UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission file number: 000-55029

5&2 STUDIOS, INC.

(Exact name of registrant as specified in its charter)

Delaware	82-3246222
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
8291 Baucum Road Midlothian, TX	76065
(Address of principal executive offices)	(Zip Code)

(833) 924-6736

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At August 1, 2025, 6,950,000 shares of the registrant’s Series A Common Stock, $0.001 par value per share, were issued and outstanding and 5,585,229 shares of the registrant’s Series B Common Stock, $0.001 par value per share, were issued and outstanding.

TABLE OF CONTENTS

	Page
Part I - Financial Information	4
Item 1. Financial Statements	4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3. Quantitative and Qualitative Disclosures About Market Risk	31
Item 4. Controls and Procedures	31
Part II - Other Information	32
Item 1. Legal Proceedings	32
Item 1A. Risk Factors	32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3. Default upon Senior Securities	32
Item 4. Mine Safety Disclosures	32
Item 5. Other Information	32
Item 6. Exhibits	33

2

CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS

THIS QUARTERLY REPORT ON FORM 10-Q (THIS “QUARTERLY REPORT”) MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE THIS FILING, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

3

Part I - Financial Information

Item 1. Financial Statements

5&2 Studios, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except par value)

	As of
	June 30,		December 31,
	2025		2024
	(Unaudited)
Assets
Cash and cash equivalents	$	31,072	$	6,466
Accounts receivable, net of allowances of $0 and $22 as of June 30, 2025 and December 31, 2024, respectively		53,851		13,474
Inventory		4,575		5,858
Prepaid assets		4,270		3,299
Other current assets		3,477		2,613
Total current assets		97,245		31,710
Property and equipment, net		26,188		28,431
Film costs, net		10,725		16,733
Other assets		5,487		2,696
Deferred tax asset, net		18,464		15,270
Total assets	$	158,109	$	94,840
Liabilities and Equity
Accounts payable	$	2,495	$	2,753
Accrued expenses and other current liabilities		59,261		10,773
Deferred revenue		65,697		62,112
Current portion of lease liabilities		664		659
Total current liabilities		128,117		76,297
Other noncurrent liabilities		6,840		2,552
Total liabilities		134,957		78,849
Commitments and contingencies (Note 9)		—		—
Series A Common Stock, $0.001 par value; 10,900 shares authorized; 6,950 and 6,950 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively		7		7
Series B Common Stock, $0.001 par value; 25,000 shares authorized; 5,585 and 5,591 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively		6		6
Additional paid-in capital		10,237		10,237
Retained earnings		10,953		1,558
Noncontrolling interests		1,949		4,183
Total equity		23,152		15,991
Total liabilities and equity	$	158,109	$	94,840

See accompanying notes to the condensed consolidated financial statements.

4

5&2 Studios, Inc.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenues
Licensed content and merchandise revenues	$	38,154	$	15,068	$	74,249	$	42,605
Production services revenues		59,014		68,872		76,122		68,872
Total revenues		97,168		83,940		150,371		111,477
Cost of licensed content and merchandise revenues		32,995		7,271		62,984		17,598
Cost of production services revenues		28,719		40,083		36,647		40,083
Distribution and marketing		2,814		7,860		4,523		22,630
Amortization of film costs		—		3,714		1,901		14,553
Impairment of film costs		10,496		—		10,496		—
Depreciation and amortization		1,432		3,577		4,973		6,403
General and administrative		9,883		7,396		19,059		21,352
Operating expenses		86,339		69,901		140,583		122,619
Gain on sale of assets		—		13,022		—		13,022
Net operating income		10,829		27,061		9,788		1,880
Interest income		176		77		288		370
Interest expense		—		(2,477)		—		(5,432)
Other income, net		36		277		41		443
Net income (loss) before income taxes		11,041		24,938		10,117		(2,739)
Provision for income taxes		(3,219)		(8,106)		(2,956)		(2,084)
Net income (loss)		7,822		16,832		7,161		(4,823)
Net loss attributable to noncontrolling interests		762		1,629		2,234		3,039
Net income (loss) attributable to 5&2 Studios, Inc.	$	8,584	$	18,461	$	9,395	$	(1,784)
Earnings (loss) per Common Stock, basic and diluted(1)	$	0.68	$	1.47	$	0.75	$	(0.14)
Weighted average Common Stock outstanding, basic and diluted(1)		12,535		12,544		12,535		12,544

⁽¹⁾ Represents earnings (loss) per share and weighted average issued and outstanding Series A Common Stock and Series B Common Stock (see Note 3).

See accompanying notes to the condensed consolidated financial statements.

5

5&2 Studios, Inc.

Condensed Consolidated Statements of Equity

(Unaudited, in thousands)

	Series A			Series B			Additional
	Common Stock			Common Stock			Paid-In		Retained		Noncontrolling		Total
Three Months Ended June 30, 2025	Shares	Amount		Shares	Amount		Capital		Earnings		Interests		Equity
Balance as of March 31, 2025	6,950	$	7	5,585	$	6	$	10,237	$	2,369	$	2,711	$	15,330
Net income (loss)	—		—	—		—		—		8,584		(762)		7,822
Balance as of June 30, 2025	6,950	$	7	5,585	$	6	$	10,237	$	10,953	$	1,949	$	23,152

	Series A			Series B			Additional
	Common Stock			Common Stock			Paid-In		Retained		Noncontrolling		Total
Six Months Ended June 30, 2025	Shares	Amount		Shares	Amount		Capital		Earnings		Interests		Equity
Balance as of December 31, 2024	6,950	$	7	5,591	$	6	$	10,237	$	1,558	$	4,183	$	15,991
Retirement of common stock	—		—	(6)		(0)		—		—		—		(0)
Net income (loss)	—		—	—		—		—		9,395		(2,234)		7,161
Balance as of June 30, 2025	6,950	$	7	5,585	$	6	$	10,237	$	10,953	$	1,949	$	23,152

	Series A			Series B			Additional
	Common Stock			Common Stock			Paid-In		Retained		Noncontrolling		Total
Three Months Ended June 30, 2024	Shares	Amount		Shares	Amount		Capital		Earnings		Interests		Equity
Balance as of March 31, 2024	6,950	$	7	5,595	$	6	$	10,237	$	(5,810)	$	8,325	$	12,765
Retirement of common stock	—		—	(1)		(0)		—		—		—		(0)
Net income (loss)	—		—	—		—		—		18,461		(1,629)		16,832
Balance as of June 30, 2024	6,950	$	7	5,594	$	6	$	10,237	$	12,651	$	6,696	$	29,597

	Series A			Series B			Additional
	Common Stock			Common Stock			Paid-In		Retained		Noncontrolling		Total
Six Months Ended June 30, 2024	Shares	Amount		Shares	Amount		Capital		Earnings		Interests		Equity
Balance as of December 31, 2023	6,950	$	7	5,595	$	6	$	10,237	$	14,435	$	9,735	$	34,420
Retirement of common stock	—		—	(1)		(0)		—		—		—		(0)
Net loss	—		—	—		—		—		(1,784)		(3,039)		(4,823)
Balance as of June 30, 2024	6,950	$	7	5,594	$	6	$	10,237	$	12,651	$	6,696	$	29,597

See accompanying notes to the condensed consolidated financial statements.

6

5&2 Studios, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

	Six Months Ended
	June 30,
	2025		2024
Cash flows from operating activities
Net income (loss)	$	7,161	$	(4,823)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization expense		4,973		6,403
Amortization of film costs		1,901		14,553
Impairment of film costs		10,496		—
Deferred income tax benefit		(3,194)		(1,547)
Accretion of debt discount and issuance costs		—		473
Non-cash lease expense		12		17
Gain on sale of assets		—		(13,022)
Allowance (recovery) for credit losses		(1)		43
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(40,355)		(17,170)
(Increase) decrease in inventory		598		68
(Increase) decrease in prepaids and other current assets		(961)		(5,319)
(Increase) decrease in film costs		(6,332)		(5,565)
Increase (decrease) in accounts payable		(489)		(2,023)
Increase (decrease) in accrued expenses and other current liabilities		49,116		10,410
Increase (decrease) in deferred revenue		3,585		(25,999)
Increase (decrease) in other noncurrent liabilities		595		1,855
Net cash flows provided by (used in) operating activities		27,105		(41,646)
Cash flows from investing activities
Acquisition of property & equipment		(2,499)		(7,059)
Net cash flows (used in) investing activities		(2,499)		(7,059)
Cash flows from financing activities
Proceeds from issuance of debt		—		11,684
Net cash flows provided by financing activities		—		11,684
Net increase (decrease) in cash and cash equivalents		24,606		(37,021)
Cash and cash equivalents, beginning of period		6,466		65,179
Cash and cash equivalents, end of period	$	31,072	$	28,158
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	5,010	$	—
Cash paid for interest	$	—	$	2,697
Cash received for interest	$	288	$	370
Supplemental disclosure of non-cash investing and financing information:
Purchase of property and equipment with accounts payable	$	231	$	1,163
Accounts payable and accrued expenses and other current liabilities related to film costs, net	$	57	$	(1,672)
Forgiveness of debt in CAS Transaction	$	—	$	157,184

See accompanying notes to the condensed consolidated financial statements.

7

5&2 Studios, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Note 1 – Basis of Presentation and Summary of Significant Accounting Policies

5&2 Studios Inc. (“5&2”), a Delaware corporation, is an independent studio and film production company, which was created to develop and produce an episodic television series entitled The Chosen (the “Series”). The Series is based on the gospels of the Bible and tells the story of the life of Jesus Christ primarily through the perspectives of those who met him throughout his life. While 5&2 Studios, Inc. is primarily focused on producing the remaining two seasons of the Series, it continues to evaluate opportunities to diversify its content through other Biblical based productions. 5&2 is engaged in new productions, including a series based on the life of Moses, a series based on the life of Joseph called Joseph of Egypt, a series based on the book of Acts, an animated series based on The Chosen called The Chosen Adventures, and an unscripted show featuring The Chosen cast and adventure enthusiast Bear Grylls called The Chosen in the Wild.

The condensed consolidated financial statements of 5&2, its wholly owned subsidiaries The Chosen Texas, LLC, TCI Animation, LLC, The Chosen House, LLC, Dream Weaver Stories, LLC, and Pit to Palace Productions, LLC, and its variable controlling interests in Impossible Math, LLC and SAS52, LLC (collectively, the “Company”), have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and are consistent in all material respects with those applied in the Company’s Annual Report for the year ended December 31, 2024 included in the Company’s Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2025. All significant intercompany balances and transactions have been eliminated in consolidation.

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the expected project cost for production services, amortization of content assets, recognition and measurement of income tax assets and liabilities, determination of the standalone selling price for licensed content revenue, and fair value assessments related to film cost impairments. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. On a regular basis, the Company evaluates the assumptions, judgments, and estimates. Actual results may differ from these estimates.

The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Interim results are not necessarily indicative of the results for a full year.

The following is provided to update the Company’s significant accounting policies previously described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. There have been no other changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report for the year ended December 31, 2024.

Impairment Assessment for Film Costs

Each film project is evaluated for impairment when an event or change in circumstances indicates that the fair value of a film may be less than its unamortized costs. The estimated fair value is determined based on a discounted cash flow analysis of the cash flows directly attributable to the film. If the result of the impairment test indicates that the unamortized film costs exceed the estimated fair value, an impairment charge will then be recorded for the amount of the difference.

As a result of revised ultimate revenue forecasts and a change in distribution strategy for certain content, the Company recognized an impairment of film costs of $10,496 thousand reflected in impairment of film costs in the Company’s Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2025. There were no amounts recorded related to impairment of film costs for the three and six months ended June 30, 2024.

8

Consolidation

SAS52, LLC was formed on March 28, 2025, to develop, produce, and monetize original animated content, and on April 4, 2025, 5&2 became an equity holder. The Company holds a 50% voting interest in SAS52, LLC through its wholly owned subsidiary, 5&2 JV Holdco, LLC, and also holds a 50% economic interest as of June 30, 2025. The Company determined that SAS52, LLC is a variable interest entity (“VIE”). This is because while 5&2 Studios, Inc. does not have a majority equity interest compared to other owners, 5&2 Studios, Inc. controls SAS52, LLC through its role as managing member and decision-making authority over key operational and financial matters once projects are approved. Further, the Company concluded it is the primary beneficiary through its power to direct activities that most significantly impact SAS52’s economic performance and its exposure to significant variable interests, including funding obligations, priority return rights, and revenue-based service fees.

As of June 30, 2025, and December 31, 2024, total consolidated assets and liabilities of the Company’s consolidated VIEs, Impossible Math, LLC and SAS52, were as follows (in thousands):

	As of
	June 30,		December 31,
	2025		2024
Total current assets	$	42	$	252
Total non-current assets		21,700		20,450
Total assets	$	21,742	$	20,702
Total current liabilities	$	685	$	225
Total non-current liabilities		3,817		126
Total liabilities	$	4,502	$	351

As of June 30, 2025, the total non-contributing interest equity balances attributable to Impossible Math, LLC and SAS52 were $17,494 thousand and $0 thousand, respectively. As of December 31, 2024, the total non-contributing interest equity balance attributable to Impossible Math, LLC was $17,494 thousand; SAS52 did not exist at this time.

Concentrations of Credit Risk

The Company maintains its cash in bank deposit accounts which, at times, exceed federally insured limits. As of June 30, 2025, and December 31, 2024, the bank balance exceeded the federally insured limit by $15,329 thousand and $3,242 thousand, respectively.

A major customer is considered to be one that comprises more than 10% of the Company’s accounts receivable or annual revenues.

For the three months ended June 30, 2025, the Company had three customers that individually comprised greater than 10% of revenue, representing 60.5%, 15.3%, and 13.8%, respectively. For the three months ended June 30, 2024, the Company had one customer that individually comprised greater than 10% of revenue, representing 82.0%.

For the six months ended June 30, 2025, the Company had three customers that individually comprised greater than 10% of revenue, representing 50.5%, 26.4%, and 13.9%, respectively. For the six months ended June 30, 2024, the Company had two customers that each individually comprised greater than 10% of revenue, representing 61.8% and 13.6%, respectively.

As of June 30, 2025, two customers accounted for a total of 81.2% of our accounts receivable balance or 70.8% and 10.4%, respectively. As of December 31, 2024, three customers accounted for a total of 90.5% of our accounts receivable balance or 43.2%, 30.2%, and 17.1%, respectively.

9

Note 2 - Revenue Recognition

Licensed content revenues are earned from licensing agreements which include distribution of the Company’s intellectual property rights via (i) streaming of digital media, (ii) physical media (digital versatile discs (“DVDs”) and Blu-ray discs), (iii) linear television, (iv) theatrical distribution of certain episodes or other content, (v) books and printed materials and (vi) merchandise.

Under these arrangements, the Company’s performance obligation is a license that provides the licensee the right to use the Company’s functional intellectual property rights, or uploaded marketing advertisements, as it exists at a point in time. Merchandise revenue is generated from online store and wholesale sales of The Chosen and 5&2 Studios, Inc. branded physical media products, and merchandise. The Company contracts with third parties to fulfill orders and also utilizes third-party distributors to sell merchandise to retailers. Other revenue consists of ticket revenues and fixed sponsor fees for events and experiences related to The Chosen and 5&2 Studios, Inc. Revenue from event promotion or production is recognized when the event occurs.

Production services revenue is earned by providing production services on a work-for-hire basis for the development, production, and delivery of the production project.

The following table presents the Company’s disaggregated revenues (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Licensed content	$	31,812	$	2,903	$	64,264	$	25,719
Merchandise		6,242		12,165		9,885		16,886
Other		100		—		100		—
Licensed content and merchandise revenues	$	38,154	$	15,068	$	74,249	$	42,605
Production services revenues		59,014		68,872		76,122		68,872
Total revenues	$	97,168	$	83,940	$	150,371	$	111,477

The following table presents revenue recognized for goods transferred at a point in time and services transferred over time on the Condensed Consolidated Statements of Operations (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Point in time	$	38,154	$	15,068	$	74,249	$	42,605
Over time		59,014		68,872		76,122		68,872
Total revenues	$	97,168	$	83,940	$	150,371	$	111,477

Transaction Price Allocated to the Remaining Performance Obligations

The Company’s remaining performance obligations under contracts primarily relate to production services arrangements that have original expected durations longer than one year. For arrangements that are short-term in nature with a contract term of one year or less, the Company has utilized the practical expedient exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

As of June 30, 2025, the aggregate consideration of the Company’s revenue arrangement allocated to remaining performance obligations in the Company’s arrangements was approximately $237,365 thousand, which relates to the allocated fixed and variable consideration for the Company’s remaining production services performance obligations to develop, produce and deliver the rights and completed content of the sixth and seventh seasons of The Chosen. The Company expects to recognize the revenue from these remaining partially satisfied and unsatisfied performance obligations over one to three years.

10

Contract Assets and Liabilities

A contract asset is recorded when revenue is recognized in advance of the Company’s right to bill and receive consideration, and that right is conditioned upon something other than the passage of time. The Company did not have any contract assets from arrangements with customers as of June 30, 2025 and December 31, 2024.

Contract liabilities are recorded when consideration is received from a customer prior to fully satisfying a performance obligation in a contract. The Company’s contract liabilities primarily consist of deferred revenue for cash received related to production services in advance of, or in excess of, the revenue recognized from satisfaction of the production service obligations, licensed content arrangements under which a payment has been received and related the content has not yet been made available to the customer, and cash received related to merchandise arrangements under which a payment has been received and the order is unfulfilled. These contract liabilities will be recognized as revenues when the performance obligation is satisfied, and control is transferred to the customer.

As of June 30, 2025 and December 31, 2024, total deferred revenue was $65,697 thousand and $62,112 thousand, respectively, which primarily relates to deferred amounts for production services in progress for Season 6 and the Company’s obligations to perform production services for Season 7 of the Series. Revenue recognized during the three and six months ended June 30, 2025 from amounts included in total deferred revenue as of December 31, 2024 was $44,831 thousand and $61,795 thousand, respectively. Revenue recognized during the three and six months ended June 30, 2024 from amounts included in total deferred revenue as of December 31, 2023 was $70 thousand and $900 thousand, respectively.

Note 3 – Earnings (loss) per share

Earnings (loss) per share (“EPS”) is calculated using the two-class method, which requires the allocation of earnings to each class of common stock outstanding and to participating securities with rights to earnings that would otherwise have been available to common stockholders. Except with respect to the number of votes per share, Series A Common Stock and Series B Common Stock have the same rights and preferences, including equal rights to participation in the dividends and other distributions of the Company. Accordingly, basic and diluted earnings per share is the same for both classes and EPS for the six months ended June 30, 2025 have been presented as a single class of common stock.

As of June 30, 2025, the Company does not have any potentially dilutive instruments outstanding.

Note 4 – Balance Sheet Components

Inventory

Inventory consisted of the following (in thousands):

	As of
	June 30,		December 31,
	2025		2024
Raw materials	$	175	$	175
Finished goods		4,540		5,745
Inventory reserve		(140)		(62)
Inventory	$	4,575	$	5,858

11

Property and Equipment

Property and Equipment and accumulated depreciation consisted of the following (in thousands):

	As of
	June 30,		December 31,		Estimated
	2025		2024		Useful Lives
	(in thousands)				(in years)
Land	$	90	$	90
Capitalized software and IT systems		782		668	3
Buildings and improvements		51,855		51,078	2 – 30
Equipment		549		519	3 – 15
Furniture and fixtures		140		130	5
Vehicles		476		476	8
Construction in process		1,824		25
Property and equipment, gross		55,716		52,986
Accumulated depreciation		(29,528)		(24,555)
Property and equipment, net	$	26,188	$	28,431

No impairment of property and equipment was recorded during the six months ended June 30, 2025 or the year ended December 31, 2024. Depreciation of property and equipment was $1,432 thousand and $3,575 thousand for the three months ended June 30, 2025 and 2024, respectively. Depreciation of property and equipment was $4,973 thousand and $6,399 thousand for the six months ended June 30, 2025 and 2024, respectively.

Film Costs

The following table represents the components of film costs (in thousands):

	As of
	June 30,		December 31,
	2025		2024
Released and completed film costs	$	2,469	$	2,469
Not released, in production film costs		18,297		14,680
In development or preproduction film costs		2,925		153
Film costs, gross		23,691		17,302
Accumulated amortization and impairments		(12,966)		(569)
Film costs, net	$	10,725	$	16,733

Amortization expense for film costs for the three months ended June 30, 2025 and 2024 was $— thousand and $3,714 thousand, respectively. Amortization expense for film costs for the six months ended June 30, 2025 and 2024 was $1,901 and $14,553 thousand, respectively.

There are no future aggregate amounts of amortization expense expected to be recognized over the next five years related to released and completed film costs as of June 30, 2025.

As a result of revised ultimate revenue forecasts and a change in distribution strategy for certain content, the Company recognized an impairment of film costs of $10,496 thousand for the three and six months ended June 30, 2025. There were no amounts recorded related to impairment of film costs for the three and six months ended June 30, 2024. Impairments of film costs are recorded in Impairment of film costs on the Company’s Condensed Consolidated Statements of Operations.

12

Leases

The Company has operating leases for certain Company offices and other facilities related to film production. The leases expire at various dates through 2036 and provide for renewal options ranging from one month to four terms of ten-years. In the normal course of business, it is expected that these leases will be renewed or replaced by leases on other properties. There were no finance leases as of June 30, 2025 and December 31, 2024.

The Company’s operating right-of-use assets and lease liabilities consisted of the following (in thousands):

	As of
	June 30,		December 31,
	2025		2024
Operating right of use assets (1)	$	4,670	$	984
Operating short-term lease liabilities (2)	$	664	$	659
Operating long-term lease liabilities (3)		3,904		211
Total operating lease liabilities	$	4,568	$	870

(1) Included in Other assets in the Condensed Consolidated Balance Sheets.

(2) Included in Current portion of lease liabilities in the Condensed Consolidated Balance Sheets.

(3) Included in Other noncurrent liabilities, net of current portion in the Condensed Consolidated Balance Sheets.

The components of lease costs consisted of the following (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Lease costs
Operating lease cost	$	263	$	134	$	477	$	268
Variable and short-term lease cost		2,243		616		2,685		1,079
Total lease cost	$	2,506	$	750	$	3,162	$	1,347

Cash paid during the period for amounts included in the measurement of lease liabilities consisted of the following (in thousands):

	Six Months Ended
	June 30,
	2025		2024
Operating cash flows for amounts included in the measurement of operating lease liabilities	$	465	$	251
Right-of-use assets obtained in exchange for operating lease obligations	$	4,096	$	79

Supplemental balance sheet information related to leases consisted of the following (in thousands):

	As of
	June 30,		December 31,
	2025		2024
Weighted average remaining lease term (in years):
Operating leases	10.28 years		1.40 years
Weighted average discount rate:
Operating leases	6.37	%	6.59	%

13

Maturities of lease liabilities as of June 30, 2025 were as follows (in thousands):

	Operating Leases
Remainder of 2025	$	565
2026		674
2027		527
2028		500
2029		500
Thereafter		3,459
Total lease payments		6,225
Imputed interest		(1,657)
Total lease liability	$	4,568

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	As of
	June 30,		December 31,
	2025		2024
Royalties, residuals, and participation fees	$	47,436	$	4,745
Income tax payable		4,365		3,123
Returns allowance		1,838		1,858
Accrued compensation		1,729		61
Accrued inventory purchases		872		167
Credit card liabilities		630		268
Other		2,391		551
Accrued expenses and other current liabilities	$	59,261	$	10,773

Note 5 - Equity

Each share of Series A Common Stock is entitled to ten votes per share, and each share of Series B Common Stock is entitled to one vote per share. Except with respect to the number of votes per share, Series A Common Stock and Series B Common Stock have the same rights and preferences, including equal rights to participation in the dividends and other distributions of the Company.

Note 6 - Income Taxes

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2025			2024			2025			2024
Deferred provision for income tax	$	604		$	4,605		$	(3,194)		$	(1,547)
Current income taxes		2,615			3,501			6,150			3,631
Provision for income taxes	$	3,219		$	8,106		$	2,956		$	2,084
Effective tax rate		29	%		33	%		29	%		-76	%

The effective tax rate for the three and six months ended June 30, 2025 differed from the Federal statutory rate primarily due to the impact from the net loss attributable to noncontrolling interest (“NCI”), executive compensation, and the benefit of state income taxes, net of Federal income tax effect.

The effective tax rate for the three and six months ended June 30, 2024 differed from the Federal statutory rate primarily due to the impact from the net loss attributable to NCI and the benefit of state income taxes, net of Federal income tax effect.

14

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. The OBBBA includes significant changes to U.S. tax law, including modifications to making bonus depreciation permanent, enabling domestic research cost expensing, and adjusting the business interest expense limitation. The Company is in the process of evaluating the impact of the OBBBA on its Consolidated Financial Statements.

Note 7 – Employee Benefits

Defined Contribution Retirement

The Company sponsors a defined contribution retirement savings plan under Section 401(k) of the Internal Revenue Code which covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre- or post-tax basis. During the three months ended June 30, 2025 and 2024, the Company contributions to the plan amounted to $185 thousand and $135 thousand, respectively. During the six months ended June 30, 2025 and 2024, the Company contributions to the plan amounted to $355 thousand and $265 thousand, respectively.

Phantom Stock Compensation Plans

During the year ended December 31, 2024, 5&2 Studios, Inc. authorized three incentive plans (collectively the “Phantom Unit Plans”) aimed at driving the Company’s success by motivating key contributors. Each plan grants awards in the form of “Phantom Units,” which provide recipients with the right to receive cash payments, less applicable withholding, equivalent to the distribution rights of Series B common shares in a qualifying sale event. While these Phantom Units do not confer ownership rights, they are also entitled to dividends, if declared, equivalent to those of Series B common stock in addition to the right to cash payment contingent upon a qualifying sale event.

The following table presents Phantom Units authorized, as well as granted and outstanding under each plan as of June 30, 2025:

	Phantom Units
Authorized	2,930,000
Outstanding as of December 31, 2024	2,178,000
Granted	482,000
Outstanding as of June 30, 2025	2,660,000

The vesting conditions for all Phantom Units granted under the plans include a performance condition contingent upon a qualifying sale event, as defined in the respective agreements. The units may only be settled through cash payment. Pursuant to the first amendment to the Phantom Unit Plans executed on January 28, 2025 (“First Amendment to the Phantom Unit Plans”), payment relating to certain of the Phantom Unit’s award agreements fully vests upon occurrence of a qualifying event, subject to continuous employment with the Company through each date. Prior to the First Amendment to the Phantom Unit Plans, payment under these award agreements previously vested upon the qualifying sale event, and in part, subject to the occurrence of a qualifying sale event, at which time a specified percentage of the unit’s right to payment would be immediately vested, based on a years of service formula as of the qualifying sale date, while the remaining portion would vest in two equal annual installments following the qualifying sale date anniversary, subject to continuous employment with the Company through each date. Additionally, certain Phantom Units were granted for which cash payment fully vests upon the qualifying sale event and shall be entitled to the cash payment at the qualifying sale event plus a sale bonus percentage, as specified in the award agreement.

The awards are liability-classified as they may only be settled in cash and are therefore subject to remeasurement based on changes in the estimated fair value of the Phantom Units at each reporting date through date of settlement. The fair value of the units was determined by considering a number of objective and subjective factors, including the following: the Company’s operating and financial forecasts with consideration to the valuation of comparable companies, the discount for lack of marketability of common stock, and other general and industry specific economic factors. As all Phantom Units are contingent upon the performance vesting condition of a qualifying sale, expense is only recognized once the event becomes probable, which shall be upon the occurrence of the qualifying sale event. Therefore, as the qualifying sale event is not considered probable, no expense has been recognized for these awards. As such, no compensation expense or liability was recognized as of June 30, 2025, related to these awards.

15

Note 8 - Related Party Transactions

The Company has entered into various agreements with an executive and their immediate family member to write various books related to the Series. They receive a percentage of sales for each book. The Company recognized expenses from transactions with related parties for writer fees and book royalties of $20 thousand and $34 thousand during the three months ended June 30, 2025 and 2024, respectively. The Company recognized expenses from transactions with related parties for writer fees and book royalties of $23 thousand and $53 thousand during the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025 and 2024, there were related party liability balances of $9 thousand and $21 thousand, respectively.

Note 9 - Commitments and Contingencies

Commitments

The Company does not have any contractual commitments outside those addressed below.

Refer to Note 4 Balance Sheet Components for information related to the Company’s contractual commitments for leasing arrangements.

Contingencies

Phantom Stock Compensation Plans

The Phantom Units granted and outstanding in the Company’s Phantom Stock Compensation Plans are liability-classified awards that may only be settled in cash and are remeasured to fair value at each reporting date through the date of settlement. Cash payment pursuant to the Phantom Units and the associated compensation expense related to these awards are only incurred in the event of a qualifying sale event, and as such, no expense or liability has been recognized as of June 30, 2025. The estimated contingent liability and unrecognized compensation expense related to the outstanding units was $33,803 thousand and $27,325 thousand as of June 30, 2025 and December 31, 2024, respectively.

Litigation

As of October 18, 2022, the Company had entered into a non-exclusive license agreement (“Content License Agreement”) with Angel Studios, Inc. (“Angel” or “Angel Studios”) pursuant to which the Company granted Angel a non-exclusive license to exploit the Series in exchange for a defined share of Angel’s revenues from such exploitation. As described in the Form 8-K filed on April 10, 2023, by the Company, the Company delivered to Angel a Notice of Termination of the Content License Agreement on April 4, 2023, due to Angel’s previously noticed and uncured material breaches of the Content License Agreement. Initially, the Company elected to hold the termination in abeyance pending binding arbitration of the dispute with Angel, which the Company initiated on April 6, 2023. On October 15, 2023, following additional noticed and uncured material breaches by Angel, the Company delivered to Angel a second Notice of Termination, with such termination of the Content License Agreement to be effective as of October 20, 2023.

As disclosed in the Company’s Form 10 - K filed with the SEC on April 1, 2024, the Company’s Form 10 - Q filed with the SEC on May 15, 2024, August 14, 2024 and November 14, 2024, respectively, and the Company’s Current Reports on Form 8 - K filed with the SEC on April 10, 2023, October 19, 2023, May 15, 2024, May 31, 2024 and October 1, 2024, the termination of the Content License Agreement was the subject of a private binding arbitration initiated by the Company to resolve the dispute. On May 28, 2024, the arbitrator of the dispute issued an interim arbitration award in favor of the Company which, among other things, found multiple material breaches had been committed by Angel and upheld the Company’s termination of the Content License Agreement. As described in the Form 8 - K filed on October 1, 2024, the arbitrator of the dispute issued the final arbitration award in favor of the Company on September 25, 2024, which includes an award of $5,097 thousand in attorneys’ fees and recoverable costs payable by Angel to the Company. Angel filed a notice of appeal of the final arbitration award with the American Arbitration Association on October 25, 2024, pursuant to the appellate procedures provided for in the Content License Agreement. On June 13, 2025, the appellate tribunal affirmed the final arbitration award.

16

Additionally, on August 16, 2024, Angel Studios filed a complaint against the Company in the Fourth Judicial District of Utah. That complaint and record are classified as private under Utah law. On September 4, 2024, the Company filed a motion to dismiss the complaint or have the proceedings compelled to arbitration. On May 27, 2025, the Court granted the Company’s motion to compel arbitration and found Angel Studios liable for reasonable attorneys’ fees incurred in connection with the Company’s motion. On June 5, 2025, Angel Studios filed a Demand for Arbitration against the Company with the American Arbitration Association in accordance with the Court’s May 27, 2025 ruling.

Based on the outcome of the ongoing proceedings to date, the Company does not believe these proceedings will have a material negative impact on the Company’s financial position, results of operations, or liquidity. Furthermore, any potential recovery represents a gain contingency; accordingly, due to uncertainty regarding collection as of June 30, 2025, the Company has not recorded any potential recovery. Subsequent to June 30, 2025, the Company satisfactorily settled all of the aforementioned disputes through a comprehensive settlement agreement with Angel Studios (see Note 11 regarding subsequent events).

Employment Agreement

On March 28, 2025, the Company entered into an employment agreement with a key executive officer that provides for two contingent performance-based one-time bonuses, each with a maximum payout of $1,000 thousand, subject to the achievement of defined performance targets. In addition, the executive is eligible to receive episodic fees for services provided as a showrunner, writer, and director on designated projects, and an episodic executive producer fee for projects in which the executive is not serving as showrunner. Each such fee as well as the executive’s salary is subject to an automatic 5% annual escalation effective January 1 of each year. Additionally, the agreement includes provisions for severance benefits, including in certain circumstances, payment of salary and bonuses through the remainder of the executive agreement contract term. As a result, the Company’s commitments and contingencies relate to future salary, bonuses, and severance payment obligations.

Film Cost Incentives

The Company has access to a governmental program that is designed to promote content production within the States of Texas, Utah, and New Mexico. As of June 30, 2025, and December 31, 2024, the Company had received $2,723 thousand and $— in incentives, respectively. The Company recognizes these benefits when there is reasonable assurance regarding the realizable amount of the incentive.

Note 10 – Information on Business Segments

The Company operates in five operating and reportable segments: Theatrical, Television & Streaming, Merchandise, Events/Other, and Production Services. The segments are based on the nature of products and services offered, as well as how the chief operating decision maker (“CODM”), who is the Company’s Chief Executive Officer and Chief Financial Officer together, reviews financial results for evaluating segment performance and allocating resources. The CODM uses segment adjusted operating income / (loss) to assess financial performance and allocate resources. Segment information is based on the “management” approach, which designates the internal reporting used by management for making decisions and assessing performance of the segments.

Segment adjusted operating income / (loss) results include the revenues and cost of revenues, distribution and marketing, and general and administrative expenses which are directly attributable to each segment. Segment adjusted operating income / (loss) excludes income and expenses which are not directly related to the operations of the segment or management believes are not relevant to management’s assessment of the operating performance of the segments to make resource allocations. These excluded costs include amortization and impairment of film costs, depreciation and amortization, unallocated indirect distribution and marketing and general and administrative costs, which costs are corporate or company-wide in nature, as well as nonrecurring items and non-operating income and expenses. The CODM does not review assets in evaluating the results of the segments, and therefore, such information is not presented.

17

The financial results of the Company’s segments for the three and six months ended June 30, 2025 were as follows (in thousands):

For the Three Months Ended June 30, 2025
(in thousands)
	Theatrical		Television & Streaming		Merchandise		Events/Other		Production Services		Total
Total revenues:
Licensed content and merchandise revenues	$	18,653	$	13,159	$	6,242	$	100	$	—	$	38,154
Production services revenues		—		—		—		—		59,014		59,014
Total revenues		18,653		13,159		6,242		100		59,014		97,168
Cost of revenues - direct		—		—		4,274		—		28,719		32,993
Royalties, residuals and participation fees		17,187		10,361		1,172		—		—		28,720
Distribution & marketing - direct		—		—		1,232		—		—		1,232
Other segment items		—		—		629		—		666		1,295
Segment adjusted operating income (loss)	$	1,466	$	2,798	$	(1,065)	$	100	$	29,629	$	32,928
Corporate and unallocated operating expenses												(7,442)
Nonrecurring operating expenses												(2,729)
Amortization and impairment of film costs												(10,496)
Depreciation and amortization												(1,432)
Gain on sale of assets												—
Interest income												176
Interest expense												—
Other income, net												36
Provision for income taxes												(3,219)
Net income											$	7,822

For the Six Months Ended June 30, 2025
(in thousands)
	Theatrical		Television & Streaming		Merchandise		Events/Other		Production Services		Total
Total revenues:
Licensed content and merchandise revenues	$	24,633	$	39,631	$	9,885	$	100	$	—	$	74,249
Production services revenues		—		—		—		—		76,122		76,122
Total revenues		24,633		39,631		9,885		100		76,122		150,371
Cost of revenues - direct		—		—		7,407		—		36,647		44,054
Royalties, residuals and participation fees		22,435		31,469		1,673		—		—		55,577
Distribution & marketing - direct		—		—		1,941		—		—		1,941
Other segment items		—		—		1,203		—		1,516		2,719
Segment adjusted operating income (loss)	$	2,198	$	8,162	$	(2,339)	$	100	$	37,959	$	46,080
Corporate and unallocated operating expenses												(13,674)
Nonrecurring operating expenses												(5,248)
Amortization and impairment of film costs												(12,397)
Depreciation and amortization												(4,973)
Gain on sale of assets												—
Interest income												288
Interest expense												—
Other income, net												41
Provision for income taxes												(2,956)
Net income											$	7,161

18

The financial results of the Company’s segments for the three and six months ended June 30, 2024 were as follows (in thousands):
​

For the Three Months Ended June 30, 2024
(in thousands)
	Theatrical		Television & Streaming		Merchandise		Events/Other		Production Services		Total
Total revenues:
Licensed content and merchandise revenues	$	1,158	$	1,438	$	12,165	$	307	$	—	$	15,068
Production services revenues		—		—		—		—		68,872		68,872
Total revenues		1,158		1,438		12,165		307		68,872		83,940
Cost of revenues - direct		—		—		6,309		—		40,104		46,413
Royalties, residuals and participation fees		4		127		811		—		—		942
Distribution & marketing - direct		404		—		1,559		—		—		1,963
Other segment items		—		—		411		—		1,117		1,528
Segment adjusted operating income	$	750	$	1,311	$	3,075	$	307	$	27,651	$	33,094
Corporate and unallocated operating expenses												(7,429)
Nonrecurring operating expenses												(4,335)
Amortization of film costs												(3,714)
Depreciation and amortization												(3,577)
Gain on sale of assets												13,022
Interest income												77
Interest expense												(2,477)
Other income, net												277
Provision for income taxes												(8,106)
Net income											$	16,832

For the Six Months Ended June 30, 2024
(in thousands)
	Theatrical		Television & Streaming		Merchandise		Events/Other		Production Services		Total
Total revenues:
Licensed content and merchandise revenues	$	15,769	$	8,291	$	16,886	$	1,659	$	—	$	42,605
Production services revenues		—		—		—		—		68,872		68,872
Total revenues		15,769		8,291		16,886		1,659		68,872		111,477
Cost of revenues - direct		—		—		9,342		—		40,104		49,446
Royalties, residuals and participation fees		7,238		127		871		—		—		8,236
Distribution & marketing - direct		7,438		—		2,302		—		—		9,740
Other segment items		—		—		741		—		1,117		1,858
Segment adjusted operating income	$	1,093	$	8,164	$	3,630	$	1,659	$	27,651	$	42,197
Corporate and unallocated operating expenses												(20,363)
Nonrecurring operating expenses												(12,020)
Amortization of film costs												(14,553)
Depreciation and amortization												(6,403)
Gain on sale of assets												13,022
Interest income												370
Interest expense												(5,432)
Other income, net												443
Provision for income taxes												(2,084)
Net loss											$	(4,823)

19

Other Segment Items – Represents costs that are directly attributable to the Company’s segments, including direct employee costs and certain IT expenses, contracted services expenses, and meals and entertainment expenses.

Corporate and Unallocated Operating Expenses – Represents costs that are not directly attributable to the Company’s segments, including undistributed general and administrative expenses and unallocated advertising and marketing expenses related to brand awareness.

Nonrecurring Operating Expenses – Includes significant and infrequent expenses that are not expected to recur regularly as part of normal operations or directly related to the Company’s segments, such as abandoned marketing project expenses, nonrecurring legal and litigation expenses, and nonrecurring accounting and consulting expenses.

Note 11 - Subsequent Events

Management has evaluated events and transactions for potential recognition or disclosure through August 14, 2025, the date the condensed consolidated financial statements were available to be issued.

Angel Litigation Settlement

On July 11, 2025, the Company entered into a settlement agreement with Angel (the “Settlement”), under which the Company and Angel settled all pending lawsuits and arbitrations between them. Pursuant to the Settlement, Angel agreed to pay $5,761 thousand to the Company. Additionally, as part of the Settlement, the Company and Angel mutually agreed to engage a third party to notify all customers who contributed Pay-It-Forward (“PIF”) funds to Angel intended for The Chosen since October 20, 2023 that they could elect to either have those funds returned to them or redirect those funds to Come and See Foundation, Inc. Accordingly, the Company deposited $2,766 thousand representing the Company’s share of such PIF funds into a third party administered escrow account. The net impact of the Settlement of $2,995 thousand will be recorded in the Company’s operating results for the quarter ending September 30, 2025.

20

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

For purposes of this discussion, the use of the words “we,” “us,” “Company,” or “our” refers to 5&2 Studios, Inc. (f/k/a The Chosen, Inc.) and its subsidiaries, except where the context otherwise requires.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Company’s Annual Report for the year ended December 31, 2024 on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2025, including the audited consolidated financial statements and the related notes included therein and the consolidated interim financial statements and related notes included elsewhere in this Quarterly Report. Our historical results are not necessarily indicative of the results to be expected for any future period, and results for any interim period are not necessarily indicative of the results to be expected for the full year.

In addition to our unaudited consolidated interim financial statements, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. See “Cautionary Statement Concerning Forward-Looking Statements” and the “Risk Factors” set forth in Part II, Item 1A herein for a discussion of the uncertainties, risks and assumptions associated with these statements.

Results of Operations

Overview

The Company is an entertainment company, which develops, produces, and licenses for distribution, domestically and internationally, an episodic television series entitled The Chosen and other production projects. The Company collaborates with partners to market, source, curate and distribute the Series to targeted audiences through (i) existing and emerging digital home entertainment platforms, including but not limited to Prime Video, and other streaming platforms, as well as (ii) physical media, including DVD and Blu-ray Discs, (iii) linear television, (iv) theatrical distribution of certain episodes or other content, (v) books, and (vi) merchandise. In September 2024, the Company announced a number of new productions, including a series based on the life of Moses, a series based on the life of Joseph called Joseph of Egypt, a series based on the book of Acts, an animated series based on The Chosen called The Chosen Adventures, and an unscripted show featuring The Chosen cast and adventure enthusiast Bear Grylls called The Chosen in the Wild.

The Company’s revenue model primarily includes production services related to the Series, royalties received from the licensing of The Chosen as well as online store and wholesale sales of The Chosen and 5&2 Studios, Inc. branded physical media products, and merchandise. Our marketing efforts include limited and strategically focused distribution and marketing campaigns through targeted TV, streaming, and social media campaigns.

We operate in five business segments: Theatrical, Television and Streaming, Merchandise, Events/Other, and Production Services. We organize our business segments based on the nature of the products and services offered.

21

Theatrical

The Theatrical segment focuses on the periodic theatrical exhibition of the Series as well as other original content. The Company theatrically released Season 5 in three parts, with part one (episodes 1 and 2) in March 2025, and part two (episodes 3, 4, 5) and part three (episodes 6, 7, 8) released in April 2025. The Company also released, theatrically, the 2021 film “Christmas with the Chosen: The Messengers” and the 2023 film “Christmas with the Chosen: Holy Night.” In 2023, with the release of Season 3, The Chosen became one of the only episodic television series to release episodes theatrically. We debuted Season 3 with a theatrical release of episodes 1 and 2 and later concluded the season with a theatrical release of episodes 7 and 8. In 2024, with the release of Season 4, The Chosen again set precedent by being one of the only episodic television shows to release all eight episodes theatrically. The Theatrical segment includes activities such as managing relationships with distribution partners and exhibitors, marketing theatrical events, and ensuring broad distribution of content to as many theaters as possible. Theatrical releases are not only viewed as revenue generating activities, but also as marketing opportunities and brand awareness events.

Television & Streaming

The Television & Streaming segment engages primarily in the distribution, licensing, exhibition, and marketing of the Series and other content to television networks and streaming platforms. Activities for this segment include negotiating and approving domestic and international licensing deals with various television networks and streaming platforms and managing the delivery of content assets to those licensees.

Merchandise

The Merchandise segment specializes in the design, manufacture, and sale of branded merchandise. This includes products such as clothing, toys, collectibles, and other consumer goods related to our entertainment properties. Also included in the Merchandise segment is the physical production, distribution, and sale of DVDs and Blu-Ray discs. Merchandise, or “gifts” as we refer to them with our audience, are critical to our strategy of engaging with our audience and providing our fans a way to share the Series and other content with those around them.

Events/Other

The Events/Other segment organizes and manages live events, exhibitions, and other entertainment-related activities. For example, in 2023 and 2024, the Company hosted thousands of fans at a live event branded as “ChosenCon.” This segment also includes other ancillary revenue streams not attributable to one of the other identified segments, such as sponsorships and Pay-it-Forward (“PIF”) revenues.

Production Services

The Production Services segment provides television and film production services for third-party clients. This includes offering expertise to produce films, TV shows, commercials, and other media content.

22

Comparison of the Three and Six Months Ended June 30, 2025 and June 30, 2024

The following summary of our condensed consolidated results of operations should be read in conjunction with our unaudited condensed consolidated interim financial statements, and related notes, included herein.

	Three Months Ended								Six Months Ended
	June 30,				Change				June 30,				Change
	2025		2024		2025 vs. 2024				2025		2024		2025 vs. 2024
	(in thousands, except percentages)								(in thousands, except percentages)
Revenues:
Licensed content and merchandise revenues	$	38,154	$	15,068	$	23,086	153	%	$	74,249	$	42,605	$	31,644	74	%
Production services revenues		59,014		68,872		(9,858)	(14)	%		76,122		68,872		7,250	11	%
Total revenues		97,168		83,940		13,228	16	%		150,371		111,477		38,894	35	%
Cost of licensed content and merchandise revenues		32,995		7,271		25,724	354	%		62,984		17,598		45,386	258	%
Cost of production services revenues		28,719		40,083		(11,364)	(28)	%		36,647		40,083		(3,436)	(9)	%
Distribution and marketing		2,814		7,860		(5,046)	(64)	%		4,523		22,630		(18,107)	(80)	%
Amortization of film costs		—		3,714		(3,714)	(100)	%		1,901		14,553		(12,652)	(87)	%
Impairment of film costs		10,496		—		10,496	100	%		10,496		—		10,496	100	%
Depreciation and amortization		1,432		3,577		(2,145)	(60)	%		4,973		6,403		(1,430)	(22)	%
General and administrative		9,883		7,396		2,487	34	%		19,059		21,352		(2,293)	(11)	%
Operating expenses		86,339		69,901		16,438	24	%		140,583		122,619		17,964	15	%
Gain on sale of assets		—		13,022		(13,022)	(100)	%		—		13,022		(13,022)	(100)	%
Net operating income		10,829		27,061		(16,232)	(60)	%		9,788		1,880		7,908	421	%
Interest income		176		77		99	129	%		288		370		(82)	(22)	%
Interest expense		—		(2,477)		2,477	100	%		—		(5,432)		5,432	100	%
Other income		36		277		(241)	(87)	%		41		443		(402)	(91)	%
Net income (loss) before income taxes		11,041		24,938		(13,897)	(56)	%		10,117		(2,739)		12,856	469	%
Provision for income taxes		(3,219)		(8,106)		4,887	60	%		(2,956)		(2,084)		(872)	42	%
Net income (loss)	$	7,822	$	16,832	$	(9,010)	(54)	%	$	7,161	$	(4,823)	$	11,984	248	%

Licensed Content and Merchandise Revenues

Licensed content and merchandise revenues include payments received, principally via royalties, from our licensing agreements and sales of merchandise. Revenues for the three months ended June 30, 2025 increased $23,086 thousand, or 153%, as compared to the three months ended June 30, 2024, primarily due to an increase of program licensing revenue of $28,909 thousand relating to a new exclusive distribution deal entered into by the Company in February 2025, and the release of Season 5 in addition to Chosen in the Wild being made available during the three months ended June 30, 2025, offset by a decrease of merchandise revenue of $5,923 thousand relating to lower sales from the Company’s digital fan-focused celebration (“5&2 Day”) in May 2025 and lower Season 5 DVD sales compared to Season 4.

Licensed content and merchandise revenues for the six months ended June 30, 2025 increased $31,644 thousand, or 74%, as compared to the six months ended June 30, 2024, primarily due to an increase of program licensing revenue of $38,545 thousand relating to a new exclusive distribution deal entered into by the Company in February 2025, and the release of Season 5 in addition to Chosen in the Wild being made available during the six months ended June 30, 2025, offset by a decrease of merchandise revenue of $7,001 thousand relating to lower 5&2 Day sales in May 2025 and lower Season 5 DVD sales compared to Season 4.

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Production Services Revenues

Production services revenues are generated by providing production services on a work-for-hire basis for Come and See Foundation, Inc. (“CAS”) for the development, production, and delivery of the remaining seasons of the Series. Production services revenues for the three months ended June 30, 2025 decreased $9,858 thousand, or 14%, as compared to the three months ended June 30, 2024, primarily due to the timing of film production for Season 6 compared to Season 5.

Production services revenue for the six months ended June 30, 2025 increased $7,250, or 11%, as compared to the six months ended June 30, 2024, primarily due to a higher transaction price allocated to Season 6 compared to Season 5.

Cost of Licensed Content and Merchandise Revenues

Cost of licensed content and merchandise revenues primarily includes the costs of products, third-party expenses to fulfill third-party merchandise sales orders, costs associated with events related to The Chosen and 5&2 Studios, Inc., and participation and residual costs owed to writers, producers, actors and other film participants. Cost of licensed content and merchandise revenues for the three months ended June 30, 2025 increased $25,724 thousand, or 354%, as compared to the three months ended June 30, 2024, primarily due to an increase in costs of sales related to royalties of $21,710 thousand due pursuant to the CAS Transaction, in addition to an increase of licensed content costs of $4,203 thousand relating to the Season 5 theatrical release bonus.

Cost of licensed content and merchandise revenues for the six months ended June 30, 2025 increased $45,386 thousand, or 258%, respectively as compared to the six months ended June 30, 2024, primarily due to an increase of royalty payments of $46,147 thousand.

Cost of Production Services Revenues

Cost of production services revenues is associated with providing production services on a work-for-hire basis, focusing on the development, production, and delivery of the remaining seasons of the Series. For the three months ended June 30, 2025, the costs related to production services revenue decreased $11,364 thousand, or 28%, as compared to the three months ended June 30, 2024, primarily due to the timing of film production for Season 6 compared to Season 5.

Cost of production services revenues for the six months ended June 30, 2025 decreased $3,436, or 9%, as compared to the six months ended June 30, 2024, primarily due to the timing of film production for Season 6 compared to Season 5.

Distribution and Marketing

Distribution and marketing include costs to promote the Series and primarily includes marketing on social and digital platforms as well as costs for producing marketing and managing the exploitation of the licensed content for both domestic and international audiences. This primarily includes marketing on social and digital platforms as well as creative costs for producing marketing.

Distribution and marketing expense for the three months ended June 30, 2025 decreased $5,046 thousand, or 64%, as compared to the three months ended June 30, 2024. The decrease is primarily attributable to a marketing reimbursement of $5,314 thousand from CAS for qualifying marketing costs incurred by the Company, related to the Series.

Distribution and marketing expense for the six months ended June 30, 2025 decrease $18,107 thousand, or 80%, as compared to the six months ended June 30, 2024, primarily due to a decrease in paid media costs of $6,874 thousand due to a decrease in media spend. The remaining decrease was attributable to a marketing reimbursement of $11,794 thousand from CAS for qualifying marketing costs incurred by the Company, related to the Series.

Amortization of Film Costs

Costs of producing the Series are amortized using the individual-film-forecast method, based on the ratio of the current period’s revenues to the Company’s estimated ultimate revenue.

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Amortization of film costs for the three months ended June 30, 2025 decreased $3,714 thousand, or 100%, as compared to the three months ended June 30, 2024, due to no additional film costs capitalization related to the Series after June 30, 2024 as a result of the Company’s sale of the commercial right to the Series pursuant to the CAS Transaction.

Amortization of film costs for the six months ended June 30, 2025 decreased $12,652 thousand, or 87%, as compared to the six months ended June 30, 2024, primarily as a result of the Company’s sale of the commercial right to the Series pursuant to the CAS Transaction, offset by the full amortization of the remaining capitalized costs associated with Jonathan and Jesus of $1,901 thousand during the three months ended March 31, 2025.

Impairment of Film Costs

Impairment of film costs for the three months ended June 30, 2025 increased $10,496 thousand, as compared to the three months ended June 30, 2024, due to the recognition of in impairment loss during the three months ended June 30, 2025 as a result of revised ultimate revenue forecasts and a change in distribution strategy for a not yet released film project.

Impairment of film costs for the six months ended June 30, 2025 increased $10,496 thousand, as compared to the six months ended June 30, 2024, due to the recognition of in impairment loss during the six months ended June 30, 2025 as a result of revised ultimate revenue forecasts and a change in distribution strategy for a not yet released film project.

Depreciation and Amortization

Depreciation and amortization for the three months ended June 30, 2025 decreased $2,145 thousand, or 60%, as compared to the three months ended June 30, 2024, primarily due to leasehold improvement asset lives being extended in conjunction with the amended film campus property lease.

Depreciation and amortization for the six months ended June 30, 2025 decreased $1,430 thousand, or 22%, as compared to the six months ended June 30, 2024, primarily due to leasehold improvement asset lives being extended in conjunction with the amended film campus property lease.

General and Administrative

General and administrative expenses for the three months ended June 30, 2025 increased $2,487 thousand, or 34%, as compared to the three months ended June 30, 2024, primarily due to an increase in payroll spend of $1,388 thousand due to an increase in headcount and an increase of predevelopment costs of $848 related to other potential future productions.

General and administrative expenses for the six months ended June 30, 2025 decreased $2,293 thousand, or 11%, as compared to the six months ended June 30, 2024, primarily due to a $2,243 thousand decrease in technology spend resulting from non-recurring application maintenance spend in 2024 related to the Chosen App, which was sold in September, 2024, and a $2,429 thousand decrease in legal expenses resulting from higher 2024 legal, accounting, and professional services fees attributed to the Angel Studios, Inc. (“Angel”) arbitration and other corporate maters. This was partially offset by $2,783 thousand of increased compensation expense, primarily associated with an increase in headcount and one-time costs in 2025 of the contract renewal for our Chief Creative Officer.

Gain on Sale of Assets

There was no gain on sale for the three and six months ended June 30, 2025. Gain on sale for the three and six months ended June 30, 2024 was related to the sale of The Chosen IP as a result of the CAS Transaction.

Income Taxes

Income tax provision for the three months ended June 30, 2025 decreased $4,887 thousand or 60%, as compared to three months ended June 30, 2024, primarily due to the decrease in the Company’s net income before income taxes.

Income tax provision for the six months ended June 30, 2025 increased $872 thousand, or 42% as compared to the six months ended June 30, 2024, primarily due to the increase in the Company’s net income before provision for income taxes.

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The effective tax rate for the three months ended June 30, 2025 decreased 4%, as compared to the three months ended June 30, 2024, primarily due to non-deductible interest expense in the prior year offset by the impact of the decrease in the net income before income taxes.

The effective tax rate for the six months ended June 30, 2025 increased 105%, as compared to the six months ended June 30, 2024, primarily due to non-deductible interest expense in the prior year offset by the impact of the increase in the net income before income taxes and executive compensation limitation.

Liquidity and Capital Resource

Comparison of June 30, 2025 and December 31, 2024

	As of
	June 30,		December 31,
	2025		2024		Change
	(in thousands)
Cash and cash equivalents	$	31,072	$	6,466	$	24,606
Lease liabilities		4,568		870		3,698

The Company’s primary sources of liquidity are from cash flows generated from operations.

The Company’s primary uses of cash generally relate to film costs associated with the production of content. Primary sources of cash are related to production of the Series and licensed content revenues. The increase in cash and cash equivalents was primarily due to a $22,250 thousand milestone payments received by the Company from CAS upon completion and delivery of Season 5 of the Series and milestone payments received for the sale of the Chosen App.

The Company believes its existing cash and expected cash flows from operations will be sufficient to meet our working capital, capital expenditures, and expected cash requirements from known contractual obligations for the next twelve months and beyond.

Comparison of the Six Months Ended June 30, 2025 and, 2024

Our cash flow activities were as follows for the periods presented:

	Six Months Ended
	June 30,
	2025		2024		Change
	(in thousands)
Net cash flows provided by (used in) operating activities	$	27,105	$	(41,646)	$	68,751
Net cash flows (used in) investing activities		(2,499)		(7,059)		4,560
Net cash flows provided by financing activities		—		11,684		(11,684)

Operating activities

Net cash flows provided by and used in operating activities was $27,105 thousand and $41,646 thousand for the six months ended June 30, 2025, and 2024, respectively. The increase of net cash flows provided by operating activities of $68,751 thousand was primarily driven by an increase of $38,706 thousand in accrued expenses and other accrued liabilities, in addition to an increase of deferred revenue of $29,584 thousand.

Investing activities

Net cash flows used in investing activities was $2,499 thousand and $7,059 thousand for the six months ended June 30, 2025 and 2024, respectively. The decrease of net cash flows used in investing activities of $4,560 thousand was primarily driven by the decrease in acquisition of property and equipment.

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Financing activities

There was no financing activity for the six months ended June 30, 2025. The financing activities of $11,684 thousand for the six months ended June 30, 2024 included proceeds from issuance of debt of $11,684 thousand.

Segment Reporting

The Company operates in five operating and reportable segments: Theatrical, Television & Streaming, Merchandise, Events/Other, and Production Services. The segments are based on the nature of products and services offered, as well as how the chief operating decision maker (“CODM”), who is the Company’s President and Chief Financial Officer together, reviews financial results for evaluating segment performance and allocating resources. The CODM uses segment adjusted operating income / (loss) to assess financial performance and allocate resources. Segment information is based on the “management” approach, which designates the internal reporting used by management for making decisions and assessing performance of the segments.

Segment adjusted operating income / (loss) results include the revenues and cost of revenues, distribution and marketing, and general and administrative expenses which are directly attributable to each segment. Segment adjusted operating income / (loss) excludes income and expenses which are not directly related to the operations of the segment or management believes are not relevant to management’s assessment of the operating performance of the segments to make resource allocations. These excluded costs include amortization of film costs, depreciation and amortization, unallocated indirect distribution and marketing and general and administrative costs, which costs are corporate or company-wide in nature, as well as nonrecurring items and non-operating income and expenses.

See Note 10 – Information on Business Segments in the accompanying unaudited interim condensed consolidated financial statements for further detail, including a reconciliation of segment adjusted operating income / (loss) to consolidated net income / (loss).

Comparison of the Three and Six Months Ended June 30, 2025 and June 30, 2024

Our segment revenues were as follows for the periods presented:

	Three Months Ended June 30,						Six Months Ended June 30,
	2025		2024		Change		2025		2024		Change
	(in thousands)						(in thousands)
Theatrical	$	18,653	$	1,158	$	17,495	$	24,633	$	15,769	$	8,864
Television & Streaming		13,159		1,438		11,721		39,631		8,291		31,340
Merchandise		6,242		12,165		(5,923)		9,885		16,886		(7,001)
Events/Other		100		307		(207)		100		1,659		(1,559)
Production Services		59,014		68,872		(9,858)		76,122		68,872		7,250
Total Revenues	$	97,168	$	83,940	$	13,228	$	150,371	$	111,477	$	38,894

Our segment adjusted operating incomes were as follows for the periods presented:

	Three Months Ended June 30,						Six Months Ended June 30,
	2025		2024		Change		2025		2024		Change
	(in thousands)						(in thousands)
Theatrical	$	1,466	$	750	$	716	$	2,198	$	1,093	$	1,105
Television & Streaming		2,798		1,311		1,487		8,162		8,164		(2)
Merchandise		(1,065)		3,075		(4,140)		(2,339)		3,630		(5,969)
Events/Other		100		307		(207)		100		1,659		(1,559)
Production Services		29,629		27,651		1,978		37,959		27,651		10,308
Total segment adjusted operating income	$	32,928	$	33,094	$	(166)	$	46,080	$	42,197	$	3,883

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Theatrical

Theatrical revenues for the three months ended June 30, 2025 and 2024 were $18,653 thousand and $1,158 thousand, respectively. Theatrical revenue increased $17,495 thousand for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to the timing of the Season 5 theatrical release as compared to the timing of the Season 4 theatrical release in the prior year. Season 5 released on March 28, 2025, and extended into the second quarter of 2025 whereas the Season 4 theatrical release was primarily in the first quarter of 2024.

Theatrical segment adjusted operating income for the three months ended June 30, 2025 and 2024 were $1,466 thousand and $750 thousand, respectively. Theatrical segment adjusted operating income increased $716 thousand for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to increased theatrical revenues because of the timing of the Season 5 theatrical release as compared to the timing of the Season 4 theatrical release in the prior year. This was partially offset by an associated increase in royalties and residuals associated with the theatrical release of Season 5 compared to Season 4 owed following the Company’s sale of the commercial right to the Series pursuant to the CAS Transaction in June 2024.

Theatrical revenues for the six months ended June 30, 2025 and 2024 were $24,633 thousand and $15,769 thousand, respectively. Theatrical revenue increased $8,864 thousand for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to the growth of the theatrical release of Season 5 compared to Season 4.

Theatrical segment adjusted operating income for the six months ended June 30, 2025 and 2024 were $2,198 thousand and $1,093 thousand, respectively. Theatrical segment adjusted operating income increased $1,105 thousand for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to increased revenues of $8,864 of the theatrical release of Season 5 compared to Season 4 as well as a decrease in direct distribution and marketing expenses of $7,438 thousand due to marketing reimbursement from CAS for qualifying marketing costs. This was partially offset by an associated increase in royalties and residuals of $15,197 thousand from the theatrical release of Season 5 compared to Season 4 owed following the Company’s sale of the commercial right to the Series pursuant to the CAS Transaction in June 2024.

Television & Streaming

Television & Streaming revenues for the three months ended June 30, 2025 and 2024 were $13,159 thousand and $1,438 thousand, respectively. Television & Streaming revenues increased $11,721 thousand for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to a new exclusive distribution deal entered into by the Company in February 2025, and the release of Season 5 in addition to Chosen in the Wild being made available during the three months ended June 30, 2025.

Television & Streaming segment adjusted operating income for the three months ended June 30, 2025 and 2024 were $2,798 thousand and $1,311 thousand, respectively. Television & Streaming segment adjusted operating income increased $1,487 thousand for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to the above revenue impact of a new exclusive distribution deal entered into by the Company in February 2025, and the release of Season 5 in addition to Chosen in the Wild being made available during the three months ended June 30, 2025. This was partially offset by an associated increase in royalties and residuals of $10,234 thousand from June 30, 2025, compared to June 30, 2024 owed following the Company’s sale of the commercial rights to the Series and IP pursuant to the CAS Transaction in June 2024.

Television & Streaming revenues for the six months ended June 30, 2025, and 2024, were $39,631 thousand and $8,291 thousand, respectively. Television & Streaming revenues increased $31,340 thousand for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to a new exclusive distribution deal entered into by the Company in February 2025, and the release of Season 5 in addition to Chosen in the Wild being made available during the three months ended June 30, 2025.

Television & Streaming segment adjusted operating income for the six months ended June 30, 2025 and 2024 were $8,162 thousand and $8,164 thousand, respectively. Television & Streaming segment adjusted operating income decreased $2 thousand for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to an increase in royalties and residuals, owed following the Company’s sale of the commercial right to the Series and IP pursuant to the CAS Transaction in June 2024, of $31,342 thousand associated increase in revenues due to the release of Season 5, in addition to Chosen in the Wild being made

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available during the six months ended June 30, 2025. This was partially offset by the increase in Television & Streaming revenues for the six months ended June 30, 2025, and June 30, 2024 of $31,340 thousand.

Merchandise

Merchandise revenues for the three months ended June 30, 2025 and 2024 were $6,242 thousand and $12,165 thousand, respectively. Merchandise revenue decreased $5,923 thousand for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to lower 5&2 Day sales in May 2025 and a decrease of Season 5 DVD sales compared to Season 4.

Merchandise segment adjusted operating loss and income, respectively, for the three months ended June 30, 2025 and 2024, were ($1,065) thousand and $3,075 thousand, respectively. Merchandise segment adjusted operating income decreased $4,140 thousand for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to lower 5&2 Day sales in May 2025 and a decrease of Season 5 DVD sales compared to Season 4. This was partially offset by associated $2,035 thousand lower costs of merchandise revenues for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Merchandise revenues for the six months ended June 30, 2025 and 2024 were $9,885 thousand and $16,886 thousand, respectively. Merchandise revenue decreased $7,001 thousand for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to lower 5&2 Day sales in May 2025 and a decrease of Season 5 DVD sales compared to Season 4.

Merchandise segment adjusted operating loss and income, respectively, for the six months ended June 30, 2025 and 2024 were ($2,339) thousand and $3,630 thousand, respectively. Merchandise segment adjusted operating income decreased $5,969 thousand for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to lower 5&2 Day sales in May 2025 and a decrease of Season 5 DVD sales compared to Season 4. This was partially offset by associated $1,935 thousand lower costs of merchandise revenues for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Events/Other

Events/Other revenues for the three months ended June 30, 2025 and 2024, were $100 thousand and $307 thousand, respectively. Events/Other revenue decreased $207 thousand for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to PIF revenue ending in Q3 of 2024 in conjunction with the Angel litigation.

Events/Other segment adjusted operating income for the three months ended June 30, 2025 and 2024 were $100 thousand and $307 thousand, respectively. Events/Other segment adjusted operating income decreased $207 thousand for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to PIF revenue ending in Q3 of 2024, in conjunction with the Angel litigation.

Events/Other revenues for the six months ended June 30, 2025 and 2024, were $100 thousand and $1,659 thousand, respectively. Events/Other revenue decreased $1,559 thousand for the three months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to PIF revenue ending in Q3 of 2024, in conjunction with the Angel litigation.

Events/Other segment adjusted operating income for the six months ended June 30, 2025 and 2024 were $100 thousand, and $1,659 thousand, respectively. Events/Other segment adjusted operating income decreased $1,559 thousand for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to PIF revenue ending in Q3 of 2024, in conjunction with the Angel litigation.

Production Services

Production Services revenues for the three months ended June 30, 2025 and 2024 were $59,014 thousand and $68,872 thousand, respectively. Production Services decreased $9,858 thousand for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to the timing of film production for Season 6 compared to Season 5.

Production Services adjusted operating income for the three months ended June 30, 2025 and 2024 were $29,629 thousand and $27,651 thousand respectively. Production Services segment adjusted operating income increased $1,978 thousand for the three months

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ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to decreased revenue of $9,858 thousand, offset by the higher margin on Season 6 production due to higher production service price for Season 6 compared to Season 5.

Production Services revenues for the six months ended June 30, 2025 and 2024 were $76,122 thousand and $68,872 thousand, respectively. Production Services revenue increased $7,250 thousand for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to higher transaction price allocated to Season 6 compared to Season 5.

Production Services segment adjusted operating income for the six months ended June 30, 2025 and 2024 were $37,959 thousand and $27,651 thousand, respectively. Production Services segment adjusted operating income increased $10,308 thousand for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to increased revenue of $7,250 thousand, as well as the higher margin on Season 6 production due to higher production service price for Season 6 compared to Season 5.

Critical Accounting Estimates

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and results of operations, and which require a company to make its most difficult and subjective judgments. Based on this definition, the Company has identified the critical accounting policies and judgments addressed below. Estimates are based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The following is provided to update the Company’s critical accounting estimates previously described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Impairment Assessment for Film Costs

Each film project is evaluated for impairment when an event or change in circumstances indicates that the fair value of a film may be less than its unamortized costs. The estimated fair value is determined based on a discounted cash flow analysis of the cash flows directly attributable to the film. If the result of the impairment test indicates that the unamortized film costs exceed the estimated fair value, an impairment charge will then be recorded for the amount of the difference.

Revenue Recognition

Licensed Content Revenue

For licensed content arrangements that include the right to exploit multiple titles with various seasons with a fixed upfront payment, the availability of each title’s season is considered a separate performance obligation, and the fixed payment is allocated to each season on a relative standalone selling price basis. Estimation of standalone selling prices requires judgment, which can impact the timing of recognizing revenues. Revenue is recognized when the season is available for use by the licensee.

Off-Balance Sheet Arrangements

As of June 30, 2025 and 2024, the Company had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and qualitative disclosures about market risks have been omitted as permitted under rules applicable to smaller reporting companies.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), we evaluated, under the supervision and with the participation of our management, including our President and our Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based on the foregoing evaluation, our President and our Chief Financial Officer concluded that, as of June 30, 2025, our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level that we would meet our disclosure obligations.

Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) of the Exchange Act) that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II - Other Information

Item 1. Legal Proceedings

From time to time we may be involved in various disputes and litigation matters that arise in the ordinary course of business. Other than as set forth below, we are currently not a party to any material legal proceeding.

As disclosed in the Company’s Form 10-K filed with the SEC on March 31, 2025, the Company delivered to Angel Studios two separate Notices of Termination (the “Termination Notices”) of the Content License Agreement, dated October 18, 2022 (the “Content License Agreement”), between Angel Studios and the Company. The Company delivered the Termination Notices due to Angel Studios’ material breach of the Content License Agreement. Such termination was effective on October 20, 2023. The termination of the Content License Agreement was the subject of a private binding arbitration initiated by the Company to resolve the dispute. On May 28, 2024, the arbitrator of the dispute issued an interim arbitration award in favor of the Company which, among other things, found multiple material breaches had been committed by Angel Studios and upheld the Company’s termination of the Content License Agreement. As described in the Form 8-K filed on October 1, 2024, the arbitrator of the dispute issued the final arbitration award in favor of the Company on September 25, 2024, which includes an award of $5,097 thousand in attorneys’ fees and recoverable costs payable by Angel Studios to the Company. Angel Studios filed a notice of appeal of the final arbitration award with the American Arbitration Association on October 25, 2024 pursuant to the appellate procedures provided for in the Content License Agreement. The Company prevailed in the appeal pursuant to a decision issued on June 13, 2025.

On August 16, 2024, Angel Studios filed a complaint against the Company in the Fourth Judicial District of Utah. That complaint and record are classified as private under Utah law. On September 4, 2024, the Company filed a motion to dismiss the complaint or have the proceedings compelled to arbitration. The Company prevailed on its motion, and Angel Studios initiated a related arbitration against the Company on June 5, 2025.

As of July 11, 2025, the Company and Angel Studios settled all ongoing legal disputes between them and agreed that the Content License Agreement, and any and all of the parties’ respective obligations thereunder, were fully and finally terminated as of October 20, 2023.

See Note 9 of the Company’s interim condensed consolidated financial statements for additional information concerning the termination of the Content License Agreement.

Item 1A. Risk Factors

Other than as set forth below, there have been no material changes from the risk factors previously disclosed within Item 1A “Risk Factors” in the Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Default upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

To come.

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Item 6. Exhibits

(Note Regarding Reliance on Statements in Our Contracts: In reviewing the agreements included as exhibits to this Quarterly Report on Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about 5&2 Studios, Inc., its subsidiaries or affiliates, or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and (i) should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; (iii) may apply standards of materiality in a way that is different from what may be viewed as material to investors; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about 5&2 Studios, Inc., its subsidiaries and affiliates may be found elsewhere in this Quarterly Report on Form 10-Q and 5&2 Studios, Inc.’s other public filings, which are available without charge through the SEC website at https://www.sec.gov.)

		Incorporated By Reference
Exhibit No.	Description	Form	File Number	Exhibit	Filing Date	Filed or Furnished Herewith
2.1	Plan of Conversion of The Chosen, LLC into a Delaware corporation to be known as “The Chosen, Inc.”	1-U	24R-00162	2.1	December 2, 2022
3.1	Certificate of Incorporation dated November 29, 2022	1-U	24R-00162	2.2	December 2, 2022
3.2	Certificate of Amendment to the Certificate of Incorporation, effective September 25, 2024	8-K	000-56519	3.1	September 30, 2024
3.3	Bylaws of The Chosen, Inc.	10-12G	000-56519	3.2	February 2, 2023
10.1	Second Amendment to Ground Lease Agreement, dated April 10, 2025 by and between 5&2 Studios, Inc. and the Salvation Army	10-Q	000-56519	10.6	May 15, 2025
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
32.2	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X

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		Incorporated By Reference
Exhibit No.	Description	Form	File Number	Exhibit	Filing Date	Filed or Furnished Herewith
101.SCH	Inline XBRL Taxonomy Extension Schema Document.					X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.					X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.					X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.					X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.					X
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.					X
104	Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).					X

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SIGNATURES

Pursuant to the requires of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	5&2 STUDIOS, INC.
	By:	/s/ Bradley Pelo
		Name: Bradley Pelo
		Title: President
	By:	/s/ JD Larsen
		Name: JD Larsen
		Title: Chief Financial Officer
Date: August 14, 2025

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