# EDGAR Filing Document

**Accession Number:** 0001867925
**File Stem:** 0001641172-25-021777
**Filing Date:** 2025-7
**Character Count:** 265377
**Document Hash:** 03c3215378fba34ab1e34a01bab51829
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001641172-25-021777.hdr.sgml**: 20250731

**ACCESSION NUMBER**: 0001641172-25-021777

**CONFORMED SUBMISSION TYPE**: 1-K/A

**PUBLIC DOCUMENT COUNT**: 7

**CONFORMED PERIOD OF REPORT**: 20241231

**FILED AS OF DATE**: 20250731

**DATE AS OF CHANGE**: 20250731

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Skybound Holdings LLC
- **CENTRAL INDEX KEY:** 0001867925
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 814711413
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 1-K/A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 24R-00809
- **FILM NUMBER:** 251172593

**BUSINESS ADDRESS:**
- **STREET 1:** 9570 WEST PICO BOULEVARD
- **CITY:** LOS ANGELES
- **STATE:** CA
- **ZIP:** 90035
- **BUSINESS PHONE:** (310) 746-1431

**MAIL ADDRESS:**
- **STREET 1:** 9570 WEST PICO BOULEVARD
- **CITY:** LOS ANGELES
- **STATE:** CA
- **ZIP:** 90035

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Mr. Mango LLC
- **DATE OF NAME CHANGE:** 20210616

## Part

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 1-K/A** 

**Amendment No.1**

**ANNUAL REPORT PURSUANT TO REGULATION A**

**For the fiscal year ended December 31, 2024**

Commission File No. **024-11950**

**Skybound Holdings LLC**

![](form1-k_001.jpg)

(Exact name of issuer as specified in its charter)

---

| | |
|:---|:---|
| **Delaware** | **81-4711413** |
| (State or other jurisdiction | (I.R.S. Employer |
| of incorporation or organization) | Identification No.) |

---

**9570 West Pico Boulevard**

**Los Angeles, California 90035**

(Full mailing address of principal executive offices)

**(310) 746-1400**

(Issuer's telephone number, including area code)

**Common Interests**

(Title of each class of securities issued pursuant to Regulation A)

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| [ITEM 1. BUSINESS](#a_001) | 1 |
| [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#a_002) | 5 |
| [ITEM 3. DIRECTORS AND OFFICERS](#a_003) | 11 |
| [ITEM 4. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS](#a_004) | 14 |
| [ITEM 5. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS](#a_005) | 15 |
| [ITEM 6. OTHER INFORMATION](#a_006) | 16 |
| [ITEM 7. FINANCIAL STATEMENTS](#a_007) | 17 |
| [ITEM 8. INDEX TO EXHIBITS/EXHIBITS](#a_008) | 61 |

---

**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS**

This report on Form 1-K (this ***"Report"***) may contain forward-looking statements, as that term is defined under the federal securities laws. Forward-looking statements include, among others, statements about our business plan, strategy and industry. These statements are often, but not always, made through the use of words or phrases such as "may," "will," "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "believe," "intend," "predict," "potential," "opportunity," and similar words or phrases or the negatives of these words or phrases.

These forward-looking statements are based on our current assumptions, expectations, and beliefs and are subject to substantial risks, estimates, assumptions, uncertainties, and changes in circumstances that may cause our actual results, performance, or achievements to differ materially from those expressed or implied in any forward-looking statement, including, among others, the profitability of the business. 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. Because the risks, estimates, assumptions, and uncertainties referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements, you should not place undue reliance on any forward-looking statements. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date of this Report. You should read this Report completely and with the understanding that our actual future results may be significantly different from our expectations. The cautionary statements set forth in this Report identify important factors which you should consider in evaluating our forward-looking statements.

Any forward-looking statement speaks only as of the date of this Report, and, except as required by law, we assume no obligation and do not intend to update any forward-looking statement to reflect events or circumstances occurring after the date hereof.

In this Report, the term "Skybound Holdings LLC" or "the Company" or "us" or "we" refers to Skybound Holdings LLC and its subsidiaries on a consolidated basis.

**ITEM 1. Business**

Skybound Holdings LLC, a Delaware limited liability company, is a creator-focused, multi-platform entertainment company that develops, produces, and monetizes intellectual property. Our portfolio includes comics, television series, films, video games, audio content, and merchandise. We are best known for globally successful franchises such as *The Walking Dead* and *Invincible.* Through strategic partnerships, in-house production capabilities, and a network of subsidiaries, we bring engaging content to fans worldwide across a variety of channels.

Skybound Holdings LLC was formed on December 14, 2016 as Mr. Mango LLC. On December 1, 2022, the Company changed its name to Skybound Holdings LLC. The Company is the holding company for a multi-platform entertainment enterprise which owns, develops, and commercializes intellectual property across platforms primarily including comics and other books, television, film, video games, tabletop games, digital content, audio programming and music publishing.

On December 16, 2022, the Company began offering for sale, at a fixed price of $100 per limited liability company unit of common equity interest (***Common Units***), up to 750,000 Common Units, for $75 million (such offering, the "Offering") pursuant to the securities registration exemption afforded by Regulation A and is described in the Skybound Holdings LLC Regulation A Offering Statement on Form 1-A (Commission File No. 024-11950) (such offering statement, the "**Form 1-A,**" available at <u>https://www.sec.gov/Archives/edgar/data/1867925/000149315222034529/0001493152-22-034529-index.htm</u>). The Company raised approximately $17,844 thousand from the Offering, which closed on June 10, 2023. Including the Offering, as of December 31, 2024, the Company raised a total of $59,451 thousand through selling equity membership interests, including units of common interests, preferred interests, options, warrants, and other convertible instruments. On April 4, 2024, the requisite members of the Company approved a forward Unit split for which 5 Units were exchanged for each Common Unit, Preferred Unit and Incentive Plan Unit held. All Units and related amounts have been retroactively restated for all periods presented.

The Company, directly or through its subsidiaries, has majority-owned subsidiaries in the art and entertainment industry.

<u>Directly owned subsidiaries</u>

Bumbio LLC is a holding company organized in Delaware on January 17, 2017.

Blah Blah Boys, LLC is a production company organized in Delaware on May 4, 2017.

Dark Stories, LLC is a production company organized in California on December 19, 2013, which engages in certain activities related to projects in production for television and film, including engaging writers and is a signatory to the Writers Guild of America collective bargaining agreement.

IBO, LLC is a music publishing and record label holding company organized in Delaware on December 10, 2018 and is a majority-owned joint venture of the Company.

Anime Productions, LLC is a limited liability company organized in Delaware on June 30, 2016, which was formerly used for a joint venture but currently has no active operations. On June 5, 2024, a Certificate of Amendment was filed with the Secretary of State of the State of Delaware to change the name of the Company's subsidiary, Itchy Water, LLC to Anime Productions, LLC.

Skybound, LLC owns certain intellectual property and was organized in California on June 2, 2010.

Tea Hot LLC is a production company organized in California on March 3, 2016, which engages in certain activities related to projects in production for television and film, including engaging actors, and is a signatory to the SAG-AFTRA collective bargaining agreement.

This is JoJo, LLC is a production company organized in Delaware on December 22, 2016, which engages in certain activities related to projects in production for television and film, including engaging directors for such works, and is a signatory to the Directors Guild of America collective bargaining agreement.

Viltrumite Pants, LLC is a production company organized in Delaware on May 25, 2018, and is primarily responsible for the production of the animated television series Invincible.

<u>Indirectly owned subsidiaries</u>

Sagafilm ehf. is an Icelandic private limited company and is majority-owned by the Company through Bumbio LLC. Sagafilm ehf. is a production company that engages in production for television and film in Iceland. Sagafilm ehf. owns Sagafinance ehf., which is an Icelandic private limited company and engages in certain financing activities related to the production of television and film projects. Sagafilm ehf. also owns the following 12 Icelandic private limited companies which are special purpose vehicles that engage (or previously engaged) in production for television and film in Iceland: Afterlands ehf.; Björgunarþyrlan ehf.; Dead Snow ehf.; European Film Group ehf.; Köld Slóð ehf.; Líf eftir dauðann ehf.; Neytendaþátturinn ehf.; Out of thin air ehf.; Sigurvegarinn TV3 ehf.; Storm ehf.; Superhuman ehf.; and Sýndarferðalag ehf.

Shoe Leather Digital, Inc. is a corporation organized in Delaware on August 30, 2017, owned by the Company through Skybound Interactive, LLC, a subsidiary of Bumbio LLC. Shoe Leather Digital, Inc., is a production company that creates and distributes original digital content.

Skybound Galactic, LLC is a limited liability company organized in Delaware on March 28, 2018, and is a majority-owned joint venture of the Company through Bumbio LLC. Skybound Galactic, LLC is a production company that engages in production for television. Skybound Galactic, LLC also owns two subsidiaries, Superform, LLC, which is a limited liability company organized in Delaware on August 6, 2019, and engages in certain activities related to projects in production for television, including engaging directors, and is a signatory to the Directors Guild of America collective bargaining agreement, and Spacebound, LLC, which is a limited liability company organized in Delaware on February 12, 2019 and engages in certain activities related to projects in production for television, including engaging writers, and is a signatory to the Writers Guild of America collective bargaining agreement.

Skybound Game Studios, Inc. is a corporation incorporated in Delaware on September 7, 2017, owned by the Company through Bumbio LLC. Skybound Game Studios, Inc., which publishes and distributes video games, owns two subsidiaries in Europe, Skybound Games Europe B.V., which was organized in the Netherlands and handles video game distribution in Europe, and Skybound Games UK Limited, which was organized in England and Wales and engages certain employees in the United Kingdom. In addition, Skybound Game Studios, Inc. holds majority ownership in 5<sup>th</sup> Planet Games A/S, a Danish stock company, which is a mobile games publisher and developer. 5<sup>th</sup> Planet Games A/S owns 5<sup>th</sup> Planet Games Development ApS, a Danish private limited company, and 5<sup>th</sup> Planet Games GmbH, a German limited liability company which is currently under liquidation.

Skybound Interactive, LLC is a limited liability company organized in Delaware on March 11, 2014, owned by the Company through Bumbio LLC. Skybound Interactive, LLC is an interactive entertainment company that licenses certain of the Company's intellectual property rights to third parties for the development of video games.

Skybound Japan K.K. is a corporation incorporated in Japan on September 21, 2022, owned by the Company through Bumbio LLC. Skybound Japan K.K. is a production company that engages in production for television and film in Japan.

Skybound Music Publishing LLC is a limited liability company organized in California on October 17, 2023, and is majority-owned by the Company through IBO, LLC. Skybound Music Publishing LLC is a music publishing company and is an ASCAP member.

Skybound Music Recordings LLC is a limited liability company organized in California on October 17, 2023, and is majority-owned by the Company through IBO, LLC. Skybound Music Recordings LLC is a music label.

**The Competitive Landscape**

The market for entertainment products is intensely competitive and subject to rapid change. We compete against providers of different sources of entertainment, such as movies, television, video games and other interactive entertainment, comic books, online casual entertainment and music that our customers can enjoy in their free time. Important competitive factors in our industry include the ability to attract and maintain strong relationships with creators, quality and creative integrity of our products, brand recognition, reputation, price, and marketing. We compete against other content creators for distribution of the Company's content across varied media and platforms. We face competition from a wide range of entertainment providers, including streaming platforms, video game companies, and other media creators. Because consumers have many options for how to spend their free time, we focus on building strong relationships with creators, producing high-quality content, and engaging fans across all platforms. The Company's merchandise licensing, publishing and retail businesses compete with other licensors, publishers and retailers of character, brand and celebrity names. Operating results for the merchandise business are influenced by seasonal consumer purchasing behavior and by the timing and performance of programming broadcasts, publication and game and theatrical releases.

We also compete against streaming entertainment providers and content producers in developing new relationships with creators and acquisitions or licenses of new content for commercialization by the Company according to its model across various media.

The Company's internet websites and digital content products compete with other websites and entertainment products in their respective categories.

While consumers may maintain simultaneous relationships with multiple entertainment sources, we strive for ongoing engagement with a dedicated audience of fans of the Company's intellectual property.

**The Company's Team**

As of the date of this Report, the Company employs 280 full-time employees and 8 part-time employees.

**Legal Proceedings**

In the ordinary course of business, the Company may become involved in legal proceedings or may be subject to claims, or the Company may encounter content and items for sale that may infringe its copyrights, trademarks, and domain names available on various online retail and streaming platforms and other websites, such as unauthorized fan reviews featuring extensive copying of Company-owned properties, unauthorized shows that copy the look and feel of Company-owned digital content and unauthorized t-shirts bearing the Skybound logo or free downloads of comic book issues. The Company addresses such possible infringement in the ordinary course of business consistent with the advice of the Company's counsel. The materiality and results of such legal proceedings and the resolution of such claims cannot be predicted with certainty; but in either case, they could have an adverse impact on the Company's business because of defense and settlement costs, diversion of resources and other factors. The Company is not currently subject to any material claims against it; however, the Company makes the following disclosure for informational purposes:

● In April 2024, the Company was made aware of an unconfirmed report concerning a cloud storage server connected to a North Korean IP address. The server supposedly contained an *Invincible* animation sketch. In response to the report, the Company published the following statement on April 21, 2024:

"We do not work with North Korean companies, or any affiliated entities, and have no knowledge of any North Korean companies working on our animation. Our policies strictly prohibit any subcontracting to any third-party without our express prior written consent, which, in this case, was neither sought nor granted. We also mandate that all our service providers fully comply with all applicable rules and regulations and prohibit disclosures of materials by our service providers to third parties.

Skybound Entertainment takes these allegations seriously and has initiated a thorough internal review to verify and rectify any potential issues. We have also notified the proper authorities and are cooperating with all appropriate bodies."

In an abundance of caution, the Company notified the U.S. Department of the Treasury, Office of Foreign Assets Control, regarding the matter, via a voluntary self-disclosure dated April 21, 2024, and supplemental voluntary self-disclosure dated May 17, 2024. The Company continues to implement its Sanctions Compliance Program (SCP) to further address sanctions compliance obligations at the organizational level.

● On September 17, 2024, Skybound Game Studios, Inc. (an indirect wholly owned subsidiary of the Company) filed a lawsuit in Los Angeles Superior Court for, among other causes of action, breach of contract against, among others, a video game publisher to whom Skybound Game Studios, Inc. had granted an exclusive license to exploit the *Invincible* IP to create a blockchain- and NFT-based mobile video game, which the publisher failed to complete development on and release. Skybound Game Studios, Inc. is seeking damages in excess of $1,500 thousand plus interest. The parties have moved to arbitration, a hearing for which is scheduled for January 2026. This matter does not have an impact on the Company's consolidated financial statements.

● Skybound, LLC (a direct wholly owned subsidiary of the Company) entered into an exclusive publishing license agreement with a publisher pursuant to which Skybound, LLC licensed to the publisher a variety of comic book IP to publish in Spanish. The publisher has failed to make payments of royalties and other fees since 2022. Skybound, LLC has terminated its relationship with the publisher and is exploring its legal options to recover the royalties and other fees that the publisher failed to pay. Skybound, LLC estimates at least $127 thousand in unpaid royalties and at least $160 thousand in other fees are owed by the publisher, but additional unreported royalties and accrued interest may be applicable. Skybound, LLC filed a claim with the Spanish courts in late 2024. As of the date of this filing, this matter is not settled and does not have an impact on the Company's consolidated financial statements.

● Skybound, LLC (a direct wholly owned subsidiary of the Company) entered into an exclusive publishing license agreement with a publisher pursuant to which Skybound, LLC licensed to the publisher a variety of comic book IP to publish in German. The publisher has failed to make payments of royalties and other fees. Skybound, LLC and the publisher have agreed on a payment plan to recover the royalties and other fees that the publisher failed to pay. Skybound, LLC estimates $214 thousand in unpaid royalties and other fees, plus additional accrued interest. The publisher made an upfront good faith payment of $30 thousand in November 2024 and has agreed to make monthly payments until paid in full.

● On February 28, 2025, Skybound Games Europe B.V. (an indirect wholly owned subsidiary of the Company) sent a pre-litigation demand letter to a video game distributor in accordance with the Practice Direction on Pre-Action Conduct and Protocols contained in the Civil Procedure Rules for the Courts of the United Kingdom. The letter asserted repudiatory breach of contract among other causes action. Skybound Games Europe B.V. had granted a license to the video game distributor to physically distribute certain video games in accordance with a Master Distribution Agreement and relevant statements of work thereto. Skybound Games Europe B.V. has asserted that the video game distributor failed to pay open invoices for video-game units that it purchased and which Skybound Games Europe B.V. delivered to it. In addition, Skybound Games Europe B.V. has asserted that the video game distributor failed to perform its contractual obligation to actually distribute and sell certain units. As of the date of this filing, the parties continue to be engaged in required pre-litigation negotiations, and the matter is not settled.

**ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations**

*This section regarding "Management's Discussion and Analysis of Financial Condition and Results of Operations" includes a number of forward-looking statements that reflect the Company management's current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as "may" "will," "expect," "anticipate," "believe," "estimate" and "continue," or similar words. Those statements include statements regarding the intent, belief or current expectations of the Company and members of its management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.*

*Readers are urged to carefully review and consider the various disclosures made by the Company in this report and in its other reports filed with the Commission. Important factors currently known to the Company could cause actual results to differ materially from those in forward-looking statements. While the Company may update forward-looking statements from time to time, it undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law to reflect changed assumptions, the occurrence of unanticipated events, or any changes in the future operating results over time. The Company believes that its assumptions are based upon reasonable data derived from and known about its business and operations. No assurances are made that actual results of operations or the results of the Company's future activities will not differ materially from its assumptions. Factors that could cause differences include, but are not limited to, expected market demand for the Company's services, fluctuations in pricing for materials, and competition.*

*Unless otherwise indicated or the context requires otherwise, the words "we," "us," "our," the "Company" or "our Company" refer to Skybound Holdings LLC, and its subsidiaries.*

**Business Overview**

The Company, together with its subsidiaries, is a multi-platform entertainment company that engages with creators and their intellectual properties to create engaging content and deliver one-of-a-kind experiences to fans. The Company extends creators' stories across platforms including comics, television, film, video games, tabletop, books, digital content, audio programming, music publishing and beyond. The Company is home to critically acclaimed global franchises, including *The Walking Dead, Invincible, Superfight,* and *Impact Winter*. The Company maintains key partnerships across the entertainment industry, including Universal Pictures and Image Comics, and holds first look development deals with Audible, Amazon, and Universal. The Company's capabilities include publishing, production, and global distribution for video games across all genres, including the multi-million unit selling Telltale's *The Walking Dead* video game series. The Company, through Skybound Game Studios, Inc., a subsidiary of Bumbio LLC, holds majority ownership of mobile games publisher and developer 5<sup>th</sup> Planet Games A/S (OAX: FIVEPG). In September 2023, the Company, through Bumbio LLC, and 5<sup>th</sup> Planet Games A/S closed their acquisition of majority ownership of Sagafilm ehf., a leading independent production company in Iceland for TV and feature films.

**Sources of Revenue**

The Company's revenue stems from the commercialization of intellectual property owned or licensed by the Company. Revenue is derived from (1) sales of entertainment products such as video games, comic books, merchandise, tabletop games and more, which includes direct-to-consumer sales and sales through third party distributors, (2) licensing and royalties from the commercialization of the Company's intellectual property by third parties across diverse media platforms, and (3) the Company's provision of professional services to third parties related to the commercialization of intellectual property in the entertainment industry, including marketing services, digital content production services and other producing and executive producing services.

**Operating Results** 

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| | | |
|:---|:---|:---|
| ***(in thousands except per unit data)<br> Years ended December 31,*** | **2024** | **2023** |
| **Revenue** | $100880 | $96475 |
| **Cost of revenue** | 65815 | 66991 |
| **Operating expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Sales and marketing | 6141 | 8036 |
| &nbsp;&nbsp;&nbsp;General and administrative | 29731 | 25120 |
| &nbsp;&nbsp;&nbsp;Research and development | 14970 | 13467 |
| &nbsp;&nbsp;&nbsp;Impairment to goodwill | 12891 |  |
| Other income (expense), net | (1466) | 8485 |
| Income tax benefit | 2205 | 1707 |
| **Net loss** | $(28009) | $(6947) |
| Net loss attributable to non-controlling interests | (456) | (27) |
| **Net loss attributable to members** | $(27553) | $(6920) |
| Loss per Common Unit, basic <sup>(1)</sup> | (6.19) | (1.58) |
| Loss per Common Unit, diluted <sup>(1)</sup> | (6.19) | (1.58) |

---

 

<sup>(1)</sup> Effective on April 4, 2024, the Company implemented a 5-for-1 forward split of its issued and outstanding limited liability company equity interests (the "Split"). References to the Company's issued and outstanding limited liability company equity interests contained in this Report, including the consolidated financial statements, have been adjusted to reflect the Split, unless otherwise indicated.

SKYBOUND HOLDINGS LLC AND SUBSIDIARIES

RECONCILIATION OF EARNINGS BEFORE INCOME TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) TO NET LOSS ATTRIBUTABLE TO MEMBERS

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| | | |
|:---|:---|:---|
| *(in thousands)*<br> **For the years ended December 31,*** | **2024** | **2023** |
| Net loss attributable to members | $(27553) | $(6920) |
| EXPENSES TO ADD BACK |  |  |
| Depreciation, depletion, accretion, and amortization | 8202 | 11843 |
| Income tax benefit | (2196) | (1707) |
| Interest expense (income), net | 304 | (821) |
| Equity-based compensation expense | 2724 | 2407 |
| Recruiting & severance expense | 1029 | 954 |
| Non-recurring corporate development projects |  | 807 |
| Inventory, returns, and non-recurring adjustments | 1288 | 730 |
| Software development impairment | 2128 | 3234 |
| TV/Film impairment | 625 |  |
| Goodwill impairment | 12891 |  |
| Derivative loss on SAFE  | 945 |  |
| Distributed game product markdown | 1963 | - |
| Adjusted EBITDA<sup>(1)</sup> | $2350 | $10527 |

---

 

<sup>(1)</sup> Adjusted EBITDA is a non-GAAP financial measure that we define as net loss, excluding interest income; interest expense; other income (expense), net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense; payroll and other tax expense related to stock-based compensation; and other non-recurring or non-cash items that may impact net loss from time to time.

The Company believes adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as management. It facilitates comparisons with prior periods and with peer companies by excluding items that may not be indicative of our core operating performance.

Recruiting expenses added back to Adjusted EBITDA relate to non-recurring senior executive additions as the Company upleveled several roles in a strategic initiative to bring in-house the capabilities to monetize its IP more effectively.

Inventory and return expenses added back to Adjusted EBITDA relate to the unanticipated voluntary cost of cancelled orders on a subpar manufactured product from a vendor in 2024 and a catch up in inventory carrying valuation adjustments that were deferred during a transition between ERP systems in 2023.

Product markdown was due to a failed product launch of a distributed game by a third party.

Adjusted EBITDA is not a measure of financial performance under U.S. GAAP and should not be considered in isolation or as a substitute for net loss, income from operations, cash flows from operating activities, or other GAAP financial measures. In addition, our calculation of Adjusted EBITDA may differ from similarly titled measures used by other companies, and therefore may not be directly comparable.

**Results of Operations**

**SKYBOUND HOLDINGS LLC AND SUBSIDIARIE**S

The Company operates an integrated business and manages its intellectual property (IP) across television, film, merchandise, and other media on a combined basis as a single operating and reportable segment, as defined by Accounting Standards Codification (ASC) 280, *Segment Reporting* (ASC 280). While the Company operates as one segment, it discloses revenue and operating results by line of business in Management's Discussion and Analysis to provide additional visibility into how it commercializes its IP and the nature and sources of its revenue streams.

**Operating Results by Line of Business**

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| | | | | |
|:---|:---|:---|:---|:---|
| ***(in thousands)<br> Year ended December 31,<br> 2024*** | **Revenue** | **Cost of revenue** | **Gross profit** | **Gross profit %** |
| Interactive | $45361 | $29878 | $15483 | 34% |
| Linear content | 45707 | 30676 | 15031 | 33% |
| Editorial | 7871 | 3367 | 4504 | 57% |
| Merchandise and other | 1941 | 1894 | 47 | -2% |
| **Total** | $**100880** | $**65815** | $**35065** | **35%** |

---

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| | | | | |
|:---|:---|:---|:---|:---|
| *(in thousands)*<br> **Year ended December 31,**<br> **2023*** | **Revenue** | **Cost of revenue** | **Gross profit** | **Gross profit %** |
| Interactive | $54162 | $32646 | $21516 | 40% |
| Linear content | 33278 | 28529 | 4749 | 14% |
| Editorial | 4836 | 3271 | 1565 | 32% |
| Merchandise and other | 4199 | 2545 | 1654 | 39% |
| **Total** | $**96475** | $**66991** | $**29484** | **31%** |

---

For the year ended December 31, 2024, Interactive revenue decreased by $8,801 thousand, primarily due to a decline in licensing and partnership activity resulting from a shift in the number of third-party titles taken to market for physical distribution and the retention of internal IP previously licensed out for future internal development initiatives. Corresponding cost of revenue decreased by $2,768 thousand, reflecting lower manufacturing and royalty expenses.

Linear Content revenue increased by $12,429 thousand, driven by a higher number of *Invincible* episodes and production and licensing revenue from Sagafilm's slate. Cost of revenue for Linear Content increased by $2,147 thousand, due to *Invincible* production costs and Sagafilm activities. Amortization of owned linear content is recorded within the research and development expense line on the consolidated statements of comprehensive loss.

Editorial revenue increased by $3,035 thousand, reflecting the launch of new premium titles in partnership with external parties. Related cost of revenue increased modestly by $96 thousand, as higher margin publications replaced existing products.

Merchandise and other revenue decreased by $2,258 thousand, reflecting a shift toward designing products in partnership with licensees rather than first-party initiatives, with a corresponding $651 thousand decrease in associated cost of goods sold.

---

| | | | |
|:---|:---|:---|:---|
| *(in thousands)*<br> **Years ended December 31,**<br>**Operating Expenses*** | **2024** | **2023** | **Increase/(decrease)** |
| Sales and marketing | $6141 | $8036 | $(1895) |
| General & administrative | $29731 | $25120 | $4611 |
| Research & development | $14970 | $13467 | $1503 |
| Impairment to goodwill | $12891 | $- | $12891 |
| **Operating Expenses Total** | $63733 | $46623 | $17110 |

---

Sales and marketing expenses decreased by $1,895 thousand due to a decrease in promotional campaigns driven by a reduced slate of game releases as well as lower commission expenses from physical distribution sales.

General and administrative expenses increased by $4,611 thousand due to increased headcount to support Skybound's publishing and marketing initiatives as well as an increase in external professional service costs from 5th Planet Games, FX, and timing adjustments.

Research and development expenses increased by $1,503 thousand due to development costs of additional Sagafilm film and TV titles.

The Company recorded a goodwill impairment charge of $12,891 thousand for the year ended December 31, 2024, compared to no impairment in 2023. The impairment was the result of a decline in the estimated fair value of 5th Planet Games.

**Other Income and Expenses**

During the year ended December 31, 2024, interest income was $333 thousand, with an interest expense of $707 thousand. During the year ended December 31, 2023, interest income was $940 thousand, with an interest expense of $119 thousand.

The Company recorded a gain on foreign currency exchange of $115 thousand and $1,506 thousand for the years ended December 31, 2024, and 2023, respectively.

The Company generated other income (expense) of $(1,207) thousand and $6,158 thousand, excluding interest and foreign currency exchange differences, for the years ended December 31, 2024, and 2023, respectively. Additionally, the Company recognized a $(945) thousand derivative loss resulting from the fair valuation of its SAFE liability, which is recorded as a derivative financial instrument under ASC 815. Included in 2023 was a derivative gain related to the forward purchase contract of 5*th* Planet Games and the Company's warrant to acquire shares of a private company. In 2023 the Company exercised the warrants and sold the underlying shares and recorded a gain of $6,012 thousand.

The company recognized a gain of $830 thousand from an equity method investment received from a non-controlling interest in 2024.

**Income Tax**

The Company's income tax benefit was $(2,205) thousand and $(1,707) thousand for the years ended on December 31, 2024, and 2023, respectively.

 **Net Loss**

The Company reported a net loss of $(28,009) thousand for the year ended December 31, 2024, compared to a net loss of $(6,947) thousand in 2023. The increase was primarily driven by non-cash and non-recurring items. In 2023, the Company recognized significant gains from the revaluation of derivative assets, which did not recur in 2024. Additionally, the 2024 results include a non-cash goodwill impairment charge of $12,891 thousand and a $945 thousand fair value adjustment related to the Company's SAFE instrument. Excluding these items, the underlying year-over-year change in net loss was more moderate and reflects continued investment in the development and expansion of the Company's intellectual property portfolio. The Company remains focused on long-term value creation and is positioning its assets for future monetization opportunities.

---

| | | | |
|:---|:---|:---|:---|
| *(in thousands)*<br> **As of December 31,*** | **2024** | **2023** | **Increase/(decrease)** |
| Total Assets | $124904 | $160592 | $(35688) |
| Total Liabilities | 49926 | 58676 | (8750) |

---

As of December 31, 2024, the Company possessed assets totaling $124,904 thousand, primarily consisting of cash and cash equivalents, receivables, inventories, software development costs, goodwill, equity-method and other investments. As of December 31, 2023, the Company possessed assets totaling $160,592 thousand. The decrease was primarily due to a decrease in cash and cash equivalents from payments to Krafton, Inc. per Note 20 (a South Korean development/publishing partner on a video game, as discussed in Note 20 to the Consolidated Financial Statements) as well as payments for the production of additional TV episodes.

As of December 31, 2024, liabilities totaled $49,926 thousand, primarily consisting of accrued liabilities and short-term deferred revenue. As of December 31, 2023, liabilities totaled $58,676 thousand, primarily consisting of distributed product payable to Krafton, accrued liabilities, and short-term deferred revenue. The decrease in liabilities was primarily due to a decrease in distributed product payable to Krafton, Inc. and was partially offset by an increase in notes payable to other current liabilities.

**Cash Flows from Operating Activities**

Net cash used in operating activities was $(32,177) thousand and $(5,566) thousand for the years ended December 31, 2024, and 2023, respectively. The change in cash flows from operating activities was primarily due to a pass-through disbursement of product payables from the agreement with Krafton Inc. The bulk of sales occurred in 2023 and $19,850 thousand of distributed product payable was principally settled in 2024 leaving only $586 thousand payable at December 31, 2024. This outflow offset other networking capital movements related to receivables, payables, deferred revenues, and the non-cash impairment charge to goodwill and software development that contributed to operating cash outflows of $32,177 approximating the $(28,009) net loss for 2024.

**Cash Flows from Investing Activities**

Net cash provided by (used in) investing activities was $(546) thousand and $6,590 thousand for the years ended December 31, 2024, and 2023, respectively. The change was due to a decrease in proceeds from the sale of stock underlying exercised warrants of a third party.

**Cash Flows from Financing Activities**

Net cash provided by financing activities was $7,637 thousand and $16,568 thousand for the years ended December 31, 2024, and 2023, respectively. The change was due to the timing of capital raised through the Company's Regulation A and Regulation CF offering, as well as a $6,500 thousand drawdown on the Company's line of credit.

**Equity Financing**

As of December 31, 2024, the Company has raised a total of $59,451 thousand through selling equity membership interests, including common units, preferred units, options, warrants, and other convertible instruments. The Company used the capital raised from its equity financings for several investments and acquisitions.

**Liquidity and Capital Resources**

The Company has a current ratio of 0.96 as of December 31, 2024, and operating expenses of 63,733 thousand for the year ended December 31, 2024. The Company expects to be able to meet anticipated cash operating expenses and capital expenditures for at least 12 months. The primary sources of the Company's liquidity are proceeds from its Regulation A offering, Regulation CF offering, SAFE investment and other crowdfunding. The Company also has access to a line of credit of up to $20,000 thousand. The Company also has potential access to additional sources of capital through additional rounds of private capital funding.

**Off-Balance Sheet Arrangements**

The Company is a guarantor of the following two debt agreements:

&nbsp;&nbsp;&nbsp;&nbsp;1. Loan Agreement, dated April 30, 2021 (as amended from time to time), between Blueberry & Chicken,
LLC and City National Bank. The loan is secured by, among other things, a building owned by Blueberry & Chicken, LLC and leased to
the Company. The Company is a guarantor under this loan pursuant to a Continuing Guaranty, dated April 30, 2021, between the Company and
City National Bank.

&nbsp;&nbsp;&nbsp;&nbsp;2. Loan Agreement, dated July 20, 2021 (as amended from time to time), between Spicy Sauce, LLC and City
National Bank. The loan is secured by, among other things, a building owned by Spicy Sauce, LLC and leased to the Company. The Company
is a guarantor under this loan pursuant to a Continuing Guaranty, dated July 20, 2021, between the Company and City National Bank.

**Trend Information**

Over the next 12 months, the Company anticipates that it will continue its current strategy of bringing creators' visions for their intellectual property to life across media platforms including comics, television, film, video games, tabletop, books, digital content, audio programming and music publishing, including:

● continuing to expand the Company's publishing and distribution of both independent video game titles and video games based on Company-owned IP such as *Invincible* and *The Walking Dead;* 

● pursuing new strategic partnership opportunities, including the development of anime projects;

● expanding productions of original television;

● building robust capabilities internally to address the growing needs of the business in the area of marketing and community management;

● strengthening internal legal, finance and HR resources;

● driving additional capital raises through other platforms; and

● closing on additional M&A deals to expand capabilities in product development and fan engagement.

**ITEM 3. Directors and Officers**

The Company's managers, executive officers and other significant individuals, their positions and ages as of the date of this Report, and their term of office are as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Name** | **Position** | **Age** | **Term of Office** |
| David Alpert | Chief Executive Officer, Secretary, and Manager | 50 | Began July 2018\* |
| Jon Goldman | Co-Chairman and Manager | 59 | Began July 2018\*\* |
| Robert Kirkman | Co-Chairman, Chief Creative Officer, and Manager | 46 | Began July 2018\*\*\* |
| Gregory Sulak | Chief Financial Officer | 57 | Began March 2024 |
| Byung Joon Song | Manager | 49 | Began November 2016 |
| Kevin D. Irwin, Jr. | Manager | 50 | Began June 2021 |
| Carmen Carpenter | Manager | 51 | Began July 2022 |

---

\* Mr. Alpert has been the CEO of Skybound, LLC and certain other subsidiaries of the Company since 2010; Mr. Alpert served as the sole Manager of the Company from May 2017 to July 2018.

\*\* Mr. Goldman has been an executive officer of Skybound, LLC and certain other subsidiaries of the Company since 2013.

\*\*\* Mr. Kirkman has been an executive officer of Skybound, LLC and certain other subsidiaries of the Company since 2010.

**<u>Executive Officers</u>**

**David Alpert**: Mr. Alpert is CEO and co-founder of the Company. Mr. Alpert co-founded Skybound, LLC in 2010 alongside Robert Kirkman, with the belief that there was a better entertainment model: One that empowers creators with more control of their intellectual property (something seldom seen in the entertainment world). This served as the inspiration for the Company's business model, The "Wheel of Awesome." The "Wheel of Awesome" model takes unique IP that can be adapted across all entertainment platforms in order to incubate, launch, and scale incredible content to best serve the creator and fan experience. Under the Company's approach, a comic book can become a video game, or a TV show can become a podcast, unlocking endless opportunities. As CEO, Mr. Alpert oversees operations, creative development and production, and strategic business initiatives for the Company and its ventures. His day doesn't stop there – he is also a prolific TV, film, and digital producer on several of Skybound's 150+ intellectual properties, with awards for The Walking Dead, Invincible, Outcast, Impact Winter, and many more. Mr. Alpert was the winner of the 2021 Ernst & Young "Entrepreneur of the Year" award and a member of the Young Presidents' Organization (YPO). He graduated with honors from Harvard University and received his JD from New York University School of Law.

**Jon Goldman**: Mr. Goldman serves as Co-Chairman of the Company. Mr. Goldman's roots lie heavily in video game venture capital, having started his career at a boutique investment bank focused on US-Asia strategic deals. He brings more than two decades of experience in videogames to the Company, where he focuses on corporate development and general leadership. Mr. Goldman has been instrumental in securing capital for the Company through innovative approaches like Regulation A+, Regulation CF, Kickstarter, and traditional venture investment. In addition to his role at the Company, Mr. Goldman runs two early-stage funds in the video game and VR gaming areas - Tower 26 VC and GC VR Gaming Tracker Fund. He has also served as a Board Partner at Greycroft and Jerusalem Venture Partners. Mr. Goldman was Founder, Chairman, and CEO of Foundation 9 Entertainment, recognized as one of the largest independent video game developers in the world, spanning 11 studios and 1000 employees. Foundation 9 created hundreds of video games based on top-tier global brands such as Star Wars, The Matrix, The Simpsons, and Lord of the Rings. He sold Foundation 9 in 2006. Mr. Goldman holds a BA from Harvard University in Asian Studies (graduating magna cum laude) and is a member of Phi Beta Kappa. He was a fellow at the University of Kyoto, Mombusho and also earned a Management Development for Entrepreneurs (MDE) Certificate from UCLA Anderson School of Management.

**Robert Kirkman**: Mr. Kirkman is the Co-Chairman, Chief Creative Officer and co-founder of the Company. Mr. Kirkman, an advocate for creator rights, co-founded Skybound, LLC alongside his long time business and producing partner, David Alpert, in an effort to ensure creators are able to maintain their intellectual property rights and creative control. Mr. Kirkman continues to develop and produce multiple personal projects and has collaborations with an extensive list of creators in all divisions of the Company, including comics, interactive games, film and television (traditional and digital platforms), licensing, and merchandising. First and foremost, a comic creator himself, Mr. Kirkman has seen groundbreaking success in the adaptation of his comic book titles into major franchises in all forms of content. In 2010, his Eisner award winning series, The Walking Dead, was developed into a television series. It became a worldwide phenomenon as the highest-rated basic cable drama of all time and was the #1 show on television among the coveted 18-49 demo. The property has also been extended into a blockbuster game franchise, licensing business and ongoing publishing success. Additionally, Mr. Kirkman's long-running comic Invincible (with co-creator Cory Walker and contributing creator Ryan Ottley) debuted in 2021 as an animated series streaming on Amazon Prime to critical acclaim and was quickly greenlit for two more seasons. The highly anticipated second season debuted in November 2023 and the third season is currently in production. Mr. Kirkman will also produce an adaptation of Invincible for the big screen. The project will be written, directed and produced by Seth Rogen and Evan Goldberg for Universal Pictures. In April 2023, the Dracula feature film, Renfield, from Universal Pictures, premiered, starring Nicolas Cage, Nicholas Hoult, and Awkwafina. Renfield is based on an original idea by Mr. Kirkman, who also serves as producer. Mr. Kirkman serves as consulting producer of The Talking Dead, the popular talk show hosted by Chris Hardwick that deep dives into each week's episode of both The Walking Dead and its companion series, Fear the Walking Dead. Mr. Kirkman is co-creator, writer, and producer of Fear the Walking Dead, which aired its final season in 2023. He is also executive producer of Robert Kirkman's Secret History of Comics, and the Korean pre-apocalyptic drama, Five Year. Mr. Kirkman's popular demonic-exorcism comic, Outcast, was adapted, produced and aired on Cinemax. Additional Kirkman comics include Fire Power (with co-creator Chris Samnee), Oblivion Song (with co-creator Lorenzo De Felici), Die!Die!Die! (with co-creators Chris Burnham and Scott M. Gimple), Super Dinosaur (with co-creator Jason Howard), Battle Pope, Astounding Wolf-Man (with co-creator Jason Howard), Thief of Thieves, and more.

**Gregory Sulak**: Mr. Sulak is the Chief Financial Officer of the Company. Mr. Sulak oversees the finance and accounting activities of the Company and its subsidiaries, including its publicly listed subsidiary, 5<sup>th</sup> Planet Games A/S, on the Oslo Stock Exchange. Prior to joining the Company, Mr. Sulak was the Chief Financial Officer of Wondery, Inc., one of the industry's leading podcast studios, and, since 2021, an Amazon-owned company, with revenue streams in advertising, audio and TV licensing, merchandise sales and subscriptions. With over 20 years of experience in digital media and technology, including roles at Machinima/Warner Bros., Yahoo!, and PricewaterhouseCoopers, Mr. Sulak brings a wealth of knowledge and a broad perspective to the Company's operations. Mr. Sulak holds a California Certified Public Accounting certification (inactive), a Master of Business Administration in Finance and Multinational Management from The Wharton School of the University of Pennsylvania and a Bachelor of Arts in Economics/Business from the University of California Los Angeles.

**<u>Board of Managers</u>**

The Board of Managers of the Company (the ***"Board of Managers"*** or the ***"Board"***) consists of the following members: David Alpert, Jon Goldman, Robert Kirkman, Kevin D. Irwin, Jr., Byung Joon Song, and Carmen Carpenter.

Please see above for biographies of David Alpert, Jon Goldman, and Robert Kirkman.

**Kevin D. Irwin, Jr.**: Mr. Irwin serves as Chief Executive Officer and Chief Investment Officer at Knollwood Investment Advisory. Mr. Irwin served as Treasurer at Bunting Family Foundation. He is also the Founder of Irwin Tax & Financial Services. He served as Advisor to Spring Capital Partners. He also served as Board Member at Highfive Technologies. Mr. Irwin has a Masters of Science and Finance from Loyola University Maryland and a Bachelor of Science in Accounting & Economics from the University of Delaware.

**Byung Joon Song**: Byung Joon Song holds the position of Global Strategy Officer (GSO) & Chairman at Com2uS Corp., Global Strategy Officer (GSO) & Chairman at Com2uS Holdings Corp. (f/k/a GAMEVIL Inc.), Chairman at Com2uS Platform Corp., Chairman at WYSIWYG Studios Co., Ltd. and Director at Com2uS USA, Inc. Mr. Song is also on the board of Korea Internet & Digital Entertainment Association. He received an undergraduate degree from Seoul National University.

**Carmen Carpenter**: Carmen Carpenter is a Partner at Investment Bank Evolution Media Capital (EMC), an affiliate of Creative Artists Agency, focusing on the media, entertainment, and sports industries. EMC has advised on transactions with value in excess of $80 billion for its clients. Prior to joining EMC, Carmen served as Senior Vice President at Bank of America Merrill Lynch in the Entertainment Industries Group, where she oversaw the bank's portfolio of more than $1 billion in direct commitments to companies in the content production and distribution sector. Carmen held similar positions at Royal Bank of Scotland and GE Capital. Ms. Carpenter received a Bachelor of Science degree from the University of Southern California.

The following table indicates the annual compensation of each of the three highest-paid persons who were executive officers or members of the Board during the issuer's last completed fiscal year:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Capacities in which compensation was received** | **Cash compensation** | **Other compensation** | **Total compensation** |
| David Alpert\* | Chief Executive Officer | $200000.00 | $- | $200000.00 |
| Jon Goldman\*\* | Co-Chairman | $200000.00 | $- | $200000.00 |
| Gregory Sulak | Chief Financial Officer | $373395.45 | $120364.00 | $493759.45 |

---

\* David Alpert is compensated via D.D. Tuercas Trading Company, Inc., a corporation solely owned by David Alpert and his wife.

\*\* Jon Goldman is compensated via Tower 26 VC, LLC, a limited liability company solely owned by Jon Goldman.

The above table discloses information regarding the Company's officers for compensation they received in their capacity as executive officers only. The Managers did not receive any compensation in the fiscal year ended on December 31, 2024, in their capacities as Managers of the Company.

**ITEM 4. Security Ownership of Management and Certain Securityholders**

The following table sets forth the information concerning the number of outstanding voting securities owned beneficially as of July 20, 2025 by (i) all Company executive officers and directors as a group, individually naming each director or executive officer who beneficially owns more than 10% of any class of the Company's voting securities, and (ii) any other securityholder who beneficially owns more than 10% of any class of the Company's voting securities. All shares shown in the table as beneficially owned are owned directly by the named beneficial owner(s).

Unless otherwise indicated, the security holders listed below possess sole voting and investment power with respect to the voting securities they own.

---

| | | | |
|:---|:---|:---|:---|
| <br>**Name and address of beneficial owner** | **Amount of beneficial ownership** | **Amount of beneficial ownership acquirable** | **Percent of class** |
| Directors and executive officers as a group | 4197957 | 0 | 94.00%(1) |
| David Alpert (through the Peanut & Pookie Family Trust)<sup>(2)</sup> | 1399319 | 0 | 31.49%(1) |
| Robert Kirkman (through the Kirkman Family 2014 Trust)<sup>(2)</sup> | 1399319 | 0 | 31.49%(1) |
| Jon Goldman (through the Goldman/Gross Family Trust)<sup>(2)</sup> | 1399319 | 0 | 31.49%(1) |
| Com2uS Corp.<sup>(3)</sup> | 172495 | 0 | 43.01%(4) |
| Knollwood Investment Funds LLC<sup>(5)</sup> | 94865 | 0 | 23.65%(4) |
| Knollwood Investment Funds LLC<sup>(5)</sup> | 172205 | 0 | 48.30%(6) |
| Hiro Capital I SCSp<sup>(7)</sup> | 78765 | 0 | 22.09%(6) |
| Ghost Angel LLC<sup>(8)</sup> | 68890 | 0 | 19.32%(6) |

---

---

| |
|:---|
| <sup>(1)</sup> The applicable class is Common Units. |
| <sup>(2)</sup> Such beneficial owner's address is 9570 West Pico Boulevard, Los Angeles, CA 90035. |
| <sup>(3)</sup> Such beneficial owner's address is Seoul, BYC, High City A 12th Floor 131, Gangseon-gu, Digital 1 Kangsan-gu, Republic of Korea. |
| <sup>(4)</sup> The applicable class is Series A Preferred Interests. |
| <sup>(5)</sup> Such beneficial owner's address is 217 International Circle, Hunt Valley, MD 21030. |
| <sup>(6)</sup> The applicable class is Series B Preferred Interests. |
| <sup>(7)</sup> Such beneficial owner's address is 1-4 Rue Stumper, Luxembourg, Luxembourg L-2557. |
| <sup>(8)</sup> Such beneficial owner's address is 55 East Third Avenue, San Mateo, CA 94401. |

---

 ****

***Changes in Control***

There are no present arrangements or pledges of any of our securities, equity or debt, that may result in a change in our control.

**ITEM 5. Interest of Management and Others in Certain Transactions**

RKI has entered into various agreements as a co-party with the Company's subsidiaries in connection with the commercialization of certain intellectual property rights belonging to RKI. These agreements allow certain third parties to use RKI's intellectual property to create and distribute certain television projects, books, films, merchandise, and video games. RKI has also entered into an agreement with Skybound Interactive, LLC, a subsidiary of the Company through Bumbio LLC, as a co-party, in which they provide marketing services to a third-party games developer.

Robert Kirkman is also a partner at Image Comics, Inc., which publishes the Company's comic books.

David Alpert, via his and his wife's wholly owned entity, D.D. Tuercas Trading Company, Inc., have entered into a Services Agreement with the Company (as the same has been or may be amended from time to time). Jon Goldman, via his wholly owned entity, via Tower 26 VC, LLC, has also entered into a Services Agreement with the Company (as the same has been or may be amended from time to time). Please see Item 3 for the compensation of such entities for the fiscal year ended December 31, 2024. For the fiscal year ended December 31, 2023, the Company compensated each of David Alpert and Jon Goldman in the amount of $120 thousand each, via the afore-mentioned entities, pursuant to the Services Agreements. In January 2024, the Company amended the Services Agreement with each of Tower 26 VC, LLC (f/s/o Jon Goldman) and D.D. Tuercas Trading Company, Inc. (f/s/o David Alpert) to increase the annual fee under each agreement from $120 thousand to $200 thousand.

Certain of the Company's subsidiaries have leased office space located at 9570 West Pico Boulevard, Los Angeles, California (the "Pico Office"), for a term of seven years, with a base rent of $87,286 per month. The lessor of the Pico Office is Blueberry & Chicken, LLC, an entity owned and controlled indirectly by David Alpert, the Company's Chief Executive Officer, Secretary, and Manager, and Robert Kirkman. Skybound, LLC has also leased an office and studio production space located at 10911 Riverside Drive in Los Angeles, California (the "Riverside Drive Office"), for a term of 84 months, with an average base rent of $52,051 per month. The lessor of the Riverside Drive Office is Spicy Sauce, LLC, an entity owned and controlled by David Alpert, Jon Goldman, the Company's Co-Chairman and Manager, and Robert Kirkman.

The Company entered into a loan agreement with its employee Ian Howe in July 2021, in the principal amount of $300 thousand, which is payable by Mr. Howe on demand by the Company. As of December 31, 2024, the principal amount of $250.5 thousand (plus accrued interest) remained outstanding under the loan agreement. The Company entered into a loan agreement with each of David Alpert, Jon Goldman and Robert Kirkman in November 2022, with each loan in the principal amount of $500 thousand and secured by a pledge of 5,000 Common Units held by each of the Peanut & Pookie Family Trust, the Goldman/Gross Family Trust and the Kirkman Family 2014 Trust, respectively. As of December 31, 2024, the principal amount of $500 thousand (plus accrued interest) remained outstanding under each loan agreement. The Company has guaranteed loans entered into between entities owned by the Company's directors and executive officers and certain lenders. Such loans include (i) the Loan Agreement dated April 30, 2021 (as amended from time to time), between Blueberry & Chicken, LLC and City National Bank and (ii) the Loan Agreement, dated July 20, 2021 (as amended from time to time), between Spicy Sauce, LLC and City National Bank.

On August 31, 2023, the Company entered into a loan agreement with each of David Alpert, Jon Goldman and Robert Kirkman, with each loan in the principal amount of $1,961 thousand and secured by a pledge of 20,000 Common Units held by each of the Peanut & Pookie Family Trust, the Goldman/Gross Family Trust and the Kirkman Family 2014 Trust, respectively. As of December 31, 2024, the principal amount of $1,961 thousand (plus accrued interest) remained outstanding under each loan agreement. On August 31, 2023, the Company also entered into a loan agreement with Daniel Murray, in the principal amount of $654 thousand and secured by a pledge of 5,500 Common Units held by Mr. Murray. As of December 31, 2024, the principal amount of $654 thousand (plus accrued interest) remained outstanding under the loan agreement.

In December 2023, the Company, through Bumbio LLC, entered into a loan and security agreement with Scenario 42 SAS, a French production company in which the Company, through Bumbio LLC, owns a 49% interest, with the loan in the principal amount of €150 thousand.

In connection with equity financing transactions by the Company from time to time, each of David Alpert (through the Peanut & Pookie Family Trust), Robert Kirkman (through the Kirkman Family 2014 Trust) and Jon Goldman (through the Goldman/Gross Family Trust) enter into redemption agreements with the Company pursuant to which the Company redeems an aggregate amount of Common Units equal to up to 12.5% of the aggregate amount raised in the applicable equity financing transaction. In 2023, the Company redeemed 8,680 Common Units from each of David Alpert (through the Peanut & Pookie Family Trust), Robert Kirkman (through the Kirkman Family 2014 Trust) and Jon Goldman (through the Goldman/Gross Family Trust) at a price of $100 per Common Unit, for an aggregate of 26,040 Common Units redeemed and a total redemption price of $2,604 thousand. In 2024, the Company redeemed 361 Common Units from each of David Alpert (through the Peanut & Pookie Family Trust), Robert Kirkman (through the Kirkman Family 2014 Trust) and Jon Goldman (through the Goldman/Gross Family Trust) at a price of $100 per Common Unit, for an aggregate of 1,083 Common Units redeemed and a total redemption price of $108 thousand.

The Company and certain of its subsidiaries have entered into standard indemnification agreements with their respective directors and officers, as applicable.

One or all of Robert Kirkman, David Alpert, Richard Jacobs (an employee of Skybound, LLC), and potentially other employees of the Company or its subsidiaries serve as executive producers or producers for television or film projects and, accordingly, may receive fees or other compensation for such services. The Company expects the fees payable to such executive producers or producers to, in the aggregate, not exceed 20% of the production fees received by the Company for each such project. David Alpert is a partner at Circle of Confusion, a talent management company. Talent that may partner with the Company on projects may also be represented by Circle of Confusion. Robert Kirkman is represented as an artist by Circle of Confusion.

**ITEM 6. Other Information**

There have been no material changes which would require disclosure pursuant to the requirements of Regulation A.

**ITEM 7. Financial Statements**

**Independent Auditors' Report**

To the Board of Directors and Members of<br> Skybound Holdings LLC and Subsidiaries

**Opinion**

We have audited the consolidated financial statements of Skybound Holdings LLC and Subsidiaries (the Company), which comprise the consolidated balance sheet as of December 31, 2024, and the related consolidated statements of comprehensive loss, changes in members' equity and cash flows for the year then ended, and the related notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

**Responsibilities of Management for the Consolidated Financial Statements**

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.

**Auditors' Responsibilities for the Audit of the Consolidated Financial Statements**

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with GAAS, we:

● Exercise professional judgment and maintain professional skepticism throughout the audit.

● Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.

● Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

● Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings and certain internal control-related matters that we identified during the audit.

/s/ Baker Tilly US, LLP<br> July 31, 2025

Los Angeles, CA

![](fin2_001.jpg)

**INDEPENDENT AUDITORS' REPORT**

To the Board of Directors and Members of

Skybound Holdings, LLC and subsidiaries:

**Opinion**

We have audited the accompanying consolidated financial statements of Skybound Holdings, LLC, a Delaware company, and subsidiaries, which comprise the consolidated balance sheet as of December 31, 2023, and the related consolidated statements of comprehensive loss, changes in members' equity, and of cash flows for the year then ended, and the related notes to the consolidated financial statements.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Skybound Holdings, LLC and subsidiaries, as of December 31, 2023, and the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of Skybound Holdings, LLC and subsidiaries and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

**<br> Responsibilities of Management for the Consolidated Financial Statements**

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Skybound Holdings, LLC and subsidiaries' ability to continue as a going concern within one year after the date that consolidated financial statements are available to be issued.

**Auditor's Responsibilities for the Audit of the Consolidated Financial Statements**

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

**INDEPENDENT AUDITORS' REPORT, continued**

In performing an audit in accordance with generally accepted auditing standards, we:

● Exercise professional judgment and maintain professional skepticism throughout the audit.

● Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Skybound Holdings, LLC and subsidiaries' internal control. Accordingly, no such opinion is expressed.

● Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

● Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Skybound Holdings, LLC and subsidiaries' ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

Newport Beach, California

July 2, 2024

![](fin2_003.jpg)

**SKYBOUND HOLDINGS LLC AND SUBSIDIARIES**

Consolidated Balance Sheets

*(in thousands)*

---

| | | |
|:---|:---|:---|
| **As of December 31,** | **2024** | **2023** |
| **ASSETS** |  |  |
| **Current assets:** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $17098 | $44275 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net of allowances of $775 thousand and $24 thousand as of December 31, 2024, and 2023, respectively | 7123 | 14554 |
| &nbsp;&nbsp;&nbsp;Unbilled receivables | 5552 | 5323 |
| &nbsp;&nbsp;&nbsp;Distributed product receivable |  | 212 |
| &nbsp;&nbsp;&nbsp;Due from related parties |  | 53 |
| &nbsp;&nbsp;&nbsp;Inventories, net | 3632 | 3426 |
| &nbsp;&nbsp;&nbsp;Software development costs, net | 50 | 3040 |
| &nbsp;&nbsp;&nbsp;Web development costs, net | 63 |  |
| &nbsp;&nbsp;&nbsp;IP development costs, net | 1047 | 1160 |
| &nbsp;&nbsp;&nbsp;Contract costs to related parties | 1039 | 590 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 2658 | 1108 |
| **Total current assets** | **38262** | **73741** |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 1093 | 974 |
| &nbsp;&nbsp;&nbsp;TV development costs, net | 9639 | 7891 |
| &nbsp;&nbsp;&nbsp;Software development costs, net | 8280 | 2476 |
| &nbsp;&nbsp;&nbsp;Web development costs, net | 251 |  |
| &nbsp;&nbsp;&nbsp;IP development costs, net | 1615 |  |
| &nbsp;&nbsp;&nbsp;Non-current due from related parties | 8794 | 8454 |
| &nbsp;&nbsp;&nbsp;Equity-method investments | 7876 | 7046 |
| &nbsp;&nbsp;&nbsp;Investments, at cost | 2572 | 2966 |
| &nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | 5340 | 6734 |
| &nbsp;&nbsp;&nbsp;Goodwill | 25851 | 38741 |
| &nbsp;&nbsp;&nbsp;Intangible assets, net | 2840 | 2595 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets | 8572 | 5946 |
| &nbsp;&nbsp;&nbsp;Other non-current assets | 3919 | 3028 |
| **Total assets** | $**124904** | $**160592** |
| **LIABILITIES AND EQUITY** |  |  |
| **Current liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $4736 | $2164 |
| &nbsp;&nbsp;&nbsp;Distributed product payable | 586 | 19850 |
| &nbsp;&nbsp;&nbsp;Due to related parties | 115 |  |
| &nbsp;&nbsp;&nbsp;Accrued liabilities | 15734 | 8833 |
| &nbsp;&nbsp;&nbsp;Lease liabilities, short-term | 1573 | 1948 |
| &nbsp;&nbsp;&nbsp;Accrued royalties payable to related parties | 2036 | 2455 |
| &nbsp;&nbsp;&nbsp;Notes payable | 6500 |  |
| &nbsp;&nbsp;&nbsp;Deferred revenue, short-term | 8161 | 8213 |
| &nbsp;&nbsp;&nbsp;Income tax liabilities | 181 | 507 |
| &nbsp;&nbsp;&nbsp;Other current liabilities | 168 | 235 |
| **Total current liabilities** | **39790** | **44205** |
| &nbsp;&nbsp;&nbsp;Deferred revenue, long-term | 683 | 5587 |
| &nbsp;&nbsp;&nbsp;Lease liabilities, long-term | 3892 | 4925 |
| &nbsp;&nbsp;&nbsp;Deferred tax liability |  | 2 |
| &nbsp;&nbsp;&nbsp;SAFE investments, net | 4565 | 3000 |
| &nbsp;&nbsp;&nbsp;Other non-current liabilities | 996 | 957 |
| **Total liabilities** | **49926** | **58676** |
| **Commitments and contingencies (Note 19)** |  |  |
| **Equity:** |  |  |
| &nbsp;&nbsp;&nbsp;Preferred units: aggregate liquidation preference of $43,796 thousand | 43811 | 43811 |
| &nbsp;&nbsp;&nbsp;Common units | 22590 | 21895 |
| &nbsp;&nbsp;&nbsp;Treasury units | (500) | (500) |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 7802 | 5111 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive (loss) income | (1450) | 757 |
| &nbsp;&nbsp;&nbsp; (Accumulated deficit) retained earnings | (17987) | 9674 |
| **Members' equity** | 54266 | 80748 |
| &nbsp;&nbsp;&nbsp;Noncontrolling interest | 20712 | 21168 |
| **Total equity** | **74978** | **101916** |
| **Total liabilities and equity** | $**124904** | $**160592** |

---

 

*See accompanying Notes.*

**SKYBOUND HOLDINGS LLC AND SUBSIDIARIES**

Consolidated Statements of Comprehensive Loss

*(in thousands, except units and per unit data)*

---

| | | |
|:---|:---|:---|
| **For the years ended December 31,** | **2024** | **2023** |
| **Revenue** | $100880 | $96475 |
| **Cost of revenue** | 65815 | 66991 |
| **Gross profit** | 35065 | 29484 |
| **Operating expenses:** |  |  |
| &nbsp;&nbsp;&nbsp;Sales and marketing | 6141 | 8036 |
| &nbsp;&nbsp;&nbsp;General and administrative | 29731 | 25120 |
| &nbsp;&nbsp;&nbsp;Research and development | 14970 | 13467 |
| &nbsp;&nbsp;&nbsp;Impairment to goodwill | 12891 | - |
| **Total operating expenses** | 63733 | 46623 |
| **Loss from operations** | (28668) | (17139) |
| Other income (expense) |  |  |
| &nbsp;&nbsp;&nbsp;Interest income | 333 | 940 |
| &nbsp;&nbsp;&nbsp;Interest expense | (707) | (119) |
| &nbsp;&nbsp;&nbsp;Foreign exchange gain | 115 | 1506 |
| &nbsp;&nbsp;&nbsp;Change in fair value of derivative | (945) | (421) |
| &nbsp;&nbsp;&nbsp;Gain on equity method investments | 830 |  |
| &nbsp;&nbsp;&nbsp;Gain on sale of stock warrants |  | 6012 |
| &nbsp;&nbsp;&nbsp;Other non-operating income (expense), net | (1172) | 567 |
| **Total other income (expense), net** | (1546) | 8485 |
| **Loss before income taxes** | (30214) | (8654) |
| Income tax benefit | 2205 | 1707 |
| **Net loss** | $**(28009)** | $**(6947)** |
| Net loss attributable to non-controlling interests | (456) | (27) |
| **Net loss attributable to members** | **(27553)** | **(6920)** |
| Other comprehensive income (loss): |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation gain (loss) | (2207) | 212 |
| **Total comprehensive loss** | $**(30216)** | $**(6735)** |
| Comprehensive loss attributable to non-controlling interests | (457) | (27) |
| Comprehensive loss attributable to members | (29759) | (6708) |
| Loss per Common Unit, basic  | $(6.19) | $(1.58) |
| Loss per Common Unit, diluted  | $(6.19) | $(1.58) |
| Weighted average shares outstanding - basic | 4453780 | 4392718 |
| Weighted average shares outstanding - diluted | 4453780 | 4392718 |

---

 

*See accompanying Notes.*

**SKYBOUND HOLDINGS LLC AND SUBSIDIARIES**

Consolidated Statements of Cash Flows

*(in thousands)*

---

| | | |
|:---|:---|:---|
| **For the years ended December 31,** | **2024** | **2023** |
| **Operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(28009) | $(6947) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 7676 | 13552 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on FV remeasurement of pre-existing interest |  | (641) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on warrants sale |  | (6012) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on equity method investments | (830) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment to goodwill | 12891 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unrealized gain | (33) | (165) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment to software development | 2128 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment to tv/film | 625 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Realized foreign currency exchange gains | (115) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative loss on SAFE | 945 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity-based compensation | 2761 | 2407 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | (2627) | (6404) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 7143 | (712) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unbilled receivables | (229) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributed product receivable | 212 | 28920 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories, net | (206) | 455 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (2441) | 8281 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Software development costs, net | (5923) | (7529) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Web development costs, net | (413) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IP development costs, net | (1519) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TV development costs, net | (6424) | (5647) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract costs to related parties | (335) | 1321 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 2572 | 95 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities | (1931) | (1701) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributed product payable | (19264) | (17497) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities | 6900 | (1367) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax liabilities | (327) | (493) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued royalties payable to related parties | (419) | (618) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | (4951) | (5262) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current and non-current liabilities | (34) | 398 |
| &nbsp;&nbsp;&nbsp;Net cash used in operating activities | $(32177) | $(5566) |
| **Investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of property and equipment | (474) | (752) |
| &nbsp;&nbsp;&nbsp;Purchase of intangible assets | (92) | (1085) |
| &nbsp;&nbsp;&nbsp;Purchase of long-term investments |  | (3212) |
| &nbsp;&nbsp;&nbsp;Proceeds from sale of warrants |  | 21927 |
| &nbsp;&nbsp;&nbsp;Cash paid in business combinations, net of cash consideration received |  | (3765) |
| &nbsp;&nbsp;&nbsp;Loan to officers and members |  | (6523) |
| &nbsp;&nbsp;&nbsp;Return on investment | 20 | - |
| Net cash (used in) provided by investing activities | $(546) | $6590 |
| **Financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from Regulation A | 184 | 17843 |
| &nbsp;&nbsp;&nbsp;Proceeds from line of credit | 6500 |  |
| &nbsp;&nbsp;&nbsp;Cash paid for offering costs |  | (1624) |
| &nbsp;&nbsp;&nbsp;Redemption of common units | (108) | (2604) |
| &nbsp;&nbsp;&nbsp;Proceeds from the issuance of warrants | 485 |  |
| &nbsp;&nbsp;&nbsp;Proceeds from SAFE investments | 620 | 3000 |
| &nbsp;&nbsp;&nbsp;Taxes paid for cashless exercise of incentive interests | (44) | (47) |
| Net cash provided by financing activities | $7637 | $16568 |
| Effect of exchange rate changes on cash and cash equivalents | (2091) | 212 |
| **Net (decrease) increase in cash and cash equivalents** | (27177) | 17804 |
| **Cash and cash equivalents: beginning of year** | 44275 | 26471 |
| **Cash and cash equivalents: end of year** | $**17098** | $**44275** |

---

 

*See accompanying Notes.*

**SKYBOUND HOLDINGS LLC AND SUBSIDIARIES**

Consolidated Statements of Changes in Members' Equity

*(in thousands except per unit data)*

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred units** | **Common units** | **Treasury units** | **Additional paid-in capital** | **Retained earnings (accumulated deficit)** | **Accumulated other comprehensive income (loss)** | **Members' equity** | **Non-controlling Interests** | **Total equity** |
| **Balance at January 01, 2024** | **43811** | **21895** | **(500)** | **5111** | **9674** | **757** | **80748** | **21168** | **101916** |
| Issuance |  | 184 |  |  |  |  | 184 |  | 184 |
| Redemption |  |  |  |  | (108) |  | (108) |  | (108) |
| Units issued for warrants |  | 485 |  |  |  |  | 485 |  | 485 |
| Exercise of incentive interest |  | 26 |  | (70) |  |  | (44) |  | (44) |
| Equity-based compensation |  |  |  | 2761 |  |  | 2761 |  | 2761 |
| Foreign currency translation |  |  |  |  |  | (2207) | (2207) |  | (2207) |
| Net loss | - | - | - | - | (27553) | - | (27553) | (456) | (28009) |
| **Balance at December 31, 2024** | **43811** | **22590** | **(500)** | **7802** | **(17987)** | **(1450)** | **54266** | **20712** | **74978** |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred units** | **Common units** | **Treasury units** | **Additional paid-in capital** | **Retained earnings** | **Accumulated other comprehensive income** | **Members' equity** | **Non-controlling Interests** | **Total equity** |
| **Balance at January 01, 2023** | **43807** | **1012** |  | **2783** | **19198** | **545** | **67345** | **640** | **67985** |
| Issuance |  | 16219 |  |  |  |  | 16219 |  | 16219 |
| Redemption |  |  |  |  | (2604) |  | (2604) |  | (2604) |
| Vesting of warrants | 4 |  |  |  |  |  | 4 |  | 4 |
| Acquisition of non-controlling interest |  | 3700 |  | 32 |  |  | 3732 | 20555 | 24287 |
| Units issued for purchase of equity method investment |  | 900 |  |  |  |  | 900 |  | 900 |
| Exercise of incentive interest |  | 64 |  | (111) |  |  | (47) |  | (47) |
| Repurchase |  |  | (500) |  |  |  | (500) |  | (500) |
| Equity-based compensation |  |  |  | 2407 |  |  | 2407 |  | 2407 |
| Foreign currency translation |  |  |  |  |  | 212 | 212 |  | 212 |
| Net loss | - | - | - | - | (6920) | - | (6920) | (27) | (6947) |
| **Balance at December 31, 2023** | **43811** | **21895** | **(500)** | **5111** | **9674** | **757** | **80748** | **21168** | **101916** |

---

 

*See accompanying Notes*

**SKYBOUND HOLDINGS LLC AND SUBSIDIARIES**

**Notes to Consolidated Financial Statements**

**For the Years Ended December 31, 2024, and 2023** 

**1. Organization and nature of business**

Skybound Holdings LLC, a Delaware limited liability company formed on December 14, 2016, and its subsidiaries (collectively, the "Company"), is a multi-platform entertainment company distributing intellectual property (IP) across comics, games, books, television shows, and movies serving customers worldwide.

**2. Summary of significant accounting policies**

***Principles of Consolidation***: The accompanying consolidated financial statements include the accounts of Skybound Holdings LLC, and its wholly owned subsidiaries: Bumbio LLC, Dark Stories, LLC, Viltrumite Pants, LLC, This is JoJo, LLC, Anime Productions LLC , Blah Blah Boys, LLC, Tea Hot LLC, Shoe Leather Digital, Inc., Skybound Game Studios, Inc., Skybound Games Europe B.V., Skybound Games UK Limited, Skybound Interactive, LLC, Skybound Japan K.K., and Skybound, LLC and are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP).

The Company, directly or through its subsidiaries, has majority owned subsidiaries including the accounts of Skybound Galactic, LLC, Spacebound, LLC, Superform, LLC, IBO, LLC, Skybound Music Publishing LLC, Skybound Music Recordings LLC, 5<sup>th</sup> Planet Games A/S, 5<sup>th</sup> Planet Games Development ApS, 5<sup>th</sup> Planet Games GmbH, Sagafilm ehf., and its 13 wholly owned subsidiaries listed in Item 1. (Sagafilm). The ownership interests not held by the Company are reflected as noncontrolling interest in these consolidated financial statements.

In the year ended December 31, 2024, the Company dissolved the wholly owned subsidiary Skybound Stories, Inc.

Collectively, all the companies above are referred to as the "Company" throughout these consolidated financial statements and accompanying notes. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company leases office space from Blueberry & Chicken, LLC (B&C), a related party owned by two members of the Company and from Spicy Sauce, LLC (Spicy), a related party owned by three members of the Company. The Company consolidates all entities in which the Company holds a controlling financial interest. The Company is considered to hold a controlling financial interest when the Company is able to exercise control over investees' operating and financial decisions. For Variable Interest Entities (VIE), the Company is considered to hold a controlling financial interest when it is determined to be the primary beneficiary of the entity. A primary beneficiary is a party that has both: (1) the power to direct the activities of a VIE that most significantly impact that entity's economic performance, and (2) the obligation to absorb losses, or the right to receive benefits, from the VIE that could potentially be significant to the VIE. The Company has a variable interest in B&C and Spicy through a loan guarantee (see Note 18). The Company does not consolidate B&C and Spicy, as it does not have the power to direct activities that most significantly impact the economic performance of B&C and Spicy, nor does the Company have the obligation to absorb losses or rights to receive benefits. As of December 31, 2024, the Company's maximum exposure to loss from its involvement with these VIEs is limited to the outstanding amounts guaranteed under these loan agreements, totaling $2,686 thousand.

***Reclassifications:***

Certain reclassifications of previously reported amounts have been made to conform to the current year's presentation.

***Recently Adopted Accounting Standards:***

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, *Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures*, which requires public entities to disclose additional information about significant segment expenses and other segment items on both an interim and annual basis. The guidance also clarifies that public entities with a single reportable segment are subject to the same disclosure and reconciliation requirements under ASC 280, *Segment Reporting* (ASC 280) on both an interim and annual basis. The Company adopted ASU 2023-07 during the year ended December 31, 2024. Adoption of this standard resulted in enhanced segment disclosures, as described in Segment and Geographic Information (Note 21) to the consolidated financial statements.

***Recently Issued Accounting Standards:***

In December 2023, the FASB issued ASU 2023-08, *Accounting for and Disclosure of Crypto Assets* (Subtopic 350-60), which requires certain crypto assets to be measured at fair value with changes recognized in net loss. The guidance also requires separate presentations and enhanced disclosures. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this guidance and has not yet adopted the standard.

***Noncontrolling Interests***: The Company accounts for the noncontrolling interests in consolidated subsidiaries under the provisions of ASC 810, *Consolidation* (ASC 810), which requires that noncontrolling interests be reported as a separate component of equity and that net loss attributable to the noncontrolling interests and net loss attributable to the members of the Company be presented separately on the consolidated statements of comprehensive loss.

***Operating Segments:*** The Company operates as one operating segment. Revenues are primarily derived from developing and commercializing intellectual property. See Note 21, Segment and Geographic Information, in the accompanying notes to our consolidated financial statements for further detail.

***Use of Estimates:*** The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets, liabilities, revenues, expenses, and disclosures as of the date of the consolidated financial statements and for the years then ended. Significant estimates affecting the consolidated financial statements, capitalization and recovery of development costs, such as the allowance for doubtful accounts, reserve for excess and obsolete inventories, certain accrued expenses, valuation of equity related grants, derivative assets, estimates related to revenue recognition when recognition is based on the inputs/time spent on the project and deferred tax assets have been prepared based on the most current and best available information. However, actual results from the resolution of such estimates and assumptions may vary from those used in the preparation of the consolidated financial statements.

***Revenue Recognition:*** The Company recognizes revenue in accordance with ASC 606, *Revenue from Contracts with Customers* (ASC 606). ASC 606 outlines a comprehensive five-step principles-based framework for recognizing revenue under US GAAP. Revenue recognition is evaluated through the following five steps:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Identify the Contract(s) with a Customer

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Identify the Performance Obligations in the Contract

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Determine the Transaction Price

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Allocate the Transaction Price to the Performance Obligations
in the Contract

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Recognize Revenue

The Company recognizes revenue at the amount to which it expects to be entitled when control of the products or services is transferred to its customers. Control is generally transferred when the Company has a present right to payment and title and the significant risks and rewards of ownership of products or services are transferred to its customers.

The Company generates revenue from the following sources:

Product Sales: The sales of physical and digital products are earned by the Company based on a predetermined sales price. The product is delivered to customers in exchange for the stated rate, and as such these revenues are recognized by the Company when control of the promised goods or services are transferred to the customer, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services, which is generally on delivery to the customer. After that point in time, the Company does not have remaining performance obligations related to the product sales.

Licensing and Royalties from the sales of licensed intellectual property (IP): Licensing revenues are based on the functionality of the IP. When the IP is fully functional, the Company records revenues at the time the license is granted. If the license is deemed symbolic or is not yet functional, revenues are recorded over time when the customer begins deriving the benefits of the Company's IP over the estimated term of the contract period of benefit. The granting of a license for IP is often coupled with services co-publishing, production and marketing services (see paragraph below). Royalty revenue is generally recognized at a point in time when merchandise is sold, as it is considered a sales-based royalty in accordance with ASC 606. After the term of the agreement, the Company does not have remaining performance obligations related to licensing.

Production and marketing services: Services revenues are fixed and determinable and earned by the Company based on a predetermined contractual amount. The service is delivered to customers throughout the production schedule in exchange for a stated rate, and revenue is recognized over time based on the percentage of completion, measured by actual costs incurred. After production is completed, the Company does not have remaining performance obligations related to producing services.

Contract assets are recorded when revenue has been earned for satisfied performance obligations, but the related invoice has not yet been issued. These amounts are classified as 'unbilled receivables' on the consolidated balance sheets. Contract liabilities arise when the Company receives payment or has an unconditional right to receive payment before transferring goods or services. These amounts are presented as 'Deferred revenue' and are recognized as revenue when the related performance obligations are satisfied. Contract assets and liabilities are assessed on a contract-by-contract basis and reclassified when billing occurs, or obligations are fulfilled.

Payment for product sales is typically due upon delivery or shortly thereafter (net 30 terms). Licensing agreements generally require upfront payments or milestone-based payments with no significant financing component. Production services are billed based on contractual milestones and are due upon invoice, with standard payment terms (net 30). No material financing components are embedded in contracts. The Company does not provide warranties or other post-sale service obligations in connection with its products or services. Accordingly, no warranty liabilities have been recognized. <br>

***Cash and Cash Equivalents:*** Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less.

***Accounts Receivable, Loans Receivable and Allowance for Credit Losses:*** Accounts receivable is stated at amounts due from customers, net of an allowance for expected credit losses. The Company generally does not require collateral. Allowance for credit risk for accounts receivables is established based on various factors including credit profiles of our customers, historical payments and current economic trends. We review the allowance for accounts receivables by assessing individual accounts receivable over a specific age and amount. All other balances are pooled based on historical collection experience. The estimate of expected credit losses is based on information about past events, current economic conditions, and forecasts of future economic conditions that affect the collectability. Accounts receivables are written-off on a case-by-case basis, net of any amounts that may be collected. If our estimate of uncollectible accounts is too low, credit loss expense may increase in future periods, and if it is too high, credit loss expense may decrease in future periods.

The Company's top five customers account for the substantial majority of accounts receivable and are considered to present minimal credit risk. One customer, which accounts for approximately 95% of the Company's production activities, has an established history of timely payments. Other key counterparties operate under structured arrangements or act as intermediaries with consistent remittance histories. Receivables from smaller, independent retailers represent less than 1% of total revenue, and any potential defaults in this segment are not expected to have a material impact on the consolidated financial statements. For loans due from related parties, the Company assessed collectability evaluating each borrower's creditworthiness, including consideration of common interest appreciation rights (CIARS) and current income levels. Based on this analysis, no allowance was deemed necessary. The Company will continue to monitor both customer-specific and macroeconomic factors and will adjust its estimate of expected credit losses if conditions materially change.

Loans receivables are stated at outstanding principal amounts, net of an allowance for expected credit losses. The allowance is based on management's evaluation of the borrower's financial condition, repayment history, the nature of the relationship, and other relevant factors. These loans are reviewed individually due to their unique terms and relationships. Expected credit losses are recognized based on historical experience, current conditions, and forecasts affecting collectability.

Interest income on loans and trade receivables is recognized based on the stated interest rate and terms of the individual agreements. Fees and direct costs associated with originating loans are evaluated individually and, when significant, are deferred and amortized over the life of the loan as an adjustment to interest income. Insignificant amounts may be recognized as incurred.

***Distributed Product Receivable:*** The Company's Distributed Products Receivable represent amounts billed to customers on behalf of a developer/publisher of a video game, which was released in December of 2022. The Company is entitled to receive distribution fees which are recorded as revenues (see Note 20). The Company, after deducting distribution fees, will remit the net balance due to the developer/publisher. The Company reports the receivable separately as a non-trade receivable. The Company has no right of offset as the Company's receivables and its developer/publisher payable are not with the same party.

***Financial Instruments and Concentrations of Business and Credit Risk:*** Financial instruments that potentially subject the Company to concentrations of business and credit risk consist primarily of cash and cash equivalents and accounts receivable.

The Company maintains cash and cash equivalents balances that at times exceed amounts insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in these accounts and believes it is not exposed to any significant credit risk in this area.

The Company's accounts receivable, which are unsecured, expose the Company to credit risks such as collectability and business risks such as customer concentration. The Company mitigates credit risks by investigating the creditworthiness of customers prior to establishing relationships with them, performing periodic reviews of the credit activities of those customers during the course of the business relationship, and recording allowances for credit losses when these receivables become uncollectible. As of December 31, 2024, the Company had two customers that accounted for more than 10% of the Company's receivable balances. As of December 31, 2023, no customer accounted for more than 10% of the Company's receivable balances. The loss of any customer would not have a significant impact on the Company's operations.

***Inventories:*** Inventories consisting of inventory components and finished goods, are stated at the lower of cost or net realizable value, net of a reserve. Cost is determined using standard costs, which approximates weighted average cost. The Company evaluates the need for reserves on inventories associated with obsolete, slow-moving, and non-sellable inventories by reviewing estimated net realizable values on a periodic basis.

***Property and Equipment:*** Property and equipment are stated at cost, net of accumulated depreciation. Depreciation on property and equipment is recognized on a straight-line basis.

---

| | |
|:---|:---|
| **Property and equipment** | **Useful lives** |
| Leasehold improvements | Lesser of lease life or asset life |
| Furniture, equipment and vehicles | Three to fifteen years |

---

Betterments, renewals, and extraordinary repairs that materially extend the useful life of the asset are capitalized; other repairs and maintenance charges are expensed as incurred.

The cost and related accumulated depreciation applicable to retired assets are removed from the accounts, and the gain or loss on disposition, if any, is recognized in the consolidated statements of comprehensive loss for that period.

 ****

***Impairment of Long-Lived Assets:*** The Company accounts for the impairment and disposition of long-lived assets in accordance with ASC Subtopic 360-10-35, *Property, Plant, and Equipment – Overall – Subsequent Measurement* (ASC 360). In accordance with ASC 360, the Company reviews its long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to future undiscounted net cash flows that it expects the asset to generate. When an asset is determined to be impaired, the Company recognizes the impairment amount, which is measured by the amount the carrying value of the asset exceeds its fair value. In addition, the Company evaluates goodwill for impairment in accordance with ASC 350, *Intangibles-Goodwill and Other* (ASC 350). Goodwill is tested at least annually, or more frequently if a triggering event occurs. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to the excess, not to exceed the total amount of goodwill. For the years ended December 31, 2024, and December 31, 2023, impairment losses of $12,891 thousand and $0, were recognized, respectively.

 ****

***Software Development Costs:*** Software development costs include payments made to independent software developers under development agreements for various digital games. Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable. Technological feasibility of a product requires both technical design documentation and game design documentation, or the completed and tested product design and a working model. For products where proven technology exists, capitalization may occur early in the development cycle. Significant management judgments and estimates are applied in assessing when capitalization commences for software development costs and the evaluation is performed on a product-by-product basis. Prior to achieving technological feasibility, we expense the amounts as part of research and development costs. Capitalized costs for products that have been released are cancelled or expected to be abandoned are charged to cost of revenue. If a software project is cancelled or determined to be no longer commercially viable before it reaches general release, the related capitalized costs are expensed immediately as a loss on investment. Management classifies software costs as current based on the determination that those costs will be realized within 12 months from the consolidated balance sheets date. For the years ended December 31, 2024 and 2023, the Company recognized software impairment charges of $2,128 thousand and $3,234 thousand, respectively.

Capitalized software development costs are stated at amortized cost. Once a game is released, amortization of capitalized production costs is computed based on actual revenues achieved as a percentage of the expected lifetime revenue or expected life, whichever is greater. Our software development costs are generally amortized in full within 36 months.

***Film and TV Costs:*** Film and Television costs include all direct costs incurred in the creation and production of content, including costs related to story, development, pre-production, production, and post-production. In accordance with ASC 926, *Entertainment-Films* (ASC 926) costs are capitalized when the project is determined to have probable future economic benefit. Capitalized costs are amortized using the individual-film-forecast method (Ultimate method), whereby each title is amortized in proportion to the ratio of current period actual revenues to estimated ultimate revenues. Estimated ultimate revenues are reassessed quarterly or as changes in market conditions or performance trends warrant. Amortization begins when a project is released, and revenue is first recognized. Projects are evaluated for impairment at the individual-film level when indicators suggest the carrying amount is not recoverable from expected future cash flows. For the years ended December 31, 2024 and 2023, the Company recognized film and tv impairment charges of $625 thousand and $0, respectively.

***IP Development Costs:*** The Company capitalizes and amortizes the cost associated with its trademarks, patents, and copyrights. IP development costs are amortized beginning on the date the asset is available for its intended use, which would generally be the regulatory approval date. The costs are generally amortized over the term of the license not to exceed 10 years.

***Equity-Method Investments:*** Investments that we do not consolidate but in which we have significant influence over the operating and financial policies of the investee are classified as equity method investments and are accounted for using the equity method of accounting. In applying the equity method of accounting, investments are initially recorded at cost and are subsequently adjusted based on our proportionate share of net loss or loss of the investee, net of any distributions received from the investee.

***Investments, at cost:*** In accordance with ASC 321-10, *Investments – Equity Securities* (ASC 321), investments where the Company does not have a significant influence are accounted for at cost. The Company reviews all material investments on an annual basis to determine whether a significant event or change in circumstances has occurred that may have an adverse effect on the fair value of the investment. In the event the fair value of the investment declines below the cost basis, the Company records an impairment with the offset recorded in the consolidated statements of comprehensive loss.

***Derivative Instruments:*** The Company accounts for free-standing derivative instruments in accordance with ASC 815, *Derivatives and Hedging* (ASC 815), which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the consolidated balance sheets at fair value. All derivative financial instruments are recorded in the consolidated balance sheets at fair value with any change in fair value recorded in the consolidated statements of comprehensive loss in the period of change.

***Fair-Value of Financial instruments:*** The Company accounts for fair value measurements in accordance with ASC 820, *Fair Value Measurement* (ASC 820). Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants.

The Company's financial instruments measured at fair value on a recurring basis as of December 31, 2024, and 2023 are summarized below:

---

| | | | |
|:---|:---|:---|:---|
| *(in thousands)* |  |  |  |
| **As of December 31,** | **Fair value level** | **2024** | **2023** |
| SAFE Investments (Note 14) | Level 3 | $4565 | $3000 |

---

These valuations require significant judgment. The Company's financial instruments measured at fair value on a recurring basis include Simple Agreements for Future Equity (SAFEs), which are classified as Level 3 due to significant unobservable inputs used in their valuation.

The fair value of the Company's SAFE instruments is sensitive to changes in key unobservable inputs such as conversion probability and discount rates. If these assumptions were to change materially, it could significantly impact the fair value conclusions. There were no changes in the valuation techniques used to determine the fair value of Level 3 instruments during the years ended December 31, 2024, and 2023.

***Deferred Issuance Costs:*** Deferred issuance costs paid in connection with obtaining long-term financing are capitalized and amortized using the straight-line method, which approximates the effective-interest method, over the term of the related financing. The Company complies with the requirements of ASC 340, *Other Assets and Deferred Costs* (ASC 340), with regards to offering costs. Prior to the completion of an offering, offering costs are capitalized. The deferred offering costs are charged to additional paid-in capital or as a discount to debt, as applicable, upon the completion of an offering or to expense if the offering is not completed.

***Financial Instruments:*** The Company evaluates financial instruments issued for potential classification under ASC 480, *Distinguishing Liabilities from Equity* (ASC 480).

***SAFE Instruments:*** The Company issued SAFEs that are classified as liability instruments under ASC 815. These instruments are measured at fair value at issuance and at each subsequent reporting period, with changes in fair value recognized in the consolidated statements of comprehensive loss. In April 2024, the Company also issued Crowd SAFE instruments in connection with a Regulation CF offering. These instruments are accounted for similarly to other SAFE liabilities and are measured at fair value. Cash Flows Proceeds from SAFEs are classified as financing activities in the consolidated statement of cash flows. Changes in the fair value of SAFEs are included in non-operating other income (expense) activities**.**

***Leases:*** In February 2016, the FASB issued ASU No. 2016-02 (ASC 842), Leases, and subsequent codification improvements. The standard requires recognition of rights and obligations arising from lease contracts, including existing and new arrangements as assets and liabilities on the consolidated balance sheets. Under this guidance, lessees need to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company to carry forward the historical determination of contracts as leases, lease classification and not reassess initial direct costs for historical lease arrangements. The finance lease classification under ASC 842 includes leases previously classified as capital leases under ASC 840.

Certain leases contain options to extend the lease term. The Company evaluates these options and includes them in the lease term only when it is reasonably certain the options will be exercised. None of the Company's leases include residual value guarantees. The Company's lease agreements do not contain significant restrictions or covenants. Management applies judgment in determining lease classification and measuring lease liabilities, including assessing whether contracts contain a lease, identifying lease and non-lease components, and determining the appropriate discount rate based on the Company's incremental borrowing rate.

***Advertising:*** Advertising costs are expensed as incurred and amounted to $816 thousand and $2,857 thousand for the years ended December 31, 2024, and 2023, respectively. Advertising costs are included in sales and marketing expenses in the accompanying consolidated statements of comprehensive loss.

***Selling Expenses:*** Selling expenses consist primarily of sales commissions and allocated personnel costs related to sales staff. These expenses are directly associated with efforts to generate revenue and promote the Company's products and services.

***Equity Incentive Plan:*** During 2019, the Company adopted an incentive interest plan, in which the Company may grant certain incentive interests to employees, consultants and board members. The incentive interests are subject to vesting over time or are based on the Company's financial performance. ASC 718, *Compensation – Stock Compensation* (ASC 718), requires that all equity-based payments to employees and board members be recognized in the consolidated statements of comprehensive loss over their service period based on the fair value of those awards on the grant date, as calculated using an option valuation model. The service period generally coincides with the vesting period. The Company issued 130,355 and 51,130 grants during the years ended December 31, 2024, and 2023, respectively.

***Foreign Currency Matters:*** The functional currency of the Company is the United States Dollar. The functional currency of Skybound Games Europe BV is the Euro and Skybound Games UK Limited is the British Pound. The functional currency of Skybound Japan is the Japanese Yen. The functional currency of 5<sup>th</sup> Planet Games is the Danish Krone. The functional currency for Sagafilm is Icelandic Krona. The financial statements of the Company's subsidiaries were translated to United States Dollars in accordance with ASC 830, *Foreign Currency Translation Matters* (ASC 830), using period-end rates of exchange for assets and liabilities, and average rates of exchange for the year for revenues and expenses. Gains and losses arising on foreign currency denominated transactions are included in consolidated statements of comprehensive loss.

***Income Taxes:*** The Company's operations consist of an LLC, which is taxed as a corporation, and certain corporate subsidiaries, which are subject to taxation under the provisions of the Internal Revenue Code. Certain LLC subsidiaries have elected to be taxed as partnerships and any associated tax obligations for those entities flow to the members of those entities.

The Company uses the asset and liability method in accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates that are expected to be in effect when the differences reverse.

The Company's policy is to classify interest and penalties related to income tax matters, if incurred, as a component of income tax expense. No interest or penalties have been accrued for the years ending December 31, 2024 and 2023.

The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax assets are recognized subject to management's judgment that realization is more likely than not.

The Company follows the provisions of uncertain tax positions as addressed in ASC 740, *Income Taxes* (ASC 740) which provides guidance for how uncertain income tax positions should be recognized, measured, presented, and disclosed in the consolidated financial statements. The Company is required to evaluate the income tax positions taken or expected to be taken to determine whether the positions are "more-likely-than-not" to be sustained upon examination by the applicable tax authority. Management believes the Company does not have uncertain tax positions pursuant to ASC 740 and accordingly no accruals were made for the year ended December 31, 2024, and 2023.

With few exceptions, the Company is subject to examination by federal tax authorities for returns filed for the prior three years and by state tax authorities for returns filed for the prior four years, and no examinations are currently pending.

***Sales Taxes:*** Sales and similar taxes collected by the Company are netted with the corresponding sale to the customer. The Company collects said sales tax from customers and remits the entire amount to the state.

***VAT Taxes:*** The Company tracks collected and paid VAT tax. The Company nets the collections with the payments and files returns quarterly.

***Delivery Costs:*** All costs of delivery are included in Cost of revenue. Delivery costs were $3,355 thousand and $3,210 thousand for the years ended December 31, 2024, and 2023, respectively.

 ****

***Goodwill:*** The Company may recognize goodwill on the acquisition date on an investment in which a controlling interest is obtained. Goodwill is the excess of the consideration transferred, the fair value of any noncontrolling interest in the acquiree, the fair value of any previously held equity interest in the acquiree, less the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

 ****

***Business Combinations:*** The Company accounts for all transactions that represent business combinations using the acquisition method of accounting under ASC 805, *Business Combinations* (ASC 805). Per ASC 805, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity are recognized and measured at their fair values on the date an entity obtains control of the acquiree. Such fair values that are not finalized for reporting periods following the acquisition date are estimated and recorded as provisional amounts. Adjustments to these provisional amounts during the measurement period (defined as the date through which all information required to identify and measure the consideration transferred, the assets acquired, the liabilities assumed, and the noncontrolling interests obtained, limited to one year from the acquisition date) are recorded when identified. Goodwill is determined as the excess of the fair value of the consideration exchanged in the acquisition over the fair value of the net assets acquired.

**3. Accounts receivable, net**

Accounts receivable, net consist of the following *(in thousands)*:

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| | | |
|:---|:---|:---|
| **As of December 31,** | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;Accounts receivable | $7898 | $14578 |
| &nbsp;&nbsp;&nbsp;Allowance for credit losses | (775) | (24) |
| **Accounts receivable, net** | $7123 | $14554 |

---

The following table summarizes the changes in the allowance for credit losses for accounts receivable *(in thousands)*:

---

| | | |
|:---|:---|:---|
| **Year ended December 31,** | **2024** | **2023** |
| Balance, beginning of period | $24 | $- |
| Provision for expected credit losses | 751 | 24 |
| Recoveries |  |  |
| Write-offs | - | - |
| **Balance, end of period** | $775 | $24 |

---

**4. Inventories, net**

Inventories, net consist of the following *(in thousands)*:

---

| | | |
|:---|:---|:---|
| **As of December 31,** | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;Finished goods | $3285 | $3313 |
| &nbsp;&nbsp;&nbsp;Work-in-progress | 953 | 495 |
| &nbsp;&nbsp;&nbsp;Inventory reserve | (606) | (382) |
| **Total inventories, net** | $3632 | $3426 |

---

**5. Capitalized Software, IP, and Production Development Costs**

The following table summarizes the components of software development, IP development, web development, and TV capitalized production cost balances *(in thousands)*:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **As of December 31, 2024** | **Average Life<br> (in years)** | **Cost** | **Accumulated Amortization** | **Net Book Value** |
| Software development costs completed | 1-3 | $7959 | $(7347) | $612 |
| Software development costs in process | n/a | 7718 |  | 7718 |
| TV production costs completed | up to 10 | 11510 | (6911) | 4599 |
| TV production costs in process | n/a | 5040 |  | 5040 |
| Website costs completed | up to 5 | 413 | (99) | 314 |
| IP development costs in process | n/a | 3924 | (1262) | 2662 |
| **Total capitalized development and production costs** |  | $**36564** | $**(15619)** | $**20945** |

---

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| | | | | |
|:---|:---|:---|:---|:---|
| **As of December 31, 2023** | **Average Life <br> (in years)** | **Cost** | **Accumulated Amortization** | **Net Book Value** |
| Software development costs completed | 1-3 | $7899 | $(6465) | $1434 |
| Software development costs in process | n/a | 4082 |  | 4082 |
| TV production costs completed | up to 10 | 5723 | (2787) | 2936 |
| TV production costs in process | n/a | 4955 |  | 4955 |
| IP development costs in process | n/a | 1375 | (215) | 1160 |
| **Total capitalized development and production costs** |  | $**24034** | $**(9467)** | $**14567** |

---

**6. Property and equipment, net**

Property and equipment, net consist of the following *(in thousands)*:

---

| | | |
|:---|:---|:---|
| **As of December 31,** | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;Leasehold improvements | $73 | $72 |
| &nbsp;&nbsp;&nbsp;Furniture and fixtures | 283 | 283 |
| &nbsp;&nbsp;&nbsp;Computers | 1426 | 948 |
| &nbsp;&nbsp;&nbsp;Machinery and equipment | 908 | 908 |
| &nbsp;&nbsp;&nbsp;Studio equipment | 365 | 345 |
| &nbsp;&nbsp;&nbsp;Less: accumulated depreciation | (1962) | (1582) |
| **Property and equipment, net** | $1093 | $974 |

---

Depreciation expense related to property and equipment was $355 thousand and $366 thousand for the years ended December 31, 2024, and 2023, respectively, and is included in general and administrative expenses in the consolidated statements of comprehensive loss.

**7. Goodwill**

In accordance with ASC 350-20, the Company performed its annual goodwill impairment test as of December 31, 2024, for its international subsidiary, 5th Planet Games A/S (5PG). A triggering event was identified due to a 41.4% decline in 5PG's publicly traded share price. 5PG is listed on the Oslo Stock Exchange under the ticker symbol '5PG'. The Company used a market approach to estimate the fair value of the reporting unit, using a share price of NOK 1.19, 268,379,000 shares outstanding, and an exchange rate of 0.088, resulting in a market capitalization of $28.1 million.

The carrying value of the reporting unit was approximately $40.94 million. The carrying value exceeded the estimated fair value of $28.1 million, and accordingly, the Company recorded a goodwill impairment charge of $12.89 million in the fourth quarter of 2024.

The Company considers the impairment recorded to be conservative in light of broader declines in market capitalization across the European gaming sector. While the public markets have not yet reflected the expected value from upcoming IP-based game releases, the Company believes the long-term economic outlook of 5PG remains strong. Goodwill and long-lived assets will continue to be monitored for future indicators of impairment.

The Company conducted its annual goodwill and intangible asset impairment evaluation for Saga and determined that no triggering events or conditions indicated impairment as of December 31, 2024. Accordingly, no impairment was recorded.

The following table reflects the changes in carrying amounts of goodwill *(in thousands)*:

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| | | |
|:---|:---|:---|
| **For the years ended December 31,** | **2024** | **2023** |
| **Balance, beginning of year** | $38741 | $- |
| &nbsp;&nbsp;&nbsp;Acquired |  | 38741 |
| &nbsp;&nbsp;&nbsp;Impairment | (12890) | - |
| **Balance, end of year** | $**25851** | $**38741** |

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**8. Intangible assets, net**

Intangible assets, net consist of the following *(in thousands)*:

---

| | | |
|:---|:---|:---|
| **As of December 31,** | **2024** | **2023** |
| **Cost:** |  |  |
| &nbsp;&nbsp;&nbsp;Cryptocurrency | $881 | $506 |
| &nbsp;&nbsp;&nbsp;Trademarks and tradenames | 710 | 710 |
| &nbsp;&nbsp;&nbsp;Titles library | 1435 | 1325 |
| &nbsp;&nbsp;&nbsp;Co-publishing rights | 340 | 340 |
| **Total intangible assets, cost** | $**3366** | $**2881** |
| **Accumulated amortization and adjustments:** |  |  |
| &nbsp;&nbsp;&nbsp;Cryptocurrency | $- | $- |
| &nbsp;&nbsp;&nbsp;Trademarks and tradenames | (95) | (24) |
| &nbsp;&nbsp;&nbsp;Titles library | (280) | (224) |
| &nbsp;&nbsp;&nbsp;Co-publishing rights | (151) | (38) |
| **Total intangible assets, accumulated amortization and adjustments** | $**(526)** | $**(286)** |
| **Intangible assets, net** | $**2840** | $**2595** |

---

The weighted-average remaining amortization period for intangible assets subject to amortization is 4.48 years as of December 31, 2024. The remaining periods by major intangible asset class are as follows:

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| | | |
|:---|:---|:---|
| **Intangible Asset Class** | **Weighted-Average Remaining Amortization Period (Years)** | **Weighted-Average Remaining Amortization Period (Years)** |
| Trademarks and tradenames |  | 8.68 |
| Titles library |  | 4.83 |
| Co-publishing rights |  | 1.68 |

---

Cryptocurrency is not subject to amortization and is therefore excluded from the weighted-average amortization period calculation.

Amortization expense related to intangible assets was $642 thousand and $286 thousand for the years ended December 31, 2024, and 2023, respectively.

Costs to renew or extend recognized intangible assets are capitalized and amortized over the renewal or extended term.

Total amortization expense for intangible assets with finite lives as of December 31, 2024, will be as follows for the years ending *(in thousands)*:

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| | |
|:---|:---|
| **December 31,** | |
| 2025 | $407 |
| 2026 | 333 |
| 2027 | 204 |
| 2028 | 194 |
| 2029 | 146 |
| Thereafter | 1556 |
| **Total** | $2840 |

---

**9. Equity-method investments**

***Mega Cat Studios***

In August 2022, the Company, through Bumbio LLC, entered into a multi-tranche investment and made the first tranche payment of $2,000 thousand for 1,666,667 shares, at $1.20 per share, in Mega Cat Studios Inc., a private video game development company. The investment in Mega Cat Studios provides the Company with additional game development resources. As of December 31, 2024, and 2023, the Company, through Bumbio LLC, had 30.4% ownership in Mega Cat Studios Inc. The investment in Mega Cat Studios provides the Company with significant influence over operating and financial policies.

The Company recognized gains of $950 thousand for the year ended December 31, 2024, and losses of $18 thousand for the year ended December 31, 2023, resulting from the portion of net losses attributable to its ownership interest.

As of December 31, 2024, the Company's equity-method investment in Mega Cat Studios was carried at $6,297 thousand, which exceeded the Company's proportionate share of the investee's net assets of $2,432 thousand by approximately $3,865 thousand. This difference has not been allocated to specific assets or liabilities of the investee and therefore remains as part of the investment's carrying amount.

***Scenario 42***

In November 2023, the Company, through Bumbio LLC, acquired a 49% ownership interest in Scenario 42 SAS (formerly known as 2.4.7. Max SAS), a French production company. The Company recognized losses of $120 thousand for the year ended December 31, 2024, and no losses for the year ended December 31, 2023, resulting from the portion of net losses attributable to its ownership interest.

**5**<sup>th</sup> **Planet Games**

In August 2021, the Company entered into a multi-tranche investment in 5<sup>th</sup> Planet Games - A/S, a Danish interactive game company publicly listed on the Euronext stock exchange. The investment provided an opportunity for the Company and 5<sup>th</sup> Planet Games to bring other games to market. The forward purchase agreement was accounted for as a derivative.

5<sup>th</sup> Planet Games was included as an equity-method investment up until September 2023, when the final tranche payment was made, leading to the Company acquiring control in September 2023. During the years ended December 31, 2023 the Company recorded losses of $39 thousand.

**10. Derivative Investments**

On May 8, 2017, the Company sold contract rights and IP assets to a private company for the total of $16.5 million and upon the earlier of (1) as of immediately prior to the consummation of a Liquidation Event or (2) May 8, 2022, the purchasing company would issue the Company a warrant to purchase 481,824 shares of the purchasing company's common stock at an exercise price of $0.01 per share. According to the agreement, the purchase price of $16.5 million was allocated as follows; $8,085 thousand to the contract rights with a remaining term of approximately two years recognized as royalty income and $8,415 thousand for purchase of IP rights recognized as other non-operating income.

The warrants did not specify any additional terms at date of grant in 2017. We determined the warrants had an uncertain date of issuance and an uncertain valuation. As a result, we deemed the value of the warrant to be indeterminable at the time, thus no value was assigned in May 2017. In May 2022, the warrant agreement was received by the Company, through Bumbio LLC. The warrant agreement provided for a cashless exercise provision which resulted in the warrant to be accounted for as a derivative at fair value under ASC 815. On December 31, 2022, the investment's estimated fair value was $15,915 thousand. In July of 2023, the Company sold all 481,824 shares for $21,927 thousand, resulting in a gain of $6,012 thousand.

**11. Investments, at Cost** 

 ****

***Enterprise Software Company Investment***

On May 5, 2022, the Company, through howyaknow, LLC, entered into a simple agreement for future equity (SAFE) with a privately held enterprise software company. The Company, through howyaknow, LLC, invested $50 thousand. On May 26, 2022, the SAFE was converted into 54,389 shares of Series Pre-Seed-1 Preferred Stock. On July 5, 2022, the Company, through howyaknow, LLC, invested an additional $50 thousand for 38,850 shares of Series Pre-Seed Preferred Stock. On December 18, 2023, the investments were transferred from howyaknow, LLC to Bumbio LLC.

***Telltale Investment***

On November 15, 2022, the Company, through Skybound, LLC, entered into a simple agreement for future equity (SAFE) with a privately held company that develops and publishes original and licensed IP games for interactive platforms. The Company, through Skybound, LLC, invested $2,000 thousand. On January 19, 2023, the SAFE was converted into 3,872,966 shares of Series A Preferred Stock.

***Japanese Company Investment***

In November 2022, the Company, through Skybound Japan K.K., invested $379 thousand to acquire 500 shares of common stock of a privately held Japanese distribution company for anime content.

**12. Accrued liabilities**

Accrued liabilities consist of the following *(in thousands)*:

---

| | | |
|:---|:---|:---|
| **As of December 31,** | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;Royalties and commissions | $9158 | $4433 |
| &nbsp;&nbsp;&nbsp;Software development | 116 | 702 |
| &nbsp;&nbsp;&nbsp;Compensation and related benefits | 977 | 1398 |
| &nbsp;&nbsp;&nbsp;TV/film development | 2429 | 630 |
| &nbsp;&nbsp;&nbsp;Professional fees | 168 | 156 |
| &nbsp;&nbsp;&nbsp;Price Protection Reserve | 2198 |  |
| &nbsp;&nbsp;&nbsp;Distributed product payable |  | 959 |
| &nbsp;&nbsp;&nbsp;Other accrued expenses | 402 | 325 |
| &nbsp;&nbsp;&nbsp;Tax inspection | 286 | 230 |
| **Total accrued liabilities** | $15734 | $8833 |

---

The balance in "compensation and related benefits" includes accruals for employee vacation and paid time off earned but not yet taken, in accordance with ASC 710-10, *Compensation-General-Overall* (ASC 710).

**13. Leases**

As of December 31, 2024, the Company has three recorded operating leases: one corporate office and two production offices. Our existing leases have remaining lease terms ranging from three to five years. Lease payments are fixed and subject to contractual annual increases of 2%; there are no variable lease payment terms.

Information related to our operating leases is as follows *(in thousands)*:

---

| | | |
|:---|:---|:---|
| **For the years ended December 31,** | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;Operating lease costs: related party | $1601 | $1492 |
| &nbsp;&nbsp;&nbsp;Short term and other lease costs | 22 | 18 |
| **Total lease costs** | $1623 | $1510 |

---

---

| | | |
|:---|:---|:---|
| **As of December 31,** | **2024** | **2023** |
| Weighted-average remaining lease term in years | 3.8 | 4.8 |
| Weighted-average discount rate, % | 8.8 | 8.8 |

---

The contractual future annual maturities of the Company's operating lease liabilities as of December 31, 2024, including anticipated lease extensions, are as follows *(in thousands)*:

---

| | |
|:---|:---|
| **For the years ended December 31:** | |
| 2025 | $1961 |
| 2026 | 1997 |
| 2027 | 833 |
| 2028 | 850 |
| 2029 | 382 |
| Thereafter | 408 |
| **Total undiscounted future lease payments** | **6431** |
| Less: imputed interest | 966 |
| Less: current portion of operating lease liabilities | 1573 |
| **Long-term operating lease liabilities** | $**3892** |

---

Supplemental cash flow information for the fiscal years ended December 31, 2024, and 2023, related to leases is as follows *(in thousands)*:

---

| | | |
|:---|:---|:---|
|  | **2024** | **2023** |
| Cash paid for amounts included in the measurement of lease liabilities: |  |  |
| Operating cash flows from operating leases | $(1852) | $(1935) |
| Non-cash additions to right-of-use assets and lease liabilities: |  |  |
| Recognition of right-of-use assets for operating leases | $- | $1314 |

---

**14. Debt**

On September 25, 2020, the Company entered into a credit agreement for a revolving line of credit which permitted borrowings up to $8,000 thousand. The rate of interest fluctuated based on an applicable margin plus the Prime Rate or LIBOR, as applicable. The interest rate could in no event be less than 3.75% per annuum. No interest was charged on the unused balance. The agreement was secured by substantially all the Company's negotiable collateral and intellectual property collateral, was subject to certain financial covenants, and was scheduled to expire on September 25, 2023. On August 3, 2023, the Company entered into an amended and restated credit agreement for a revolving line of credit which permits borrowings up to $10,000 thousand with an accordion feature that can extend the line of credit by another $10,000 thousand (subject to lender approval), which replaced the revolving line of credit described above. The rate of interest will fluctuate based on an applicable margin plus the Prime Rate. The interest rate shall in no event be less than 3.5% per annum. The interest rate as of December 31, 2024, and 2023 was 7.25% and 8.25%, respectively. No interest or commitment fees are charged on the unused balance. The lender may terminate unused commitments in the event of covenant violations or material adverse changes. The agreement is secured by substantially all of the Company's negotiable collateral and intellectual property collateral, is subject to certain financial covenants, and expires on August 3, 2026. The collateral securing the agreement includes all of the Company's and its direct and indirect wholly-owned subsidiaries' personal property, tangible property and intangible property (including, but not limited to, intellectual property), whether now owned, presently existing or later acquired or created. The outstanding balance on the line was $6,500 thousand and $0 as of December 31, 2024, and 2023, respectively. As of December 31, 2024, the Company was in violation of certain financial covenants under its revolving credit agreement. A waiver of these covenants was received subsequent to year-end, but prior to the issuance of the consolidated financial statements. In accordance with ASC 470, *Debt* (ASC 470) the outstanding balance of $6,500 thousand under the revolving line of credit is classified as a current liability.

**Future Maturities of Long-Term Borrowings:**

*(in thousands)*

---

| | |
|:---|:---|
| **Year** | **Amount** |
| 2025 | $- |
| 2026\* | 6500 |
| 2027\*\* |  |
| Thereafter | $- |

---

\*Represents the maturity of the Company's amended and restated revolving line of credit with East West Bank

\*\*Represents the contingent backstop note, which becomes due six months after the maturity of the revolving line of credit (see Note 15).

As of December 31, 2024, unamortized debt issuance costs related to the Company's revolving credit facility and backstop arrangements totaled $78 thousand. These costs are presented as a direct deduction from the carrying amount of the related debt. As of December 31, 2024, the gross principal amount of the credit facility was $6,500 thousand, and the net carrying amount after issuance costs was $6,446 thousand. Loan fees are being amortized using the straight-line method, which approximates the effective interest rate method, over the term of the Loan. Amortization of loan fees is included in interest expense. Interest expense was $225 thousand and $50 thousand for the years ended December 31, 2024, and December 31, 2023, respectively.

On June 12, 2023, the Company issued a SAFE in the amount of $3,000 thousand, which SAFE will automatically convert into preferred units of the Company upon the occurrence of a bona fide equity financing in which the Company issues and sells preferred units. The SAFE carries a post-money valuation cap of $500 million, which is adjusted to 90% of its original value, amounting to $450 million. This valuation cap is then increased by the investment amount, resulting in a total post-money valuation cap of $453 million.

If a liquidity event, such as a change of control or IPO, or a dissolution event occurs prior to any such bona fide equity financing, then the SAFE investor will be entitled to receive a portion of the proceeds payable in connection with such liquidity event or dissolution event, as the case may be, in accordance with the terms of the SAFE.

The Company has determined that the SAFE meets the definition of a derivative instrument under ASC 815-10 due to its settlement features. The instrument does not qualify for equity classification under ASC 815-40 due to the potential for variable settlement that is not solely indexed to the Company's equity. The Company recorded the SAFE at an initial fair value of $3,000 thousand on June 12, 2023. As of December 31, 2023, the fair value of the SAFE was $3,000 thousand.

On April 9, 2024, the Company filed a Form C pursuant to Regulation CF under the Securities Act in connection with the sale of Crowd SAFE (Simple Agreement for Future Equity) securities (the "CF Offering") through OpenDeal Portal LLC dba Republic (the "Intermediary"). The Company offered a minimum amount of $50 thousand and up to a maximum amount of $5,000 thousand. At the launch of the CF Offering, the minimum individual purchase amount was $5 thousand, and the maximum individual purchase amount was $5,000 thousand. On April 11, 2024, the Company filed a Form C/A to, among other things, reduce the minimum individual purchase amount to $100. The CF Offering closed on April 29, 2024. The Company issued $701 thousand of Crowd SAFE securities and, after paying $41 thousand cash commission and $40 thousand in other issuance costs, received net cash proceeds of $620 thousand. If a liquidity event, such as a change of control or IPO, or a dissolution event occurs prior to any such bona fide equity financing or the conversion of the Crowd SAFEs, then the Crowd SAFE investors will be entitled to receive a portion of the proceeds payable in connection with such liquidity event or dissolution event, as the case may be, in accordance with the terms of the Crowd SAFE.

The Crowd SAFEs are substantively similar in structure to the 2023 SAFE and are classified as derivative liabilities under ASC 815-10. As of December 31, 2024, the combined fair value of the Company's SAFE and Crowd SAFE instruments is $4,565 thousand compared to $3,000 thousand as of December 31, 2023, which included a total change in fair value of the SAFE of $945 thousand recognized during 2024.

The Company did not transfer any instruments between fair value levels during the year. The Company did not have any other derivative instruments or hedging activities during the reporting period. SAFE instruments are categorized as Level 3 financial liabilities under the fair value hierarchy, due to the use of unobservable inputs in their valuation.

The fair value of the SAFE and Crowd SAFEs was determined using a probability-weighted expected return method (PWERM) under a hybrid income and market approach, which incorporated multiple potential exit scenarios, including an IPO, acquisition, and a continued private holding.

Key assumptions as of December 31, 2024, included (*in thousands*):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Liability** | **Fair Value** | **Valuation Technique** | **Unobservable inputs** | **Low** | **High** | **<br> Weighted Average** |
| SAFE | $4565 | Probability-weighted expected return method | Cost of equity | 13% | 15% |  |
|  |  |  | Expected term | 0 yrs | 4.8 yrs | 2.4 yrs |
|  |  |  | Probability of exit scenario | 5% | 40% |  |
|  |  |  | Expected equity values | $251789 | $1654000 | $965261 |

---

The enterprise value weighted average was determined by assigning expected equity values under each exit scenario, weighting them based on probability and their present value contribution to the total modeled fair value. Inputs were benchmarked and calibrated to recent transactions, including the Company's April 2025 Regulation CF offering and contemporaneous Regulation A equity issuances.

The fair value measurement is sensitive to changes in unobservable inputs. Significant increases or decreases in any of these inputs may result in significantly higher or lower fair value measurements. These inputs are inherently subjective and based on management's best estimates of future outcomes. Actual results may differ materially.

The discount for lack of marketability was derived from empirical studies (e.g., Finnerty and Stout), reflecting a 20% reduction in value for non-transferability and lack of liquidity prior to a conversion event. The valuation was developed with the assistance of a third-party valuation specialist and reviewed by Company management.

The SAFE and Crowd SAFE instruments are measured at fair value on a recurring basi**s** at each reporting period. The following table summarizes the changes in fair value of Level 3 instruments for the year ended December 31, 2024:

*(in thousands)*

---

| | |
|:---|:---|
| **As of December 31,** | **2024** |
| Beginning Balance | $3000 |
| Change in fair value | 945 |
| CF Raise | 701 |
| CF Raise issuance costs | (81) |
| Ending Balance | $4565 |

---

 

 

*(in thousands)*

---

| | |
|:---|:---|
| **As of December 31,** | **2023** |
| Beginning Balance | $- |
| Issuance of SAFE | 3000 |
| Change in fair value |  |
| Ending Balance | $3000 |

---

**15. Backstop arrangement**

On September 25, 2020, the Company entered into an agreement with one of its members to advance up to $5,000 thousand to East West Bank, the lender on the Company's revolving line of credit (Original Backstop Note). The Backstop Note accrued interest at 7% per annum and, unless converted to equity, would be due at the six-month anniversary of the line of credit or March 25, 2024. The advances would be in effect if the Company was unable to repay its line of credit with East West Bank as lender and the lender calls for borrowings under the Backstop Note. Any borrowings and any unpaid interest on the Backstop Note were able to be converted into an equivalent amount of the Company's equity at 80% of the then-current Series A Preferred Unit price. The agreement was secured by substantially all the Company's negotiable collateral and intellectual property collateral, which was subordinated to the rights of East West Bank in the same collateral.

In addition to the convertible note and as part of the backstop arrangement, the Company issued 8,620 warrants to purchase Common Units in the Company for an exercise price of $0.28. The Company recorded the fair value of the warrant issued to the member as a deferred issuance cost associated on the date when the warrant was granted. The fair value of the warrants was $97,331, as determined using a market approach valuation.

The deferred issuance cost will be amortized on a straight-line basis over the stated term of the line of credit, i.e., the access period.

The backstop arrangement was terminated upon the amended and restated credit agreement with East West Bank.

On November 18, 2024, the Company entered into a new agreement with one of its members to advance up to $5,000 thousand to East West Bank (New Backstop Note) on substantially the same terms and conditions as the Original Backstop Note. The New Backstop Note accrues interest at 7% per annum and, unless converted to equity, will be due at the six-month anniversary of the line of credit or February 3, 2027. The advances would be in effect if the Company was unable to repay its line of credit with East West Bank as lender and the lender calls for borrowings under the New Backstop Note. Any borrowings and any unpaid interest on the New Backstop Note are able to be converted into an equivalent amount of the Company's equity at 80% of the then-current Series A Preferred Unit price. The agreement is secured by substantially all the Company's negotiable collateral and intellectual property collateral, which is subordinated to the rights of East West Bank in the same collateral.

In addition to the New Backstop Note and as part of the backstop arrangement, the Company issued 6,889 warrants to purchase Common Units in the Company for an aggregate exercise price of $10. The Company recorded the fair value of the warrant issued to the member as a deferred issuance cost associated on the date when the warrant was granted. The fair value of the warrants was $482 thousand, as determined using a market approach valuation. The outstanding principal and accrued but unpaid interest, if any, under the New Backstop Note is convertible into Company equity at the noteholder's election as follows: (i) at any time the Company consummates an equity financing; or (ii) at any time following the maturity date of the note.

The deferred issuance cost is amortized on a straight-line basis over the stated term of the line of credit, i.e., the access period.

**16. Equity**

The Company is authorized to issue multiple classes of equity, including Common Units, Series A Preferred Units, Series B Preferred Units, and Incentive Plan Units (collectively, "Units"). All Units are classified as equity interests and are not subject to mandatory redemption provisions.

As of December 31, 2024, the following equity interests were issued and outstanding:

---

| | | |
|:---|:---|:---|
| **Class of Units** | **Units Issued and Outstanding** | **Units Issued and Outstanding** |
| Common Units |  | 4435982 |
| Series A Preferred Units |  | 401020 |
| Series B Preferred Units |  | 356540 |
| Incentive Plan Units |  | 8375 |

---

Preferred Units activity during the reporting periods was as follows:

---

| | | |
|:---|:---|:---|
| **For the years ended December 31,** | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;**At the beginning of the year** | 766685 | 764385 |
| &nbsp;&nbsp;&nbsp;Issuance |  |  |
| &nbsp;&nbsp;&nbsp;Redemption |  |  |
| &nbsp;&nbsp;&nbsp;Vesting of warrants | - | 2300 |
| **At the end of the year** | **766685** | **766685** |

---

**Series A Units:** During 2019 and 2020, the Company issued a total of 401,020 Series A Preferred Units at a value of $57.97 per unit, resulting in an aggregate liquidation preference of approximately $23.0 million. The Series A Preferred Units carry a 1x liquidation preference over Common Units based on their original issue price and thereafter participate pro rata with all Units up to an amount equal to their 1x liquidation preference. The total return on Series A Preferred Units is capped at 2x the original issue price. Holders of Series A Preferred Units also have the right to participate in any non-liquidating distributions on a pro-rata basis and may convert into Common Units at a conversion rate which is currently equal to one-for-one, subject to anti-dilution adjustments. The Series A Preferred Units are subject to mandatory conversion to Common Units at the then-applicable conversion rate upon (i) the written consent of the holders of at least two-thirds of the Series A Preferred Units or (ii) an initial public offering by the Company. The Series A Preferred Units and the Series B Preferred Units, voting together as a single class, carry certain protective voting rights for significant transactions or actions, including, but not limited to, approvals required for any merger, consolidation or majority sale of the Company, changes to the Company's primary line of business, authorization or creation of any new class or series of securities having rights, preferences or privileges senior to the Series A Preferred Units or the Series B Preferred Units, incurrence of debt exceeding 25% of the Company's most recent trailing twelve months' revenue (on a consolidated basis), equity redemptions, and distributions on any equity interests. There are no call provisions, no sinking fund requirements, and no cumulative dividends in arrears as of December 31, 2024.

**Series B Units:** During 2021 and 2022, the Company issued a total of 356,540 Series B Preferred Units at a value of $58.06 per unit, resulting in an aggregate liquidation preference of approximately $20.7 million. The Series B Preferred Units have similar liquidation, dividend, and conversion to the Series A Preferred Units. In addition to the above-described protective voting rights that the Series B Preferred Units have with the Series A Preferred Units, voting together a single class, the Series B Preferred Units also have additional protective voting rights, including, but not limited to, any amendment or waiver of any of the rights of the Series B Preferred Units, issuance of additional Series B Preferred Units, and any deemed liquidation event of the Company with an implied enterprise value of less than $600 million. Similar to the Series A Preferred Units, the Series B Preferred Units also carry a 1x liquidation preference over Common Units based on their original issue price and thereafter participate pro rata with all Units up to an amount equal to their 1x liquidation preference, with a 2x total return cap. Holders of Series B Preferred Units have the right to participate in any non-liquidating distributions on a pro-rata basis and may convert into Common Units at a conversion rate which is currently equal to one-for-one, subject to anti-dilution adjustments. The Series B Preferred Units are subject to mandatory conversion to Common Units at the then-applicable conversion rate upon (i) the written consent of the holders of at least a majority of the Series B Preferred Units or (ii) an initial public offering by the Company. There are no call provisions, no sinking fund requirements, and no cumulative dividends in arrears as of December 31, 2024.

**Conversion Features of Preferred Units:** The Company's Series A Preferred Units and Series B Preferred Units are convertible into Common Units at a conversion rate which is currently equal to one-for-one, subject to anti-dilution adjustments. A holder of Series A Preferred Units or Series B Preferred Units may elect to convert to Common Units at any time and are subject to mandatory conversion upon the occurrence of specific events, including (i) a qualified initial public offering or (ii) the written consent of the requisite holders of the respective series. No conversions occurred during the year ended December 31, 2024. The conversion rate is based on the original issue price divided by the applicable conversion price and is subject to adjustment for standard anti-dilution provisions in the event of equity splits or combinations, reorganizations or reclassifications, or dilutive issuances. No changes in circumstances occurred during the year ended December 31, 2024, that would adjust the conversion rate or trigger the mandatory conversion, and no holder of Preferred Units elected to convert to Common Units during the period.

**Earnings Per Unit Considerations:** The potential Common Units issuable upon conversion of the Series A Preferred Units and Series B Preferred Units are not included in the calculation of diluted earnings per unit for the year ended December 31, 2024, because the mandatory conversion contingencies had not been met and no voluntary conversion election has been made as of the reporting date. In accordance with ASC 260, *Earnings per Share* (ASC 260) these units are excluded from diluted EPS unless and until the conversion becomes probable or the contingent event occurs.

Common Units activity during the reporting periods was as follows:

---

| | | |
|:---|:---|:---|
| **For the years ended December 31,** | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;**At the beginning of the year** | 4451530 | 4252230 |
| &nbsp;&nbsp;&nbsp;Regulation A |  | 178435 |
| &nbsp;&nbsp;&nbsp;SEEDRS raise | 2170 |  |
| &nbsp;&nbsp;&nbsp;Acquisition of noncontrolling interest |  | 37000 |
| &nbsp;&nbsp;&nbsp;Units issued for purchase of equity method investment |  | 9000 |
| &nbsp;&nbsp;&nbsp;Common warrants issued | 6939 |  |
| &nbsp;&nbsp;&nbsp;Redemption | (1083) | (26040) |
| &nbsp;&nbsp;&nbsp;Exercise of incentive interest options | 360 | 905 |
| **At the end of the year** | **4459916** | **4451530** |

---

**Common Units:** Common Units were granted to the founding members of the Company. Common Units have also been issued, and the Company anticipates that it will in the future issue Common Units, in connection with certain strategic transactions and initiatives, including, but not limited to, the Offering, other capital raising activities and acquisition opportunities. Once the liquidation preference of the Preferred Units has been met, Common Units will receive distribution pro-rata with all Units according to the number of Units held, subject to the total return cap applicable to the Series A Preferred Units and Series B Preferred Units. During the year ended December 31, 2024, the Company issued 2,170 Common Units. The Company redeemed 1,083 and 26,040 Common Units in 2024 and 2023, respectively. There are no call provisions, sinking fund requirements, or conversion rights associated with Common Units. Holders of Common Units have voting rights on all matters submitted to the members in accordance with their ownership interests, unless otherwise specified in the Company's operating agreement. All unit redemptions during 2024 and 2023 were conducted at values consistent with the most recent independent valuation or recent transaction prices. There were no repurchases at amounts that significantly exceeded estimated fair value. Accordingly, no portion of the redemption payments has been allocated to non-equity elements. In accordance with ASC 505-30, *Equity-Treasury Stock* (ASC 505) and ASC 505-30-45-2, the redemption amounts were accounted for as a reduction to members' equity, with no portion reclassified as a dividend or compensation expense. The Company does not maintain treasury units. All redemptions resulted in the full cancellation and retirement of the respective units.

**Incentive Plan Units:** Incentive Plan Units are comparable to Common Units in terms of value and rights. However, unlike Common Units, Incentive Plan Units do not carry voting privileges and do not grant the holder the right to obtain information about the Company and its subsidiaries or inspect their financial records. For the fiscal years concluding on December 31, 2024, and 2023 the Company reported that Incentive Plan Units were exercised in the amounts of 360 and 905 units, respectively. The Incentive Plan Units are subject to standard anti-dilution adjustments, and do not contain any provisions for contingent repricing or conversion terms outside of the standard equity incentive plan terms.

**Warrants:** In connection with the issuance of Preferred Units with one of its members, in December 2019, the Company issued 9,125 warrants to purchase Series A Preferred Units. The warrants have an exercise price per Unit of $109.55 and an aggregate purchase price of $1,000 thousand. The warrants vest over four years in the following manner: 2,300 units at December 13, 2020; 2,260 units at December 13, 2021; 2,265 units at December 13, 2022; and 2,300 units at December 13, 2023. The fair value of the warrants was estimated at the issuance date using a market approach valuation. The grant date fair value of the outstanding warrants was $8 thousand, recorded in members' equity upon issuance as the warrants will be settled with Series A Preferred Units.

In September 2020, the Company issued 8,620 warrants to purchase Common Units. The warrants have an exercise price per Unit of $0.28 and an aggregate exercise price of $2 thousand. In November 2024, the Company issued 6,889 warrants to purchase Common Units, with an aggregate exercise price of $10, and 50 warrants to purchase Common Units, with an exercise price per Unit of $0.01. The warrants were fully vested on the date of grant. The fair value of the warrants was estimated at the issuance date using a market approach valuation. The grant date fair value of the outstanding warrants was $350, recorded in members' equity upon issuance as the warrants will be settled with Common Units. The Company recorded warrants vesting expenses of $486 thousand and $0 for the years ended December 31, 2024 and 2023, respectively. There were no changes to the exercise price of any outstanding warrants during the reporting periods other than those resulting from standard anti-dilution provisions.

**Acquisition on Noncontrolling Interests:** On July 19, 2023, and November 30, 2023, the Company increased its interest in Skybound Stories, Inc., through Skybound Interactive, LLC, from 64.46% to 88.03% and from 88.03% to 100%, respectively. The Company dissolved Skybound Stories, Inc. on December 31, 2024.

**Units split:** On April 4, 2024, the requisite members of the Company approved a forward Unit split for which 5 Units were exchanged for each Common Unit, Preferred Unit, and Incentive Plan Units held. All Units and related amounts have been retroactively restated for all periods presented.

**Conversion Price Adjustments: T**he Company's Preferred Units, Incentive Units, and warrants contain standard weighted-average anti-dilution provisions. There are no provisions that allow for discretionary or contingent repricing or conversion outside of standard anti-dilution mechanisms. The Company did not recognize any down-round features triggered during the reporting periods, and therefore no disclosures were required under ASC 260-10-25-1 or ASC 505-10-50-3A.

The Company's Series A Preferred Units and Series B Preferred Units contain discretionary conversion features and contingent conversion features that may be triggered upon an initial public offering or, in the case of Series A Preferred Units, with the written consent of holders of at least two-thirds of the Series A Preferred Units, and for Series B Preferred Units, with the written consent of holders of a majority of Series B Preferred Units. No events or changes in circumstances occurred during the years ended December 31, 2024, or 2023 that would cause the conversion contingencies to be met. The Company did not declare any dividends or make any distributions on its Preferred Units or Common Units for the years ended December 31, 2024, or 2023.

**Regulation A Offering:** On December 5, 2022, the Company filed a Tier 2 Offering Statement pursuant to Regulation A under the Securities Act of 1933, as amended (the "Securities Act"), in connection with the sale of its Common Units. On June 10, 2023, the Company closed on the sale of 178,435 Common Units at $100 per Unit, for $17,844 thousand in connection with its Regulation A offering. The sale of these Units was subject to the terms and conditions of the offering circular, including certain escrow requirements. The Company raised $17,844 thousand. The Company paid $1,624 thousand in commissions, fees and expenses related to the sales and realized net proceeds of $16,220 thousand.

**Seedrs Offering:** On February 23, 2024, the Company closed on the sale of 2,170 Common Units, at a price of £77.22 per Unit, for £168 thousand in connection with a crowdfunding campaign conducted by Seedrs Limited. The Company paid £22 thousand in commissions, fees and expenses related to the sales and realized net proceeds of £146 thousand as of December 31, 2024.

**SAFE and Crowd SAFE:** As of December 31, 2024, the Company has issued SAFE and Crowd SAFE instruments totaling $4,565 thousand. These instruments are not included in members' equity and are classified as liabilities (see Note 14).

**Non-Controlling Interest Holders:** In January 2024, 5<sup>th</sup> Planet Games recorded the exercise of 300 warrants. The exercise resulted in an increase in equity attributable to non-controlling interests.

**Operating Agreement Provisions:** As provided in the Company's Sixth Amended and Restated Limited Liability Operating Agreement of the Company, as amended (the "Operating Agreement") and in accordance with the Delaware Limited Liability Company Act, the Members are not personally liable for the debts, obligations, or liabilities of the Company, whether arising in contract, tort, or otherwise, except as required by applicable law. Upon dissolution, Members are entitled to receive a distribution of liquidation proceeds solely from the Company's remaining assets in the order of priority set forth in the Operating Agreement, and no Member is obligated to contribute additional capital or restore any deficit in their capital account. The Operating Agreement further provides that the Company will indemnify Members, Managers, and their respective affiliates to the fullest extent permitted under applicable law for liabilities arising out of the business or operations of the Company (excluding liabilities to any Member), other than liabilities resulting from fraud, willful misconduct, or bad faith. The Company is the indemnitor of first resort and may maintain insurance coverage to support such indemnification obligations.

**17. Equity-based compensation**

The Company maintains a 2019 Equity Incentive Plan (as amended and restated as of December 1, 2022, the "Plan"), under which it may grant awards, including "incentive stock options" (as defined in Section 422 of the Internal Revenue Code of 1986, as amended) and other options to purchase Incentive Plan Units (i.e., non-qualified stock options), to employees, directors, and consultants, which award grants are convertible into Incentive Plan Units. The Plan is administered by David Alpert and Jon Goldman, acting together and in their capacities as appointed officers of the Company, which have the authority to determine award types, terms, and vesting conditions. Incentive Plan Units are substantially equivalent to Common Units, except Incentive Plan Units are non-voting Units and do not have rights to receive information pertaining to the Company and its subsidiaries and access to their respective books and records.

The Company has reserved 496,500 Incentive Plan Units for issuance under the Plan. In 2023, the Company entered into agreements to issue 51,130 options under the Plan. In 2023, 2,690 of those options were exercised through a cashless transaction, resulting in 905 Incentive Plan Units being issued. In 2024, the Company entered into agreements to issue 130,355 options under the Plan. In 2024, 1,080 of those options were exercised through a cashless transaction, resulting in 360 Incentive Plan Units being issued.

The Plan authorizes the use of both incentive stock options and non-qualified stock options. The incentive interests are subject to vesting over time or based on the Company's financial performance. ASC 718, requires that all share-based payments to employees and board members be recognized in the consolidated statements of comprehensive loss over their service period based on the grant date fair value of incentive interests. The requisite service period is generally the period over which Unit-based awards vest, which may vary depending on the specific terms of each grant. As of December 31, 2024, 124,648 Incentive Plan Units were available for grant under the Plan.

**Valuation of Awards**

The Company estimates the fair value of option awards on the date of grant using the Black-Scholes option-pricing model. This model requires the input of subjective assumptions including the expected term of the award, expected volatility, risk-free rate of return, dividend yield and the current unit price of the underlying equity. Because the Company is a private entity, expected volatility was based on the historical volatilities of publicly traded peer companies. The expected term was calculated using the simplified method (midpoint between vesting and contractual expiration), as allowed under ASC 718 for nonpublic entities.

The Company has elected to apply the practical expedient under ASC 718-10-30-20F and 718-10-30-20G, which permits nonpublic entities to determine the current price of their underlying equity using a reasonable valuation performed in accordance with Section 409A of the Internal Revenue Code. The current unit price used in the option valuation was based on the most recent independent third-party 409A valuation report.

Key assumptions used in determining the fair value of options granted during the year ended December 31, 2024 were as follows:

---

| | | |
|:---|:---|:---|
| **Assumptions for Equity-Based Compensation** | **2024** | **2023** |
| Risk-free interest rate | 4.1%-4.5% | 3.8%-4.7% |
| Expected life (in years) | 5.43-7.98 | 6.1-7.1 |
| Dividend yield |  |  |
| Expected volatility | 59%-206% | 64.9%-70.3% |

---

The Company recorded the total equity-based compensation expense as follows *(in thousands)*:

---

| | | |
|:---|:---|:---|
| **For the years ended December 31,** | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;Research and development | $464 | $326 |
| &nbsp;&nbsp;&nbsp;Sales and marketing | 484 | 326 |
| &nbsp;&nbsp;&nbsp;General and administrative | 842 | 642 |
| **Total** | $1790 | $1294 |

---

As of December 31, 2024, the unamortized expense related to outstanding equity-based compensation was $5,741 thousand, with a weighted average remaining recognition period of approximately 3.77 years. No restricted units vested during the period.

No compensation cost related to Unit-based payment arrangements was capitalized as part of the cost of an asset during the years ended December 31, 2024, and 2023.

The following is a roll forward of the outstanding options:

(in thousands except per unit data) 

 

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Options outstanding** | **Number of Units** | **Weighted - Average exercise price** | **Weighted-Average Remaining Contractual Term (years)** | **Aggregate Intrinsic value** |
| **Outstanding at December 31, 2022** | 223440 | $29.03 |  |  |
| &nbsp;&nbsp;&nbsp;Granted | 51130 | 63.44 |  |  |
| &nbsp;&nbsp;&nbsp;Exercised | (2690) | 29.03 |  |  |
| &nbsp;&nbsp;&nbsp;Expired / forfeited | (6695) | 29.03 |  |  |
| **Outstanding at December 31, 2023** | 265185 | $29.03 |  |  |
| &nbsp;&nbsp;&nbsp;Granted | 130355 | 70.00 |  |  |
| &nbsp;&nbsp;&nbsp;Exercised | (1080) | 29.03 |  |  |
| &nbsp;&nbsp;&nbsp;Expired / forfeited | (54838) | 46.37 |  |  |
| **Outstanding at December 31, 2024** | 339622 | $48.06 | 8.2 | $7450 |
| **Vested and expected to vest as of December 31, 2024** | 263686 | $45.07 | 8.1 | 6574 |
| **Exercisable as of December 31, 2024** | 85500 | $34.48 | 7.4 | $3037 |

---

**Weighted-Average Grant-Date Fair Value**

The weighted-average grant-date fair value of options granted was estimated using the Black-Scholes option pricing model, based on assumptions including expected volatility, expected term, risk-free interest rate, and dividend yield as disclosed above.

**Intrinsic Value of Options Exercised**

The intrinsic value of options exercised is calculated as the difference between the fair market value of the underlying units at the time of exercise and the exercise price.

**Fair Value of Options Vested**

The fair value of options vested represents the portion of previously granted awards for which vesting occurred during the period.

***Current Unit Price***

On each grant date, the fair value of the Company's Common Units was determined using market-based valuation techniques that were produced through a 409A valuation. Specifically, we considered the public market sales price as a relevant indicator of fair value. The fair value of the Company's Common Units was determined in accordance with applicable elements of the practice aid issued by the American Institute of Certified Public Accountants, Valuation of Privately Held Company Equity Securities Issued as Compensation.

***Expected Volatility***

The Company estimates expected volatility based on historical volatility data of comparable companies.

***Expected Term***

The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated based on an average between the contractual and vesting terms of the awards.

***Risk-Free Rate***

The risk-free rate assumed in valuing the options is based on the United States Treasury yield curve in effect at the time of grant for the expected term of the option.

***Dividend Yield***

The Company currently has no history or expectation of paying cash dividends on its units.

***Forfeiture Rate***

The Company recognizes forfeitures as they occur.

Changes in these assumptions can materially affect the fair value of the options.

During the year ended December 31, 2024, no cash was received from the exercise of options, as all exercises were settled through cashless transactions. No income tax benefits were recognized from these exercises. The Company did not use any cash to settle equity instruments granted under equity-based payment arrangements during the year ended December 31, 2024. Upon exercise of stock options, the Company issues Incentive Plan Units from its authorized but unissued equity pool under the 2019 Equity Incentive Plan. The Company does not currently use treasury units to settle option exercises.

**Settlement Method**

All options are settled in Incentive Plan Units upon exercise. There are no provisions for cash settlement of awards granted under the Plan.

The Company did not use any cash to settle equity instruments granted under equity-based payment arrangements during the year ended December 31, 2024.

**Award Modifications**

There were no modifications to outstanding equity awards during the year ended December 31, 2024, or 2023.

During the years ended December 31, 2024, and 2023, no cash was received from the exercise of options, as all exercises were settled through cashless transactions. The total intrinsic value of options exercised for the years ended December 2024, and 2023, was $44 thousand and $110 thousand, respectively. The total fair value of Units vested during the years ended December 31, 2024, and 2023, was $1,284 thousand and $860 thousand, respectively.

**18. Related party transactions**

The Company is a guarantor on a mortgage loan for B&C. The loan balance as of December 31, 2024, and 2023 amounted to $17,984 thousand and $18,567 thousand, respectively. As of December 31, 2024, B&C had a right-of-use asset balance of $2,056 thousand. The note is secured by a building owned by B&C and leased to the Company. The Company may be required to perform under the note should B&C default on its obligations. Management does not anticipate any requirement to pay in the near future. Management believes the Company and B&C are following any covenants and restrictions related to the loan in B&C.

The Company leases a building under an operating lease agreement from B&C. The Company currently makes monthly payments until December 31, 2026. The monthly lease payments for 2024 and 2023 were $94 thousand and $93 thousand, respectively. The agreement provides for annual increases of 2% of base rent in the immediately preceding year. There was no rent or operating payable to B&C as of December 31, 2024, and 2023, respectively.

The Company incurs expenses to make building improvements which are reimbursed by B&C. As of December 31, 2024, and 2023, B&C had a balance due of $486 thousand in both years for building improvements recorded in Due from Related Parties on the consolidated balance sheets.

In July 2021, the Company became a guarantor on a mortgage loan for Spicy. The loan balance as of December 31, 2024, and 2023, amounted to $8,626 thousand and $8,811 thousand, respectively. As of December 31, 2024, Spicy had a right-of-use asset balance of $2,067 thousand. The note is secured by a building owned by Spicy and leased to the Company. The Company may be required to perform under the note should Spicy default on its obligations. Management does not anticipate any requirement to pay in the near future. Management believes the Company and Spicy are following any covenants and restrictions related to the loan in Spicy.

The Company leases a building under an operating lease agreement from Spicy. The Company currently makes monthly payments until December 31, 2029. The monthly lease payments for 2024 and 2023 were $49 thousand and $47 thousand, respectively. The agreement provides for annual increases of 2% of base rent in the immediately preceding year. Rent and operating expenses due Spicy totaled $0 thousand and $91 thousand as of December 31, 2024, and 2023, respectively.

The Company incurs expenses to make building improvements which are reimbursed by Spicy. For both years ending December 31, 2024, and 2023 Spicy owed the Company $0 for building improvements.

The Company has a royalty agreement with one of its members for 15% on sales of comics, and sales at conventions and merchandise sold, 30% on local licensing and 70% on international comic licensing. Total royalty expense to related parties of $5,443 thousand and $5,556 thousand was incurred for the years ended December 31, 2024, and 2023, respectively. Accrued royalties and commissions to the related party were $2,036 thousand and $2,455 thousand as of December 31, 2024, and December 31, 2023, respectively.

The Company paid management service fees of $200 thousand and $120 thousand for the years ended December 31, 2024, and 2023, respectively, to Tower 26 VC, LLC (f/s/o Jon Goldman) and D.D. Tuercas Trading Company, Inc. (f/s/o David Alpert).

The Company entered into a loan agreement with its employee, Ian Howe, in July 2021, in the principal amount of $300 thousand, which is payable by Mr. Howe on demand by the Company. The Company calculates interest rate at 2.05% per annum. The loan is due and payable on demand of the Company. The Company earned interest income in the amount of $5 thousand and $5 thousand for the years ended December 31, 2024, and 2023, respectively.

In November 2022, the Company entered into a loan agreement with each of David Alpert, Jon Goldman and Robert Kirkman, with each loan in the principal amount of $500 thousand and secured by a pledge of 5,000 Common Units held by each of the Peanut & Pookie Family Trust, the Goldman/Gross Family Trust and the Kirkman Family 2014 Trust. The Company calculates interest rate at 3.92% per annum. The maturity date of the loans is November 2032. The Company earned interest income in the amount of $63 thousand and $60 thousand for the years ended December 31, 2024, and 2023, respectively.

In August 2023, the Company entered into a loan agreement with each of David Alpert, Jon Goldman and Robert Kirkman, with each loan in the principal amount of $1,961 thousand and secured by a pledge of 20,000 Common Units held by each of the Peanut & Pookie Family Trust, the Goldman/Gross Family Trust and the Kirkman Family 2014 Trust. In August 2023, the Company also entered into a loan agreement with Daniel Murray, in the principal amount of $654 thousand and secured by a pledge of 5,500 Common Units held by Mr. Murray. The Company calculates interest rate at 4.03% per annum. The maturity date of the loans is August 2033. The Company earned interest income in the amount of $246 thousand and $79 thousand for the years ended December 31, 2024 and 2023, respectively.

In December 2023, the Company, through Bumbio LLC, entered into a loan and security agreement with Scenario 42 SAS, a French production company in which the Company, through Bumbio LLC, owns a 49% interest, with the loan in the principal amount of €150 thousand. The Company calculates interest at 9.5% per annum.

In connection with equity financing transactions by the Company from time to time, each of David Alpert (through the Peanut & Pookie Family Trust), Robert Kirkman (through the Kirkman Family 2014 Trust) and Jon Goldman (through the Goldman/Gross Family Trust) enter into redemption agreements with the Company pursuant to which the Company redeems an aggregate amount of Common Units equal to up to 12.5% of the aggregate amount raised in the applicable equity financing transaction.

One or all of Robert Kirkman, David Alpert, Richard Jacobs (an employee of Skybound, LLC), and potentially other employees of the Company or its subsidiaries serve as executive producers or producers for television or film projects and, accordingly, may receive fees or other compensation for such services. The Company expects the fees payable to such executive producers or producers to, in the aggregate, not exceed 20% of the production fees received by the Company for each such project. David Alpert is a partner at Circle of Confusion, a talent management company. Talent that may partner with the Company on projects may also be represented by Circle of Confusion. Robert Kirkman is represented as an artist by Circle of Confusion. The Company received revenues of $60 thousand and $60 thousand for the years ended December 31, 2024, and 2023, respectively.

The Company also paid royalty expenses due to related parties in the amount of $4,149 thousand and $624 thousand for the years ended December 31, 2024, and 2023, respectively.

The Company received revenues of $201 thousand and $651 thousand from Com2uS Corp. for the years ended December 31, 2024, and 2023, respectively. Com2uS Corp. holds equity membership interests in the Company and has the right to appoint one (1) Manager to the Company's Board of Managers.

The Company has an agreement with Image Comics to purchase and distribute comic books. The Company recorded revenues net of cost of $4,387 thousand and $873 thousand for the years ended December 31, 2024, and 2023, respectively.

**19. Commitments and contingencies**

***Operating Leases:*** The Company is obligated under non-cancellable operating leases for certain facilities and equipment which expire on various dates through March 2029. Total rent expense to related parties was $1,710 thousand for the year ended December 31, 2024 (see Note 18). Rent expense is included in operating expenses on the accompanying consolidated statements of comprehensive loss.

A summary of future annual minimum lease payments on all operating leases as of December 31, 2024, in aggregate of $6,431 thousand, can be seen on Note 13.

***Litigation:*** The Company is subject to certain legal proceedings and claims that arise in the normal course of business. The Company does not believe the amount of liability, as a result of these types of proceedings and claims will have a materially adverse effect on the Company's consolidated financial position, results of operations, and cash flows.

From time to time, the Company encounters content and items for sale that may infringe their copyrights, trademarks, and domain names available on various online retail and streaming platforms and other websites, such as unauthorized fan reviews featuring extensive copying of Company-owned properties, unauthorized shows that copy the look and feel of Company owned digital content and unauthorized t-shirts bearing the Skybound logo or free downloads of comic book issues. The Company addresses such possible infringement in the ordinary course of business consistent with the advice of the Company's counsel.

● In April 2024, the Company was made aware of an unconfirmed report concerning a cloud storage server connected to a North Korean IP address. The server supposedly contained an *Invincible* animation sketch. In response to the report, the Company published the following statement on April 21, 2024:

"We do not work with North Korean companies, or any affiliated entities, and have no knowledge of any North Korean companies working on our animation. Our policies strictly prohibit any subcontracting to any third-party without our express prior written consent, which, in this case, was neither sought nor granted. We also mandate that all our service providers fully comply with all applicable rules and regulations and prohibit disclosures of materials by our service providers to third parties.

Skybound Entertainment takes these allegations seriously and has initiated a thorough internal review to verify and rectify any potential issues. We have also notified the proper authorities and are cooperating with all appropriate bodies."

In an abundance of caution, the Company notified the U.S. Department of the Treasury, Office of Foreign Assets Control, regarding the matter, via a voluntary self-disclosure dated April 21, 2024, and supplemental voluntary self-disclosure dated May 17, 2024. The Company continues to implement its Sanctions Compliance Program (SCP) to further address sanctions compliance obligations at the organizational level.

● On September 17, 2024, Skybound Game Studios, Inc. (an indirect wholly owned subsidiary of the Company) filed a lawsuit in Los Angeles Superior Court for, among other causes of action, breach of contract against, among others, a video game publisher to whom Skybound Game Studios, Inc. had granted an exclusive license to exploit the *Invincible* IP to create a blockchain- and NFT-based mobile video game, which the publisher failed to complete development on and release. Skybound Game Studios, Inc. is seeking damages in excess of $1,500 thousand plus interest. The parties have moved to arbitration, a hearing for which is scheduled for January 2026. This matter does not have an impact on the Company's consolidated financial statements.

● Skybound, LLC (a direct wholly owned subsidiary of the Company) entered into an exclusive publishing license agreement with a publisher pursuant to which Skybound, LLC licensed to the publisher a variety of comic book IP to publish in Spanish. The publisher has failed to make payments of royalties and other fees since 2022. Skybound, LLC has terminated its relationship with the publisher and is exploring its legal options to recover the royalties and other fees that the publisher failed to pay. Skybound, LLC estimates at least $127 thousand in unpaid royalties and at least $160 thousand in other fees are owed by the publisher, but additional unreported royalties and accrued interest may be applicable. Skybound, LLC filed a claim with the Spanish courts in late 2024. As of the date of this filing, this matter is not settled and does not have an impact on the Company's consolidated financial statements.

● Skybound, LLC (a direct wholly owned subsidiary of the Company) entered into an exclusive publishing license agreement with a publisher pursuant to which Skybound, LLC licensed to the publisher a variety of comic book IP to publish in German. The publisher has failed to make payments of royalties and other fees. Skybound, LLC and the publisher have agreed upon a payment plan to recover the royalties and other fees that the publisher failed to pay. Skybound, LLC estimates $214 thousand in unpaid royalties and other fees, plus additional accrued interest. The publisher made an upfront good faith payment of $30 thousand in November 2024 and has agreed to make monthly payments until paid in full.

● On February 28, 2025, Skybound Games Europe B.V. (an indirect wholly owned subsidiary of the Company) sent a pre-litigation demand letter to a video game distributor in accordance with the Practice Direction on Pre-Action Conduct and Protocols contained in the Civil Procedure Rules for the Courts of the United Kingdom. The letter asserted repudiatory breach of contract among other causes action. Skybound Games Europe B.V. had granted a license to the video game distributor to physically distribute certain video games in accordance with a Master Distribution Agreement and relevant statements of work thereto. Skybound Games Europe B.V. has asserted that the video game distributor failed to pay open invoices for video-game units that it purchased and which Skybound Games Europe B.V. delivered to it. In addition, Skybound Games Europe B.V. has asserted that the video game distributor failed to perform its contractual obligation to actually distribute and sell certain units. As of the date of this filing, the parties continue to be engaged in required pre-litigation negotiations, and the matter is not settled.

**20. Revenue**

The Company recognizes revenue in accordance with ASC 606. Revenue is recognized when control of goods or services is transferred to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

The Company generates revenue primarily through the sale of physical and digital products, licensing and royalties, and certain services, including production, merchandise, and marketing services. The timing of revenue recognition depends on the nature of the performance obligations and the specific terms of the contracts. In accordance with ASC 606, the following table represents a disaggregation of the Company's revenues *(in thousands)*:

---

| | | |
|:---|:---|:---|
| <br>**For the years ended December 31,** | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;Physical product sales | $31864 | $28252 |
| &nbsp;&nbsp;&nbsp;Digital product sales | 9813 | 9443 |
| &nbsp;&nbsp;&nbsp;Licensing and royalty | 16616 | 25269 |
| &nbsp;&nbsp;&nbsp;Services | 38479 | 27161 |
| &nbsp;&nbsp;&nbsp;Other | 4108 | 6350 |
| **Total revenue** | $**100880** | $**96475** |

---

For the year ended December 31, 2024, one customer accounted for approximately 29% of the Company's revenue. For the year ended December 31, 2023, two customers accounted for approximately 31% and 10% of the Company's revenue, respectively. These customer concentrations reflect the nature of the Company's strategic relationships and revenue timing, and management does not believe this concentration presents a significant risk to ongoing operations or revenue stability.

The following table breaks out the Company's revenue by geographical region *(in thousands)*:

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| | | |
|:---|:---|:---|
| **For the years ended December 31,** | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;North America | $69937 | $72466 |
| &nbsp;&nbsp;&nbsp;Asia | 22483 | 14664 |
| &nbsp;&nbsp;&nbsp;Europe | 7047 | 8970 |
| &nbsp;&nbsp;&nbsp;Rest of World | 1413 | 375 |
| **Total revenue** | $100880 | $96475 |

---

This disaggregation reflects the nature of the Company's customer arrangements and is consistent with how financial performance is evaluated internally.

Revenue recognized at a point-in-time is primarily related to sales of physical and digital products when control passes to the customer upon delivery or fulfillment. Revenue recognized over time primarily includes licensing, creative development, production services, marketing support, and other services provided under IP licensing or production agreements. The Company applies the guidance in ASC 606 to determine whether revenue should be recognized over time based on the criteria in ASC 606-10-25-27.

Revenue recognized over time primarily includes production services, creative development, marketing support, and symbolic IP licensing. The Company uses both input and output methods to measure progress, depending on the nature of the service and how performance is transferred to the customer.

● Input methods (e.g., hours incurred) are used when contractor labor drives the service (e.g., production).

● Output methods (e.g., milestone or billing schedules) are used when internal resources are used and discrete deliverables align with progress (e.g., creative and marketing support).

● In certain cases, revenue is recognized based on the right-to-invoice practical expedient when billing reflects performance to date.

These methods are applied consistently and are considered to faithfully depict the transfer of services, as customers typically consume the benefit as services are performed and the Company maintains an enforceable right to payment.

The percentage of our consolidated net revenues that are recognized from revenue sources that are recognized at a "point-in-time" and from sources that are recognized "over-time and other" were as follows:

---

| | | |
|:---|:---|:---|
| **For the years ended December 31,** | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;Point in time | 45.3% | 45.7% |
| &nbsp;&nbsp;&nbsp;Over time and other | 54.7% | 54.3% |

---

The Company evaluates contracts for multiple performance obligations, including assessing whether the obligations are distinct and can be separately identified. If a contract contains more than one performance obligation, the total transaction price is allocated based on the standalone selling prices of each performance obligation. The transaction price for each contract is determined based on the terms set forth in the executed agreement with the customer. In general:

● Production Services and Creative Development: Prices are contractually stipulated in signed agreements, typically with milestone-based billing or fixed-fee deliverables. These may be tied to predefined deliverables or scope-based budgets.

● Licensing Revenue: Transaction prices are typically based on contractual royalty rates applied to reported sales or usage by licensees, or minimum guarantees as defined in the license agreement. MSRPs or distributor prices may be used when calculating royalties but are not set by the Company.

● Merchandise and Physical Product Sales: Transaction prices are based on purchase orders or invoice amounts, which reflect agreed-upon unit pricing and quantities.

● Digital Publishing and Media: Transaction prices are typically determined through invoiced amounts per the customer's insertion orders or advertising schedules.

Variable consideration, such as sales-based royalties or performance bonuses, is estimated and included in the transaction price only to the extent it is probable that a significant reversal will not occur.

Payment terms for product sales are typically net 30. Licensing and production service contracts may include milestones or upfront payments, and the Company does not assess a significant financing component in such arrangements. Discounts, returns, and refunds are not material to the Company's consolidated financial statements and do not represent a significant component of variable consideration. Accordingly, the Company does not record obligations for such amounts in advance; they are recognized as a reduction in revenue in the period in which they occur.

Contract assets are recorded when revenue has been earned for satisfied performance obligations, but the related invoice has not yet been issued. These amounts are classified as "Unbilled receivables" on the consolidated balance sheets.

Contract liabilities arise when the Company receives payment or has an unconditional right to receive payment before transferring goods or services. These amounts are presented as "Deferred revenue" on the consolidated balance sheets and are recognized as revenue when the related performance obligations are satisfied.

The Company's beginning and ending contract assets were as follows *(in thousands)*:

---

| | | | |
|:---|:---|:---|:---|
| **For the years ending December 31,** | **2024** | **2023** | **2022** |
| Accounts receivable | $7898 | $14578 | $18503 |
| Unbilled receivable | $5552 | $5323 | $7055 |

---

The Company's beginning and ending contract liabilities were as follows *(in thousands)*:

---

| | | | |
|:---|:---|:---|:---|
| **For the years ending December 31,** | **2024** | **2023** | **2022** |
| Deferred revenue | $8844 | $13800 | $18564 |

---

Changes in the Company's contract assets and contract liabilities during the year were primarily attributable to the timing differences between revenue recognition and billing or cash collection.

The increase in contract assets was driven primarily by game development and production services, where revenue was recognized on milestones or labor incurred but had not yet been billed at period-end. The decrease in contract liabilities primarily related to the recognition of revenue from advance payments received for production services and licensing agreements as related performance obligations were satisfied.

There were no material changes in the transaction price or timing of performance obligations that resulted in contract assets or liability adjustments. Additionally, there were no significant contract modifications, no material changes in estimates of variable consideration, and no impairments of contract assets recorded during the reporting period.

The Company evaluates contract assets for credit losses under ASC 326-20, *Financial Instruments-Credit Losses-Measured at Amortized Cost* (ASC 326). As of December 31, 2024, no credit loss expense was recognized on contract assets.

Receivables from customer contracts are assessed separately under ASC 326. No material difference existed between the initial receivable recognition and the revenue recognized.

During the years ended December 31, 2024, and 2023, the Company recognized $6,396 thousand and $18,880 thousand revenue that was recognized in deferred revenue as of the beginning of respective year.

As of December 31, 2024, the Company had approximately $8,844 thousand of transaction price allocated to unsatisfied contract performance obligations.

The Company expects to recognize this deferred revenue as follows *(in thousands)*:

---

| | |
|:---|:---|
| <br>**For the years ending December 31,** | |
| 2025 | $8161 |
| 2026 | 174 |
| 2027 | 255 |
| 2028 | 254 |
| **Total** | $8844 |

---

The Company applies the optional exemption under ASC 606-10-50-14 through 50-15 for contracts with an expected duration of one year or less and excludes such contracts from its remaining performance obligation disclosures. This exemption primarily applies to:

● Production services contracts with fixed timelines (typically under 12 months), where deliverables are milestone-based or tied to specific content production phases.

● Licensing agreements for symbolic IP or content where the license term is one year or less.

● Creative and marketing services contracts that are completed within the calendar year under statement of work arrangements.

The Company applies the optional exemption in ASC 606-10-50-14 for contracts with an expected duration of one year or less, and such contracts have been excluded from the totals above.

The Company engages in Kickstarter campaigns that generate revenue on unfulfilled campaigns. The Company classifies these revenues as deferred and recognizes the revenue at the point the campaign reaches fulfillment. The average length of a Kickstarter is fifteen months.

In 2020, the Company entered into an agreement with PUBG (Krafton, Inc) to offer two years of marketing services for an upcoming game, followed by a period of distribution for that game. The game launched in December 2022. Per the agreement, the Company acts as an agent. On behalf of PUBG (Krafton, Inc), the Company purchases inventory, facilitates sales through the Company customers, invoices for the revenue, and collects payment of those invoices. The Company receives a fee of $1 per unit of physical sales and $0.60 per unit of digital sales. The Company recognized revenue upon sale of the product, which is initiated once the invoice is raised. The Company kept the receivables in an account separate from trade receivables to reflect the funds collected on behalf of PUBG (Krafton, Inc). In addition, the Company also records the initial liability to the PUBG (Krafton, Inc) under distributed product payable on the consolidated balance sheets.

At the end of 2024, the Company held $7 thousand of third-party receivables, related to the August 1, 2020, agreement with PUBG (Krafton, Inc) for the game which launched on December 1, 2022.

**21. Segment and Geographic Information**

The Company applies the provisions of ASC 280 and has determined that it operates as one reportable segment. The Company's business lines share common infrastructure and monetize similar IP across overlapping customer bases. Accordingly, the Company has determined it has a single operating and reportable segment.

The Company's chief operating decision maker (CODM) is its chief executive officer, who reviews financial information presented on a consolidated basis. The CODM uses gross margin, net loss, and adjusted EBITDA to make decisions on resource allocation and to assess the performance of the business across the Company's business lines, which include editorial publishing, television and film production, video games, and tabletop games. Our CODM does not assess segment performance using segment asset information. All significant segment expense categories related to net loss/income are presented on our consolidated statement of comprehensive income.

Adjusted EBITDA is a measure of segment profit or loss, which we define as net loss, excluding interest income; interest expense; other income (expense), net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense; payroll and other tax expense related to stock-based compensation; and certain other items impacting net loss from time to time.

Adjusted EBITDA is reconciled from net loss attributable to members. Accordingly, adjustments for interest, taxes, depreciation, and amortization exclude the portion attributable to noncontrolling interests, as that impact is already captured in the starting net loss attributable to members. Such adjustments are considered significant segment expense categories included in the measure of Adjusted EBITDA.

The following table reconciles the Company's Adjusted EBITDA to net loss attributable to members, the most directly comparable GAAP measure:

*(in thousands)*

---

| | | |
|:---|:---|:---|
| **EBITDA** | **2024** | **2023** |
| (Loss) before income taxes | $(30214) | $(8654) |
| Income tax benefit | 2205 | 1707 |
| Net (Loss) | (28009) | (6947) |
| Net (Loss) attributable to NCI | (456) | (27) |
| Net (Loss) attributable to members | (27553) | (6920) |
| Depreciation | 355 | 243 |
| Amortization | 7847 | 11600 |
| Tax expense | (2196) | (1707) |
| Interest income/expense | 304 | (821) |
| Equity-based compensation | 2724 | 2407 |
| Recruiting & severance expense | 1029 | 954 |
| Non-recurring corporate development projects |  | 807 |
| Inventory, returns, and non-recurring promotion expenses | 1288 | 730 |
| Software development/TV/Film impairment | 2753 | 3234 |
| Derivative loss on SAFE | 945 |  |
| Impairment to goodwill | 12891 |  |
| Distributed game product markdown | 1963 | - |
| **Adjusted EBITDA** | $2350 | $10527 |

---

The following table presents the Company's long-lived assets by geographic region as of December 31, 2024:

---

| | |
|:---|:---|
| *(in thousands)* | **Long lived assets** |
| North America | $101117 |
| Other foreign countries | 23787 |
| **Total** | $124904 |

---

**22. Income taxes**

Total current and deferred income tax benefit consists of the following *(in thousands)*:

---

| | | |
|:---|:---|:---|
| **For the years ended December 31,** | **2024** | **2023** |
| **Current tax expense:** |  |  |
| &nbsp;&nbsp;&nbsp;Federal | $(21) | $2435 |
| &nbsp;&nbsp;&nbsp;State and local | 355 | 2003 |
| &nbsp;&nbsp;&nbsp;Foreign | 338 | 8 |
| Total current tax expense | 672 | 4446 |
| **Deferred tax benefit:** |  |  |
| &nbsp;&nbsp;&nbsp;Federal | (2127) | (5191) |
| &nbsp;&nbsp;&nbsp;State and local | (720) | (859) |
| &nbsp;&nbsp;&nbsp;Foreign | (30) | (103) |
| Total deferred tax benefit | (2877) | (6153) |
| **Total income tax benefit** | $**(2205)** | $**(1707)** |

---

Deferred tax assets and liabilities consist of the following *(in thousands)*:

---

| | | |
|:---|:---|:---|
| **As of December 31,** | **2024** | **2023** |
| **Deferred tax assets:** |  |  |
| &nbsp;&nbsp;&nbsp;Net operating losses (NOL) | $5867 | $2066 |
| &nbsp;&nbsp;&nbsp;Equity-based compensation | 1923 | 609 |
| &nbsp;&nbsp;&nbsp;Intangible assets | 3829 | 2731 |
| &nbsp;&nbsp;&nbsp;Accruals and other | 1055 | 696 |
| &nbsp;&nbsp;&nbsp;Valuation allowance (VA) | (2974) | - |
| Total | 9700 | 6102 |
| **Deferred tax liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;Unrealized gain on derivative asset |  |  |
| &nbsp;&nbsp;&nbsp;Other | (1128) | (158) |
| Total | (1128) | (158) |
| **Net deferred assets** | $**8572** | $**5944** |

---

As of December 31, 2024, the Company had total combined, net operating losses carryforwards for federal, state and foreign income tax purposes of $39,852 thousand. The utilization of NOL carryforwards may be carried forward indefinitely until used. The utilization of NOL carryforwards is subject to annual limitations under Section 382 of the Internal Revenue Code. The Company has assessed the realizability of its deferred tax assets and concluded that a full valuation allowance is required for foreign jurisdictions. However, no valuation allowance is considered necessary for federal and state jurisdictions due to the presence of sufficient positive evidence, including cumulative book income over the preceding three years.

The federal and blended state income tax rates used in determining the provision for the year ended December 31, 2024 is 21.0% and 3.7%, when applicable, respectively. The Company's effective tax rate was less than the statutory rate due to net operating losses (NOLs) applied against income. The Company has not recognized a deferred tax liability on the undistributed earnings of its foreign subsidiaries, as these earnings are considered to be indefinitely reinvested.

For the years ended December 31, 2024, and 2023, the Company did not take any material uncertain tax positions.

The Company has not received any notice or indication of federal income tax examination and as such the tax years 2019 through 2023 remain open to examination for federal income tax purposes and by other major taxing jurisdictions to which the Company is subject.

A reconciliation of total income tax benefit to the amount computed by applying the statutory federal income tax rate to the net loss is summarized as follows *(in thousands)*:

---

| | | |
|:---|:---|:---|
| **For the year ended December 31,** | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;Provision at statutory rate | $(9016) | $(1662) |
| &nbsp;&nbsp;&nbsp;State taxes, net of federal benefit | (519) | (257) |
| &nbsp;&nbsp;&nbsp;Permanent items | 5826 | (73) |
| &nbsp;&nbsp;&nbsp;Change in VA | 2974 |  |
| &nbsp;&nbsp;&nbsp;Other | (1470) | 285 |
| **Total tax expense** | $(2205) | $(1707) |

---

**23. Earnings per share**

The Company follows ASC 260 to account for earnings per unit. Basic EPS is computed by dividing net losses attributable to members by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares, to the extent such shares are dilutive. EPS is presented on a net-of-tax basis.

The following table presents a reconciliation of the numerators and denominators used in computing basic and diluted EPS for the years ended December 31, 2024, and 2023:

---

| | | |
|:---|:---|:---|
| **For the years ended December 31,** | **2024** | **2023** |
| **Numerator** |  |  |
| Net loss attributable to members | (27553) | (6920) |
| Preferred dividends | - | - |
| **Net Loss attributable to common shareholders** | **(27553)** | **(6920)** |

---

---

| | | |
|:---|:---|:---|
| **For the years ended December 31,** | **2024** | **2023** |
| **Weighted average common units outstanding used in calculating diluted EPS** | 4453780 | 4392718 |
| Loss per Common Unit, basic | (6.19) | (1.58) |
| Loss per Common Unit, diluted | (6.19) | (1.58) |

---

Because the Company incurred net losses in each period presented, all potentially dilutive securities were excluded from the calculation of diluted EPS, as their inclusion would have been anti-dilutive. The following instruments were excluded:

● Options and warrants

● Incentive Plan Units and unvested equity-based awards

Each of these securities could potentially dilute EPS in future periods. The Company intends to apply the treasury stock method these instruments as applicable in periods where it reports net loss.

The following methods were used in calculating diluted EPS:

● Options and warrants: Treasury stock method

● Contingently issuable units: Considered under ASC 260-10-45-48 if triggering events occur

On April 4, 2024, the requisite members of the Company approved a forward Unit split for which 5 Units were exchanged for each Common Unit, Preferred Unit and Incentive Plan Unit held. All Units and related amounts have been retroactively restated for all periods presented.

A transaction that may have materially changed the number of Common Units or potentially dilutive Units outstanding occurred after the reporting period. Please refer to Note 26 for further detail. The impact of this transaction was not included in the earnings per share calculations for the year ended December 31, 2024.

**24. Supplemental cash flows information**

*(in thousands)*

---

| | | |
|:---|:---|:---|
| **For the years ended December 31,** | **2024** | **2023** |
| **Supplemental disclosures of cash flows information:** |  |  |
| Cash paid for interest | $229 | $- |
| Cash paid for income taxes | 3418 | 50 |
| **Non-cash investing and financing activities:** |  |  |
| Common interests issued to acquire non-controlling interest |  | 3700 |
| Units issued for purchase of equity method investment |  | 9 |
| Common interest appreciation rights issued to acquire non-controlling interest | 1112 | 1112 |
| C2X Investment | $- | $375 |

---

**25. Employee benefit plan**

The Company maintains a 401(k) retirement plan (the 401(k) Plan) that covers eligible employees of the Company. Under the terms of the 401(k) Plan, employees may make voluntary contributions, subject to certain limitations, and the Company may make discretionary contributions to the Plan. The Company contributed $621 thousand and $435 thousand for December 31, 2024, and 2023, respectively which is included in operating expenses on the accompanying consolidated statements of comprehensive loss. The contributions represent 100% match of the employee's 401(k) contributions after three months of employment, based on contributions up to 4%. The Company offers certain post-employment benefits, including continuation of health coverage and other limited benefits to eligible former employees. As of December 31, 2024, the Company had no material obligations that required accrual under ASC 712.

**26. Subsequent events**

The Company evaluated subsequent events that occurred from January 1, 2025, through the date that the consolidated financial statements were available to be issued and determined that there were no subsequent events or transactions that required recognition or disclosure in the consolidated financial statements, except as noted below.

On February 4, 2025, the Company acquired 100% of Maple Media, LLC, a limited liability company organized in California, and its six subsidiaries: Do More Mobile, LLC, a limited liability company organized in California; Maple Media Apps, LLC, a limited liability company organized in California; Stocks, LLC, a limited liability company organized in California; Super Basic, LLC, a limited liability company organized in California; Super Software, LLC, a limited liability company organized in California; and 9368-0148 Quebec Inc., a corporation formed in Quebec, Canada (collectively, "Maple Media"). Maple Media is a leader in mobile app publishing and boasts a diverse portfolio of apps across productivity, entertainment and lifestyle categories. In the ordinary course of business, Maple Media may become involved in legal proceedings or may be subject to claims, including copyright takedown notices. Maple Media addresses such possible takedown notices in the ordinary course of business consistent with advice of counsel. The materiality and results of any such legal proceedings and the resolution of any such claims cannot be predicted with certainty; but in either case, they could have an adverse impact on Maple Media's and the Company's business because of defense and settlement costs, diversion of resources and other factors. The Company dissolved Stocks LLC on June 6, 2025. The initial accounting for Maple Media, LLC was incomplete. As a result, disclosures such as the fair value of consideration transferred, identifiable assets acquired, liabilities assumed, and the amount of goodwill recognized have not been finalized. The Company will update these disclosures in future filings when information becomes available.

On February 22, 2025, in accordance with the terms of the Sixth Amended and Restated Limited Liability Operating Agreement of the Company, as amended, the right of Hiro Capital SCSp I to designate a manager to the Board of Managers automatically terminated and, accordingly, Hiro Capital's designee, Ian Livingstone, ceased to be a member of the Board of Managers.

On March 5, 2025, the Company filed a Form C pursuant to Regulation CF under the Securities Act in connection with the offering of a minimum amount of $9.998 thousand and up to a maximum amount of $4,312.85 thousand of its Common Units at a purchase price of $105 per Common Unit (the "2025 CF Offering"). The 2025 CF Offering is being conducted through DealMaker Securities LLC (the "CF Intermediary"). The Company achieved its target offering amount of $9.998 thousand prior to the offering deadline of April 30, 2025. The minimum individual purchase amount was $525 (excluding investor processing fees) for the initial 35 calendar days of the 2025 CF Offering and is $1,050 (excluding investor processing fees) for the remainder of the 2025 CF Offering, and the maximum individual purchase amount is $4,312.85 thousand (including investor processing fees). On January 15, 2025, in anticipation of the 2025 CF Offering, the Company formed Skybound Holdings CF Investors SPV, LLC, a special purpose investment vehicle exempt from registration under the Investment Company Act pursuant to Rule 270.3a-9 promulgated under the Securities Act. Investments in the 2025 CF Offering are made through Skybound Holdings CF Investors SPV, LLC, as a co-issuer in the 2025 CF Offering. As compensation for the services provided by the CF Intermediary, the Company is required to pay to the CF Intermediary a fee consisting of an 8.5% cash commission based on the dollar amount of the Common Units sold in the 2025 CF Offering and paid upon disbursement of funds from escrow at the time of a closing. This fee is inclusive of all payment processing fees, transaction fees, electronic signature fees and AML search fees. There is also a $30 thousand setup fee and $12 thousand monthly fee for the use of the platform and marketing services payable to the CF Intermediary and its affiliates. The Company closed investments under the 2025 CF Offering totaling $672 thousand including investor processing fees.

On March 6, 2025, Skybound Games UK Limited entered into a settlement agreement with Ian Howe pursuant to which Mr. Howe's employment with Skybound Games UK Limited was terminated effective as of February 7, 2025. The Company's loan agreement (see Note 18) with Mr. Howe will remain in effect in accordance with its terms (as amended from time to time). Pursuant to the loan agreement, the Company loaned Mr. Howe the principal amount of $300 thousand in July 2021, which loan is payable by Mr. Howe on demand by the Company.

On March 11, 2025, the Company made an additional draw on its line of credit with East West Bank in the amount of $3,500 thousand, bringing the total drawn amount to $10,000 thousand.

On March 26, 2025, 5th Planet Games A/S finalized the internal merger between 5th Planet Games A/S and its wholly owned subsidiary, 5th Planet Games Development ApS. 5th Planet Games A/S will be the continuing company and 5th Planet Games Development ApS will be dissolved without liquidation by transferring its assets and liabilities as a whole to 5th Planet Games A/S. The purpose of the merger was to simplify the group structure and eliminate unnecessary administrative burdens and costs. As the merger is a group internal merger, the merger will have no effect on the value of 5th Planet Games A/S and no financial impact on the Company.

On April 16, 2025, the Company, through Bumbio LLC, acquired 100% of Nine Four Entertainment Inc, a corporation formed in Nevada. Nine Four Entertainment is a leading creator and influencer talent management and brand development company.

On April 18, 2025, the Company, through Bumbio LLC, sold approximately 3,646 thousand shares of Series A Preferred Stock in Mega Cat Studios Inc., a private video game development company, to Mega Cat Studios Inc., which shares represented approximately 25% of Mega Cat Studios Inc.'s issued and outstanding shares. The Company, through Bumbio LLC, continues to hold approximately 5% ownership interest in Mega Cat Studios Inc.

On June 12, 2025, Nine Four Entertainment Inc (an indirect wholly owned subsidiary of the Company) formed Nine Four Ventures LLC, a California limited liability company. Nine Four Ventures LLC will be an incubator to fund creator-led brands.

Between April 1, 2025, and June 30, 2025, the Company issued 56,071 option grants, including 1,643 option grants to each of David Alpert and Jon Goldman and 6,571 option grants to Gregory Sulak.

Effective July 31, 2025, the Company and the requisite Members adopted an Eighth Amendment (the "Eighth Amendment") to the Sixth Amended and Restated Limited Liability Operating Agreement of the Company, as amended, to, among other things, establish an unprotected series under Section 18-215(a) of the Delaware Limited Liability Company Act under the name Skybound Holdings LLC – Regulation A Series. All investors who purchased Common Units through the Company's Regulation A offering will have their ownership interests moved into this Regulation A Series. The Regulation A Series is governed by a separate Series Operating Agreement that supplements the Company's Operating Agreement. The foregoing description of the Eighth Amendment is qualified in its entirety by reference to the copy of the Eight Amendment (including the Series Operating Agreement) attached hereto as Exhibit 2.10 and incorporated herein by reference.

**ITEM 8. Exhibits**

---

| | |
|:---|:---|
| **Exhibit <br> number** | **Description** |
| 1.1 | [Engagement Agreement with OpenDeal Broker LLC\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315222034529/ex1-1.htm) |
| 2.1 | [Certificate of Amendment\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315222034529/ex2-1.htm) |
| 2.2 | [Sixth Amended and Restated Limited Liability Operating Agreement\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315222029929/ex2-1.htm) |
| 2.3 | [First Amendment to the Sixth Amended and Restated Limited Liability Operating Agreement\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315222029929/ex2-2.htm) |
| 2.4 | [Second Amendment to the Sixth Amended and Restated Limited Liability Operating Agreement\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315222029929/ex2-3.htm) |
| 2.5 | [Third Amendment to the Sixth Amended and Restated Limited Liability Operating Agreement\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315222029929/ex2-4.htm) |
| 2.6 | [Fourth Amendment to the Sixth Amended and Restated Limited Liability Operating Agreement\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315222034529/ex2-6.htm) |
| 2.7 | [Fifth Amendment to the Sixth Amended and Restated Limited Liability Operating Agreement\*\*\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315224014247/ex2-7.htm) |
| 2.8 | [Sixth Amendment to the Sixth Amended and Restated Limited Liability Operating Agreement\*\*\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315224014247/ex2-8.htm) |
| 2.9 | [Seventh Amendment to the Sixth Amended and Restated Limited Liability Operating Agreement\*\*\*\*\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315224023186/ex2-9.htm) |
| 2.10 | [Eighth Amendment to the Sixth Amended and Restated Limited Liability Operating Agreement](ex2-10.htm) |
| 4.1 | [Subscription Agreement\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315222034529/ex4-1.htm) |
| 6.2 | [Investment Agreement between 5<sup>th</sup> Planet Games A/S and Skybound Game Studios, Inc.\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315222034529/ex6-2.htm) |
| 6.3 | [Master Agreement between East West Bank and Skybound Game Studios\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315222034529/ex6-3.htm) |
| 6.4 | [Amended and Restated Master License Agreement between Skybound, LLC and Robert Kirkman, LLC\*\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315223011894/ex6-4.htm) |
| 6.5 | [Amended Schedule A to the Amended and Restated Master License Agreement between Skybound, LLC and Robert Kirkman, LLC\*\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315223011894/ex6-5.htm) |
| 6.6 | [Loan Agreement dated November 15, 2022 between Mr. Mango LLC and David Alpert\*\*\*\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315224017090/ex6-6.htm) |
| 6.7 | [Loan Agreement dated November 15, 2022 between Mr. Mango LLC and Jon Goldman\*\*\*\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315224017090/ex6-7.htm) |
| 6.8 | [Loan Agreement dated November 15, 2022 between Mr. Mango LLC and Robert Kirkman\*\*\*\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315224017090/ex6-8.htm) |
| 6.9 | [Loan Agreement dated August 31, 2023 between Skybound Holdings LLC and David Alpert\*\*\*\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315224017090/ex6-9.htm) |
| 6.10 | [Loan Agreement dated August 31, 2023 between Skybound Holdings LLC and Jon Goldman\*\*\*\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315224017090/ex6-10.htm) |
| 6.11 | [Loan Agreement dated August 31, 2023 between Skybound Holdings LLC and Robert Kirkman\*\*\*\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315224017090/ex6-11.htm) |
| 6.12 | [Loan Agreement dated August 31, 2023 between Skybound Holdings LLC and Daniel Murray\*\*\*\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315224017090/ex6-12.htm) |
| 6.13 | [Skybound Holdings LLC - Form of Redemption Agreement\*\*\*\*](https://www.sec.gov/Archives/edgar/data/1867925/000149315224017090/ex6-13.htm) |

---

\*Previously filed as an exhibit to the Skybound Holdings LLC Regulation A Offering Statement on Form 1-A filed December 6, 2022 (Commission File No. 024-11950, available at https://www.sec.gov/Archives/edgar/data/1867925/000149315222034529/0001493152-22-034529-index.htm).

\*\*Previously filed as an exhibit to the Skybound Holdings LLC Form 1-K filed April 11, 2023 (Commission File No. 24R-00809, available at https://www.sec.gov/Archives/edgar/data/1867925/000149315223011894/0001493152-23-011894-index.htm).

\*\*\*Previously filed as an exhibit to the Skybound Holdings LLC Form 1-U filed April 10, 2024 (Commission File No. 24R-00809, available at https://www.sec.gov/Archives/edgar/data/1867925/000149315224014247/0001493152-24-014247-index.htm).

\*\*\*Previously filed as an exhibit to the Skybound Holdings LLC Form 1-K filed April 30, 2024 (Commission File No. 24R-00809, available at https://www.sec.gov/Archives/edgar/data/1867925/000149315224017090/0001493152-24-017090-index.htm).

\*\*\*\*Previously filed as an exhibit to the Skybound Holdings LLC Form 1-U June 7, 2024 (Commission File No. 24R-00809, available at https://www.sec.gov/Archives/edgar/data/1867925/000149315224023186/0001493152-24-023186-index.htm).

SIGNATURES

Pursuant to the requirements of Regulation A, the issuer has duly caused this Form 1-K/A to be signed on its behalf by the undersigned, thereunto duly authorized, as of July 31, 2025.

---

| | |
|:---|:---|
| **SKYBOUND HOLDINGS LLC** | **SKYBOUND HOLDINGS LLC** |
| By: | */s/ David Alpert* |
| Name: | David Alpert |
| Title: | CEO (Principal Executive Officer) |

---

Pursuant to the requirements of Regulation A, this Form 1-K/A has been signed as of July 31, 2025, by the following persons on behalf of the issuer and in the capacities indicated.

---

| | |
|:---|:---|
| */s/ David Alpert* | */s/ David Alpert* |
| Name: | David Alpert |
| Title: | CEO, Secretary, and Manager |
| */s/ Jon Goldman* | */s/ Jon Goldman* |
| Name: | Jon Goldman |
| Title: | Co-Chairman and Manager |
| */s/ Robert Kirkman* | */s/ Robert Kirkman* |
| Name: | Robert Kirkman |
| Title: | Co-Chairman, Chief Creative Officer, and Manager |
| */s/ Carmen Carpenter* | */s/ Carmen Carpenter* |
| Name: | Carmen Carpenter |
| Title: | Manager |

---

## Add

**Exhibit 2.10**

**EIGHTH AMENDMENT TO THE**

**SIXTH AMENDED AND RESTATED OPERATING AGREEMENT**

THIS EIGHTH AMENDMENT to the Sixth Amended and Restated Limited Liability Company Operating Agreement, as amended (this "<u>Eighth Amendment</u>"), is made effective as of July 31, 2025 (the "<u>Eighth Amendment Effective Date</u>"), by and between Skybound Holdings LLC (formerly known as Mr. Mango LLC), a Delaware limited liability company (the "<u>Company</u>"), and the Members (as defined in the Agreement). All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Agreement.

**RECITALS**

**WHEREAS**, the Company and the Members entered into that certain Sixth Amended and Restated Limited Liability Company Operating Agreement, dated as of June 4, 2021, as amended by that certain First Amendment to the Sixth Amended and Restated Operating Agreement, dated as of October 6, 2021, that certain Second Amendment to the Sixth Amended and Restated Operating Agreement, dated February 22, 2022, that certain Third Amendment to the Sixth Amended and Restated Operating Agreement, dated October 24, 2022, that certain Fourth Amendment to the Sixth Amended and Restated Operating Agreement, dated December 1, 2022, that certain Fifth Amendment to the Sixth Amended and Restated Operating Agreement, dated December 18, 2023, that certain Sixth Amendment to the Sixth Amended and Restated Operating Agreement, dated April 4, 2024, and that certain Seventh Amendment to the Sixth Amended and Restated Operating Agreement, dated June 4, 2024 attached hereto as <u>Exhibit A</u> (as so amended, the "<u>Agreement</u>");

**WHEREAS**, pursuant to Section 10.1 of the Agreement, subject to Section 5.2.4.1, Section 5.2.5, and Section 5.3 of the Agreement, the Agreement may be amended with the affirmative vote or the written consent of (i) the holders of a majority of the then-outstanding Common Interests, and (ii) the holders of a majority of the then-outstanding Preferred Interests (voting together as a single class on an as-if-converted basis) (the holders referred to in the foregoing clause (i) and (ii), collectively, the "<u>Requisite Holders</u>"); and

**WHEREAS**, the Requisite Holders desire to amend the Agreement as set forth herein.

**NOW THEREFORE,** in consideration of the premises and the mutual covenants contained in the Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Article 1 of the Agreement is hereby amended to add the following new definition as Section 1.64 and the existing Sections 1.64 – 1.66 are accordingly renumbered to Sections 1.65 – 1.67:

"1.64. "**Series Interest**" means, with respect to a Series, the limited liability company interest of a Series Member at any particular time, including the right of such Series Member to any and all benefits to which such Series Member may be entitled as provided in this Agreement, the relevant Series Operating Agreement and in the Act, together with the obligations of such Series Member to comply with all the terms and provisions of this Agreement, the relevant Series Operating Agreement and the Act."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Article 1 of the Agreement is hereby amended to add the following defined terms to "Other Defined Terms" in alphabetical order:

---

| | |
|:---|:---|
| **Other Defined Terms** | **Section** |
| Series<br>| 11.1<br>|
| Series Manager | 11.1 |
| Series Member | 11.1 |
| Series Operating Agreement | 11.1 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Section 5.1 of the Agreement is hereby deleted in its entirety and replaced with the following:

"5.1 **<u>Limited Liability</u>**. Except as required under the Act, no Member shall be personally liable for any debt, obligation or liability of the Company or any Series, whether that liability or obligation arises in contract, tort or otherwise."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Section 5.9.1 of the Agreement is hereby deleted in its entirety and replaced with the following:

"5.9.1 **<u>Indemnification of Members and Managers</u>**. The Company, its receiver or its trustee, shall indemnify and hold harmless the Members, the Managers, the Series Managers, their respective Affiliates and their respective officers, directors, managers, members, partners, Affiliates, employees, agents, shareholders, heirs, successors and assigns (hereinafter collectively referred to, for purposes of this <u>Section 5.9.1</u>, as the "<u>Indemnitees</u>"), jointly and severally, from and against any and all losses, claims, demands, costs, damages, liabilities, joint and several, expenses of any nature (including reasonable attorneys' fees and disbursements), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which the Indemnitee was involved or may be involved, or threatened to be involved, as a party or otherwise, arising out of the business or operations of the Company, excluding liabilities to any Member, regardless of whether the Indemnitee continues to be a Member, a Manager, a Series Manager, an Affiliate, or an officer, director, employee, agent of the Company or Principal of any Skybound Member at the time any such liability or expense is paid or incurred, to the fullest extent permitted by the Act and all other applicable laws."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. A new Article 11 is hereby added to the Agreement as follows:

"**ARTICLE 11**

**<u>SERIES</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1 **<u>Establishment of Series</u>**. Pursuant to Section 18-215 of the Act and this Agreement, the Company is authorized and empowered to establish one or more series of limited liability company interests, with separate and distinct rights, powers, duties, obligations, businesses and objectives (each, a "<u>Series</u>") and appoint a manager for each Series (each, a "<u>Series Manager</u>"). The number of Series admitted, and the rights and obligations of the Members of any Series (each, a "<u>Series Member</u>"), shall be governed by this Agreement and the limited liability company operating agreement of that Series and any associated schedules thereto (collectively, the "<u>Series Operating Agreement</u>"), each of which may be in the form of the agreement attached hereto as <u>Exhibit D</u> or such other form as the Series Manager may determine, provided it is consistent with the terms of this Agreement. A Person may be admitted to the Company as a Member associated with a Series by the issuance of Series Interests for such consideration as the Series Manager associated with such Series shall determine. In the event of any inconsistency between this Agreement and the Series Operating Agreement, the Series Operating Agreement shall control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2 **<u>Applicability of Series Article</u>**. This Article 11 governs all Series of the Company established pursuant to Section 18-215(a) of the Act, whether or not such Series complies with Section 18-215(b) or is a registered series under Section 18-218. Certain provisions herein may apply only to Series that maintain separate assets and liabilities under the Act, in whole or in part. To the extent a Series is not a protected series, such provisions shall not apply and the Series shall be governed primarily by its Series Operating Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3 **<u>Membership in Multiple Series; Admission Standards</u>**. A Series Member may be a member of one or more Series. Any Member holding more than one Series Interest shall have separate rights under this Agreement with respect to each Series Interest held by such Member. No Person shall be accepted as a Series Member associated with a particular Series unless the Series Manager of such Series, after a reasonable review of the proposed new Series Member, reasonably believes that such new Series Member of such Series has the ability, experience and financial resources appropriate for participation as a Series Member, and that admission of the new Series Member would not violate any law applicable to the Company or any of its Series and would not invalidate any contract or regulatory approval which affects the Company or any of its Series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4 **<u>Recordkeeping and Asset Allocation by Series Type</u>**. The Company shall maintain separate and distinct records for each Series that is intended to qualify as a protected series under Section 18-215(b) of the Act, and shall separately hold and account for the assets of each such Series. For Series that are not protected series, the Company may maintain internal administrative tracking of such Series for recordkeeping and investor communications, but such Series shall not be treated as having separate assets or liabilities under the Act. Such administrative tracking may include the assignment of rights or obligations through schedules or contractual designations, but shall not be treated as having separate assets or liabilities under the Act, and shall not benefit from any liability shield provided by Section 18-215(b) of the Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.5 **<u>Maintenance of Separateness</u>**. Each Series Manager shall use commercially reasonable efforts to maintain the limited liability company existence of the Company and each Series therein separate and apart from one another and from the existence of each Series Member, any Affiliate of each Series Member and any Affiliate of the Series Manager's Series, including maintaining the Series' books and records on a current basis separate from that of any Affiliate of the Series or any other Person. In furtherance, and not in limitation, of the foregoing, each Series shall (a) maintain or cause to be maintained by an agent under the Series' control physical possession of all its books and records, (b) account for and manage all of its liabilities separately from those of any other Person, including payment by it of any taxes or other governmental charges levied against the Series and (c) identify or cause to be identified separately all its assets from those of any other Person. The obligations in this Section 11.5 shall apply only to Series intended to qualify as a protected series or registered series under the Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.6. **<u>Member Cooperation and Legal Compliance</u>**. Each Series Member shall promptly execute and deliver such documents and perform such acts consistent with the terms of this Agreement and the relevant Series Operating Agreement as may be reasonably necessary to comply with the requirements of law for the formation, qualification and continuation of existence of a series of a limited liability company under the laws of the State of Delaware and any other jurisdiction in which the Company or any Series conducts business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.7 **<u>Title to Series Assets</u>**. To the extent a Series is structured to qualify as a protected series under Section 18-215(b) of the Act or a registered series under Section 18-218 of the Act, all assets of such Series shall be deemed to be owned exclusively by the Series as an entity, and no Series Member shall have any direct ownership interest in such assets. With respect to any Series that is not a protected series or a registered series, the Company may internally allocate or track assets for administrative purposes, but legal title shall remain with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.8 **<u>Series Members; Series Interests</u>**. The name, address and Series Interest of each Series Member shall be maintained by the Company's transfer agent, Colonial Stock Transfer Company, Inc. Except as otherwise set forth in the relevant Series Operating Agreement, the rights, obligations and restrictions applicable to the Series Members and the Series Interests shall conform to those of the Members holding Common Interests (excluding the Skybound Members) and the Common Interests, respectively, as set forth in this Agreement, except as otherwise expressly provided in the relevant Series Operating Agreement or schedule of Series rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.9 **<u>Management of the Series</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.9.1 The business and affairs of each Series shall be controlled, directed and managed by a Series Manager. Except when the approval of the Series Members is expressly required by the Act, this Agreement or the relevant Series Operating Agreement, the Series Manager shall have the full, exclusive and complete authority, power and discretion to operate, manage and control the affairs, business and property of the relevant Series, to make all decisions related to that Series' affairs, business and property and to perform any and all other acts or activities customary or incident to the management of that Series' affairs, business and property, including, without limitation, (a) signing agreements and otherwise binding the Series in its own name, (b) effecting distributions to Series Members, and (c) taking any other action that may be necessary or appropriate for the continuation of the relevant Series' valid existence and authority to do business as a Series of a limited liability company under the laws of the State of Delaware and of each other jurisdiction in which such authority to do business is, in the judgment of the Series Manager, necessary or advisable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.9.2 Each Series Manager, as applicable, may agree to (a) delegate any matters or actions that it is authorized to perform under this Agreement or the relevant Series Operating Agreement to employees or agents of the Series Manager or third parties and (b) appoint any Persons, with such titles as the Series Manager may select, to act on behalf of the Series, with such power and authority as the Series Manager may delegate from time to time to such Persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.9.3 The Series Manager or its representative shall be the signatory on any bank accounts of the relevant Series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.9.4 Third parties dealing with a Series may rely conclusively upon any certificate of the relevant Series Manager, as applicable, to the effect that it is acting on behalf of the Series. The signature of the relevant Series Manager shall be sufficient to bind the Series, as applicable in every manner to any agreement or on any document, without any requirement for further corporate (or other similar) action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.9.5 Except as otherwise set forth in the relevant Series Operating Agreement, the rights, duties and other obligations of each Series Manager shall conform to those of the Managers as set forth in this Agreement, including but not limited to <u>Section 5.4</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.10 **<u>Termination of a Series</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.10.1 A Series shall be terminated upon the occurrence of any of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.10.1.1 upon the dissolution of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.10.1.2 at the election of the Series Manager associated with such Series, and upon forty-five (45) calendar days' prior written notice to all Series Members; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.10.1.3 upon the entry of a decree of judicial termination of the Series under Section 18-215(b)(11) of the Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.10.2 The termination and winding up of a Series shall not cause a dissolution of the Company or the termination of any other Series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.10.3 The Series Manager may require that a formal legal termination of a Series be delayed for up to twenty-four (24) months. During such twenty-four (24) months, the capital of the Series Members of that Series may remain in that Series for such time if necessary, in the sole discretion of the Series Manager, in order to maintain adequate capitalization of the Company, to satisfy capital or net worth covenants in agreements between the Company and third parties, or as otherwise reasonably determined by the Series Manager. A Series need not actively engage in business during any period for which it is required to remain in existence by the Series Manager pursuant to this <u>Section 11.10.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.11 **<u>Liquidation of a Series</u>**. Except as otherwise set forth in the relevant Series Operating Agreement, subject to <u>Section 11.10.3</u>, upon termination of a Series, the affairs of the Series shall be wound up and distributions of liquidation proceeds shall be made in accordance with Article 8 of this Agreement."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Except as expressly set forth in this Eighth Amendment, the Agreement remains in full force and effect with no further modifications. In the event of any conflict between the terms of the Agreement and the terms of this Eighth Amendment, the terms of this Eighth Amendment shall control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. This Eighth Amendment shall form a part of the Agreement for all purposes, and each party to the Agreement shall be bound hereby. From and after the execution of this Eighth Amendment by the Requisite Holders, any reference to the Agreement shall be deemed a reference to the Agreement and this Eighth Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. This Eighth Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. Delivery by a party hereto of an electronic transmission of this Eighth Amendment executed by such party shall constitute delivery by such party of an original hereof.

[*Signature Page Follows*]

IN WITNESS WHEREOF, each of the Company and the undersigned has caused this Eighth Amendment to be executed on the date first written above by its duly authorized representative.

---

| | |
|:---|:---|
| **SKYBOUND HOLDINGS LLC** | **SKYBOUND HOLDINGS LLC** |
| By: | */s/ David Alpert* |
| Name: | David Alpert |
| Title: | Chief Executive Officer |

---

*[Signature Page to Eighth Amendment to the Sixth A&R Operating Agreement]*

---

| | |
|:---|:---|
| **KNOLLWOOD INVESTMENT FUND LLC** | **KNOLLWOOD INVESTMENT FUND LLC** |
| By: | */s/ Kevin D. Irwin, Jr.* |
| Name: | Kevin D. Irwin, Jr. |
| Title: | CEO of Managing Member |

---

*[Signature Page to Eighth Amendment to the Sixth A&R Operating Agreement]*

---

| | |
|:---|:---|
| **HIRO CAPITAL SCSP I** | **HIRO CAPITAL SCSP I** |
| By: | */s/ Luke Alvarez* |
| Name: | Luke Alvarez |
| Title: | Partner |

---

*[Signature Page to Eighth Amendment to the Sixth A&R Operating Agreement]*

---

| | |
|:---|:---|
| **GHOST ANGEL LLC** | **GHOST ANGEL LLC** |
| By: | */s/ Adam Draper* |
| Name: | Adam Draper |
| Title: | Managing Member |

---

---

| | |
|:---|:---|
| **BOOST VC FUND 4, LP** | **BOOST VC FUND 4, LP** |
| By: | Boost VC Fund 4 Partners LLC |
| By: | */s/ Adam Draper* |
| Name: | Adam Draper |
| Title: | Managing Director |

---

*[Signature Page to Eighth Amendment to the Sixth A&R Operating Agreement]*

---

| | |
|:---|:---|
| **THE KIRKMAN FAMILY 2014 TRUST UNDER TRUST AGREEMENT DATED OCTOBER 27, 2014** | **THE KIRKMAN FAMILY 2014 TRUST UNDER TRUST AGREEMENT DATED OCTOBER 27, 2014** |
| By: | */s/ Robert Kirkman* |
| Name: | Robert Kirkman |
| Title: | Trustee |

---

---

| | |
|:---|:---|
| **THE PEANUT & POOKIE FAMILY TRUST UNDER TRUST AGREEMENT DATED MAY 30, 2012** | **THE PEANUT & POOKIE FAMILY TRUST UNDER TRUST AGREEMENT DATED MAY 30, 2012** |
| By: | */s/ David Alpert* |
| Name: | David Alpert |
| Title: | Trustee |

---

---

| | |
|:---|:---|
| **THE GOLDMAN/GROSS FAMILY TRUST DATED NOVEMBER 8, 2022** | **THE GOLDMAN/GROSS FAMILY TRUST DATED NOVEMBER 8, 2022** |
| By: | */s/ Jon Goldman* |
| Name: | Jon Goldman |
| Title: | Trustee |

---

*[Signature Page to Eighth Amendment to the Sixth A&R Operating Agreement]*

**<u>EXHIBIT A</u>**

**Sixth Amended and Restated Operating Agreement, as amended**

(see attached)

**<u>EXHIBIT D</u>**

**Form of Series Operating Agreement**

(see attached)

SERIES OPERATING AGREEMENT

OF

SKYBOUND HOLDINGS LLC – REGULATION A SERIES

THIS SERIES OPERATING AGREEMENT, dated as of July 31, 2025 (this "<u>Series Operating Agreement</u>"), is entered into by the Series Manager (as defined below). Capitalized terms used herein and not otherwise defined are used as defined in the Master Operating Agreement (as defined below)*.*

WHEREAS, Skybound Holdings LLC, a Delaware series limited liability company (the "<u>Company</u>"), has established this Regulation A Series (as defined below) pursuant to Section 18-215 of the Delaware Limited Liability Company Act (the "<u>Act</u>") by filing a Certificate of Amendment to the Certificate of Formation of the Company with the office of the Secretary of State of the State of Delaware; and

WHEREAS, it is intended by the Company, the Series Manager and the Series Members (as defined below) to create a separate Series in accordance with Section 18-215 of the Act.

NOW THEREFORE, in consideration of the mutual promises and obligations contained herein, the parties, intending to be legally bound, hereby agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. New Series.** In accordance with Section 11.1 of the Sixth Amended and Restated Limited Liability Company Operating Agreement of the Company, dated as of June 4, 2021 (as the same has been and may be amended from time to time, the "<u>Master Operating Agreement</u>"), this Regulation A Series is hereby created and shall be a "<u>Series</u>" for purposes of the Master Operating Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. Agreement to be Bound.** Each of the investors (collectively, the "<u>Series Members</u>") who acquired Common Interests pursuant to the offering conducted under Regulation A under the Securities Act that closed on June 10, 2023 (the "<u>Regulation A Offering</u>") are bound by the terms and provisions of the Master Operating Agreement and this Series Operating Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4. Manager.** The Manager of this Regulation A Series shall be Skybound Holdings LLC, who is the "<u>Series Manager</u>" for this Regulation A Series, as that term is defined in the Master Operating Agreement. The Series Manager may, at any time and in its sole discretion, appoint one or more additional Series Managers of this Regulation A Series. If the Series Manager is dissolved or otherwise removed without appointing any additional Series Managers, the replacement Series Manager shall be replaced in the sole discretion of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5. Management.** The Series Manager will expressly have such powers as granted in this Series Operating Agreement, Section 11.9 of the Master Operating Agreement and Section 18-215 of the Act. The Series Manager will have the power to manage the business and affairs of this Regulation A Series, to make all decisions with respect to the business and affairs of this Regulation A Series and to perform any and all other acts that are customary or incidental to the management of the business and affairs of this Regulation A Series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6. Officers.** The Series Manager may, at any time and in its sole discretion, appoint officers to aid in the management of this Regulation A Series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7. Purpose.** The separate purpose of this Regulation A Series shall be to hold and administer the interests of the Series Members, and to engage in all related business as necessary, incidental or convenient to carry on the business of this Regulation A Series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8. Distributions**. Distributions shall be made as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. First, the Regulation A Series shall use available assets to pay outstanding debts and obligations, if any, of the Regulation A Series; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Then, the Regulation A Series shall make distributions, at such times and intervals, in accordance with Article 4 of the Master Operating Agreement in the same manner as distributions are made to holders of Common Interests in the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9. Liquidation.** The Regulation A Series shall wind up and liquidate pursuant to Sections 11.10 and 11.11 of the Master Operating Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10. Headings.** The headings in this Series Operating Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent, or intent of this Series Operating Agreement or any provision hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11. Severability.** The invalidity or unenforceability of any particular provision of this Series Operating Agreement shall not affect the other provisions hereof, and this Series Operating Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12. Integration.** This Series Operating Agreement and the Master Operating Agreement, including all schedules and exhibits thereof, constitute the entire agreement among the parties hereto pertaining to the subject matter hereof and supersede all prior agreements and understandings pertaining thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13. Indemnification.** The Series Manager and the Series Members shall be subject to the indemnification provisions set forth in Section 5.9 of the Master Operating Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**14. Counterparts.** This Series Operating Agreement may be executed in any number of counterparts with the same effect as if all parties had signed the same document. All counterparts shall be construed together and shall constitute one instrument.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**15. Governing Law.** This Series Operating Agreement and the rights of the parties hereunder shall be interpreted in accordance with the laws of the State of Delaware, and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**16. Schedule of Series Rights.** The rights, preferences, and obligations of the Series Members specific to this Regulation A Series, including with respect to transferability and information rights, are set forth in <u>Schedule A</u> attached hereto and incorporated by reference herein.

[*Signature Page Follows*]

IN WITNESS WHEREOF, the Series Manager has executed this Series Operating Agreement as of the date first above written.

---

| | |
|:---|:---|
| **Skybound Holdings LLC,** | **Skybound Holdings LLC,** |
| **AS SERIES MANAGER** | **AS SERIES MANAGER** |
| By: | */s/ David Alpert* |
| Name: | David Alpert |
| Title: | Chief Executive Officer |

---

*[Signature Page to Regulation A Series Operating Agreement]*

**<u>SCHEDULE A</u>**

**REGULATION A SERIES RIGHTS AND PREFERENCES**

This Schedule sets forth the rights, preferences, and obligations of the Series Members associated with the Regulation A Series of Skybound Holdings LLC, a Delaware series limited liability company (the "<u>Company</u>"). Capitalized terms used herein and not otherwise defined are used as defined in (i) the Sixth Amended and Restated Limited Liability Company Operating Agreement of the Company, dated as of June 4, 2021 (as the same has been and may be amended from time to time, the "<u>Master Operating Agreement</u>"), or (ii) the Series Operating Agreement of Skybound Holdings LLC – Regulation A Series, dated as of July 31, 2025 (as the same may be amended from time to time, the "<u>Series Operating Agreement</u>").

&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Series Name:** Skybound Holdings LLC – Regulation
 A Series (the " <u>Regulation A Series</u> ").

**2.** **Economic Treatment:** The Company shall internally track, or shall cause to be tracked, the interests
 of the Series Members for administrative purposes. Such tracking does not constitute or imply
 legal segregation of capital accounts, assets, or liabilities, and the interests of Series
 Members shall be subject to the same economic terms as the class of Common Interests of the
 Company, except as expressly provided herein.

**3.** **Transferability:** Notwithstanding anything to the contrary set forth in Article 6 of the Master Operating Agreement,
 Series Interests in the Regulation A Series may be Transferred, in whole or in part (provided
 that fractional Series Interests shall not be Transferred), *provided* that (i) any
 such Transfer complies with applicable federal and state securities laws, (ii) the transferee
 of such Series Interests agrees, in a writing reasonably acceptable to the Series Manager,
 to be bound by the Master Operating Agreement, the Series Operating Agreement, and this Schedule,
 (iii) the transferor provides written notice of the Transfer to the Series Manager, including
 the name and contact information of the transferee and a written certification reasonably
 acceptable to the Series Manager that the Transfer complies with applicable federal and state
 securities laws, and (iv) the transferor and transferee comply with any and all requirements
 of the Company's transfer agent, Colonial Stock Transfer Company, Inc., necessary in
 order to effect such Transfer on the books and records of the Company. Any attempted Transfer
 consummated in violation of this Section 3 or applicable federal and state securities laws
 shall be void *ab initio*.

&nbsp;&nbsp;&nbsp;&nbsp;**4.** **Information Rights:** So long as OpenDeal Broker LLC dba Capital R (or any successor or replacement
 platform that administers investor communications on behalf of the Company in connection
 with the Regulation A Offering, the " <u>Platform</u> "), continues to distribute
 periodic updates or filings to investors in connection with the Regulation A Offering, including
 copies of the Company's Form 1-K and Form 1-SA filings with the U.S. Securities and
 Exchange Commission, the Company shall cause the Series Members of the Regulation A Series
 to receive the same materials, in the same manner and on the same schedule as provided by
 the Platform. The Company may but is not obligated to provide such materials independently
 if the Platform ceases to distribute them.

&nbsp;&nbsp;&nbsp;&nbsp;**5.** **Series Status:** The Regulation A Series is an unprotected series established under Section 18-215(a)
 of the Act. It is intended solely for administrative and accounting purposes. No separate
 assets or liabilities are legally associated with the Regulation A Series, and no statutory
 liability shield is available under Section 18-215(b) of the Act.

&nbsp;&nbsp;&nbsp;&nbsp;**6.** **No Other Rights:** Except as expressly provided in this Schedule or the Series Operating Agreement,
 the Series Members of the Regulation A Series will have no additional rights, preferences,
 or privileges distinct from other Members holding Common Interests as set forth in Section
 11.8 of the Master Operating Agreement.

## Form 1-K Filing Summary

### Filer Information

**Issuer CIK:** 0001867925

**Issuer CCC:** XXXXXXXX

**Is filer a shell company?:** No

**Is this filing by a successor company?:** No

### Submission Contact Information

**Is this a LIVE or TEST Filing?:** LIVE

**Period:** 12-31-2024

### Item 1: Issuer Information (Tab 1 Notification)

**Type of Report:** Annual Report

**Fiscal Year End:** 12-31-2024

**Exact Name of Issuer:** Skybound Holdings LLC

**CIK:** 0001867925

**Jurisdiction of Incorporation:** DE

**IRS Number:** 81-4711413

**Address:** 9570 WEST PICO BOULEVARD, LOS ANGELES, CA 90035

**Issuer Phone Number:** 310-746-1400

**Title of each class of securities issued pursuant to Regulation A:** Common Interests

### Item 2: Ongoing Reporting Requirements

**Is the issuer relying on the relief provided by Rule 257(d) for this filing?** Yes