Notes Payable |
3 Months Ended |
|---|---|
Mar. 31, 2025 | |
| Notes Payable | |
| Notes Payable | 3.Notes Payable In January 2024, the Company entered into a short-term loan agreement with an unaffiliated third party for $0.3 million with a 10.0% interest rate and maturity date of 100 days. As of December 31, 2024, the note principal and interest had been repaid. In February 2024, the Company entered into a revolving P&A loan agreement with a related-party. See Note 6, Related-Party Transactions, for further discussion. In May 2024, the Company entered into P&A loans totaling $3.0 million. The maturity date is dependent on the timing of cash collections from theatrical sales, licensing revenue, merchandise sales and other revenue. The principal balance is payable along with a 10.0% coupon on the total loans. As of March 31, 2025 and December 31, 2024, the total amount outstanding was $2.5 million and $3.3 million, respectively. The balance is expected to be fully paid within the next twelve months. In May 2024, the Company entered into a short-term loan agreement for $0.5 million with a 10.0% interest rate and maturity date of 100 days. As of December 31, 2024, the note principal and interest had been repaid. On February 5, 2025, the Company entered into a loan agreement with a third-party lender to secure senior secured financing related to the licensing receivables from the feature film “Sound of Freedom.” Under the agreement, the lender paid to the borrower $5.4 million (the “Loan”) for working capital and future media acquisition and production. In exchange, the borrower assigned the rights to certain licensing receivables to the lender. The loan has an effective interest rate of 18.5% and is repayable in nine quarterly installments of $0.7 million each, commencing February 15, 2025, with a maturity date of February 15, 2027. The loan is secured by a first-priority security interest in all assets related to “Sound of Freedom,” including distribution proceeds, and a repayment lien on all future media projects of the borrower and the Company, subordinated to certain pre-existing obligations except for “Sound of Freedom” assets. Additional costs include $0.1 million in set-up and legal fees which were recorded as a debt discount. During January and February 2025, the Company entered into several note agreements totalling $13.5 million. The notes mature between February 2026 and April 2026 with interest on the notes ranging between 11.5% to 12.0%. The Company used a portion of their digital assets as collateral on the notes. The initial margin required as collateral ranged between 150.0% – 167.0% percent of the note amount. Additional collateral is required if the value of the note to collateralized digital currency falls between 140.0% – 143.0% percent depending on the note. As of March 31, 2025, the market value of digital assets transferred to the lenders as collateral was approximately $21.7 million. As the Company retains the economic risk of the digital currency, digital assets receivable are recorded in the condensed consolidated balance sheets.
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