On February 9, 2026, we entered into a share purchase agreement (the “Purchase Agreement”) with UTG to form a new joint venture for the Playboy licensing business in China, Hong Kong and Macau (the “New China JV”), in which UTG will ultimately acquire a 50% interest for an aggregate purchase price of $45.0 million (the “Purchase Price”), payable across three closings. At the initial closing on March 20, 2026 (the “New China JV Initial Closing”), we received $15.0 million and UTG acquired a 16.67% interest in the New China JV, while we owned the remaining 83.33% as of the New China JV Initial Closing and at September 30, 2026. UTG will acquire additional interests for $15.0 million at each of the second and third closings, on or before January 4, 2027 and January 4, 2028, respectively. The Purchase Price proceeds are required to be applied to repay our senior secured debt, of which $15.0 million was repaid in the first quarter of 2026 (see Note 8, Debt). UTG operates the New China JV’s licensing business.

The New China JV is required to pay us minimum distributions totaling $67.0 million through 2033 ($10.0 million in 2026, $9.0 million in 2027 and $8.0 million in each year from 2028 through 2033), in each case payable semi-annually. UTG is required to contribute to the New China JV any shortfall in funds available for such distributions from the New China JV itself (the “Noncontrolling Interest Capital Contribution”). Noncontrolling Interest Capital Contributions totaled $3.4 million for the nine months ended September 30, 2026, of which $2.4 million was received in April 2026 and $1.0 million was recognized in the third quarter of 2026 and received in October 2026. The $1.0 million receivable from UTG is included in prepaid expenses and other current assets as of September 30, 2026, with a corresponding increase in additional paid-in capital.

Under the BSSA, UTG pays us for brand support services up to $4.0 million in each of the first two contract years and $2.0 million in the third contract year. In the first quarter of 2026, UTG advanced the $4.0 million for the first contract year. We applied $1.3 million and $2.6 million of the advance against cost of sales, and $0.2 million and $0.4 million against selling and administrative expenses, for the three and nine months ended September 30, 2026, respectively. The unapplied $1.0 million is included in other current liabilities and accrued expenses as of September 30, 2026.

The New China JV is a VIE of which we are the primary beneficiary, and we have consolidated it since the New China JV Initial Closing. We are the primary beneficiary because, through our majority ownership interest, we have the power to direct the activities that most significantly impact the New China JV’s economic performance, and, through our 83.33% equity interest and our right to the minimum distributions, we have the obligation to absorb losses of, and the right to receive benefits from, the New China JV that could potentially be significant to it. Because UTG bears any shortfalls in the minimum distributions required to be paid to us from the New China JV, profits are not shared in proportion to ownership, and we attribute net income or loss to the noncontrolling interest using the hypothetical liquidation at book value method. No earnings will be allocated to the noncontrolling interest until we have received the $67.0 million of minimum distributions we are entitled to pursuant to the New China JV’s governing agreements. Accordingly, no net income or loss was attributed to the noncontrolling interest, and no distributions were made to UTG, for the three and nine months ended September 30, 2026. The assets of the New China JV can be used only to settle its obligations, and its creditors have no recourse to our general credit.


Assets
Cash and cash equivalents	$	5,164
Receivables, net	7,359
Prepaid expenses and other current assets	2,316
Other	64
Total assets	$	14,903
Liabilities
Deferred revenues, current portion	$	1,216
Other current liabilities and accrued expenses	4,179
Deferred revenues, net of current portion	1,194
Other	126
Total liabilities	$	6,715

The New China JV’s net revenues and net income included in our condensed consolidated statements of operations were $4.4 million and $4.3 million for the three months ended September 30, 2026, respectively, and $7.4 million and $7.1 million for the period from the New China JV Initial Closing through September 30, 2026, respectively, all of which was attributable to the Company.