Playboy, Inc.

Notes to 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 20, Segments.

Basis of Presentation

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

Principles of Consolidation

The 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.

Reclassifications

Certain prior period amounts in the consolidated statements of cash flows and certain notes to consolidated financial statements have been reclassified to conform with the current period presentation.

Use of Estimates

The preparation of 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 fina ncial 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 our only authorized and issued preferred stock; pay-per-view and video-on-demand buys, and monthly subscriptions to our television and digital content; 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.

The following table represents revenue from our customers exceeding 10% of our total revenue:

The following table represents accounts receivable from our customers exceeding 10% of our total accounts receivable:

Cash Equivalents

Cash equivalents are temporary cash investments with an original maturity of three months or less at the date of purchase and are stated at cost, which approximates fair value.

Restricted Cash

At December 31, 2025 and 2024, restricted cash was primarily related to cash collateralized letters 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

The macroeconomic factors that 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 year ended December 31, 2025 increased by $4.8 million, compared to the year ended December 31, 2024, and this increase, coupled with a $22.0 million decrease in expenses related to the revamp of our digital business and lower non-cash asset impairment charges of $24.0 million, drove a decrease in our operating loss and net loss in 2025 compared to 2024. For the year ended December 31, 2025, we reported an operating loss of $8.0 million, and positive operating cash flows of $0.02 million. As of December 31, 2025, we had approximately $37.8 million in unrestricted cash and cash equivalents. We expect our capital expenditures and working capital requirements in 2026 to be largely consistent with 2025.

As of December 31, 2025, we were in compliance with the covenants under our senior secured credit agreement (including through there being 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 could experience difficulty remaining in compliance with such covenants. Refer to Note 9, Debt, for further details regarding the terms of our A&R Credit Agreement and the A&R Term Loans (as such terms are defined in such Note 9).

The accompanying 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 Annual Report on Form 10-K. 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.

Accounts Receivable, Net

Trade receivables are reported at their outstanding unpaid balances, less allowances for expected credit losses. The allowances for expected credit losses are increased by the recognition of bad debt expense and decreased by charge-offs (net of recoveries) or by reversals to income. In determining expected credit losses, we consider our historical level of credit losses, current economic trends, and reasonable and supportable forecasts that affect the collectability of the future cash flows. A receivable balance is written off when we deem the balance to be uncollectible.

Inventories

Inventories consist primarily of finished goods and are stated at the lower of cost, using the first-in, first-out (“FIFO”) method, and net realizable value. Inventory reserves are recorded for excess and slow-moving inventory. Our analysis to determine reserves includes a review of inventory quantities on hand at period-end in relation to year-to-date sales, existing orders from customers and projections for sales in the foreseeable future. The net realizable value is determined based on historical sales experience on a style-by-style basis. The valuation of inventory could be impacted by changes in public and consumer preferences, demand for product, changes in the buying patterns of both retailers and consumers and inventory management.

Property and Equipment, Net

Property and equipment are stated at cost, less accumulated depreciation, except for assets acquired in connection with our business combinations, which are reflected at fair value at the date of combination. Costs incurred for computer software developed or obtained for internal use are capitalized for application development activities and are immediately expensed for preliminary project activities or post-implementation activities. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets. The useful life for furniture and equipment ranges from three toseven years and software fromtwo tothree years. Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or the terms of the related leases. The amortization of leasehold improvements is included in depreciation expense. Repair and maintenance costs are expensed as incurred and major betterments are capitalized. Sales and retirements of property and equipment are recorded by removing the related cost and accumulated depreciation from the accounts, after which any related gains or losses are recognized.

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

Long-Lived Assets

The carrying amounts of long-lived assets, including property and equipment, stores, internally developed software, 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.

Definite-lived intangible assets include distribution agreements and trade names, which we recognized in connection with our business combinations. Because these assets were recognized as identifiable intangible assets in connection with our previous business combinations, we do not incur costs to renew or extend their terms. All of our definite-lived intangible assets are amortized using the straight-line method over their estimated useful lives.

Indefinite-lived Intangible Assets and Goodwill

Indefinite-lived intangible assets that are not amortized but subject to annual impairment testing consist of Playboy-branded trademarks. Our indefinite-lived Playboy-branded trademarks are periodically reviewed for indicators of impairment whenever events or changes in circumstances indicate that the value of these assets may not be recoverable or that the useful life is shorter than originally estimated.

We evaluate the indefinite-lived Playboy-branded trademarks for impairment using the discounted cash flow and relief from royalty method. This valuation approach requires that we make a number of assumptions to estimate fair value, including projections of future revenues, market royalty rates, tax rates, discount rates and other relevant variables. The projections we use in the model are updated annually or more frequently if an impairment triggering event has been identified and will change over time based on the historical performance and changing business conditions. If the carrying value of the trademark exceeds its estimated fair value, an impairment charge is recognized for the excess amount.

In the third quarter of 2024, we had impairment indicators with respect to our indefinite-lived Playboy-branded trademarks, causing us to perform a quantitative impairment test on our indefinite-lived Playboy-branded trademarks as of September 30, 2024. The quantitative test indicated that their carrying value was less than their fair value, thus, no impairment charges to our Playboy-branded trademarks were recognized. No impairment charges to our indefinite-lived Playboy-branded trademarks were recorded during the year ended December 31, 2024.

During the year ended December 31, 2025, there were no impairment indicators pertaining to our indefinite-lived Playboy-branded trademarks.

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 second quarter of 2024, we had impairment indicators to our direct-to-consumer business, causing us to perform a quantitative impairment test for our indefinite-lived and amortizable intangibles, including goodwill, as of June 30, 2024. The quantitative impairment test for indefinite-lived and amortizable intangibles, including goodwill, indicated that their carrying values were less than the fair values, therefore, there wereno impairment charges to be recognized on our intangibles, including goodwill during the second quarter of 2024.

In the third quarter of 2024, we had declines in our future projected cash flows for Digital Subscriptions and Content, 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 ofimpairment charges to our goodwill at the impairment date in the third quarter of 2024.

No impairment charges to our goodwill were recognized during the year ended December 31, 2025.

Assets and Liabilities 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.

Leases

We determine if an arrangement is a lease at inception. We determine the classification of the lease, whether operating or financing, at the lease commencement date, which is the date the leased assets are made available for use. We use the non-cancelable lease term when recognizing the right-of-use (“ROU”) assets and lease liabilities, unless it is reasonably certain that a renewal or termination option will be exercised. We account for lease components and non-lease components as a single lease component. Modifications are assessed to determine whether incremental differences result in new contract terms and should be accounted for as a new lease or whether the additional right of use should be included in the original lease and continue to be accounted for with the remaining ROU asset.

Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. Lease payments consist of the fixed payments under the arrangement, less any lease incentives. Variable costs, such as common area maintenance costs and additional payments for percentage rent, are not included in the measurement of the ROU assets and lease liabilities, but are expensed as incurred. As the implicit rate of the leases is not determinable, we use an incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments in determining the present value of the lease payments. Lease expenses are recognized on a straight-line basis over the lease term. We do not recognize ROU assets on lease arrangements with a term of 12 months or less.

For operating subleases, sublease income is recognized on a straight-line basis over the sublease term. We continue to account for the head lease right-of-use assets and related liabilities as we did prior to the related sublease. Sublease income is presented separately from lease expense in our consolidated statements of operations and is not netted against lease expense.

Treasury Stock

Treasury stock is stated at cost.

Revenue Recognition

We recognize revenue when we transfer promised goods or services in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. This is determined by following a five-step process which includes (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price and (5) recognizing revenue when or as we satisfy a performance obligation. We apply judgment to determine the nature of the promises within a revenue contract and whether those promises represent distinct performance obligations. In determining the transaction price, we do not include amounts subject to uncertainties unless it is probable that there will be no significant reversal of cumulative revenue when the uncertainty is resolved. We evaluate the nature of the license as to whether it provides a right to access or right to use the intellectual property (“IP”), which then determines whether the revenue is recognized over time or at a point in time. Sales or usage-based royalties received in exchange for licenses of IP are recognized at the later of when (1) the subsequent sale or usage occurs or (2) the performance obligation to which some or all of the sales or usage-based royalty has been allocated is satisfied.

Direct-To-Consumer Products

We generate revenue from the sale of intimates and other apparel and accessories, primarily through our direct-to-consumer channels (e-commerce sites and brick-and-mortar retail stores). We recognize e-commerce revenue upon delivery of the purchased goods to the buyer as our performance obligation, consisting of the sale of goods, is satisfied at this point in time when control is transferred, and the payment is due when an e-commerce order is made. We recognize retail store revenue at a point in time when a store satisfies a performance obligation and transfers control of the product to the customer, and the payment is due when a store order is made. Our revenue is recognized net of incentives and estimated returns. We periodically offer promotional incentives to customers, including basket promotional code discounts and other credits, that are treated as a reduction of revenue.

A portion of consumer product sales is generated through third-party sellers, who list the product on their websites. These sales are either fulfilled by us or through the third-party seller’s fulfillment services. We recognize the fees retained by the third-party sellers as expenses in cost of sales for inventory provided through drop-shipment arrangements. Such arrangements ended in the first half of 2025.

We charge shipping fees to customers. Since control transfers to the customer after the shipping and handling activities, we account for these activities as fulfillment activities. All outbound shipping and handling costs are accounted for as fulfillment costs in cost of sales at the time revenue is recognized.

We license trademarks under multi-year arrangements with consumer products, online and location-based entertainment businesses. Typically, the initial contract term ranges betweenone to 15 years. Renewals are separately negotiated through amendments. Under these arrangements, we generally receive an annual nonrefundable minimum guarantee that is recoupable against a sales-based royalty generated during the license year. Annual minimum guarantee amounts are billed quarterly, semi-annually, or annually in advance and these payments do not include a significant financing component. Earned royalties in excess of the minimum guarantee (“Excess Royalties”) are payable quarterly. The performance obligation is a license of symbolic IP that provides the customer with a right to access the IP, which represents a stand-ready obligation that is satisfied over time. We recognize revenue for the total minimum guarantee specified in the agreement on a straight-line basis over the term of the agreement and recognize Excess Royalties only when the annual minimum guarantee is exceeded. Generally, Excess Royalties are recognized when they are earned and the payment is usually due 30 days after the end of each reporting period. In the event that the collection of any royalty becomes materially uncertain or unlikely, we recognize revenue from our licensees up to the cash we have received. As the sales reports from licensees are typically not received until after the close of the reporting period, we follow the variable consideration framework and constraint guidance using the expected value method to estimate the underlying sales volume to recognize Excess Royalties based on historical experience and general economic trends. Historical adjustments to recorded estimates have not been material.

Digital Subscriptions and Content

Starting January 1, 2025, we licensed the operation of our Playboy Plus, Playboy TV (online and linear) and Playboy Club digital businesses, which were previously owned and operated by us and included in our former Digital Subscriptions and Content reportable segment in the prior year comparative period, to Byborg pursuant to the LMA. Revenues received pursuant to the LMA are recognized in accordance with our licensing revenue recognition policy.

Prior to January 1, 2025, digital subscription revenue was derived from subscription sales ofplayboyplus.com andplayboy.tv, which are online content platforms. Digital subscriptions represent stand-ready obligations to provide continuous access to our platforms, and they are satisfied ratably over the term of such subscriptions. We received fixed consideration shortly before the start of the subscription periods from these contracts, which were primarily sold in monthly, annual, or lifetime subscriptions. Revenues from lifetime subscriptions were recognized ratably over afive-year period, representing the estimated period during which the customer accesses the platforms. Revenues from digital subscriptions were recognized ratably over the subscription period. Revenues generated from the sales of creator content offerings and memberships to consumers via our Playboy Club creator platform were recognized at the point in time when the sale is processed. Revenues generated from subscriptions to our creator platform were recognized ratably over the subscription period.

Prior to January 1, 2025, revenues generated from the sales of creator content offerings to consumers on our Playboy Club creator platform were recognized at the point in time when the sale was processed, and the payment was due upon sale. Revenues generated from subscriptions to our creator platform and memberships to consumers were recognized ratably over the applicable subscription/membership period. We received fixed consideration shortly before the start of such subscription/membership periods, which were monthly, quarterly or annual.

Revenues generated from events and sponsorships are recognized when the event occurs, and the payment terms vary on a contract by contract basis and are usually based on contract milestones. Revenues generated from magazine sales and related promotional activities are recognized at the point in time when control is transferred to the customer, and the payment is due when a purchase is made. Effective January 1, 2025, such revenues and expenses, which were previously included in our Digital Subscriptions and Content segment, were 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.

Prior to January 1, 2025, we also licensed programming content to certain cable television operators and direct-to-home satellite television operators who paid royalties based on monthly subscriber counts and pay-per-view and video-on-demand buys for the right to distribute our programming under the terms of affiliation agreements. The distinct performance obligations under such affiliation agreements included (i) a continuous transmission service to deliver live linear feeds and (ii) licenses to our functional intellectual property that are provided over the contract term that provide the operators the right to use our content library as it exists at a point in time. For both performance obligations, our intellectual property was the predominant or sole item to which the royalties relate. Royalties were generally collected monthly and recognized as revenue as earned. The amount of royalties due to us was reported by operators based on actual subscriber and transaction levels. Such information was generally not received until after the close of the reporting period. In these cases, we followed the variable consideration framework and constraint guidance to estimate the number of subscribers and transactions to recognize royalty amounts based on historical experience. Historical adjustments to recorded estimates have been immaterial. We offered sales incentives through various programs, consisting primarily of co-op marketing. We recorded advertising with customers as a reduction to revenue unless we received a distinct benefit in exchange for credits claimed by the customer and could reasonably estimate the fair value of the distinct benefit received, in which case we recorded it as a marketing expense.

Contract Assets and Contract Liabilities

The timing of revenue recognition may differ from the timing of invoicing to customers. We record a receivable when we have an unconditional right to consideration which will become due solely due to the passage of time. We record a contract asset when revenue is recognized prior to invoicing or payment is contingent upon transfer of control of an unsatisfied performance obligation. We record a contract liability (deferred revenue) when revenue is recognized subsequent to cash collection. For long-term non-cancelable contracts whereby we have begun satisfying the performance obligation, we will record contract assets for the unbilled consideration which is contingent upon our future performance. Contract assets and contract liabilities are netted on a contract-by-contract basis.

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, referred to as gift card breakage. Depending on the jurisdiction in which we operate, gift cards sold to customers have expiration dates 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 December 31, 2025, 2024 and 2023, respectively. Revenue recognized from unredeemed gift card beginning balances was immaterial in 2025 and 2024.

Cost of Sales

Cost of sales primarily consist of merchandise costs, warehousing and fulfillment costs, agency and commission fees, website expenses, marketplace traffic acquisition costs, digital platform expenses (prior to January 1, 2025), transition expenses per the Transition Service Agreement (the “TSA”) (commencing January 1, 2025 through June 30, 2025), credit card processing fees, personnel and affiliate costs, including stock-based compensation, costs associated with brand related initiatives, customer shipping and handling expenses, fulfillment activity costs and freight-in expenses, offset by a reversal of related selling and administrative expenses due to settlement at a discount of certain payable balances in 2024.

Selling and administrative expenses primarily consist of corporate office and retail store occupancy costs, personnel costs, including stock-based compensation, transition expenses per the TSA (commencing January 1, 2025 through June 30, 2025), brand marketing costs, including magazine related and promotional activities, contractor fees for accounting/finance, legal, human resources, insurance, information technology and other administrative functions.

Advertising Costs

We expense advertising costs as incurred. Advertising expenses were $5.1 million and $4.9 million for the years ended December 31, 2025 and 2024, respectively. Prior to January 1, 2025, we also had various arrangements with customers pursuant to which we reimbursed them for a portion of their advertising costs in the form of cooperative marketing, which provided advertising benefits to us. The costs that we incur for such advertising costs are recorded as a reduction of revenue.

Stock-Based Compensation

We measure compensation expense for all stock-based payment awards, including stock options, restricted stock units and performance stock units granted to employees, directors, and non-employees, based on the estimated fair value of the awards on the date of grant. Compensation expense is recognized ratably in earnings, generally over the period during which the recipient is required to provide service. Forfeitures are recognized when they occur.

Our stock options vest ratably over their contractual vesting period, which is generally three tofour years, and the fair value of the awards is estimated on the date of grant using a Black-Scholes option pricing model. The expected term of the stock options is estimated using the simplified method, as we have limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for our stock option grants. The expected term represents an estimate of the time options are expected to remain outstanding.

Our restricted stock units vest ratably over the contractual vesting period and the fair value of the awards is estimated on the date of grant as the underlying value of the award. Awards with graded vesting features are recognized over the requisite service period for the entire award. Our performance-based restricted stock units (“PSUs”) vest ratably over the derived requisite service period, which is generallytwo years, or upon achieving one of certain Playboy’s performance milestones during the contractual vesting period, with certain awards vesting fully upon change in control of the Company or upon sale of the majority of the assets of the Company.

Troubled Debt Restructuring

As per Accounting Standards Codification (“ASC”) subtopic 470-60, “Troubled Debt Restructuring by Debtors” (“ASC 470-60”), a Troubled Debt Restructuring refers to a situation where the creditor grants concessions to a borrower experiencing financial difficulties. A lender is deemed to have granted a concession if the borrower’s effective interest rate on the restructured debt is less than the effective interest rate of the old debt immediately before the restructuring. Such restructuring is done with the intent to provide relief to the borrower and to maximize the potential for payable recovery by the lender.

In accordance with ASC 470-60, when the total future cash payments under the new terms are less than the carrying amount of the payable at the date of restructuring, the difference between the carrying amount and the total future cash payments is recognized as a gain on troubled debt restructuring in the consolidated financial statements. This gain is recorded immediately in the period the restructuring occurs. If the total future cash payments under the new terms exceed the carrying amount of the debt at the date of restructuring, no adjustment to the carrying amount of the debt is made. Instead, the Company calculates a new effective interest rate (“EIR”) based on the revised terms of the restructured debt. The debt is then amortized over the remaining term of the debt using the new EIR, with interest expense recognized based on such rate in future periods.

Income Taxes

We record income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards. The carrying amounts of deferred tax assets are reduced by a valuation allowance if, based on available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically based on the more-likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency, and severity of current and cumulative losses, the duration of statutory carryforward periods, and tax planning alternatives. We use a two-step approach in recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals and litigation processes, if any. The second step is to measure the largest amount of tax benefit as the largest amount that is more likely than not to be realized upon settlement. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Significant management judgment is required in determining provision for income taxes, deferred tax assets and liabilities, tax contingencies, unrecognized tax benefits, and any required valuation allowance, including taking into consideration the probability of the tax contingencies being incurred. Management assesses this probability based upon information provided by its tax advisers, its legal advisers and similar tax cases. If at a later time the assessment of the probability of these tax contingencies changes, accrual for such tax uncertainties may increase or decrease.

The Company has a valuation allowance due to management’s overall assessment of risks and uncertainties related to its future ability in the U.S. to realize and, hence, utilize certain deferred tax assets, primarily consisting of net operating losses (“NOLs”), carry forward temporary differences and future tax deductions.

The effective tax rate for annual and interim reporting periods could be impacted if uncertain tax positions that are not recognized are settled at an amount which differs from the Company’s estimate. Finally, if the Company is impacted by a change in the valuation allowance resulting from a change in judgment regarding the realizability of deferred tax assets, such effect will be recognized in the interim period in which the change occurs.

Comprehensive Loss

Comprehensive loss consists of net loss and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net loss. Our other comprehensive income represents foreign currency translation adjustment attributable to Honey Birdette operations. Refer to Consolidated Statements of Comprehensive Loss. Total foreign currency transaction gains and losses were $1.9 million of net gain and $1.6 million of net loss for the years ended December 31, 2025 and 2024, respectively.

Mezzanine Equity

Equity instruments that are redeemable for cash or other assets are classified as temporary equity if the instrument is redeemable, at the option of the holder, at a fixed or determinable price on a fixed or determinable date or upon the occurrence of an event that is not solely within the control of the issuer. Redeemable equity instruments are initially carried at the fair value of the equity instrument at the issuance date, which is subsequently adjusted to its redemptions value at each balance sheet date if the instrument is currently redeemable, or probable of becoming redeemable. Prior to August 22, 2025 our Series B Convertible Preferred Stock, par value $0.0001 per share, issued in connection with the Exchange Agreement, as described in Note 9, Debt, and Note 12, Convertible Preferred Stock, was classified as mezzanine equity in our accompanying consolidated financial statements. We elected the accreted redemption value method under which the Series B Convertible Preferred Stock accretes changes in redemption value over the period from the date of issuance (November 13, 2024) to the potential redemption date (December 31, 2027) using the effective interest method. Such adjustments are included in preferred stock accretion on the Series B Convertible Preferred Stock in our Consolidated Statements of Mezzanine Equity and Stockholders’ Equity (Deficit) and treated similarly to a dividend on preferred stock in accordance with U.S. GAAP. On August 22, 2025, we completed the conversion of all remaining outstanding shares of Series B Convertible Preferred Stock into shares of our common stock in accordance with the terms of the Series B Convertible Preferred Stock. As of the date of such conversion, we no longer had any shares of preferred stock outstanding. See Note 12, Convertible Preferred Stock, for further details regarding our Series B Convertible Preferred Stock.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss attributable to Playboy, Inc. stockholders by the weighted-average number of shares of common stock outstanding for the period. The diluted net loss per share is computed by giving effect to all potentially dilutive securities outstanding for the period. In calculating basic and diluted earnings per share, the Company must allocate earnings to its participating securities with a corresponding reduction in the earnings attributable to common shares under the two-class method. Losses are only allocated to participating securities when the security holders have a contractual obligation to share in the losses of the Company with common stockholders. Because the holders of the Series B Convertible Preferred Stock do not have a contractual obligation to share in the Company’s losses with its common stockholders, the full amount of the Company’s losses for the year ended December 31, 2024 was attributed to the shares of common stock. Thus, the Series B Convertible Preferred Stock discussed in Note 12, Convertible Preferred Stock, has not been included in the diluted earnings per share for the year ended December 31, 2024. In calculating diluted earnings per share, the weighted-average number of shares outstanding for the period is increased to include all potentially dilutive securities. 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 consolidated financial statements, as recognized losses related to the fair value remeasurement of our crypto assets during the year ended December 31, 2025 were immaterial, and the fair value of our crypto assets was immaterial as of December 31, 2025 and 2024.

In December 2023, the 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 adopted this ASU on a retrospective basis, and prior period income tax disclosures have been updated to conform to the new requirements. The adoption did not have a material impact on our consolidated financial statements; however, our income tax disclosures have been expanded. Refer to Note 16, Income Taxes, for further information.

Pronouncements Issued but Not Yet Adopted

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 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 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 consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270), which is intended to improve the navigability of the required interim disclosures and clarifies when the guidance is applicable, as well as provides additional guidance on what disclosures should be provided in interim reporting periods. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods beginning after December 15, 2028. We are currently evaluating the anticipated impact of this pronouncement on our disclosures and our consolidated financial statements.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which is intended to address suggestions received from stakeholders regarding the Accounting Standards Codification and makes other incremental improvements to U.S. GAAP. The update represents changes to the Codification that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years. Entities will be required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. Early adoption is permitted. We are currently evaluating the anticipated impact of this pronouncement on our disclosures and our 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 December 31, 2025 and 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 as of December 31, 2025 and 2024 approximates fair value, as our debt is variable-rate debt that reprices to current market rates frequently. Refer to Note 9, Debt, foradditional disclosures about our debt. Our debt is classified within Level 2 of the valuation hierarchy.

The fair value of our artwork is based on 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.

Assets and 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 Level 3 financial instruments 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 acquired to build our creator platform, and represents the fair value for shares which may be still be issued and cash which may be paid to the GlowUp sellers, subject to certain indemnification obligations that remained unsettled as of December 31, 2025 and 2024.

We recorded the acquisition-date fair value of these contingent liabilities as part of the consideration transferred. The fair value option was elected for these contingent liabilities, as we believe fair value best reflects the expected future economic value. The fair value of contingent and deferred consideration was estimated using either (i) a Monte Carlo simulation analysis in an option pricing framework, using revenue projections, volatility and stock price as key inputs or (ii) a scenario-based valuation model using probability of payment, certain cost projections, and either discounting (in the case of cash-settled consideration) or stock price (for share-settled consideration) as key inputs. The analysis approach was chosen based on the terms of the purchase agreement and our assessment of appropriate methodology. The contingent payments and value of stock issuances are subsequently remeasured to fair value each reporting date using the same fair value estimation method originally applied with updated estimates and inputs as of December 31, 2025. Fair value change as a result of contingent liabilities fair value remeasurement in 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 key inputs 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 year ended December 31, 2025 (in thousands):

The increase in the fair value of the contingent consideration for the year ended December 31, 2025 was primarily due to the increase in the price per share of our common stock.

The fair value of our digital assets held, the cryptocurrency “Ethereum”, is based on Level 1 inputs. Recognized losses related to the fair value remeasurement of our digital assets during the year ended December 31, 2025 were immaterial, and the fair value of our digital assets was immaterial as of December 31, 2025 and 2024. Periods prior to December 31, 2025 include digital assets at cost, net of impairment losses incurred since their acquisition, which were immaterial for the year ended December 31, 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, the Company records assets and liabilities at fair value on a nonrecurring basis. Generally, the Company’s 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.

We use an income approach, using discounted cash flow and relief from royalty valuation models with Level 3 inputs to measure the fair value of our non-financial assets, including goodwill, indefinite-lived trademarks and definite-lived trade names, and liabilities. With respect to goodwill, key assumptions applied in an income approach using the discounted cash flow valuation model include revenue growth rates and discount rates. With respect to indefinite-lived trademarks, key assumptions used in the income approach and the relief from royalty valuation model include revenue growth rates, royalty rates, and discount rates. With respect to the definite-lived trade names, key assumptions used in the relief from royalty valuation model include revenue growth rates, royalty rates and discount rates. Our cash flow projections represent management’s most recent planning assumptions, which are based on a combination of industry outlooks, views on general economic conditions, our expected pricing plans and expected future savings. Terminal values are determined using a common methodology of capturing the present value of perpetual cash flow estimates beyond the last projected period assuming a constant weighted-average cost of capital and long-term growth rates. Changes in key assumptions, namely discount rates, royalty rates and growth rates, could have an impact on the fair value of our non-financial assets and liabilities. At the impairment date in the third quarter of 2024, we recorded non-cash asset impairment charges related to the write-down of goodwill of $17.0 million. There wereno impairment charges on our goodwill during the year ended December 31, 2025.

In the third quarter of 2024, we had impairment indicators with respect to our Playboy Club creator digital platform associated with a decrease in its revenue projections, and we determined that its carrying value was not recoverable as of September 30, 2024. As a result, we recorded $4.7 million ofimpairment charges related to the write-off of its internally developed software during the year ended December 31, 2024. There wereno such impairment charges during the year ended December 31, 2025.

During the year ended December 31, 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 aggregate amount of $0.4 million due to our decision to sublease certain of our corporate office space. Impairment charges on right-of-use assets pertaining to our corporate leases during the year ended December 31, 2024 were $0.6 million.

The following table provides information regarding significant unobservable inputs used in the valuation of our goodwill measured and recorded at fair value at the impairment date (dollar amounts in thousands):

Assets Held for Sale

In the fourth quarter of 2023, in connection with our transition to a more capital-light business model and to release additional working capital, we initiated the sale of certain pieces of our artwork at auction, but they were not fully disposed of as of December 31, 2025 or 2024. As of December 31, 2025 and 2024, unsold artwork assets met the criteria discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, to be classified as current assets held for sale in our consolidated balance sheets as of December 31, 2025 and 2024.

During the year ended December 31, 2025 and 2024, we sold certain pieces of our artwork held for sale for $0.8 million and $2.7 million, respectively, recording a $0.4 million loss on sale in each of the years of 2025 and 2024.

Additionally, we recorded $0.5 million and $3.8 million of impairment charges on our artwork in 2025 and 2024, respectively. Artwork classified as current assets held for sale in our accompanying consolidated balance sheets totaled $3.1 million and $4.8 million as of December 31, 2025 and 2024, respectively.

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.

Series B Convertible Preferred Stock

On November 13, 2024, pursuant to the Exchange Agreement (as defined in Note 9 below), we issued an aggregate of 28,000.00001 shares of a newly created series of our preferred stock, par value $0.0001 per share, designated as “Series B Convertible Preferred Stock” (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 the A&R Credit Agreement (as such terms are defined in Note 9, Debt, refer to such Note 9, Debt, for additional details).

The fair value of our only currently authorized (but no longer issued or outstanding as of December 31, 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 is classified as mezzanine equity in our consolidated balance sheets as of December 31, 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 12, 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.

The following table provides information regarding significant unobservable inputs used in the valuation of our Series B Convertible Preferred Stock measured and recorded at fair value at the measurement date:

3. Revenue Recognition

Contract Balances

Our contract assets relate to our trademark licensing revenue stream where 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 consolidated balance sheets as of December 31, 2025 and 2024.

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

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

Future Performance Obligations

As of December 31, 2025, unrecognized revenue attributable to unsatisfied and partially unsatisfied performance obligations under our long-term contracts was $348.1 million, of which $343.1 million related to trademark licensing, including minimum guaranteed royalties from licensed digital operations per the LMA, $2.4 million pertained to December 31, 2024 deferred revenue balances from our legacy digital subscriptions and products operations and $2.6 million related to direct-to-consumer products.

Unrecognized revenue of the trademark licensing revenue stream will be recognized over the next 14 years, of which 47% will 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 the digital subscriptions and products revenue stream, which pertains to related deferred revenue balances as of December 31, 2024, will be recognized over the next four years, of which 52% will be recognized in the first year.

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 (first-in, first-out) and net realizable value (in thousands):

At December 31, 2025 and 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 are set forth in the table below (in thousands):

6. Property and Equipment, Net

Property and equipment, net is set forth in the table below (in thousands):

The aggregate depreciation expense related to property and equipment, net was $1.6 million and $5.5 million for the years ended December 31, 2025 and 2024, respectively.

7. Intangible Assets and Goodwill

Intangible Assets

Our indefinite-lived intangible assets that are not amortized but subject to annual impairment testing consist of $146.3 million and $145.7 million of Playboy-branded trademarks as of December 31, 2025 and 2024, respectively. Capitalized trademark costs include costs associated with the acquisition, registration and/or renewal of our trademarks. We expense certain costs associated with the defense of our trademarks. Registration and renewal costs capitalized during the years ended December 31, 2025 and 2024 were immaterial.

The table below summarizes our intangible assets, net (in thousands):

Impairment charges related to our digital assets, comprised of the cryptocurrency “Ethereum”, were immaterial for the years ended December 31, 2025 and 2024.

Our amortizable intangible assets consisted of the following (in thousands):

The aggregate amortization expense for definite-lived intangible assets was $1.5 million for the years ended December 31, 2025 and 2024.

As of December 31, 2025, expected amortization expense relating to definite-lived intangible assets for the next five years and thereafter is as follows (in thousands):

Goodwill

As a result of ongoing impacts to our revenue, including declines in consumer demand and discontinued operations, we recorded non-cash asset impairment charges, at the impairment date in the third quarter of 2024, related to the write-down of goodwill of $17.0 million.

Changes in the carrying value of goodwill for the years ended December 31, 2025 and 2024 were as follows (in thousands):

Changes in the recorded carrying value of goodwill for the year ended December 31, 2025 by reportable segment were as follows (in thousands):

8. Other Current Liabilities and Accrued Expense

Other current liabilities and accrued expenses are set forth in the table below (in thousands):

The LMA with Byborg that was entered into during the fourth quarter of 2024 became effective January 1, 2025. There was a transition period under which we continued 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 worked to take full operational control. The first $5.0 million of operating expenses incurred in relation to such licensed businesses was our responsibility to bear. Any operating expenses paid by us with respect to such licensed businesses above the $5.0 million threshold are reimbursable 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 December 31, 2025, the remittances payable to Byborg totaled $2.8 million. 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.

9. Debt

The following table sets forth debt (in thousands):

Term Loan

On March 27, 2024, we entered into Amendment No. 2 (the “A&R Second Amendment”) to our Amended and Restated Credit and Guaranty Agreement, dated as of May 10, 2023 (as amended on November 2, 2023, the “A&R Credit Agreement”), which provided for, among other things:

(a) the amendment of the Total Net Leverage Ratio covenant to (i) suspend testing of such covenant until the quarter ending June 30, 2026, (ii) adjust the Total Net Leverage Ratio financial covenant levels once the covenant testing is resumed, and (iii) add a mechanism for the Total Net Leverage Ratio to be eliminated permanently upon the satisfaction of certain prepayment-related conditions (the date upon which such prepayment-related conditions are satisfied, the “Financial Covenant Sunset Date”);

(b) the addition of a covenant to maintain a $7.5 million minimum balance of unrestricted cash and cash equivalents (on a consolidated basis), subject to periodic testing and certification, as well as the ability to cure a below-minimum balance, and which covenant will be in effect (i) from March 27, 2024 until March 31, 2026 and (ii) from and after the Financial Covenant Sunset Date; and

(c) that assignments of commitments or loans under the A&R Credit Agreement from existing lenders to certain eligible assignees under the A&R Credit Agreement (i.e. a commercial bank, insurance company, investment or mutual fund or other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act of 1933) and which extends credit or buys loans in the ordinary course of business) shall not require consent from us while the minimum cash balance financial covenant is in effect.

The other terms of the A&R Credit Agreement prior to the A&R Second Amendment remained substantially unchanged.

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 SOFR, 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 remain 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 will commence accruing six months after the issuance date, which will be payable in cash or in-kind, solely at our discretion. We have 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. Refer to Note 12, Convertible Preferred Stock, for further details in regards to the Series B Convertible Preferred Stock.

We performed an assessment of the A&R Third Amendment, on a lender-by-lender basis, and determined that the transaction met the criteria for a troubled debt restructuring under ASC 470-60, Troubled Debt Restructurings by Debtors, as we were experiencing financial difficulties and the lenders granted a concession. However, the total future cash payments under the new debt terms exceeded the carrying amount of our senior secured debt at the date of transaction, therefore, no adjustment to the carrying amount of the senior secured debt was made. Instead, we calculated a new effective interest rate (“EIR”) based on the revised terms of the debt. The debt premium/discount is then amortized over the remaining term of the debt using the new EIR, with interest expense recognized based on such rate in future periods. Third party fees of $0.5 million incurred in connection with the A&R Third Amendment were recorded in Other (expense) income, net in the consolidated statements of operations for the year ended December 31, 2024.

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 more than $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. No applicable prepayments had been made as of December 31, 2025.

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.

On November 10, 2025, we 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% or 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, we also paid a fee of $0.4 million to our lenders. The other terms of the A&R Credit Agreement prior to the A&R Sixth Amendment remain substantively unchanged. No prepayments were made in the fourth quarter of 2025 or January 2026.

We performed an assessment of the A&R Sixth Amendment, on a lender-by-lender basis, and determined that the transaction met the criteria for a troubled debt restructuring under ASC 470-60, Troubled Debt Restructurings by Debtors, as we were experiencing financial difficulties and the lenders granted a concession. However, the total future cash payments under the new debt terms exceeded the carrying amount of our senior secured debt at the date of transaction, therefore, no adjustment to the carrying amount of the senior secured debt was made. Instead, we calculated a new effective interest rate (“EIR”) based on the revised terms of the debt. The debt premium/discount is then amortized over the remaining term of the debt using the new EIR, with interest expense recognized based on such rate in future periods.

As a result of A&R Fourth Amendment, A&R Fifth Amendment and A&R Sixth Amendment, debt issuance costs of $0.5 million were capitalized in 2025. In addition, third party fees of $0.2 million expensed in the period they were incurred in connection with such amendments were recorded in Other (Expense) Income, net during 2025.

The stated interest rate of each of Tranche A and Tranche B of the A&R Term Loans as of December 31, 2025 was 10.08%. 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 A&R Term Loans as of December 31, 2025 was 3.88% and 6.34%, respectively. The effective interest rate of Tranche A and Tranche B A&R Term Loans as of December 31, 2024 was 1.05% and 4.93%, respectively. The difference between the stated interest rate and effective interest rate for Tranche B as of December 31, 2024 was driven primarily by the amortization of $21.3 million of debt discount which is included in the calculation of the effective interest rate.

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

The following table sets forth maturities of the principal amount of our A&R Term Loans as of December 31, 2025 (in thousands):

10. Redeemable Noncontrolling Interest

On April 13, 2015, the Company sold 25% of the membership interest in its subsidiary, After Dark LLC, to an unaffiliated third party for $1.0 million. As part of the arrangement the Company granted a put right to this party which provides the right, but not the obligation, to the third party to cause the Company to purchase all of the third party’s interest in After Dark LLC at the then fair market value. This put right can be exercised on April 13 of each year. Additionally, the put right can be exercised upon a change of control of the Company. To date, the put right has not been exercised. The Company’s controlling interest in this subsidiary requires the operations of this subsidiary to be included in the consolidated financial statements. Noncontrolling interest with redemption features, such as put options, that are not solely within our control are reported as redeemable noncontrolling interest on the consolidated balance sheets as of December 31, 2025 and 2024, between liabilities and equity. Net income or loss of After Dark LLC is allocated to its noncontrolling member interest based on the noncontrolling member interest’s ownership percentage. There were no operations attributable to redeemable noncontrolling interest that need to be reported in the consolidated statements of operations for the years ended December 31, 2025 and 2024. There was no change in the balance of the redeemable noncontrolling interest as After Dark LLC did not have any operating activities during 2025 and 2024.

11. Stockholders’ Equity

Common Stock

The holders of the Company’s common stock haveone vote for each share of common stock. Common stockholders are entitled to dividends when, as, and if declared by the Company’s Board of Directors (the “Board”). As of December 31, 2025, no dividends had been declared by the Board.

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:

Common stock reserved for future issuance consisted of the following as of the dates shown:

In 2025, we sold shares of our common stock pursuant to our previously registered and announced at-the-market (“ATM”) offering, selling a total of 5,253,769 shares for net proceeds of $10.3 million. As of December 31, 2025, we had $4.2 million of remaining capacity under the ATM. On February 23, 2026, we increased the availability under our ATM to $200,000,000 worth of our common stock.

Treasury Stock

We held 2,249,929 shares of treasury stock as of December 31, 2025 and 2024.

12. 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,50,000 shares were previously designated as “Series A Preferred Stock” (which series of preferred stock ceased to be outstanding as of May 10, 2023 and was legally eliminated on November 12, 2024), and 28,001 shares are designated as “Series B Convertible Preferred Stock”.

Series B Convertible Preferred Stock

On November 13, 2024, pursuant to the Exchange Agreement, we issued to our lenders an aggregate of 28,000.00001 shares of the newly created 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 (and as defined in) that certain A&R Credit Agreement.

The Series B Convertible Preferred Stock ranks senior and in priority of payment to the Company’s common stock with respect to distributions on liquidation, winding-up and dissolution. Each share of Series B Convertible Preferred Stock has a liquidation preference equal to the sum of (i) $1,000 (the “Stated Value”) and (ii) all accumulated and unpaid dividends (the “Liquidation Preference”).

Commencing as of May 13, 2025, holders of shares of Series B Convertible Preferred Stock were entitled to receive dividends on such shares (the “Preferred Dividends”). With respect to each share of Series B Convertible Preferred Stock, Preferred Dividends shall accrue daily at a rate of 12.0% per annum (the “Dividend Rate”) on the Stated Value of such share, and will either be payable quarterly in arrears in cash at the sole discretion of the Board, or automatically accrue by increasing the Stated Value of such share and compounded quarterly in arrears. In the event of an Event of Default (as defined in the Certificate of Designation) that remains uncured for 30 days following its occurrence, the Dividend Rate would increase 2% for so long as such Event of Default is continuing.

Holders of shares of Series B Convertible Preferred Stock are also entitled, in certain limited circumstances set forth in the Certificate of Designation, to receive distributions in the same form as dividends actually paid on shares of any Common Stock of the Company (the “Participating Dividends”). With respect to each share of Series B Convertible Preferred Stock, the Participating Dividends would be paid at the Conversion Price (as defined below) as if such share were to be converted into a share of Common Stock.

The Company may, in its sole discretion, effect a conversion of all or a portion of the Series B Convertible Preferred Stock according to the terms set forth in the Certificate of Designations, at the Conversion Price, provided that, on the date of delivery of conversion notice, the Average Price (as defined below) of such Series B Convertible Preferred Stock is at least $1.50. “Conversion Price” means, with respect to each share of Series B Convertible Preferred Stock, (i) if the average of the volume-weighted average price per share of Common Stock over thefive-day trading period prior to the delivery of conversion notice (the “Average Price”) is equal to $1.50, then $1.50; (ii) if such Average Price is greater than $1.50 but less than $4.50, then the Average Price; and (iii) if such Average Price is equal to or greater than $4.50, then $4.50. In connection with conversions, the Certificate of Designation contains limitations on beneficial ownership that, notwithstanding the above, a conversion may still not occur in certain cases where such conversion would result in a holder’s ownership exceeding certain customary limitations.

At any time, the Company will have the right, at its option, to redeem, in whole or in part, the Series B Convertible Preferred Stock for cash. The Company would otherwise be required to redeem any then-still outstanding Series B Convertible Preferred Stock in full on December 31, 2027, or upon certain changes of control of the Company, subject to the terms of the Certificate of Designation.

The redemption price would be equal to (i) in the event of a voluntary redemption, the aggregate Liquidation Preference of shares of Series B Convertible Preferred Stock being redeemed, and (ii) in the event of a mandatory redemption, the greater of (a) the Liquidation Preference of such shares and (b) the Average Price of the Common Stock issuable upon conversion of a number of shares Series B Convertible Preferred Stock, which number is equal to the quotient of the Conversion Price of such shares (as if the redemption of such shares were a conversion thereof) divided by $1.50; provided, however, if the mandatory conversion is triggered by a change of control event and the obligations under the Credit Agreement have been paid in full, then the redemption price will be an amount equal to the Liquidation Preference.

Holders of the Series B Convertible Preferred Stock would generally not be entitled to vote on any matter required or permitted to be voted upon by the stockholders of the Company. However, certain matters will require the approval of the holders of not less than the majority of the aggregate Liquidation Preference of the outstanding Series B Convertible Preferred Stock, voting as a separate class, including (1) certain business activities of the Company, (2) certain amendments to the organizational documents of the Company, (3) the incurrence or issuance by the Company of certain indebtedness or shares of senior equity securities, (4) any change to the authorized number of Series B Convertible Preferred Stock shares or (5) taking any action to effect any voluntary deregistration of the Company’s common stock or any voluntary delisting with Nasdaq of the common stock, in each case subject to certain conditions and exceptions.

Holders who each hold Series B Convertible Preferred Stock with aggregate Liquidation Preference in excess of $1 million are entitled to certain customary information rights. Holders of at least 50% of the Series B Convertible Preferred Stock outstanding are entitled to designate one individual as a non-voting observer to the Company’s board of directors.

The fair value of the Series B Convertible Preferred Stock, initially measured as of November 13, 2024 (the initial issuance date) was $23.1 million. In the fourth quarter of 2024, we recognized a $0.8 million of accretion to its redemption value, resulting in a $23.9 million mezzanine equity balance in the consolidated balance sheet as of December 31, 2024.

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 our 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 our 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. In 2025, we recognized $2.7 million of accretion to the Series B Convertible Preferred Stock’s redemption value recorded in our Consolidated Statement of Mezzanine Equity and Stockholders’ Equity (Deficit) for the year ended December 31, 2025.

13. Stock-Based Compensation

In June 2018, Playboy Enterprises, Inc., a Delaware corporation (“PEI”) adopted its 2018 Equity Incentive Plan (“2018 Plan”), under which 6,287,687 of PEI’s common shares were originally reserved for issuance. Stock options and restricted stock unit awards previously granted under the 2018 Plan that were outstanding immediately prior to the consummation of PEI’s 2021 business combination with the predecessor of Playboy, Inc. (the “Business Combination”) were accelerated and fully vested, and subsequently converted into options to purchase or the right to receive shares of our common stock. Certain of our officers retain outstanding non-qualified stock options under the 2018 Plan.

On February 9, 2021, our stockholders approved our 2021 Equity and Incentive Compensation Plan (“2021 Plan” and with the 2018 Plan, the “Plans”), which became effective following consummation of the Business Combination. As of December 31, 2025,14,331,506 shares of common stock had been authorized for issuance under our 2021 Plan. In addition, the shares authorized for the 2021 Plan may be increased on an annual basis via an evergreen refresh mechanism for a period of up to 10 years, beginning with the fiscal year that begins January 1, 2022, in an amount equal up to 4% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year. Following the effectiveness of the 2021 Plan, the 2018 Plan still remains outstanding and continues to govern outstanding awards granted thereunder.

Stock Option Activity

Stock option activity under our Plans in 2025 was as follows:

The aggregate intrinsic value at December 31, 2025 and 2024 is calculated as the difference between the exercise price of all outstanding and exercisable stock options and the fair value of the Company’s common stock at December 31, 2025 and 2024, respectively.

There wereno stock options granted or exercised during the year ended December 31, 2024. The grant date fair value of options that vested during the years ended December 31, 2025 and 2024 was $0.5 million during each year.

Restricted Stock Units

A summary of restricted stock unit activity under our Plans in 2025 was as follows:

The total fair value of restricted stock units that vested during the years ended December 31, 2025 and 2024 was approximately $4.8 million and $1.9 million, respectively. The weighted-average fair value of restricted stock units granted during the year ended December 31, 2024 was $0.83 per share at the grant date. We had 1,846,766 and 72,000 of outstanding and fully vested restricted stock units that remained unsettled at December 31, 2025 and December 31, 2024, respectively, all of which were resolved in 2026 and 2025, respectively. As such, they were excluded from outstanding shares of common stock but were included in weighted-average shares outstanding for the calculation of basic net loss per share for the year ended December 31, 2025 and 2024. The total tax benefit realized from restricted stock units vested was $0.2 million in 2025 and $0.1 million in 2024.

Performance Stock Units

A summary of PSU activity under our 2021 Plan in 2025 was as follows:

The total fair value of PSUs that vested during the years ended December 31, 2025 and 2024 was $0.3 million and $0.5 million, respectively. We had 155,816 outstanding and fully vested PSUs that remained unsettled at December 31, 2025, all of which were settled in 2026. As such, they are excluded from outstanding shares of common stock but are included in weighted-average shares outstanding for the calculation of net loss per share for the year ended December 31, 2025. There wereno outstanding and fully vested PSUs that remained unsettled at December 31, 2024. The weighted-average fair value of PSUs that vested during the year ended December 31, 2024 was $12.48 per share at the grant date. There wereno PSUs granted during the year ended December 31, 2024. The total tax impact realized from performance stock units vested in 2025 and 2024 wasimmaterial.

Stock-Based Compensation Expense

Stock-based compensation expense under our Plans was as follows (in thousands):

At December 31, 2025, there wasno unrecognized stock-based compensation expense related to unvested stock options or PSUs as all previously unvested and outstanding stock options and PSUs were fully vested as of December 31, 2025. Unrecognized compensation cost related to unvested RSUs was $1.8 million and is expected to be recognized over the remaining weighted-average service period of 0.40 years.

14. Commitments and Contingencies

Leases

Our principal lease commitments are for office, retail store and warehouse spaces under noncancellable operating leases with contractual terms expiring from 2026 to 2037. Some of these leases contain renewal options and rent escalations.

We had $4.4 million in cash collateralized letters of credit related to our corporate headquarters lease, the lease of office space in Miami Beach, and Honey Birdette’s term deposit in relation to its Sydney office lease as of December 31, 2025, and $1.8 million in a cash collateralized letter of credit related to our corporate headquarters lease and Honey Birdette’s term deposit in relation to its Sydney office lease as of December 31, 2024.

We subleased space in our corporate office for fixed rent, which arrangement expires in 2027. We also subleased a part of our former New York office space for a period that approximated the term of such lease that expired in 2024.

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 consolidated balance sheet as of December 31, 2025. All other terms of such lease remained the same.

In relation to the operations of Honey Birdette, we had 51 retail stores, one warehouse andtwo office spaces as of December 31, 2025, which Honey Birdette leases and operates in Australia, the United States and the United Kingdom for the purpose of selling its products to customers. The majority of the leases are triple net leases, for which Honey Birdette, as a lessee, is responsible for paying rent as well as common area maintenance, insurance and taxes. Lease terms run betweentwo and 10 years in length, with the average lease term being approximately five years and, in many cases, include renewal options.

Lease cost associated with operating leases is charged to selling, general and administrative expense, with an immaterial amount charged to cost of sales, in the year incurred and is included in our consolidated statements of oper ations. Most of our leases includeone or more options to renew, with renewal terms that generally can extend the lease term for an additional four tofive years. The exercise of lease renewal options is at our sole discretion. The extension period has not been included in the determination of the right of use asset or the lease liability, as we concluded that it is not reasonably certain that we would exercise such option.

Finance leases as of December 31, 2025, and their related costfor theyear ended December 31, 2025, were immaterial and were included in Other noncurrent assets in our consolidated balance sheet as of December 31, 2025, with the amortization of the related right-of-use assets being included in selling, general and administrative expenses and interest on the lease liabilities being included in interest expense in our consolidated statements of operations for the year ended December 31, 2025. There were no finance leases for the year ended December 31, 2024.

As of December 31, 2025 and 2024 the weighted average remaining term of these operating leases was 3.9 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 8.2% and 7.2%, respectively. Cash payments for amounts included in the measurement of operating lease liabilities were $8.6 million and $8.5 millionfor the years ended December 31, 2025 and 2024, respectively. Right of use assets obtained in exchange for new operating lease liabilities for the years ended December 31, 2025 and 2024 were $3.9 million and $2.3 million, respectively.

Net lease cost recognized in our consolidated statements of operations as of December 31, 2025 and 2024 is summarized in the table below (in thousands).

Maturities of our operating lease liabilities as of December 31, 2025 were as follows (in thousands):

Future minimum lease payments that are contractually due to us from our sublease arrangements as of December 31, 2025 were as follows (in thousands):

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 as of December 31, 2025, it is not reflected in our consolidated financial statements or in the tables above. 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.

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 are seeking 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, New Handong has not complied with the requirements of such decision. PEII and the Company are seeking enforcement of the Arbitration award in China through the Chinese courts. There can be no assurance that New Handong will comply with a Chinese court’s actions in the future, including making the required monetary payments to PEII and the Company.

Former Model Case

On July 5, 2024, a former Playboy model filed a complaint against the Company, certain of the Company’s affiliates and A&E Television Networks LLC (“A&E”, and collectively, with the Company and its affiliates, the “Defendants”) in California Superior Court for claims arising from A&E’s “Secrets of Playboy” show (the “A&E Show”) which showed certain Playboy videos that depicted the former model. Neither the Company nor its affiliates participated in any way in the creation, production, distribution or airing of the A&E Show, nor did the Company or its affiliates license or otherwise authorize use of the videos in the A&E Show. The complaint alleged, among other things, invasion of privacy, appropriation, distribution of private explicit video, negligence and unfair competition by the Defendants to the detriment of the former model. The lawsuit sought at least $2 million in damages from the Defendants. As neither the Company nor its affiliates participated in any way in the creation, production, distribution or airing of the A&E Show, nor did the Company or its affiliates license or otherwise authorize use of the videos in the A&E Show, this case was dismissed as to the Company and its affiliates, with prejudice, on April 1, 2025.

15. 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 capital-light model. Severance costs recorded in “All Other” in the table below for the year ended December 31, 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 year ended December 31, 2025 were primarily related to brand marketing activities. Refer to Note 20, Segments, for further details. Severance costs are recorded inselling and administrative expenses in our consolidated statements of operations, and in other current liabilities and accrued expenses in our consolidated balance sheets. The cumulative amount of related severance costs incurred starting in 2023 was $7.1 million as of December 31, 2025.

Severance costs in our 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 consolidated balance sheets (in thousands):

16. Income Taxes

The following table sets forth the domestic and foreign components of loss before income taxes (in thousands):

The following table sets forth income tax benefit (expense) (in thousands):

We adopted ASU 2023-09 “Income Taxes (Topic 740) Improvements to Income Tax Disclosures” on a retrospective basis beginning with the year ended December 31, 2024. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective tax amount and rate (in thousands, except percentages):

(1)The state and local jurisdiction that contributes to the majority (greater than 50%) of the tax effect in this category is California.

On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law in the United States and includes a 15% book minimum tax on corporations with financial accounting profits over $1 billion and a 1% excise tax on certain stock buybacks. The IRA also contains numerous clean energy tax incentives related to electricity production, carbon sequestration, alternative vehicles and fuels, and residential and commercial energy efficiency. The IRA did not have any material impact on the Company’s consolidated financial statements for the years ended December 31, 2025 and 2024.

The Company repatriated foreign earnings of $6.1 million to the United States for the year ended December 31, 2025. Due to the Company’s overall losses incurred and the deduction in the United States for dividends received, such repatriation did not have any material impact on the Company’s tax provision for the year ended December 31, 2025.

Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to apply in the years in which the temporary differences are expected to reverse.

The following table sets forth the significant components of deferred tax assets and liabilities (in thousands):

The realization of deferred income tax assets may be dependent on the Company’s ability to generate sufficient income in future years in the associated jurisdiction to which the deferred tax assets relate. The Company considers all available positive and negative evidence, including scheduled reversals of deferred income tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based on the review of all positive and negative evidence, including a three-year cumulative pre-tax loss, the Company concluded that except for the deferred tax liability recorded on certain indefinite life intangibles, it should record a full valuation allowance against all other net deferred income tax assets at December 31, 2025 and 2024 as none of these deferred income tax assets were more likely than not to be realized as of the balance sheet dates. However, the amount of the deferred income tax assets considered realizable may be adjusted if estimates of future taxable income during the carryforward period are increased or if objective negative evidence in the form of cumulative losses is no longer present. Based on the level of historical operating results the Company has recorded a valuation allowance of $90.8 million and $86.8 million as of December 31, 2025 and 2024, respectively. During the years ended December 31, 2025 and 2024, the Company’s valuation allowance increased by $4.0 million and increased by $14.7 million, respectively. The increase in valuation allowance in 2025 and 2024 was primarily driven by the increase of federal and foreign NOLs.

As of December 31, 2025, the Company had U.S. federal and state NOL carryforwards of $378.6 million and $149.1 million, respectively, available to offset taxable income in tax year 2025 and thereafter. Of the $378.6 million in federal NOL carryforwards, $196.2 million can be carried forward indefinitely, and the remaining NOL carryforwards start to expire in 2028. Of the $149.1 million in state NOL carryforwards, $9.4 million can be carried forward indefinitely and the remaining start to expire in 2028. The Company also had Australian NOLs, United Kingdom (“U.K.”) NOLs and Hong Kong NOLs of $11.9 million, $1.2 million and $0.2 million, respectively, that can be carried forward indefinitely.

Tax laws impose restrictions on the utilization of NOL carryforwards in the event of a change in ownership of the Company as defined by Internal Revenue Code Sections 382 and 383. The Company has experienced ownership changes in the past that impact the availability of its net operating losses and tax credits. The Company’s ability to utilize existing carryforwards could be substantially restricted should there be additional ownership changes in the future.

A summary of changes to the amount of unrecognized tax benefits is as follows (in thousands):

The Company records a tax benefit from uncertain tax positions only if it is more likely than not the tax position will be sustained with the taxing authority having full knowledge of all relevant information. The Company records a reduction to deferred tax assets for unrecognized tax benefits from uncertain tax positions as discrete tax adjustments in the first period that the more-likely-than-not threshold is not met. The Company recorded unrecognized net tax benefits of $0.6 million for the year ended December 31, 2025 and $0.5 million for the year ended December 31, 2024. The unrecognized tax benefits are related to foreign withholding taxes on the Company’s licensing revenue, allocation of expenses between foreign jurisdictions and permanent establishment risk in a foreign country.

The reversal of the uncertain tax benefits would affect the effective tax rate. The Company has not incurred any material interest or penalties as of the current reporting period with respect to income tax matters. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. We estimate that none of the unrecognized tax benefits will be recognized over the next 12 months. As of December 31, 2025 and 2024, there were no material interest and penalties associated with unrecognized tax benefits recorded in the Company’s consolidated statements of operations or consolidated balance sheets.

The Company is subject to examinations by taxing authorities for income tax returns filed in the U.S. federal and states as well as foreign jurisdictions. The Company is no longer subject to income tax examination by the U.S. federal, state or local tax authorities for years ended December 31, 2020 or prior; however, its tax attributes, such as NOL carryforwards, are still subject to examination in the year they are used. In our foreign tax jurisdictions, the statute of limitation for tax years after 2019 remain open for examinations in Australia, for tax years after 2021 in the U.K., and for tax years after 2023 in China and Hong Kong.

The amounts of cash income taxes paid by the Company were as follows (in thousands):

17. Net Loss Per Share

The following table presents the reconciliation of weighted-average shares used in computing net loss per share, basic and diluted:

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

18. Accrued Salaries, Wages, and Employee Benefits

We maintain a 401(k) retirement savings plan (the “401(k) Plan”) for all eligible employees in the United States. The 401(k) Plan offers several mutual fund investment options. The purchase of our stock has never been an option in the 401(k) Plan. We make matching contributions to the 401(k) Plan based on each participating employee’s contributions and eligible compensation. The matching contribution expense related to the 401(k) Plan was $0.3 million for each of the years ended December 31, 2025 and 2024. We are also party to an Australian contribution plan that requires contributions based on a percentage of annual compensation. Contributions to such plans totaled $1.2 million and $1.0 million for the years ended December 31, 2025 and 2024, respectively.

19. Related Party Transactions

Transactions with Former China JV Partner

In the first quarter of 2023, we entered into a joint venture for Playboy’s China business (the “China JV”) with CT Licensing Limited, a brand management unit of Fung Group, representing many global brands in China, to jointly own and operate the Playboy licensed business in China (including Hong Kong and Macau). For the year ended December 31, 2025 and 2024, the China JV partner earned approximately $0.6 million and $0.4 million in cash dividends, respectively.

In December 2023, we entered into a short-term loan agreement with an affiliate of our China JV partner to support the affiliate’s operating activities related to the China JV. The unsecured loan of $1.2 million accrued interest at a rate of 7.82% per annum and matured as of February 28, 2024. In January 2024, the loan was repaid in full.

In August 2024, we entered into another short-term loan agreement with an affiliate of our China JV partner and shareholder for $96,000. The advanced amounts accrued interest at a rate of 5.00% per annum. The balance as of December 31, 2024 was approximately $40,000. The loan was repaid by the retention of applicable dividends earned and was repaid in full in 2025.

As of October 1, 2025, we and an affiliate of CT Licensing Limited entered into an agency agreement (the “Agency Agreement”), pursuant to which we and CT Licensing Limited agreed to terminate our joint venture relationship and replace it with an agency arrangement, pursuant to which CT Licensing Limited’s affiliate would provide our China licensing business with certain licensing agent and administrative services, in exchange for our payment of commissions to CT Licensing Limited’s affiliate on all licensing revenues they originated for us, from October 1, 2025 until the termination of the Agency Agreement. Such commission expense recorded in 2025 was $0.4 million.

As called for by the Agency Agreement, in December 2025, we purchased from CT Licensing Limited all of its interests in the China JV and terminated all of the management agreements and shareholder agreement with CT Licensing Limited in connection with the China JV. Refer to the Consolidated Statements of Mezzanine Equity and Stockholders’ Equity (Deficit) for 2025 for additional details. As a result of such termination, CT Licensing Limited was no longer a related party as of December 31, 2025.

Transactions with Byborg

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 year ended December 31, 2025, the Company recognized $20.0 million of royalties as licensing revenue pursuant to the LMA. As of December 31, 2025, the contract liabilities, net balance attributable to the LMA was $15.0 million.

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 worked to take full operational control. The first $5.0 million of operating expenses incurred in relation to such licensed businesses was our responsibility to bear. Any operating expenses paid by us with respect to such licensed businesses above the $5.0 million threshold are reimbursable 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 December 31, 2025, the remittances payable to Byborg totaled $2.8 million.

Transactions with our Primary Lender and its Affiliates

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 the conversion date. 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 12, 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 9, Debt, was $158.0 million and $160.2 million as of December 31, 2025 and 2024, respectively. Accrued interest included in other current liabilities and accrued expenses in our consolidated balance sheet as of December 31, 2025 and attributable to affiliates of our primary senior secured lender was $0.4 million. 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 December 31, 2025 was $3.0 million. Interest expense paid to affiliates of our primary senior secured lender for the period from the date of the second conversion through December 31, 2025 was $5.1 million. Pursuant to the A&R Sixth Amendment, we also paid a fee of $0.4 million to our lenders, in November 2025.

20. 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 December 31, 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 December 31, 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 platform. The “All Other” column for the year ended December 31, 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 year ended December 31, 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 years ended December 31, 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, and audit and tax fees for the years ended December 31, 2025 and 2024, as well as non-cash impairment charges of $0.5 million and $3.8 million on our artwork held for sale and $1.5 million and $0.6 million on our corporate leases during the years ended December 31, 2025 and 2024, respectively.

All Other: outside consulting expenses for the years ended December 31, 2025 and 2024, as well as non-cash impairment charges of $17.0 million on our goodwill and $4.7 million related to our internally developed software during the year ended December 31, 2024.

The following table sets forth financial information by reportable segment (in thousands):

Refer to Note 7, Intangible Assets and Goodwill, for details on goodwill by reportable segment.

Geographic Information

Revenue by geographyis based on where the customer is located. Long-lived assets, net includes property and equipment, net and operating lease right-of-use assets. The following tables set forth revenue and long-lived assets, net by geographic area (in thousands):

21. Subsequent Events

On February 9, 2026 (the “Effective Date”), we entered into a share purchase agreement with UTG Brands Management Group Limited, a company incorporated in Hong Kong (“UTG,” and such agreement, the “Purchase Agreement”). The Purchase Agreement involves the sale and issuance of equity interests in a joint venture entity and the proposed joint venture arrangement with UTG in connection with the management and licensing of Playboy’s intellectual property in the People’s Republic of China, Hong Kong and Macau. At the initial closing of the Purchase Agreement, certain of our subsidiaries will enter into a shareholders agreement that will govern the joint venture.

Share Purchase Agreement

Under the terms of the Purchase Agreement, UTG will purchase 50% of our licensing business in the People’s Republic of China, Hong Kong and Macau, through the acquisition of 50% of the equity interest in Playboy China (BVI) Limited, a BVI business company incorporated in the British Virgin Islands (the “New China JV”), for an aggregate purchase price of $45,000,000. Concurrent with the execution of the Purchase Agreement, UTG paid $9,000,000 to us as a signing deposit (the “Signing Deposit”).

The sale and purchase of the shares will take place over three separate closings, the first of which is expected on or before March 31, 2026 (the “Initial Closing Date”). On the Initial Closing Date, the New China JV will issue and sell 1,333 class B ordinary shares of the New China JV (“Class B Shares”) to UTG for aggregate consideration of $11,997,000 ($9,000,000 of which will be credited from the Signing Deposit, and $2,997,000 of which will be paid on the Initial Closing Date) and we will sell and transfer to UTG 334 Class B Shares for aggregate consideration of $3,006,000, for total aggregate consideration on the Initial Closing Date of $15,003,000. At the second closing (to occur on or before January 4, 2027), we will sell and transfer to UTG 1,667 Class B Shares for aggregate consideration of $15,003,000, and, at the third closing (to occur on or before January 4, 2028), we shall sell and transfer to UTG 1,666 Class B Shares for aggregate consideration of $14,994,000. We will use the full proceeds from the initial, second, and third closings pursuant to the Purchase Agreement for the repayment of debt.

In addition to the proceeds from the sale of equity interest in the New China JV, and subject to the consummation of the transactions contemplated under the Purchase Agreement, we expect to receive (a) $10,000,000 over athree-year period from UTG in connection with brand support services we will provide to UTG under a brand support services agreement, and (b) annual minimum distributions under a shareholders agreement of $10,000,000 in 2026, $9,000,000 in 2027 and $8,000,000 in each of year 2028 through and including 2033. Each of the brand support services agreement and shareholders agreement will be entered into concurrent with the initial closing under the Purchase Agreement.

Conditions to the Transaction

The consummation of the transaction contemplated by the Purchase Agreement (the “Transaction”) is subject to the mutual conditions set forth in the Purchase Agreement, including: (a) absence of any applicable law by a governmental authority prohibiting consummation of the Transaction and (b) the absence of any governmental order, decree, ruling or any other action of a governmental authority restraining, enjoining or prohibiting the Transaction.

In addition, the obligation of UTG to consummate the Transaction is conditioned upon: (a) performance by us and any of our applicable affiliates of all obligations, agreements and covenants in all material respects and compliance with all covenants and conditions in all material respects; (b) the absence of a material adverse change; and (c) receipt of Chinese outbound direct investment approvals and related matters (“ODI Approvals”).

Our obligation to consummate the Transaction is conditioned upon performance by UTG of all obligations, agreements and covenants in all material respects and compliance with all covenants and conditions in all material respects.

Additional Covenants; Other Terms

The Purchase Agreement contains certain representations and warranties, covenants and indemnities customary for transactions similar to the transaction contemplated therein, including, among others, covenants by us and UTG to use commercially reasonable efforts to consummate the Transaction, comply promptly with applicable law as may be imposed and to obtain the ODI Approvals. The representations, warranties, and covenants contained in the Purchase Agreement were made solely for the benefit of the parties thereto and may be subject to limitations agreed upon by such parties.

Termination Fee; Outside Date

The Purchase Agreement contains customary termination rights, including the right of either us or UTG to terminate if certain conditions precedents have not been satisfied on or before March 31, 2026 (the “Outside Date”). If, prior to the Initial Closing Date, the Purchase Agreement is terminated (a) by us or UTG due to any governmental order or governmental authority prohibiting (or the enactment or promulgation of an applicable law that prohibits) the consummation of the Transaction other than a termination as a result of any governmental order or applicable law of the United States that prohibits the consummation of the Transaction, (b) by us in the event the ODI Approvals are not received if (i) the ODI Approvals closing condition has not been waived by UTG and (ii) the failure to receive such approvals is not primarily the result of our failure to comply with our covenants under the Purchase Agreement, (iii) by us or UTG due to the consummation of the Transaction violating an order, decree or judgment of a governmental authority other than a termination as a result of any order, decree or judgment by a governmental authority of the United States, (iv) by us due to UTG’s failure to deliver all items that it is required to deliver under the Purchase Agreement prior to the initial closing, (v) by us due to UTG’s material breach or failure to perform its covenants under the Purchase Agreement, or (vi) by UTG due to ODI Approvals not having been received by the Outside Date, then we will be entitled to retain the Signing Deposit as a termination fee. If the Purchase Agreement is terminated for any other reason prior to the Initial Closing Date, we will be required to reimburse UTG for the amount of the Signing Deposit as a termination fee.

Amendment No. 7 to the Amended and Restated Credit and Guaranty Agreement

On the Effective Date, we entered into Amendment No. 7 of the A&R Credit Agreement (“Amendment No. 7”) to, substantially concurrently with the initial closing of the Transaction, amend the terms of the A&R Credit Agreement, to, among other things: (i) permit the Transaction, (ii) permit the contribution of certain intellectual property from us to the New China JV at the second closing pursuant to the Purchase Agreement, and (iii) provide for additional representations, covenants, and mandatory prepayments related to the Transaction (including the entire $45,000,000 purchase price for the Transaction and an additional $6.666 million from us).