| Debt |
3.Debt Notes Payable The following table summarizes the Company’s debt facilities as of June 30, 2025 and December 31, 2024 (in millions): | | | | | | | | | | | | | | | | | | | Type of Facility
or Arrangement | | Balance as of June 30, 2025 | | | Balance as of December 31, 2024 | | | Original Principal Amount | | | Interest Rate | | | Repayment Terms | May 2024 P&A loans | | $ | 2.1 | | | $ | 3.3 | | | $ | 3.0 | | | 10.0* | % | | | For detailed terms, see (1) | Feb 2025 loan agreement | | | 4.3 | | | | — | | | | 5.4 | | | 18.5 | | | | For detailed terms, see (2) | Jan and Feb 2025 note agreements | | | 13.5 | | | | — | | | | 13.5 | | | 11.5 - 12.0 | | | | For detailed terms, see (3) | May 2025 convertible note | | | 5.1 | | | | — | | | | 5.0 | | | 15.0 | | | | See Convertible Note and Warrant section below. | Revolving P&A loans (See Note 6, Related-Party Transactions) | | | 11.8 | | | | 8.2 | | | | | | | 10.0 - 15.0* | | | | The current notes mature between July and August 2025. | Total | | | 36.8 | | | | 11.5 | | | | | | | | | | | | Less: Discounts, net of amortization | | | (1.4) | | | | — | | | | | | | | | | | | Total notes payable balance | | $ | 35.4 | | | $ | 11.5 | | | | | | | | | | | |
* The interest rates for these loans are calculated as simple interest, where the amount of interest is a fixed amount of the principal. | (1) | The maturity date is dependent on the timing of cash collections from theatrical sales, licensing revenue, merchandise sales and other revenue. The balance is expected to be fully paid within the next twelve months. |
| (2) | 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 included $0.1 million in set-up and legal fees which were recorded as a debt discount. Maturity date is dependent on the timing of cash collections from theatrical sales, licensing revenue, merchandise sales and other revenue. $2.3 million of the remaining balance is classified as short-term, as it is expected to be repaid in the next 12 months. |
| (3) | The notes mature between February 2026 and April 2026. The Company used a portion of their digital assets to be held in custody 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 June 30, 2025, the market value of digital assets transferred to the lenders as collateral was approximately $28.8 million. As the Company retains the economic risk of the digital currency, digital assets receivable are recorded in the condensed consolidated balance sheets. |
Convertible Note and Warrant In May 2025, the Company entered into a note and warrant purchase agreement with an unaffiliated third party, providing for the private placement of a subordinated convertible promissory note and warrant to purchase 30,525 shares of the Company’s Class C common stock with an exercise price of $32.76 per share. The Company does not have the right to prepay the convertible note. Interest is compounded monthly and payable on the maturity date. A discount of $1.3 million was recorded for the convertible feature of the note and the warrant, as allocated based on the relative fair values of the elements of the convertible note. This discount was recorded as paid-in capital. Due to the total fair value of the note, including the warrant and convertible feature, being greater than the principal amount of the note, the effective interest rate is greater than the coupon rate and is approximately 30.9%. The following table summarizes further details of the Note: | | | | | | | | | | | | Notes | | Issuance Date | | Maturity Date | | Principal Amount | | Coupon Interest Rate | | 2025 Note | | May 2, 2025 | | May 1, 2027 | | $ | 5,000,000 | | 15.00 | % | |
Conversion Rights of the Note At the investor’s option and prior to the maturity date, the convertible note and any accrued interest may be converted into shares of the Company’s Class C common stock at a fixed price of $32.76 per share. Components and Fair Value of the Note and Warrant The convertible note and warrant consisted of the following components as of June 30, 2025. The principal shown in the table below consists of the original principal amount of the note as well as the interest (which is paid-in-kind each month). | | | | 2025 Note | As of June 30, 2025 | | Principal | $ | 5,125,781 | | Less: discount, net of amortization | | 1,272,193 | | Net carrying amount | $ | 3,853,588 | | | | | | Estimated fair value at date of issuance (1) | $ | 6,825,393 | |
| (1) | The fair value includes the note, the conversion feature on the note, and the warrant. The conversion feature and warrant were determined based on the Black Scholes option pricing model on the date of issuance of the note and has been classified as level 3 in the fair value hierarchy. |
Interest Expense The following table summarizes interest expenses related to the convertible note and warrant: | | | | | | | | | | | | | For the three months ended June 30, | | For the six months ended June 30, | | 2025 | | 2024 | | 2025 | | 2024 | Amortization of debt discount | $ | 65,016 | | $ | — | | $ | 65,016 | | $ | — | Coupon interest payable on convertible note | | 125,781 | | | — | | | 125,781 | | | — | Total interest expense on convertible note | $ | 190,797 | | $ | — | | $ | 190,797 | | $ | — |
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