remained unsettled at September 30, 2025, all of which are expected to be settled in 2025. As such, they were excluded from outstanding shares of common stock but were included in weighted-average shares outstanding for the calculation of net income (loss) per share for the three and nine months ended September 30, 2025. There wereno outstanding and fully vested RSUs that remained unsettled at September 30, 2024.

Performance Stock Unit Activity

A summary of performance-based restricted stock unit (“PSU”) activity under our equity incentive plans is as follows:

There wereno PSUs that vested during the three months ended September 30, 2025 and 2024. The total fair value of PSUs that vested during the nine months ended September 30, 2025 and 2024 was approximately $0.3 million and $0.2 million, respectively. We had 155,816 outstanding and fully vested PSUs that remained unsettled at September 30, 2025, all of which are expected to be settled in 2025. As such, they are excluded from outstanding shares of common stock but are included in weighted-average shares outstanding for the calculation of net income (loss) per share for the three and nine months ended September 30, 2025. There wereno outstanding and fully vested PSUs that remained unsettled at September 30, 2024.

Stock-Based Compensation Expense

Stock-based compensation expense under our equity incentive plans was as follows (in thousands):

At September 30, 2025, there wasno unrecognized stock-based compensation expense related to unvested stock options and PSUs as all previously unvested and outstanding stock options and PSUs were fully vested as of September 30, 2025. At September 30, 2025, total unrecognized compensation cost related to unvested RSUs was $3.0 million and is expected to be recognized over the remaining weighted-average service period of 0.64 years.

12. Commitments and Contingencies

Leases

Lease cost associated with operating leases for thethree and nine months ended September 30, 2025 is included in the table below. Finance leases as of September 30, 2025, and their related costfor thethree and nine months ended September 30, 2025, were immaterial. There were no finance leases for the three and nine months ended September 30, 2024.

On August 11, 2025, through our wholly-owned subsidiary, Playboy Enterprises, Inc., we entered into a triple net lease (the “Lease”) with RK Rivani LLC, a Florida limited liability company (the “Landlord”), pursuant to which, among other matters and on the terms and subject to the conditions set forth in the Lease, we leased from the Landlord approximately 20,169 square feet of office space in Miami Beach, Florida, for a term of 11 years, with lease payments commencing in August 2026, following renovations of the office space. As we did not take possession of the office space yet, it is not reflected in our condensed consolidated financial statements or in the tables below. We expect to account for the Lease as an operating lease under Accounting Standards Codification, Topic 842, Leases. The future undiscounted fixed non-cancelable payment obligation pertaining to the Lease is approximately $27.1 million.

As of September 30, 2025 and December 31, 2024, the weighted-average remaining term of our operating leases was 4.0 years and 4.5 years, respectively, and the weighted-average discount rate used to estimate the net present value of the operating lease liabilities was 8.0% and 7.2%, respectively. Cash payments for amounts included in the measurement of operating lease liabilities were $2.2 million and $2.0 million for the three months ended September 30, 2025 and 2024, respectively, and $6.3 million and $6.5 million for the nine months ended September 30, 2025 and 2024, respectively. Right-of-use assets obtained in exchange for new operating lease liabilities were $2.2 million and $1.5 million during the three months ended September 30, 2025 and 2024, respectively. Right-of-use assets obtained in exchange for new operating lease liabilities were $2.8 million and $2.1 million for the nine months ended September 30, 2025 and 2024, respectively.

In the second quarter of 2025, we renegotiated the terms of a lease related to a formerly disposed business, which remained with us, and was subleased to a third party, to shorten the lease term expiration date from 2031 to 2029. As a result, we recorded a $0.9 million reduction in right-of-use assets and related lease liabilities in the condensed consolidated balance sheet as of September 30, 2025. All other terms of such lease remained the same.

Net lease cost recognized in our condensed consolidated statements of operations is summarized in the table below (in thousands):

Maturities of our operating lease liabilities as of September 30, 2025 were as follows (in thousands):

Legal Contingencies

From time to time, we may have certain contingent liabilities that arise in the ordinary course of our business activities. We accrue a liability for such matters when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount.

AVS Case

In March 2020, our subsidiary Playboy Enterprises International, Inc. (together with its subsidiaries, “PEII”) terminated its license agreement with a licensee, AVS Products, LLC (“AVS”), for AVS’s failure to make required payments to PEII under the agreement, following notice of breach and an opportunity to cure. On February 6, 2021, PEII received a letter from counsel to AVS alleging that the termination of the contract was improper, and that PEII failed to meet its contractual obligations, preventing AVS from fulfilling its obligations under the license agreement.

On February 25, 2021, PEII brought suit against AVS in Los Angeles Superior Court to prevent further unauthorized sales of Playboy-branded products and for disgorgement of unlawfully obtained funds. On March 1, 2021, PEII also brought a claim in arbitration against AVS for outstanding and unpaid license fees. PEII and AVS subsequently agreed that the claims PEII brought in arbitration would be alleged in the Los Angeles Superior Court case instead, and on April 23, 2021, the parties entered into and filed a stipulation to that effect with the court. On May 18, 2021, AVS filed a demurrer, asking for the court to remove an individual defendant and dismiss PEII’s request for a permanent injunction. On June 10, 2021, the court denied AVS’s demurrer. AVS filed an opposition to PEII’s motion for a preliminary injunction to enjoin AVS from continuing to sell or market Playboy-branded products on July 2, 2021, which the court denied on July 28, 2021.

On August 10, 2021, AVS filed a cross-complaint for breach of contract, breach of the implied covenant of good faith and fair dealing, quantum meruit and declaratory relief. As in its February 2021 letter, AVS alleges its license was wrongfully terminated and that PEII failed to approve AVS’ marketing efforts in a manner that was either timely or that was commensurate with industry practice. AVS is seeking to be excused from having to perform its obligations as a licensee, payment of the value for services rendered by AVS to PEII outside of the license, and damages to be proven at trial. The court heard PEII’s motion for summary judgment on June 6, 2023, and dismissedsix out of 10 of AVS’ causes of action. AVS’ contract-related claims remain to be determined at trial, which has been rescheduled for August 10, 2026. In addition, PEII filed a complaint against Sunrise Brands based on their participation in AVS’s misconduct, as well as their own direct misconduct. Both cases have been related together by the court and will be tried together, for both pretrial and trial purposes. We believe AVS’ remaining claims and allegations are without merit, and we will defend this matter vigorously.

New Handong Arbitration

On February 8, 2024, PEII and certain of its subsidiaries initiated arbitration in the Hong Kong International Arbitration Centre (the “Arbitration”) against PEII’s terminated China licensee, New Handong Investment (Guangdong) Co., Ltd. (“New Handong”). In October 2023, PEII’s subsidiary terminated its license agreement with New Handong due to ongoing, uncured material breaches by New Handong. PEII and certain of its subsidiaries sought damages, including the payment of outstanding guaranteed minimum royalties, the payment of all guaranteed minimum royalties for the remainder of the term of the agreement, and other contractual damages for a variety of breaches. Such breaches included unauthorized sales of products, underpayment of earned royalties, failure to use approved trademarks and affix official holograms to all products, and the use of unapproved sublicensees. PEII and certain of its subsidiaries also sought a declaration that the termination of the agreement was lawful and valid and the issuance of a legal order to require New Handong to refrain from any further manufacture, sale, distribution or other use of any Playboy intellectual property or products.

On September 5, 2025, PEII received the decision of the Arbitration tribunal (the “Tribunal”), which found in favor of PEII in connection with its claims, and as a result ordered, among other things, that: (i) the termination notice issued by PEII to New Handong was found to be lawful and effective, (ii) New Handong must cease any further use of Playboy property and materials, including but not limited to the production, sale, or distribution of Playboy-branded products, (iii) New Handong is required to make payments to PEII for guaranteed royalties outstanding at the time of termination, a termination fee, and unpaid marketing expenses, plus interest thereon, and certain other fees and expenses, totaling approximately $81 million, and (iv) all of New Handong’s counterclaims were dismissed. In addition, per the terms of the Tribunal’s decision, as payment of the amounts awarded to PEII were not made in full to PEII by September 20, 2025, interest has been accruing on the amounts owed from the award date to the date of payment at an annual rate of 8.25%. The decision of the Tribunal is final; however, as New Handong has not fully complied with the requirements of such decision, PEII and the Company will seek enforcement of such decision in China through the Chinese courts. There can be no assurance that New Handong will comply with the Tribunal’s decision, or a Chinese court’s decision in the future, including making the required monetary payments to PEII and the Company within the timeframe that was, or is, ordered, if at all.

13. Severance Costs

We incurred severance and related employee benefits costs during 2025 and 2024 due to the reduction of headcount, as we continue to shift our business to a more capital-light model. Severance costs recorded in “All Other” in the table below for the three and nine months ended September 30, 2025 were primarily related to the transition of our digital subscriptions and content operations into a licensing model pursuant to the LMA, which we expect to complete in 2026. Severance costs recorded in “Corporate” for the three and nine months ended September 30, 2025 were primarily related to brand marketing activities. Refer to Note 17, Segments, for further details. Severance costs are recorded in selling and administrative expenses in our condensed consolidated statements of operations, and in other current liabilities and accrued expenses in our condensed consolidated balance sheets.

Severance costs in our condensed consolidated statements of operations were as follows (in thousands):

The following is a reconciliation of the beginning and ending severance costs balances recorded in other current liabilities and accrued expenses in our condensed consolidated balance sheets (in thousands):

14. Income Taxes

The effective tax rate for the three months ended September 30, 2025 and 2024 was 560.0% and (1.8)%, respectively. The effective tax rate for the nine months ended September 30, 2025 and 2024 was (9.6)% and (3.5)%, respectively. The effective tax rate for the three and nine months ended September 30, 2025 differed from the U.S. statutory federal income tax rate of 21% primarily due to foreign withholding taxes and the release of valuation allowance due to a reduction in net deferred tax liabilities of indefinite lived intangibles. The effective tax rate for the three and nine months ended September 30, 2024 differed from the U.S. statutory federal income tax rate of 21% primarily due to impairment charges on artwork held for sale, foreign withholding taxes and the release of valuation allowance due to a reduction in net deferred tax liabilities of indefinite lived intangibles.

The One Big Beautiful Bill Act (“OBBBA”) of 2025, or the 2025 Tax Act, enacted on July 4, 2025, makes changes to U.S. corporate income taxes, including reinstating the option to claim the full amount of accelerated depreciation deductions on qualified property, with retroactive application beginning January 1, 2025, immediate expensing of domestic research and development costs, with retroactive application beginning January 1, 2025, and the calculation of the limitation for business interest using earnings before interest, taxes, depreciation and amortization, with retroactive application beginning January 1, 2025. We are currently in the process of evaluating the impact of adoption of such tax law changes to our consolidated financial position and results of operations for the year ending December 31, 2025 and do not expect the OBBBA to have a material impact on our condensed consolidated financial statements.

15. Net Income (Loss) Per Share

The following table shows the computation of basic and diluted net income per common share for the three months ended September 30, 2025 (in thousands, except per share amounts):

The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net income (loss) per share due to their anti-dilutive effect:

16. Related Party Transactions

On November 5, 2024, The Million S.a.r.l (a subsidiary of Byborg) completed the purchase of 14,900,000 shares of our common stock and became a significant stockholder of the Company as of such date. Thus, both The Million S.a.r.l and Byborg, as well as their subsidiaries, are considered related parties of the Company.

On December 14, 2024, we entered into a Securities Purchase Agreement with The Million S.a.r.l, pursuant to which we agreed to sell to such purchaser 16,956,842 shares of our common stock, par value $0.0001 per share, at a price of $1.50 per share, which agreement was entered into subject to the approval of our stockholders. At our 2025 annual meeting of stockholders held on June 16, 2025, our stockholders rejected the transaction, preventing it from being completed.

In addition, on December 14, 2024, we entered into the LMA with Byborg, pursuant to which Byborg agreed to license the operation of our Playboy Plus, Playboy TV (online and linear) and Playboy Club digital businesses and to license the right to use certain Playboy trademarks and other intellectual property for related businesses and certain other categories. The LMA has an initial term of 15 years, with the operations and license rights pursuant to the LMA having commenced as of January 1, 2025. Pursuant to the LMA, we receive minimum guaranteed royalties of $20 million per year of the term, which are paid in installments during each year. In addition, per the terms of the LMA, Byborg prepaid the minimum guaranteed amount for the second half of year 15 of the initial term of the LMA, which was received in the third quarter of 2025. Playboy is also entitled to receive excess royalties from the businesses licensed to and operated by Byborg, on the terms and conditions set forth in the LMA. During the three and nine months ended September 30, 2025, the Company recognized $5.0 million and $15.0 million of minimum guaranteed royalties as licensing revenue pursuant to the LMA, respectively.

There is a transition period under which we will continue to operate the licensed Playboy Plus, Playboy TV (online and linear) and Playboy Club digital businesses according to the terms of the TSA while Byborg works to take full operational control. The first $5.0 million of operating expenses incurred in relation to such licensed businesses is our responsibility to bear. Any operating expenses paid by us with respect to such licensed businesses above the $5.0 million threshold will be reimbursed to us by Byborg. Byborg is entitled to cash collected by us while operating the licensed businesses during the transition period, and we are obligated to remit the funds to Byborg quarterly. The cash is remitted on a net basis to Byborg, such that any operating expenses incurred beyond the $5.0 million expense threshold are deducted from amounts we have collected for Byborg. In the second quarter of 2025, we reached the $5.0 million threshold of operating expenses of the digital businesses which we were responsible for under the LMA. As of September 30, 2025, the remittances payable to Byborg totaled $2.9 million, the majority of which will be paid to Byborg in the fourth quarter of 2025.

On January 29, 2025, we completed the conversion of 7,000 shares of the 28,000.00001 outstanding shares of our Series B Convertible Preferred Stock into 3,784,688 shares of our common stock, at a conversion price of $1.84956 per share in accordance with the terms of the Series B Convertible Preferred Stock. On August 22, 2025, we completed the conversion of all remaining 21,000.00001 outstanding shares of Series B Convertible Preferred Stock into 12,439,730 shares of our common stock, at a conversion price of $1.74448 per share, in accordance with the terms of the Series B Convertible Preferred Stock. As a result of such conversions, a total of 14,008,313 shares of common stock were issued to affiliates of our primary senior secured lender, as of September 30, 2025. As a result, on August 22, 2025 (the date of the second conversion), our primary senior secured lender and its affiliates became a related party of the Company. Refer to Note 10, Convertible Preferred Stock, for further information on our Series B Convertible Preferred Stock and its conversion resulting in the elimination of all outstanding shares of our Series B Convertible Preferred Stock as of August 22, 2025.

Total debt, net of unamortized debt issuance costs and debt premium, attributable to affiliates of our primary senior secured lender under the term loan described in Note 8, Debt, was $160.4 million and $160.2 million as of September 30, 2025 and December 31 2024, respectively, out of which $1.4 million and $0.3 million was classified as current in our condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024, respectively. Accrued interest included in other current liabilities and accrued expenses in our condensed consolidated balance sheets as of September 30, 2025 and attributable to affiliates of our primary senior secured lender was $0.7 million. The interest expense attributable to affiliates of our primary senior secured lender for the period from August 22, 2025 (the date of the second conversion) through September 30, 2025 was $0.7 million. Interest expense paid to affiliates of our primary senior secured lender for the period from the date of the second conversion through September 30, 2025 was $1.0 million.

17. Segments

As of January 1, 2025, our digital subscriptions and content operations transitioned into a licensing model in conjunction with the LMA. As a result, our previously reported Digital Subscriptions and Content operating and reportable segment was eliminated as of January 1, 2025. As of September 30, 2025, we hadtwo reportable segments: Direct-to-Consumer and Licensing. The Direct-to-Consumer segment derives revenue from sales of consumer products sold directly to customers online or at brick-and-mortar stores through our lingerie business, Honey Birdette, with 51 stores inthree countries as of September 30, 2025. The Licensing segment derives revenue from trademark licenses for third-party consumer products and location-based entertainment businesses, and starting January 1, 2025, minimum guaranteed royalties from licensing certain intellectual property and operation of our Playboy Plus, Playboy TV (online and linear) and Playboy Club digital businesses to Byborg pursuant to the LMA.

The prior year comparative period has been recast to include previously reported digital subscriptions and content operations in “All Other”. The “All Other” column in the prior year comparative period table below derived revenue from the subscription of Playboy programming that was distributed through various channels, including websites and domestic and international television, as well as sales of creator content offerings and memberships to consumers through the Playboy Club onplayboy.com. The “All Other” column for the three and nine months ended September 30, 2025 includes amortization of deferred revenue balances related to the previously reported digital subscriptions and content operations that existed as of December 31, 2024 (prior to the LMA effective date of January 1, 2025), the write-off of certain previously capitalized content expenses and transition expenses incurred pursuant to the TSA.

Revenues and expenses associated with Playboy magazine, events and sponsorships, which were previously included in the Digital Subscriptions and Content segment, were not allocated to segments for the three and nine months ended September 30, 2025 due to the realignment of the presentation of such revenues and expenses in the financial information our Chief Operating Decision Maker (“CODM”) reviews. Such revenues and expenses were instead presented in our corporate revenue and expense allocations as activities associated with brand marketing and awareness. Our prior year comparative period segment reporting recast such revenues and expenses to conform to our current period segment presentation for comparative purposes. In the first, second and third quarters of 2024, there were no business activities related to Playboy magazine, events and sponsorships.

Our Chief Executive Officer is our CODM. Segment information is presented in the same manner that our CODM reviews the operating results in assessing performance and allocating resources. Consolidated operating (loss) income is the measure of segment operating (loss) profit most consistent with GAAP that is regularly reviewed by our CODM. Total asset information is not included in the tables below as it is not provided to and reviewed by our CODM. The “All Other” columns in the tables below primarily include previously reported digital subscriptions and content operations as described above. These operations are no longer reviewed by our CODM due to their transition into a licensing model pursuant to the LMA. The “Corporate” line item in the tables below includes operating revenues associated with Playboy magazine, events and sponsorships and expenses that are not allocated to the reportable segments presented to our CODM. These expenses include legal, human resources, information technology and facilities, accounting/finance and brand marketing costs. Expenses associated with Playboy magazine, events and sponsorships are included in brand marketing costs. The accounting policies of the reportable segments are the same as those described in Note 1, Basis of Presentation and Summary of Significant Accounting Policies.

The following table sets forth financial information by reportable segment and attributable to corporate and certain other activities (in thousands):

Other segment items for the three and nine months ended September 30, 2025 and 2024 were primarily comprised of the following:

Direct-to-Consumer: outside consulting and legal fees, as well as technology and equipment expenses.

Licensing: expenses that were attributable to our China joint venture, outside consulting expenses and legal fees.

Corporate: outside consulting expenses, rent expense, insurance expense, audit and tax fees, as well as non-cash impairment charges of $0.2 million on our artwork held for sale during the three months ended September 30, 2025, and $2.1 million and $3.0 million on our artwork held for sale and our right-of-use assets related to our corporate leases during the nine months ended September 30, 2025 and 2024, respectively.

Corporate expenses for the three and nine months ended September 30, 2025 also include brand marketing costs, such as expenses associated with iPlayboy archives, Playboy magazine, events and sponsorships, which were $0.3 million during the three months ended September 30, 2025, and $0.8 million during the nine months ended September 30, 2025. There wereno such costs incurred during the three and nine months ended September 30, 2024.

All Other: outside consulting expenses, technology and equipment expense, as well as non-cash impairment charges of $21.7 million on our internally developed software and goodwill related to our former Digital Subscriptions and Content segment for the three and nine months ended September 30, 2024.

Geographic Information

Revenue by geography is based on where the customer is located. The following table sets forth revenue by geographic area (in thousands):

Changes in the recorded carrying value of goodwill for the nine months ended September 30, 2025 by reportable segment were as follows (in thousands):

(1) Previously reported under our former Digital Subscriptions and Content operating and reportable segment in our most recent Annual Report on Form 10-K filed with the SEC on March 13, 2025.

18. Subsequent Events

On November 10, 2025, the Company entered into Amendment No. 6 to the A&R Credit Agreement (the “A&R Sixth Amendment”). The A&R Sixth Amendment, among other things, (i) extends the maturity of the A&R Credit Agreement to May 25, 2028, (ii) provides that the cash interest rate will be reduced by 0.15% and 0.50% in the event of certain prepayments of $25 million and $50 million, respectively, and (iii) provides that upon the first such prepayment made on the terms and conditions set forth in the A&R Sixth Amendment, the total net leverage ratio will be set at 9.00:1.00 for the quarter ending June 30, 2026, and step down over time until the ratio reaches 7.25:1.00 for the quarter ending December 31, 2027 and any subsequent quarter. Pursuant to the A&R Sixth Amendment, the Company also paid a fee of $0.4 million to the Company’s lenders. The other terms of the A&R Credit Agreement prior to the A&R Sixth Amendment remain substantively unchanged.