PLBY Group Inc

Notes to Consolidated Financial Statements

1. Basis of Presentation and Summary of Significant Accounting Policies

Description of Business

PLBY Group, Inc. (the “Company”, “PLBY”, “we”, “our” or “us”), together with its subsidiaries, through which it conducts business, is a global consumer and lifestyle company marketing the Playboy brand through a wide range of direct-to-consumer products, licensing initiatives, and digital subscriptions and content, in addition to the sale of direct-to-consumer products under its Honey Birdette brand.

We have three reportable segments: Direct-to-Consumer, Licensing, and Digital Subscriptions and Content. Refer to Note 21, Segments, for further details.

Basis of Presentation

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

As discussed in Note 3, Assets and Liabilities Held for Sale and Discontinued Operations, the Yandy Enterprises LLC (“Yandy”) and TLA Acquisition Corp. (“TLA”, owner of the Lovers business) disposal groups, which were previously included in the Direct-to-Consumer segment in the prior year comparative period prior to them becoming assets held for sale, were classified as discontinued operations in the consolidated statements of operations for the prior year comparative period presented. The sale of Yandy was completed on April 4, 2023 (the “Yandy Sale”). The sale of TLA was completed on November 3, 2023 (the “TLA Sale”). As of December 31, 2024, we determined that our art assets continued to meet the held for sale criteria and were classified as held for sale in the consolidated balance sheet as of December 31, 2024.

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 operations and consolidated balance sheets 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.

There were no receivables from any individual customers exceeding 10% of our total receivables as of December 31, 2024 and 2023.

The following table represents revenue from our customers exceeding 10% of our total revenue, excluding revenues from discontinued operations:

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, 2024 and 2023, restricted cash was primarily related to cash collateralized letters of credit we maintained in connection with the lease of our Los Angeles headquarters and Honey Birdette’s term deposit in relation to its Sydney office lease. The December 31, 2023 restricted cash balance also included cash held in escrow related to the TLA Sale, which had been released to us in full in the second quarter of 2024.

Liquidity Assessment

Our revenues, results of operations and cash flows have been materially adversely impacted by negative macroeconomic factors beginning in the second quarter of 2022 and continuing through 2024. The persistently challenging macroeconomic and retail environments, including reduced consumer spending and increased price sensitivity in discretionary categories, has significantly impacted our licensees’ performance. Our net revenues from continuing operations for the year ended December 31, 2024 decreased by $26.8 million, compared to the year ended December 31, 2023, and this decline, coupled with investments into our digital operations, drove our impairment charge, operating loss and net loss. For the year ended December 31, 2024, we reported an operating loss from continuing operations of $50.8 million, and negative operating cash flows from continuing operations of $19.1 million. As of December 31, 2024, we had approximately $30.9 million in unrestricted cash and cash equivalents. We expect our capital expenditures and working capital requirements in 2025 to be largely consistent with 2024.

As of December 31, 2024, 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 further 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 10, 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 10).

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. The allowance for expected credit losses was immaterial at December 31, 2024 and 2023.

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 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

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.

In the third quarter of 2024, we had impairment indicators with respect to our creator digital platform onplayboy.comdue to 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 recognized $4.7 million ofimpairment charges related to the write-off of its internally developed software during the year ended December 31, 2024. Additionally, we recognized $0.6 million of impairment charges on right-of-use assets pertaining to our corporate leases in the third quarter of 2024. During the year ended 2023, we recorded $2.3 million of impairment charges related to certain Honey Birdette right-of-use assets and related leasehold improvements in the fourth quarter of 2023, and $5.1 million ofimpairment charges on Honey Birdette’s trade names at the impairment date in the third quarter of 2023

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 during the year ended December 31, 2024.

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 three and six months ended June 30, 2024.

In the second quarter of 2023, we experienced declines in revenue and profitability, causing us to test the recoverability of our indefinite-lived assets as of June 30, 2023. The resulting impairment charges on our indefinite-lived Playboy-branded trademarks were $65.5 million at the impairment date in the second quarter of 2023.

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

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

In the fourth quarter of 2023, we experienced declines in revenue related to the termination of licensing agreements with certain Chinese licensees due to material, uncured breaches resulting in collectability issues, causing us to test the recoverability of our indefinite-lived assets, including goodwill, as of October 31, 2023. As a result, we recognized $5.8 million of impairment charges on our indefinite-lived Playboy-branded trademarks at the impairment date in the fourth quarter of 2023.

In the second quarter of 2023, we experienced declines in revenue and profitability, causing us to test our goodwill for impairment as of June 30, 2023. Utilizing the income approach, we performed a quantitative impairment test on goodwill using a discounted cash flow analysis, which determined that the carrying value of certain of our reporting units exceeded their fair value. As a result, we recognized $66.7 million of impairment charges on our goodwill at the impairment date in the second quarter of 2023.

Assets and Liabilities Held for Sale and Discontinued Operations

We classify assets and liabilities as held for sale, collectively referred to as the 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.

We account for discontinued operations when assets and liabilities of a disposal group are classified as held for sale, or have been sold, and only if the disposal represents a strategic shift that has or will have a meaningful effect on our operations and financial results. We aggregate the results of operations for discontinued operations into a single line item in the consolidated statements of operations for all periods presented. General corporate overhead is not allocated to discontinued operations. Refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations.

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.

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.

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 toten 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 subscription revenue is derived from subscription sales ofplayboyplus.com andplayboy.tvprimarily, which are online content platforms. Digital subscriptions represent a stand-ready obligation to provide continuous access to the platform, which is satisfied ratably over the term of the subscription. We receive fixed consideration shortly before the start of the subscription periods from these contracts, which are primarily sold in monthly, annual, or lifetime subscriptions. Revenues from lifetime subscriptions are recognized ratably over afive-year period, representing the estimated period during which the customer accesses the platforms. Revenues from digital subscriptions are recognized ratably over the subscription period.

Revenues generated from the sales of creator content offerings to consumers via our creator platform onplayboy.com are recognized at the point in time when the sale is processed and the payment is due upon sale. Revenues generated from subscriptions to our creator platform and memberships to consumers are recognized ratably over the subscription/membership period. We receive fixed consideration shortly before the start of such subscription/membership periods, which are 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 usually are based on contract milestones.

We record revenue from sales of our tokenized digital art and collectibles at the point in time when the control is transferred on a gross basis and the payment is due upon sale. We are primarily responsible for fulfillment of the promise, have inventory risk, and have the latitude in establishing pricing and selecting suppliers, among other factors. As such, we determined that we are the principal in these transactions as we have custody and control of our digital assets prior to the sale to the customer, and discretion and latitude in establishing the price.

We also license our programming content to certain cable television operators and direct-to-home satellite television operators who pay 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 include (i) a continuous transmission service to deliver live linear feeds and (ii) licenses to our functional IP 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 IP is the predominant or sole item to which the royalties relate. Royalties are generally collected monthly and revenue is recognized as earned. The amount of royalties due to us is reported by operators based on actual subscriber and transaction levels. Such information is generally not received until after the close of the reporting period. In these cases, we follow 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 not been material. We offer sales incentives through various programs, consisting primarily of co-op marketing. We record advertising with customers as a reduction to revenue unless we receive a distinct benefit in exchange for credits claimed by the customer and can reasonably estimate the fair value of the distinct benefit received, in which case we record 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 $1.7 million, $1.6 million and $1.6 million as of December 31, 2024, 2023 and 2022, respectively. Revenue recognized from unredeemed gift card beginning balances was $0.1 million for the years ended December 31, 2024 and 2023.

Cost of Sales

Cost of sales primarily consist of merchandise costs, warehousing and fulfillment costs, agency fees, website expenses, digital platform expenses, marketplace traffic acquisition costs, credit card processing fees, personnel and affiliate costs, including stock-based compensation and costs associated with branding events, 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 occupancy costs, personnel costs, including stock-based compensation, and contractor fees for accounting/finance, legal, human resources, information technology and other administrative functions, general marketing and promotional activities and insurance.

Advertising Costs

We expense advertising costs as incurred. Advertising expenses were $4.9 million and $6.0 million for the years ended December 31, 2024 and 2023, respectively, excluding $2.9 million of advertising costs related to discontinued operations for the year ended December 31, 2023. We also have various arrangements with customers pursuant to which we reimburse them for a portion of their advertising costs in the form of co-op marketing which provide 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. We adjust compensation expense based on actual forfeitures, as necessary. In the event of a modification to a previously granted award, the incremental cost of the modification is added to the unamortized cost as of the modification date and amortized over the remaining portion of the requisite service period of the modified award.

Our stock options vest ratably over the 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 the Company has limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its 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 PLBY’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. For milestones that have not been achieved, such PSUs vest over the derived requisite service period and the fair value of such awards is estimated on the grant date using Monte Carlo simulations. The determination of the grant date fair value of PSUs issued is affected by a number of variables and subjective assumptions, including (i) the fair value of PLBY’s common stock, (ii) the expected common stock price volatility over the expected life of the award, (iii) the expected term of the award, (iv) risk-free interest rates, (v) the exercise price and (vi) the expected dividend yield. Forfeitures are recognized when they occur.

Troubled Debt Restructuring

As per 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 loss 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 immaterial for the years ended December 31, 2024 and 2023.

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. Our Series B Convertible Preferred Stock, par value $0.0001 per share, issued in connection with the Exchange Agreement, as described in Note 10, Debt, and Note 13, Preferred Stock, is 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.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss attributable to PLBY Group, 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 13, 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 November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The ASU’s amendments are effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We adopted this ASU on December 31, 2024, and applied the amendment retrospectively to all periods presented in our consolidated financial statements (refer to Note 21, Segments, for further details).

Accounting Pronouncements Issued but Not Yet Adopted

In December 2023, the FASB issued 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 are currently evaluating the impact of this pronouncement, but we do not expect it to have a material impact on our disclosures and our consolidated financial statements.

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 are currently evaluating the impact of this pronouncement on our disclosures.

In November 2024, FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to disaggregate any relevant expense caption presented on the face of the income statement within continuing operations into the following required natural expense categories, as applicable: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities or other depletion expenses. An entity’s share of earnings or losses from investments accounted for under the equity method is not a relevant expense caption that requires disaggregation. Such ASU’s amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the 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, 2024 and 2023, 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 and 2024, we believe that its carrying value as of December 31, 2024 and 2023 approximates fair value, as our debt is variable-rate debt that reprices to current market rates frequently. Refer to Note 10, 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.

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, 2024 and 2023.

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, 2024. Fair value change as a result of contingent liabilities fair value remeasurement in 2024 and 2023 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.

Our Series A Preferred Stock liability, initially valued as of May 16, 2022 (the initial issuance date), and our subsequent Series A Preferred Stock liability, valued as of the August 8, 2022 (the final issuance date), were each calculated using a stochastic interest rate model implemented in a binomial lattice, in order to incorporate the various early redemption features. The fair value option was elected for Series A Preferred Stock liability, as we believe fair value best reflects the expected future economic value. Such liabilities are subsequently remeasured to fair value for each reporting date using the same valuation methodology as originally applied with updated input assumptions. In May 2023, in connection with the amendment and restatement of our senior secured credit agreement, the outstanding Series A Preferred Stock was exchanged for debt (and thereby ceased to be outstanding). Refer to Note 10, Debt, for further details. The fair value gain recorded in nonoperating income as a result of remeasurement of the fair value of our Series A Preferred Stock during the year ended December 31, 2023 was $6.5 million. We classified financial liabilities associated with our Series A Preferred Stock as Level 3 due to the lack of relevant observable inputs.

The following table provides information regarding significant unobservable inputs used in the valuation of our Series A Preferred Stock measured and recorded at fair value upon its exchange for debt in connection with the amendment and restatement of our senior secured credit agreement in May 2023 (amounts in thousands):

The following table provides a roll-forward of the fair value of the liabilities categorized as Level 3 for the year ended December 31, 2024 (in thousands):

The decrease in the fair value of the contingent consideration for the year ended December 31, 2024 was primarily due to a decrease in a price per share of our common stock.

Assets and Liabilities Held for Sale

We initially measure an asset that is classified as held for sale at the lower of its carrying amount or fair value less costs to sell. We assess the fair value of an asset less costs to sell each reporting period that it remains classified as held for sale, and report any subsequent changes as an adjustment to the carrying amount of the asset. Assets are not depreciated or amortized while they are classified as held for sale.

In the fourth quarter of 2023, we began the sale of artwork assets, but they were not fully disposed of as of December 31, 2023 and 2024, and as such continued to be classified as current assets held for sale in our consolidated balance sheet as of December 31, 2024. Refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations, for further details.

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. During the year ended December 31, 2024, we recorded $3.8 million of impairment charges related to our artwork held for sale.

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, including digital 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. Recognized losses related to the impairment of our digital assets during the year ended December 31, 2024 and 2023 were immaterial, and the fair value of our digital assets wasimmaterial as of December 31, 2024 and 2023. The fair value of digital assets held is predominantly based on Level 1 inputs.

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. At the impairment date in the fourth quarter of 2023, we recorded impairment charges on our indefinite-lived Playboy-branded trademarks of $5.8 million. At the impairment date in the second quarter of 2023, we recorded non-cash asset impairment charges of $65.5 million related to the write-down of indefinite-lived trademarks andimpairment charges of $66.7 million related to the write-down of goodwill and $5.1 million related to trade names and other assets.

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

Series B Convertible Preferred Stock

On November 13, 2024, pursuant to the Exchange Agreement (as defined in Note 10 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, 10, Debt, refer to such Note 10, Debt, for additional details).

The fair value of the 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.

The Series B Convertible Preferred Stock was classified as mezzanine equity in the consolidated balance sheet as of 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. 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. Assets and Liabilities Held for Sale and Discontinued Operations

On April 4, 2023, we completed the sale of Yandy to an unaffiliated, private, third-party buyer (“Yandy Buyer”). The consideration paid by the Yandy Buyer for the Yandy Sale consisted of $1 million in cash and a $2 million secured promissory note, which accrued interest at 8% per annum, was payable over three years and was secured by substantially all the assets of Yandy and the Yandy Buyer’s interests in Yandy. The sale resulted in a loss of $0.3 million before income taxes. Transaction expenses incurred in connection with the sale were immaterial. In connection with the Yandy Sale, on April 4, 2023, we entered into a sublease agreement with Yandy (under its new ownership by Yandy Buyer) for Yandy’s warehouse on substantively the same terms as the original lease. As a result, Yandy’s warehouse right of use assets and related lease liabilities, including leasehold improvements associated with the lease, remained on our consolidated balance sheet as of December 31, 2024 and 2023.

On October 3, 2023, we entered into a Stock Purchase Agreement (the “SPA”) with LV Holding, LLC (“TLA Buyer”) for the TLA Sale. We closed the TLA Sale on November 3, 2023. Pursuant to the terms and subject to the conditions set forth in the SPA, TLA Buyer acquired from Playboy Enterprises, Inc., our wholly-owned subsidiary and the holder of all equity of TLA (“Seller”), all of the issued and outstanding equity interests of TLA, which held and operated the Lovers business, for approximately $13.5 million in cash (the “Purchase Price”). We also received approximately $0.8 million as part of a working capital adjustment following closing of the TLA Sale. Approximately $2.1 million of the Purchase Price was placed into a short-term escrow account at the closing of the TLA Sale in connection with a post-closing working capital adjustment, certain possible indemnification claims payable by the Seller and for certain post-closing items to be completed by Seller. The TLA Sale resulted in a gain of $7.7 million before income taxes.

For the year ended December 31, 2023, Yandy and TLA disposal groups met the criteria discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, to be classified as discontinued operations for the year ended December 31, 2023, as the divestiture of Yandy and TLA in the aggregate represented a strategic shift that had a major effect on our operations and financial results.

In the fourth quarter of 2023, in further pursuit of a 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, 2023 and 2024. As of December 31, 2024 and 2023, 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, 2024 and 2023.

During the year ended December 31, 2024, we sold certain pieces of our artwork held for sale for $2.7 million, recording a $0.4 million loss on sale. Additionally, we recorded a $3.8 million impairment charge on our artwork for 2024.

In the fourth quarter of 2024, we decided to retain our Honey Birdette business and to not pursue strategic alternatives for it following recent improvements in our financial position. Honey Birdette’s assets and liabilities did not meet the criteria discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, to be classified as assets and liabilities held for sale in the consolidated balance sheet as of December 31, 2024 and 2023. Honey Birdette’s operations are included in our continuing operations in our consolidated statement of operations for all periods presented.

The following table summarizes the components of income from discontinued operations, net of tax in the accompanying consolidated statements of operations for the year ended December 31, 2023 (in thousands):

4. 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, 2024 and 2023.

The following table summarizes our contract assets and certain contract liabilities (in thousands). Such table excludes $4.2 million of accounts receivable included in assets held for sale in the consolidated balance sheets as of December 31, 2022, and $0.3 million of contract liabilities included in liabilities held for sale in the consolidated balance sheets as of December 31, 2022. Refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations.

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

Future Performance Obligations

As of December 31, 2024, unrecognized revenue attributable to unsatisfied and partially unsatisfied performance obligations under our long-term contracts was $79.3 million, of which $72.2 million relates to trademark licensing, $5.5 million relates to digital subscriptions and content, and $1.6 million relates to direct-to-consumer products. Due to challenging economic conditions in China, collections from certain Chinese licensees there have slowed significantly. Future contract modifications and collectability issues could further impact the revenue recognized against our ongoing contract assets.

In the fourth quarter of 2024, we entered into a licensing agreement with Byborg Enterprises SA (“Byborg”) to license digital intellectual property and select Playboy digital assets for $300.0 million in minimum guaranteed payments over the initial 15-year term of the license, which began as of January 1, 2025. As a result, Licensing operations will include revenues from licensing Playboy Club, Playboy Plus and Playboy businesses to Byborg effective January 1, 2025.

Unrecognized revenue of the trademark licensing revenue stream will be recognized over the nextten years, of which 93% 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 will be recognized over the next five years, of which 56% will be recognized in the first year.

Disaggregation of Revenue

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

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

5. 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, 2024 and 2023, reserves for slow-moving and obsolete inventory amounted to $4.2 million and $5.5 million, respectively.

6. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets are set forth in the table below (in thousands):

In 2023, we significantly restructured our technology expenses, and cost-excessive and under-utilized software packages were either terminated or not renewed upon expiration of applicable agreements. This resulted in a restructuring charge of $5.1 million recorded inselling and administrative expenses in the consolidated results of operations for the year ended December 31, 2023, excluding $0.4 million of costs related to discontinued operations, out of which $1.5 million was the accelerated amortization of prepaid software.

7. 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 $5.5 million and $5.4 million for the years ended December 31, 2024 and 2023, respectively. Depreciation expense related to property and equipment attributable to discontinued operations for the year ended December 31, 2023 wasimmaterial.

8. Intangible Assets and Goodwill

Intangible Assets

Our indefinite-lived intangible assets that are not amortized but subject to annual impairment testing consist of $145.7 million and $145.1 million of Playboy-branded trademarks as of December 31, 2024 and 2023, 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, 2024 and 2023 were immaterial.

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. In the fourth quarter of 2023, we experienced declines in revenue related to the termination of licensing agreements with certain Chinese licensees due to material, uncured breaches resulting in collectability issues. As a result, we recognized $5.8 million of impairment charges on our indefinite-lived Playboy-branded trademarks at the impairment date in the fourth quarter of 2023. At the impairment date in the second quarter of 2023, we recorded non-cash asset impairment charges of $65.5 million related to the write-down of our indefinite-lived trademarks, of $66.7 million related to the write-down of goodwill and of $5.1 million related to trade names and other assets.

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, 2024 and 2023, respectively.

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

The aggregate amortization expense for definite-lived intangible assets included in loss from continuing operations was $1.5 million and $1.8 million for the years ended December 31, 2024, and 2023, respectively. Amortization expense for definite-lived intangible assets attributable to discontinued operations was immaterial for the year ended December 31, 2023.

As of December 31, 2024, expected amortization expense relating to definite-lived intangible assets for the next five years and thereafter is as follows (in thousands):

Goodwill

Changes in the carrying value of goodwill for the years ended December 31, 2024 and 2023 were as follows (in thousands):

Changes in the recorded carrying value of goodwill for the year ended December 31, 2024 by reportable segment were as follows (in thousands):

9. Other Current Liabilities and Accrued Expense

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

10. Debt

The following table sets forth debt (in thousands):

Term Loan

On February 17, 2023, we entered into Amendment No. 4 (the “Fourth Amendment”) to our prior credit agreement (the “Credit Agreement”), which, among other things: (i) required that the mandatory prepayment of 80% of PLBY’s equity offering proceeds apply only to PLBY’s $50 million rights offering completed in February 2023 (thereby reducing the applicable prepayment cap to $40 million), (ii) required an additional $5 million prepayment by us as a condition to completing the Fourth Amendment, and (iii) reduced the prepayment threshold for waiving our Total Net Leverage Ratio financial covenant through June 30, 2024 to $70 million (from the prior $75 million prepayment threshold). Such $70 million of prepayments were achieved by the Company through the combination of a $25 million prepayment in December 2022, a $40 million prepayment made in connection with the Company’s rights offering in February 2023, and an additional $5 million prepayment made at the completion of the Fourth Amendment.

As a result of the prepayments described above, we obtained a waiver of the Total Net Leverage Ratio covenant through the second quarter of 2024, eliminated the cash maintenance covenants, eliminated the lenders’ board observer rights and eliminated applicable additional margin which had previously been provided for under the Credit Agreement, as amended.

On April 4, 2023, we entered into Amendment No. 5 to the Credit Agreement (the “Fifth Amendment”) to permit, among other things, the Yandy Sale, and that the proceeds of such sale would not be required to prepay the loans under the Credit Agreement (as amended through the Fifth Amendment); provided that at least 30% of the consideration for the Yandy Sale was paid in cash.

On May 10, 2023 (the “Restatement Date”), we entered into an amendment and restatement of the Credit Agreement (the “A&R Credit Agreement”) to reduce the interest rate applicable to our senior secured debt and the implied interest rate on our then outstanding Series A Preferred Stock, exchange our then outstanding Series A Preferred Stock for debt (such that the Series A Preferred Stock would cease to be outstanding), and obtain additional covenant relief and funding.

In connection with the A&R Credit Agreement, Fortress Credit Corp. and its affiliates (together, “Fortress”) became our lender with respect to approximately 90% of the term loans under the A&R Credit Agreement (the “A&R Term Loans”). Fortress exchanged 50,000 shares of our Series A Preferred Stock (representing all of our issued and outstanding preferred stock) for approximately $53.6 million of the A&R Term Loans, and we obtained approximately $11.8 million of additional funding as part of the A&R Term Loans. As a result, our Series A Preferred Stock ceased to be outstanding, and the principal balance of the A&R Term Loans under the A&R Credit Agreement became approximately $210.0 million on the Restatement Date.

In connection with the A&R Credit Agreement, the original Credit Agreement’s New Term Loan was apportioned into approximately $20.6 million of Tranche A term loans (“Tranche A”) and approximately $189.4 million of Tranche B term loans (“Tranche B”, and together with Tranche A comprising the A&R Term Loans). The prior amortization payments applicable to the New Term Loan under the original Credit Agreement were eliminated. The A&R Credit Agreement only requires the smaller Tranche A be subject to quarterly amortization payments of approximately $76,000 per quarter. The benchmark rate for the A&R Term Loans is the applicable term of secured overnight financing rate as published by the U.S. Federal Reserve Bank of New York (rather than LIBOR, as under the original Credit Agreement). As of the Restatement Date, Tranche A accrues interest at SOFR plus 6.25% and 0.10% SOFR adjustment, with a SOFR floor of 0.50%. As of the Restatement Date, Tranche B accrues interest at SOFR plus 4.25% and 0.10% SOFR adjustment, with a SOFR floor of 0.50%.

We obtained additional leverage covenant relief through the first quarter of 2025, with testing of a total net leverage ratio covenant commencing following the quarter ending March 31, 2025, which covenant will be initially set at 7.25:1.00, reducing in 0.25 increments per quarter until the ratio reaches 5.25:1.00 for the quarter ending March 31, 2027.

As a result of of entering into the A&R Credit Agreement in the second quarter of 2023, we recorded $8.0 million of gain for partial debt extinguishment and capitalized an additional $21.3 million of debt discount while deferring and continuing to amortize an existing discount of $2.6 million, which will be amortized over the remaining term of our senior secured debt and recorded in interest expense in our consolidated statements of operations. As a result of entering into the A&R Credit Agreement, fees of $0.3 million were expensed as incurred and $0.4 million of debt issuance costs were capitalized in the second quarter of 2023.

In July 2023, DBD Credit Funding LLC, an affiliate of Fortress, became the administrative agent and collateral agent under the A&R Credit Agreement.

In connection with the sale of TLA, on November 2, 2023, we entered into Amendment No. 1 to the A&R Credit Agreement (the “A&R First Amendment”), to permit, among other things: (a) the sale of TLA and the sale of certain other assets (and the proceeds of such sales will not be required to prepay the A&R Term Loans); and (b) the Company to elect, through August 31, 2025, to pay in cash accrued interest equal to the applicable SOFR plus 1.00%, with the remainder of any applicable accrued interest not paid in cash capitalized into the A&R Term Loans. The other terms of the A&R Credit Agreement will remain substantially unchanged from those prior to the A&R First Amendment.

On March 27, 2024, we entered into Amendment No. 2 to the A&R Credit Agreement (the “A&R Second Amendment”), 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 and Tranche B term loans to the same rate of 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 13, 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 $0.4 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.

The stated interest rate of Tranche A and Tranche B term loans as of December 31, 2024 was 11.01%. The stated interest rate of Tranche A and Tranche B term loans as of December 31, 2023 was 11.41% and 9.41%, 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 effective interest rate of Tranche A and Tranche B A&R Term Loans as of December 31, 2023 was 12.03% and 13.27%, respectively. The difference between the stated interest rate and effective interest rate for Tranche B as of December 31, 2023 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, 2024 and 2023.

The following table sets forth maturities of the principal amount of our A&R Term Loans as of December 31, 2024 (in thousands):

11. 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, 2024 and 2023, 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, 2024 and 2023. There was no change in the balance of the redeemable noncontrolling interest as After Dark LLC did not have any operating activities during 2024 and 2023.

12. 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, 2024, no dividends had been declared by the Board.

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

Treasury Stock

We held 2,249,929 shares of treasury stock as of December 31, 2024 and 2023.

In May 2022, the Board of Directors approved a common stock repurchase program (the “2022 Stock Repurchase Program”), pursuant to which up to $50 million of shares of Company common stock may be repurchased through May 31, 2024. As of December 31, 2023, we repurchased 1,549,929 shares of our common stock as authorized pursuant to the 2022 Stock Repurchase Program, all of which shares became treasury shares upon their return to the Company. There wereno repurchases of common stock in 2024.

13. 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 A Mandatorily Redeemable Preferred Stock

On May 16, 2022, we issued and sold 25,000 shares of the Series A Preferred Stock to Drawbridge DSO Securities LLC (“Drawbridge”) at a price of $1,000 per share, resulting in total gross proceeds to us of $25.0 million. We incurred approximately $1.5 million of fees associated with the transaction, out of which $1.0 million was netted against the gross proceeds.

On August 8, 2022, the Company issued and sold the remaining 25,000 shares of Series A Preferred Stock to Drawbridge at a price of $1,000 per share, resulting in additional gross proceeds to the Company of $25.0 million (the “Second Drawdown”). The Company incurred approximately $0.5 million of fees associated with the Second Drawdown, which were netted against the gross proceeds. As a result of the transaction, all of the Company’s then-authorized shares of Series A Preferred Stock were issued and outstanding as of August 8, 2022.

Our Series A Preferred Stock liability, initially valued as of May 16, 2022 (the initial issuance date), and our subsequent Series A Preferred Stock liability, valued as of the August 8, 2022 (the final issuance date), were each calculated using a stochastic interest rate model implemented in a binomial lattice, in order to incorporate the various early redemption features. Such liabilities are subsequently remeasured to fair value for each reporting date using the same valuation methodology as originally applied with updated input assumptions. We recorded $6.5 million of fair value change in nonoperating income as a result of remeasurement of the fair value of our Series A Preferred Stock during the year ended December 31, 2023.

On May 10, 2023, in connection with the A&R Credit Agreement, all of our Series A Preferred Stock ceased to be outstanding as of such date. The fair value of our Series A Preferred Stock liability was $32.6 million as of such date. On November 12, 2024, the Series A Preferred Stock was legally eliminated as a preferred stock of the Company.

Series B Convertible Preferred Stock

On November 13, 2024, pursuant to the Exchange Agreement, we issued to 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 shall be 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 Company’s board of directors, 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 will 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 will 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 will also 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 will 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 will 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. Refer to Note 2, Fair Value Measurement, for further details.

14. Stock-Based Compensation

In June 2018, Playboy Enterprises, Inc., a Delaware corporation (“Legacy Playboy”) adopted its 2018 Equity Incentive Plan (“2018 Plan”), under which 6,287,687 of Legacy Playboy’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 Legacy Playboy’s 2021 business combination with the predecessor of PLBY Group, 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, 2024,10,737,065 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 2024 and 2023 was as follows:

In the fourth quarter of 2023, stock option awards granted totwo employees were modified, with respect to which 1,002,534 shares were cancelled and 914,574 shares were granted, with new terms (including the number of underlying shares). We accounted for this as a Type III modification pursuant to ASC 718, Compensation - Stock Compensation. As a result, we recorded an immaterial amount of incremental cost, which was set to amortize ratably over the modified terms. There were no equity awards modifications in 2024.

The aggregate intrinsic value 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, 2024.

The grant date fair value of options that vested during the years ended December 31, 2024 and 2023 was $0.5 million and $1.6 million, respectively. The options granted during the year ended December 31, 2023 had a weighted-average fair value of $1.05 per share at the grant date. There wereno options exercised during the year ended December 31, 2023.

Restricted Stock Units

A summary of restricted stock unit activity under our Plans in 2024 and 2023 was as follows:

The total fair value of restricted stock units that vested during the years ended December 31, 2024 and 2023 was approximately $1.9 million and $1.8 million, respectively. The weighted-average fair value of restricted stock units granted during the year ended December 31, 2023 was $0.66 per share at the grant date. We had 72,000 and 14,994 of outstanding and fully vested restricted stock units that remained unsettled at December 31, 2024 and December 31, 2023, respectively, all of which were resolved in 2025 and 2024, 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, 2024 and 2023. The total tax benefit realized from restricted stock units vested was $0.1 million in 2024 and 2023.

Performance Stock Units

Prior to October 9, 2023, our PSUs vested upon achieving each of certain Company stock price milestones during the contractual vesting period. The stock price milestones varied among grantees and are set forth in each grantee’s PSU grant agreement (for example, achievement of each of the following 30-day volume-weighted average prices for a share of Company common stock: $20, $30, $40 and $50). The vesting of PSUs is subject to each grantee’s continued service to the Company. On October 9, 2023, the Compensation Committee approved the amendment of performance stock units granted tofive employees to eliminate the performance-based conditions and the unvested shares underlying the original awards were changed to time-based vesting overtwo subsequent years. On December 7, 2023, a PSU award was granted to an employee, with vesting conditions based on meeting certain performance milestones associated with our creator platform within a period ofone year.

Prior to October 9, 2023, to determine the value of PSUs with market conditions for stock-based compensation purposes, the Company used the Monte Carlo simulation valuation model. For each path, the PSUs payoff was calculated based on the contractual terms, whereas the fair value of the PSUs was calculated as the average present value of all modeled payoffs. The determination of the grant date fair value of PSUs issued was affected by a number of variables and subjective assumptions, including (i) the fair value of the Company’s common stock of $9.83, (ii) the expected common stock price volatility over the expected life of the award of 55%, (iii) the term of the award of 7 years, (iv) risk-free interest rate of 2.9%, (v) the exercise price as described above, and (vi) the expected dividend yield of 0%. Forfeitures are recognized when they occur. The Company used the same model to calculate the derived service period for each tranche of performance-based stock corresponding to each stock price threshold. For milestones that have not been achieved, such PSUs vest over the derived requisite service period and the fair value of such awards is estimated on the grant date using Monte Carlo simulations.

To determine the value of PSUs with performance conditions that were granted after October 9, 2023, for stock-based compensation purposes, the Company uses the grant date closing price of the Company’s common stock. The probability of the vesting conditions being met is reevaluated each reporting period. There wereno PSUs granted in 2024.

A summary of PSU activity under our 2021 Plan in 2024 and 2023 was as follows:

The total fair value of PSUs that vested during the year ended December 31, 2024 was $0.5 million. There wereno PSUs that vested during the year ended December 31, 2023. The weighted-average fair value of PSUs granted during the year ended December 31, 2023 was $0.64 per share at the grant date. The total tax impact realized from performance stock units vested in 2024 was $0.1 million of expense.

Stock Options Granted

To determine the value of stock option awards for stock-based compensation purposes, the Company uses the Black-Scholes option-pricing model and the assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment.

Fair value of common stock –The fair value of our common stock is based on the price of our common stock quoted on Nasdaq.

Expected term — For employee awards granted at-the-money, we estimate the expected term based on the simplified method, which is the midpoint between the vesting date and the end of the contractual term for each award since our historical share option exercise experience does not provide a reasonable basis upon which to estimate the expected term. For non-employee awards and employee awards granted out-of-the-money, our best estimate of the expected term is the contractual term of the award.

Volatility — We derive the volatility from the average historical stock volatilities of several peer public companies over a period equivalent to the expected term of the awards as we do not have sufficient historical trading history for our stock. We selected companies with comparable characteristics to us, including enterprise value, risk profiles, and position within the industry and with historical share price information sufficient to meet the expected terms of the stock options. We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own stock price becomes available.

Risk-free interest rate — The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of grant, the term of which is consistent with the expected life of the award.

Dividend yield — We have never paid dividends on our common stock and have no plans to pay dividends on our common stock. Therefore, we used an expected dividend yield ofzero.

For options granted during the applicable period, we estimated the fair value of each option on the date of grant using the Black-Scholes option pricing model and applying the weighted-average assumptions in the following table:

For options subject to modification accounting in the applicable period, we estimate the fair value of each applicable option on the date before and after the modification using the Black-Scholes option pricing model and applying the weighted-average assumptions in the above table.

Stock-Based Compensation Expense

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

(1)Cost of sales for the year ended December 31, 2023 includes a net reversal of $1.0 million of stock-based compensation expense associated with equity awards granted to an independent contractor for services pursuant to the terms of a license services and collaboration agreement.

(2)Selling and administrative expenses for the year ended December 31, 2023 includes $2.3 million of accelerated amortization of stock-based compensation expense for certain equity awards, offset by a $2.4 million reduction in stock-based compensation expense due to forfeitures of certain equity grants during the year ended December 31, 2023.

The expense presented in the table above is net of capitalized stock-based compensation relating to software development costs of $1.7 million during the years ended December 31, 2023. There wasno capitalized stock-based compensation relating to software development costs during the year ended December 31, 2024, as stock-based compensation relating to software development costs eligible to be capitalized during the year ended December 31, 2024 was immaterial.

At December 31, 2024, total unrecognized compensation expense related to unvested stock option awards was $0.2 million and is expected to be recognized over the remaining weighted-average service period of 0.50 years. Unrecognized compensation cost related to unvested performance-based stock units and restricted stock units was $2.9 million and is expected to be recognized over the remaining weighted-average service period of 0.82 years.

15. 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 2025 to 2033. Some of these leases contain renewal options and rent escalations.

We had $1.2 million and $1.4 million in cash collateralized letters of credit related to our corporate headquarters lease as of December 31, 2024 and 2023, respectively.

We sublease a part of our New York office space for a period approximating the remaining term of our lease. Our New York office lease expired in 2024.

In conjunction with the sale of Yandy in the second quarter of 2023, we entered into a sublease agreement with the buyer of Yandy in relation to its warehouse and office space for the remaining term of the lease, which expires in 2031.

In relation to the operations of Honey Birdette, we had 54 retail stores, one warehouse andtwo office spaces as of December 31, 2024, 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.

As of December 31, 2024 and 2023 the weighted average remaining term of these operating leases from continuing operations was 4.5 years and 5.2 years, respectively, and the weighted average discount rate used to estimate the net present value of the operating lease liabilities was 7.2% and 7.0%, respectively. Cash payments for amounts included in the measurement of operating lease liabilities attributable to continuing operations were $8.5 million and $8.8 millionfor the years ended December 31, 2024 and 2023, respectively. Right of use assets obtained in exchange for new operating lease liabilities attributable to continuing operations for the years ended December 31, 2024 and 2023 were $2.3 million and $4.5 million, respectively. Right-of-use assets obtained in exchange for new operating lease liabilities attributable to discontinued operations for the year ended December 31, 2023 were $1.0 million.

Net lease cost recognized in our consolidated statements of operations as of December 31, 2024 and 2023 is summarized in the table below (in thousands). The table excludes TLA’s total net lease cost of $3.7 million for the year ended 2023, which is included in discontinued operations in the consolidated statement of operations for the year ended December 31, 2023.

Maturities of our operating lease liabilities as of December 31, 2024 were as follows (in thousands):

Legal Contingencies

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

AVS Case

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

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

On August 10, 2021, AVS filed a cross-complaint for breach of contract, breach of the implied covenant of good faith and fair dealing, quantum meruit and declaratory relief. As in its February 2021 letter, AVS alleges its license was wrongfully terminated and that PEII failed to approve AVS’ marketing efforts in a manner that was either timely or that was commensurate with industry practice. AVS is seeking to be excused from having to perform its obligations as a licensee, payment of the value for services rendered by AVS to PEII outside of the license, and damages to be proven at trial. The court heard PEII’s motion for summary judgment on June 6, 2023, and dismissedsix out of 10 of AVS’ causes of action. AVS’ contract-related claims remain to be determined at trial, which is set for September 2025. In addition, PEII filed a new, related complaint against Sunrise Brands based on their participation in AVS’s misconduct, as well as their own direct misconduct. Sunrise Brands has submitted an answer to that complaint. The parties in the AVS and Sunrise Brand cases are currently engaged in discovery, and both cases 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 include 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 are also seeking 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. While PEII believes it has strong claims against New Handong, and that the facts of the matter support those claims, even in the event PEII were to obtain all the relief it seeks from the Arbitration, PEII can provide no assurance or guarantee that it will be able to enforce the results of the Arbitration against New Handong or recover all monetary awards from New Handong.

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 alleges, 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 seeks at least $2 million in damages from the Defendants. The Company believes the plaintiff’s claims and allegations with respect to the Company and its affiliates are without merit, and it will defend itself vigorously in this matter.

16. Severance Costs

We incurred severance costs during 2024 and 2023 due to the reduction of headcount to shift our business to a capital-light model. Severance costs are recorded in selling and administrative expenses in the consolidated statements of operations, with an immaterial amount recorded in cost of sales, and in accrued salaries, wages, and employee benefits in our consolidated balance sheets. The cumulative amount of related severance costs incurred starting in 2023 was $4.4 million as of December 31, 2024. Severance costs from discontinued operations during the prior year comparative period wasimmaterial.

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 accrued salaries, wages, and employee benefits in our consolidated balance sheets (in thousands):

17. 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 (in thousands):

The following table sets forth a reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate:

(1)Foreign withholding taxes, net of credits relate to foreign tax withholding on royalties received from various foreign jurisdictions.

(2)The 2024 and 2023 equity compensation adjustments are mainly related to shortfall and the officer compensation limitations.

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, 2024 and 2023.

As of December 31, 2024, the Company had an immaterial amount of unremitted earnings related to certain foreign subsidiaries and does not expect to incur any material taxes in the United States related to such amounts. The Company intends to continue to reinvest its foreign earnings indefinitely except it may revoke its permanent reinvestment assertion in Hong Kong. The Company repatriated foreign earnings of $5.5 million to the United States for the year ended December 31, 2024. 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, 2024.

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, 2024 and 2023 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 $86.8 million and $72.1 million as of December 31, 2024 and 2023, respectively. During the years ended December 31, 2024 and 2023, the Company’s valuation allowance increased by $14.7 million and decreased by $13.2 million, respectively. The increase in valuation allowance in 2024 and 2023 was primarily driven by the increase of federal and foreign NOLs, partly offset by the impairment of intangibles.

As of December 31, 2024, the Company had U.S. federal and state NOL carryforwards of $346.0 million and $145.9 million, respectively, available to offset taxable income in tax year 2024 and thereafter. Of the $346.0 million in federal NOL carryforwards, $163.5 million can be carried forward indefinitely, and the remaining NOL carryforwards start to expire in 2028. Of the $145.9 million in state NOL carryforwards, $9.6 million can be carried forward indefinitely and the remaining start to expire in 2028. The Company also had Australian NOLs of $8.6 million and U.K. NOLs of $1.2 million 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. For the years ended December 31, 2024 and 2023, the Company recorded unrecognized net tax benefits of $0.5 million and $0.2 million, respectively. 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 uncertaintax 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, 2024 and 2023, 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, 2019 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 2018 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.

18. 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:

19. Accrued Salaries, Wages, and Employee Benefits

Our U.S. Employee Investment Savings Plan is a defined-contribution plan consisting oftwo components: a 401(k) plan and a profit-sharing plan. Eligible employees may participate in our 401(k) plan upon their date of hire. The 401(k) plan offers several mutual fund investment options. The purchase of our stock has never been an option. 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 this plan and attributable to the continuing operations was $0.3 million and $0.5 million for the years ended December 31, 2024 and 2023, respectively. We are also party to an Australian contribution plan that requires contributions based on a percentage of annual compensation. Contributions to these plans totaled $1.0 million for the years ended December 31, 2024 and 2023.

The profit-sharing plan covers all employees who have completed 12 months of service or at least 1,000 hours. Our discretionary contribution to the profit-sharing plan is distributed to each eligible employee’s account in an amount equal to the ratio of each eligible employee’s compensation, subject to Internal Revenue Service limitations, to the total compensation paid to all such employees. We didnot make any contributions to the plan during the years ended December 31, 2024 and 2023.

20. Related Party Transactions

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). The China JV is working to reinvigorate our China-market Playboy apparel business, including online and offline retail strategies, product design and assortment, and brand marketing to its multi-generational audience. For the year ended December 31, 2024, the China JV partner has earned approximately $0.4 million in dividends.

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. As of December 31, 2023, the loan was recorded in prepaid and other current assets in our consolidated balance sheets. In January 2024, the loan was repaid in full.

In August 2024, we entered into a short-term loan agreement with an affiliate of our China JV partner and shareholder for $96,000. The loan is being repaid by the retention of applicable dividends earned. The advanced amounts accrue interest at a rate of 5.00% per annum and matures on June 30, 2025. The remaining balance as of December 31, 2024 is approximately $40,000. The remaining balances due under the loan will be repaid through the retention of additional dividends through the maturity date.

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

In addition, on December 14, 2024, we entered into a License & Management Agreement (the “LMA”) with Byborg, pursuant to which Byborg agreed to operate our Playboy Plus, Playboy TV (digital and linear) and Playboy Club 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 commencing as of January 1, 2025. Pursuant to the LMA, Playboy will receive minimum guaranteed royalties of $20 million per year of the term, to be paid in installments during each year. In addition, Byborg will prepay the minimum guaranteed amount for the second half of year 15 of the initial term of the LMA. Playboy is also entitled to receive excess royalties from the businesses licensed and operated by Byborg, on the terms and conditions set forth in the LMA.

On December 14, 2024, the Company also entered into a Securities Purchase Agreement (the “December SPA”) with The Million S.a.r.l, pursuant to which the Company agreed to sell to such purchaser 16,956,842 shares of the Company’s common stock, par value $0.0001 per share, at a price of $1.50 per share. The closing of the sale and issuance of shares pursuant to the December SPA is expected to occur by the end of the first quarter of 2025 and result in aggregate proceeds to us of approximately $25.44 million.

21. Segments

As of December 31, 2024, we hadthree reportable segments: Direct-to-Consumer, Licensing, and Digital Subscriptions and Content. The Direct-to-Consumer segment derives revenue from sales of consumer products sold through third-party retailers, online direct-to-customer or brick-and-mortar through our lingerie business, Honey Birdette, with 54 stores inthree countries as of December 31, 2024. The TLA and Yandy direct-to-consumer businesses met the criteria for discontinued operations classification as of December 31, 2023 (refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations, for further details). Therefore, they were excluded from the tables below and classified as discontinued operations in our consolidated statement of operations for the year ended December 31, 2023. The Licensing segment derives revenue from trademark licenses for third-party consumer products and online and location-based entertainment businesses. The Digital Subscriptions and Content segment derives revenue from the subscription of Playboy programming that is distributed through various channels, including websites and domestic and international television, and sales of creator content offerings and memberships to consumers through the Playboy Club onplayboy.com.

Our Chief Executive Officer is our Chief Operating Decision Maker (“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 U.S. 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” line items in the tables below are miscellaneous in nature and do not relate to the previously identified reportable segments disclosed herein. These segments do not meet the quantitative threshold for determining reportable segments. The “Corporate” line item in the tables below includes certain operating expenses that are not allocated to the reporting segments presented to our CODM. These expenses include legal, human resources, accounting/finance, information technology and facilities. 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 operating results by reportable segment (in thousands):

Other segment items for the year ended December 31, 2024 and 2023 were primarily comprised of the following:

Direct-to-Consumer: outside consulting and legal fees, and technology and equipment expenses for the years ended December 31, 2024 and 2023, as well as non-cash impairment charges of $72.6 million on certain of our intangible assets, including goodwill, and $2.3 million on certain Honey Birdette right-of-use assets and related leasehold improvements during the year ended December 31, 2023.

Licensing: China JV expenses, outside consulting expenses and legal fees for the years ended December 31, 2024 and 2023, as well as non-cash impairment charges of $71.3 million on our trademarks and $8.7 million on certain licensing contracts during the year ended December 31, 2023.

Digital Subscriptions and Content: outside consulting expenses for the years ended December 31, 2024 and 2023, 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.

Corporate: outside consulting expenses, rent expense, insurance expense, and audit and tax fees for the years ended December 31, 2024 and 2023, as well as non-cash impairment charges of $3.8 million on our artwork held for sale and $0.6 million on our corporate leases during the year ended December 31, 2024.

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

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):

22. Subsequent Events

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 Common Stock, at a conversion price of $1.84956 per share, 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.

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