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What changed in ALLIANCE ENTERTAINMENT HOLDING CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of ALLIANCE ENTERTAINMENT HOLDING CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+323 added−314 removedSource: 10-K (2025-09-10) vs 10-K (2024-09-20)

Top changes in ALLIANCE ENTERTAINMENT HOLDING CORP's 2025 10-K

323 paragraphs added · 314 removed · 179 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

57 edited+26 added−27 removed58 unchanged
Biggest changeAs a leading global wholesaler, direct-to-consumer ( “ DTC ” ) distributor, and e-commerce provider, Alliance operates as the vital link between renowned suppliers of music labels, home video studios, video game publishers, and collectables of entertainment content, such as Universal Pictures, Warner Brothers Home Video, Walt Disney Studios, Sony Pictures, Lionsgate, Paramount, Universal Music Group, Sony Music, Warner Music Group, Microsoft, Nintendo, Take Two, Electronic Arts, Ubisoft, Square Enix, and others.
Biggest changeHome Video, Walt Disney Studios, Sony Pictures, Lionsgate, Paramount Pictures, Universal Music Group, Sony Music, Warner Music Group, Microsoft, Nintendo, Take-Two, Electronic Arts, Ubisoft, and Square Enix with leading retailers such as Walmart, Amazon, Best Buy, Barnes & Noble, Wayfair, Costco, Dell, Verizon, Kohl’s, Target, and Shopify.
Backlog is usually not material to its business because orders are generally filled shortly after acceptance. Alliance has specific agreements in place with certain suppliers and resellers in which it provides supply chain management services such as order management, technical support, call center services, forward and reverse logistics management, and procurement management services.
Backlog is usually not material to its business because orders are generally filled shortly after acceptance. 7 Alliance has specific agreements in place with certain suppliers and resellers in which it provides supply chain management services such as order management, technical support, call center services, forward and reverse logistics management, and procurement management services.
The changing trends in consumer preferences with respect to entertainment and barriers to entry as well as the emergence of new technologies and different mediums for viewing content, such as the growing number of streaming platform options, continually creates new opportunities for existing competitors and start-ups to develop products and offerings that compete with our entertainment and e-commerce offerings.
The changing trends in consumer preferences with respect to entertainment and collectibles and barriers to entry as well as the emergence of new technologies and different mediums for viewing content, such as the growing number of streaming platform options, continually creates new opportunities for existing competitors and start-ups to develop products and offerings that compete with our entertainment and e-commerce offerings.
Most of these brands were purchased from Infinity Resources in 2010. Mill Creek Entertainment — is the home entertainment industry’s leading independent studio for Blu-ray, DVD, and digital distribution.
Most of these brands were purchased from Infinity Resources in 2010. 2 Mill Creek Entertainment — is the home entertainment industry’s leading independent studio for Blu-ray, DVD, and digital distribution.
As the market evolves, distributors that can innovate and meet the demands of niche audiences will likely thrive. 8 Intellectual Property Alliance’s intellectual property is an important component of its business. The Company relies on a combination of domain names, trademarks, copyright, know-how and trade secrets, as well as contractual provisions and restrictions, to protect its intellectual property.
As the market evolves, distributors that can innovate and meet the demands of niche audiences will likely thrive. 9 Intellectual Property Alliance’s intellectual property is an important component of its business. The Company relies on a combination of domain names, trademarks, copyright, know-how and trade secrets, as well as contractual provisions and restrictions, to protect its intellectual property.
With over 30 years of operations and experience, Alliance management has extensive knowledge and is rolling over all their equity in the Business Combination in preparation to lead the Company towards future growth. ● Significant barriers to entry and market leadership. Alliance is a leader in fulfillment and e-commerce distribution with over 325,000 SKUs in stock.
With over 30 years of operations and experience, Alliance management has extensive knowledge and is rolling over all their equity in the Business Combination in preparation to lead the Company towards future growth. ● Significant barriers to entry and market leadership. Alliance is a leader in fulfillment and e-commerce distribution with over 340,000 SKUs in stock.
In addition, Alliance creates and utilizes specialized channel marketing communities to deliver focused resources and business building support to solution providers. 7 For its Direct-to-Consumer division, the Company deploys performance marketing strategies through digital and offline channels to drive additional traffic and transactions from high-intent prospective customers.
In addition, Alliance creates and utilizes specialized channel marketing communities to deliver focused resources and business building support to solution providers. 8 For its Direct-to-Consumer division, the Company deploys performance marketing strategies through digital and offline channels to drive additional traffic and transactions from high-intent prospective customers.
As of June 30, 2024, Alliance has no active patents or patent applications, but intends to pursue patent protection to the extent it believes it would be beneficial and cost effective. As of June 30, 2024, the Company owned 22 U.S. registered or pending trademarks and one registered or pending trademark in another jurisdiction.
As of June 30, 2025, Alliance has no active patents or patent applications, but intends to pursue patent protection to the extent it believes it would be beneficial and cost effective. As of June 30, 2025, the Company owned 22 U.S. registered or pending trademarks and one registered or pending trademark in another jurisdiction.
Suppliers Alliance distributes and markets over 400,000 products worldwide from more than 600 of the industry’s premier physical media entertainment products suppliers. The Company maintains approximately 325,000 SKUs of unique items in its inventory.
Suppliers Alliance distributes and markets over 400,000 products worldwide from more than 600 of the industry’s premier physical media entertainment products suppliers. The Company maintains approximately 340,000 SKUs of unique items in its inventory.
Alliance’s program resulted in an annualized turnover rate of about 14% for the fiscal year ended June 30, 2024. Compensation Practice & Pay Equality. As Alliance evolves and expands operations, Human Resources, in partnership with the leadership team, will continue to evaluate the existing workforce to ensure that best practices are maintained across the entire team without risk of inequality.
Alliance’s program resulted in an annualized turnover rate of about 11.4% for the fiscal year ended June 30, 2025. Compensation Practice & Pay Equality. As Alliance evolves and expands operations, Human Resources, in partnership with the leadership team, will continue to evaluate the existing workforce to ensure that best practices are maintained across the entire team without risk of inequality.
None of Alliance’s employees are subject to a collective bargaining agreement and Alliance believes it has a good relationship with its employees and staffing agencies. Employees & Demographics. With respect to global demographics on June 30, 2024, approximately 50% of the Company’s payroll employees are female and 50% are male. Talent & Turnover.
None of Alliance’s employees are subject to a collective bargaining agreement and Alliance believes it has a good relationship with its employees and staffing agencies. Employees & Demographics. With respect to global demographics on June 30, 2025, approximately 49.5% of the Company’s payroll employees are female and 50.5% are male. Talent & Turnover.
We will continue to be classified as a smaller reporting company until the last day of the fiscal 10
We will continue to be classified as a smaller reporting company until the last day of the fiscal year.
For the year ended June 30, 2023, DVD, Blu-Ray and UltraHD represented approximately 16% of Alliance revenues on a consolidated basis. ● Compact Discs: CDs for the fiscal year ended June 30, 2024, represent 12% of Alliance’s consolidated revenue.
For the year ended June 30, 2024, DVD, Blu-Ray and UltraHD represented approximately 19% of Alliance revenues on a consolidated basis. ● Compact Discs: CDs for the fiscal year ended June 30, 2025, represent approximately 12% of Alliance’s consolidated revenue.
Leading products distributed are: Nintendo, Microsoft, Arcade1Up, and third party video game publishers. For the year ended June 30, 2023, gaming represented approximately 34% of Alliance revenues on a consolidated basis. ● Vinyl Records: For the fiscal year ended June 30, 2024, vinyl represented 30% of all Company revenues on a consolidated basis.
Leading products distributed are Nintendo, Microsoft, Arcade1Up, and third-party video game publishers. For the year ended June 30, 2024, gaming represented approximately 31% of Alliance revenues on a consolidated basis. ● Vinyl Records: For the fiscal year ended June 30, 2025, vinyl represented approximately 32% of all Company revenues on a consolidated basis.
Accordingly, Alliance’s trade secrets may otherwise become known or be independently discovered by competitors. Human Capital Resources As of June 30, 2024, Alliance had approximately 657 employees on its payroll and approximately 226 workers hired through staffing agencies throughout the U.S. and internationally.
Accordingly, Alliance’s trade secrets may otherwise become known or be independently discovered by competitors. Human Capital Resources As of June 30, 2025, Alliance had approximately 697 employees on its payroll and approximately 168 workers hired through staffing agencies throughout the U.S. and internationally.
These agreements generally may be terminated by either party without cause following reasonable notice. None of the Company’s customer contracts exceed a one-year term, with most contracts having auto-renewal clauses. For the year ended June 30, 2024, Alliance’s top five customers represented approximately 47% of its consolidated revenue. Alliance’s top customer represented 18% of its consolidated net sales.
These agreements generally may be terminated by either party without cause following reasonable notice. None of the Company’s customer contracts exceed a one-year term, with most contracts having auto-renewal clauses. For the year ended June 30, 2025, Alliance’s top three customers represented approximately 40% of its consolidated revenue. Alliance’s top customer represented approximately 15% of its consolidated net sales.
For the year ended June 30, 2023, vinyl represented approximately 28% of Alliance revenues on a consolidated basis. ● Digital Video Discs (DVD)/Blu-Ray/UltraHD: Sales for the fiscal year ended June 30, 2024, represented 19% of Alliance’s consolidated revenue.
For the year ended June 30, 2024, vinyl represented approximately 30% of Alliance revenues on a consolidated basis. ● Digital Video Discs (DVD)/Blu-Ray/UltraHD: Sales for the fiscal year ended June 30, 2025, represented approximately 26% of Alliance’s consolidated revenue.
As of June 30, 2023, Alliance had approximately 761 employees on its payroll and approximately 266 workers hired through staffing agencies throughout the U.S. and internationally. Staffing agencies are used to flex labor capacity to ensure the labor supply and demand are in balance.
As of June 30, 2024, Alliance had approximately 657 employees on its payroll and approximately 226 workers hired through staffing agencies throughout the U.S. and internationally. Staffing agencies are used to flex labor capacity to ensure the labor supply and demand are in balance.
By comparison, for the fiscal year ended June 30, 2023, the top five customers generated approximately 50% of consolidated revenue with one customer representing almost 23%. Our Business is Affected by Seasonality Alliance experiences some seasonal fluctuation in demand in our business due to changes in consumer behavior and schedules of new releases.
By comparison, for the fiscal year ended June 30, 2024, the top three customers generated approximately 39% of consolidated revenue with one customer representing approximately 18%. Our Business is Affected by Seasonality Alliance experiences some seasonal fluctuation in demand in our business due to changes in consumer behavior and schedules of new releases.
For the year ended June 30, 2023, CDs represented approximately 11% of Alliance revenues on a consolidated basis. ● Collectables and Consumer Products: Sales in Collectables and Consumer Products represented 4% of the Company consolidated revenue for the fiscal year ended June 30, 2024, and approximately 7% of Alliance revenues on a consolidated basis for the year ended June 30, 2023.
For the year ended June 30, 2024, CDs represented approximately 12% of Alliance revenues on a consolidated basis. ● Collectables and Electronics: Sales in Collectables and Consumer Electronics represented approximately 4% of the Company consolidated revenue for the fiscal year ended June 30, 2025, and approximately 4% of Alliance revenues on a consolidated basis for the year ended June 30, 2024.
By comparison, for the fiscal year that ended June 30, 2023, five suppliers made up approximately 49% of the product receipt value, and 23 suppliers made up 80% of the product receipt value. One supplier comprised of approximately 21% of Alliance’s total product receipt value for the year ended June 30, 2024, versus 15% in 2023.
For the fiscal year that ended June 30, 2025, five suppliers made up approximately 59% of product receipt value, and 11 suppliers made up 80% of product receipt value. One supplier comprised of approximately 23% of Alliance’s total product receipt value for the year ended June 30, 2025, versus 21% in 2024.
The Company’s market leadership is further protected by a three-pronged moat of services, selection, and technology. The Company’s platforms create efficiencies, which benefit its partners in the physical media and entertainment marketplace. As a result, both suppliers and retailer customers rely on the Company’s platforms to fuel transaction volume. ● Organic Growth Opportunities.
The company’s market leadership is further protected by a three-pronged moat of services, selection, and technology. The company’s platforms create efficiencies that benefit its partners in the physical media and entertainment marketplace. As a result, both suppliers and retail customers rely on the company’s platforms to drive transaction volume. ● Strategic Partnerships with Major Content Providers.
Pursuant to the Business Combination Agreement, Alliance issued (i) 47,500,000 shares of Class A common stock of Alliance to holders of common stock of Legacy Alliance and (ii) 60,000,000 contingent shares of Class E common stock of Alliance to the Legacy Alliance stockholders were placed in an escrow account to be released to such Legacy Alliance stockholders and converted into Class A common stock upon the contingent occurrence of certain triggering events.
Pursuant to the Business Combination Agreement, Alliance issued (i) 47,500,000 shares of Class A common stock of Alliance to holders of common stock of Legacy Alliance and (ii) 60,000,000 contingent shares of Class E common stock of Alliance to the Legacy Alliance stockholders were placed in an escrow account to be released to such Legacy Alliance stockholders and converted into Class A common stock upon the contingent occurrence of certain triggering events. 1 Alliance’s Business With more than thirty years of distribution experience, Alliance serves customers of every size, providing a suite of services to resellers and retailers worldwide.
For additional information regarding the laws and regulations that affect the Company’s business, see “Item 1A. Risk Factors.” Privacy and Data Protection Regulation In processing purchase transactions and information about customers, the Company receives and stores a large volume of personally identifiable data.
Risk Factors.” Privacy and Data Protection Regulation In processing purchase transactions and information about customers, the Company receives and stores a large volume of personally identifiable data.
Many of the major entertainment and gaming companies are part of large, diversified companies with a variety of other operations. Some of these competitors have substantially greater marketing and financial resources than we do and may be able to compete aggressively on pricing in order to increase entertainment revenues and streaming placement.
Some of these competitors have substantially greater marketing and financial resources than we do and may be able to compete aggressively on pricing in order to increase entertainment revenues and streaming placement.
Alliance has a buying office in the UK and operates under the name Fulfillment Express. Fulfillment Express sources music from the UK music suppliers that is then transferred (exported from the United Kingdom) to Kentucky where that music product is prepared to sell in the US market.
Fulfillment Express sources music from the UK music suppliers that is then transferred (exported from the United Kingdom) to Kentucky where that music product is prepared to sell in the US market. Fulfillment Express makes no sales of any kind, for it is a buying office.
We believe that our key strengths position us to deliver on our strategy to grow profitably, optimize our core physical media and entertainment product distributors’ fulfillment and e-commerce distribution solutions, and expand and invest in higher-margin advanced technology solutions and high-value services.
We believe that our key strengths position us to deliver on our strategy to grow profitably, optimize our core physical media and entertainment and collectibles product distributors’ fulfillment and e-commerce distribution solutions, and expand and continue to invest in higher-margin advanced technology solutions and high-value services. 5 The Company believes the following strengths are key to its ability to grow and maintain its position as a market leader: ● Proven Management Experience and Equity Rollover.
We are a leading company in the sale and marketing of physical media entertainment products, including vinyl, gaming, DVDs, CD’s and consumer products and toys offerings, and operate in the competitive e-commerce business environment. We compete with several smaller physical media companies in our product categories, as well as with many larger e-commerce companies in the United States and internationally.
We are a leading company in the sale and marketing of physical media entertainment and collectible products, including vinyl, gaming, DVDs, CD’s and consumer products and toys offerings, and operate in the competitive e-commerce business environment.
Service Alliance provides efficient, Omni-Channel expansion solutions for retailers, including: ● E-Commerce and Direct to Consumer (DTC) Alliance provides leading product and e-commerce distribution and inventory solutions. Alliance provides a full, enterprise-level infrastructure and whitelists dropships orders directly to consumers on behalf of its omni customers. The entire ordering, confirmation and invoicing process is automated.
Alliance provides a full, enterprise-level infrastructure and whitelists dropships orders directly to consumers on behalf of its omni customers. The entire ordering, confirmation and invoicing process is automated.
In addition, we compete with entertainment companies that digitally download and stream their products. Competition is based primarily on meeting consumer product preferences and on the quality and play value of our physical media products and experiences. To a lesser extent, competition is also based on product pricing.
Competition is based primarily on meeting consumer product preferences and on the quality and play value of our physical media products and experiences. To a lesser extent, competition is also based on product pricing. Many of the major entertainment and gaming companies are part of large, diversified companies with a variety of other operations.
Leveraging existing relationships, Alliance can expand into new consumer product segments, growing its product offering and providing more to its existing customer base while attracting new customers in the process. ● Continuing Technological Advancement. Alliance will further invest in automating facilities and upgrading proprietary software.
Enhancing DTC relationships will grow existing revenue lines and improving capabilities will generate a more attractive overall service offering. ● Expand into New Consumer Products. Leveraging existing relationships, Alliance can expand into new consumer product segments, growing its product offering and providing more to its existing customer base while attracting new customers in the process. ● Continuing Technological Advancement.
With a public listing, we have access to additional capital to finance future growth. Our strategy will include: ● Execute Acquisition Strategy. Alliance has a proven track record of successfully acquiring and integrating competitors and complementary businesses. With additional capital, Alliance will be able to execute its acquisition strategy more effectively. ● Increase Market Share.
Alliance has a proven track record of successfully acquiring and integrating competitors and complementary businesses. With additional capital, Alliance will be able to execute its acquisition strategy more effectively. ● Increase Market Share. Expanding its existing product and service offerings and executing its acquisition strategy will drive Alliance’s efforts toward increasing market share.
These reports and other important information are available on our website at www.aent.com under the Investor Relations section, free of charge, as soon as they are filed with the SEC. Please note that information on our website is not incorporated by reference into this report.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC (www.sec.gov). These reports and other important information are available on our website at www.aent.com under the Investor Relations section, free of charge, as soon as they are filed with the SEC.
While overall demand for physical media has declined, niche markets for music and movie enthusiasts are growing. This trend is evidenced by the rising popularity of K-pop in the form of CDs and vinyl records, special edition collections SteelBook DVDs, and 4K UHD Blu-ray movies, especially among distributors with exclusive content.
Although overall demand for physical media has declined, niche markets serving music and movie enthusiasts have shown growth. This trend is reflected in the rising popularity of K-pop releases in CD and vinyl formats, special edition SteelBook® DVDs, and 4K UHD Blu-ray titles particularly among consumers seeking exclusive content.
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act.
Please note that information on our website is not incorporated by reference into this report. 11 We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act.
It also has resale contracts with some of its reseller customers that are terminable at will after a reasonable notice period and have no minimum purchase requirements. Alliance typically ships products on the same day it receives and accepts customers’ purchase orders. Unless otherwise requested, substantially all of Alliance’s products are delivered by common freight carriers.
Alliance typically ships products on the same day it receives and accepts customers’ purchase orders. Unless otherwise requested, substantially all of Alliance’s products are delivered by common freight carriers.
Alliance tries to reduce our exposure to the impact of business fluctuations by maintaining a balance in the customer categories we serve.
Alliance tries to reduce our exposure to the impact of business fluctuations by maintaining a balance in the customer categories we serve. Alliance has over 4,000 customers shipping to over 35,000 storefronts and distributes to over 2,500 independent music and video retailers.
Some relevant laws and regulations are inconsistent, ambiguous and could be interpreted by regulators and courts in ways that could adversely affect the Company’s business, results of operations, and financial condition. Moreover, certain laws and regulations have not historically been applied to an innovative hospitality provider such as Alliance, which often makes their application to its business uncertain.
Moreover, certain laws and regulations have not historically been applied to an innovative hospitality provider such as Alliance, which often makes their application to its business uncertain. For additional information regarding the laws and regulations that affect the Company’s business, see “Item 1A.
Pay structures for hourly employees are reviewed annually and for all other employees, compensation is benchmarked according to the position when a vacancy becomes available. This ensures best practices in a competitive market and, as part of that review, compensation will be realigned where appropriate for existing employees and new hires.
Pay structures for hourly employees are reviewed annually and for all other employees, compensation is benchmarked according to the position when a vacancy becomes available.
NCircle’s library includes many of the most loved and best-selling children’s brands including Gigantosaurus, The Cat in the Hat Knows a Lot About That!, Llama, The Octonauts, Sonic Boom, The Snowman and many more. 2 Selection: Product Categories — Alliance consolidates and distributes a portfolio of entertainment products with over 325,000 SKUs in stock in core media and entertainment product areas in five primary categories: ● Gaming Products: For the fiscal year ended June 30, 2024, gaming represented 31% of Alliance revenues on a consolidated basis.
Selection: Product Categories — Alliance consolidates and distributes a portfolio of entertainment products with over 340,000 SKUs in stock in core media and entertainment product areas in five primary categories: ● Gaming Products: For the fiscal year ended June 30, 2025, gaming represented approximately 24% of Alliance revenues on a consolidated basis.
In addition, retailers and manufacturers are increasingly focusing on their core competencies to sustain intense competition, leading them to outsource fulfillment activities to third-party vendors. Our Competitive Strengths Alliance is one of the largest physical media and entertainment product distributors in the world and a leader in fulfillment and e-commerce distribution solutions.
Our Competitive Strengths Alliance is one of the largest physical media and entertainment and collectibles product distributors in the world and a leader in fulfillment and e-commerce distribution solutions.
Alliance believes that it is a single source for all customer entertainment product needs. As a solutions-based operation, Alliance seeks to drive sales for their suppliers with broad product selection and cost-efficient processing. 1 Alliance’s distribution business is built around three areas, where our marketplace value is created: Service, Selection and Technology.
We believe that our efficient processing and essential seller tools noticeably reduce the costs associated with administrating multiple vendor relationships and streamline the overall purchasing experience. Alliance believes that it is a single source for all customer entertainment product needs. As a solutions-based operation, Alliance seeks to drive sales for their suppliers with broad product selection and cost-efficient processing.
Management believes the result is a more comprehensive, engaging, and cost-effective transaction process designed to make all stakeholders more productive and competitive. 3 Industry Background The industries in which the Company distributes product are: ● Packaged Goods consisting of licensed physical media and entertainment content; ● Gaming Consoles and Accessories; and ● Licensed Toys and Collectables.
Management believes these platforms enhance stakeholder productivity and competitiveness. Industry Background The industries in which the Company distributes products are: ● Packaged Goods consisting of licensed physical media and entertainment content; ● Gaming Consoles and Accessories; and ● Licensed Toys and Collectables.
Alliance expects to continue pursuing strategic opportunities that strengthen its platforms, expand the breadth and depth of its content, and enhance its distribution infrastructure. Alliance will continue to actively monitor and evaluate these and future opportunities in its acquisition pipeline in both the near and mid-term. ● Enhance Direct to Consumer (DTC) Relationships and Capabilities.
Alliance will continue to actively monitor and evaluate these and future opportunities in its acquisition pipeline in both the near and mid-term. 6 ● Enhance Direct to Consumer (DTC) Relationships and Capabilities. Alliance’s DTC services are in greater demand as consumer preferences shift and stress retailers’ e-commerce and DTC capabilities.
Regulatory Compliance The Company’s overall business approach and strategy includes rigorous attention to regulatory compliance, as its operations are subject to regulations in the following principal areas, across a wide variety of jurisdictions. Alliance’s business is subject to a wide array of laws, regulations, and standards in each domestic and foreign jurisdiction where we operate.
This ensures best practices in a competitive market and, as part of that review, compensation will be realigned where appropriate for existing employees and new hires. 10 Regulatory Compliance The Company’s overall business approach and strategy includes rigorous attention to regulatory compliance, as its operations are subject to regulations in the following principal areas, across a wide variety of jurisdictions.
This M&A activity has built scale and added capabilities to the Company’s platforms. Further, Alliance has demonstrated an ability to integrate those companies into its existing platforms to fundamentally improve the acquired businesses. Alliance management believes significant consolidation opportunities remain to drive future growth by acquiring complementary businesses and competitors. ● Modern technology distribution platform and interface.
Since its inception, Alliance has successfully acquired and integrated ten businesses that have greatly expanded the vendors and customers we are supporting. This M&A activity has built scale and added capabilities to the Company’s platforms. Further, Alliance has demonstrated an ability to integrate those companies into its existing platforms to fundamentally improve the acquired businesses.
This shift in demand, combined with the evolving retail and supplier landscape, may prompt the consolidation of distribution networks. This presents a unique opportunity for distributors that can cater to the evolving preferences and values of the retailers they distribute to and suppliers they procure from.
This shift in demand, coupled with structural changes in the retail and supplier landscape, is contributing to the consolidation of distribution networks. Management believes this presents an opportunity for distributors, such as Alliance, that are positioned to meet the evolving needs of retailers and suppliers, such as Alliance.
Expanding its existing product and service offerings and executing its acquisition strategy will drive Alliance’s efforts toward increasing market share. The Company has historically built scale and added capabilities through acquisitions. It has demonstrated an ability to execute accretive and synergistic acquisitions as well as integrate and fundamentally improve the acquired businesses.
The Company has historically built scale and added capabilities through acquisitions. It has demonstrated an ability to execute accretive and synergistic acquisitions as well as integrate and fundamentally improve the acquired businesses. Alliance expects to continue pursuing strategic opportunities that strengthen its platforms, expand the breadth and depth of its content, and enhance its distribution infrastructure.
Alliance will seek to grow revenue and expand margins through the expansion of partnerships with vendors and customers and investment in existing facilities. ● Proven track record of building scale through significant acquisitions. Since its inception, Alliance has successfully acquired and integrated ten businesses that have greatly expanded the vendors and customers we are supporting.
This leverages Alliance’s core distribution infrastructure and deep relationships in entertainment to capitalize on the growing demand for pop culture merchandise. ● Organic Growth Opportunities. Alliance will seek to grow revenue and expand margins through the expansion of partnerships with vendors and customers and investment in existing facilities. ● Proven track record of building scale through significant acquisitions.
Market Opportunity The Company has identified three primary market areas where it currently conducts business and plans to grow its business: Content Media As technology and social trends evolve, film and music market studios are overhauling their business models to take advantage of changing consumer behavior and expanding media platforms.
Alliance leverages its broad product portfolio to create bundled, exclusive collectibles that support omni-channel retail strategies and appeal to collectors and enthusiasts. 4 Market Opportunity The Company has identified three primary market areas where it currently conducts business and plans to grow its operations: Content Media As technology and consumer trends evolve, film, music, and gaming studios continue to re-evaluate distribution strategies to address shifting behaviors and expanding digital and physical platforms.
The Company’s technology platform increases transaction efficiency, provides great mobile accessibility, and incorporates modern marketing and Fintech tools. 5 Strategy for Future Growth Alliance will continue to capitalize on its services, selection, and scalable distribution network technology to propel its future growth both organically and through acquisitions.
Strategy for Future Growth Alliance will continue to capitalize on its services, selection, and scalable distribution network technology to propel its future growth both organically and through acquisitions. With a public listing, we have access to additional capital to finance future growth. Our strategy will include: ● Execute Acquisition Strategy.
The Business Combination Agreement On February 10, 2023, Adara, Alliance and Merger Sub consummated the closing of the transactions contemplated by the Business Combination Agreement.
Alliance’s competitive advantage is driven by its commitment to three pillars, Service, Selection, and Technology, which enable the Company to serve as a trusted partner across the entertainment and collectibles landscape. The Business Combination Agreement On February 10, 2023, Adara, Alliance and Merger Sub consummated the closing of the transactions contemplated by the Business Combination Agreement.
While many consumers are transitioning to digital media consumption, such as streaming music and video services, there remains a growing market driven by the collectability of physical media including Vinyl Records, specialty SteelBooks DVD’s, Box Sets of CD’s, and Pop Culture Collectables.
Distributors of physical media continue to navigate changes in consumer demand, an evolving omni-channel retail environment, and ongoing supplier consolidation. While many consumers have shifted to digital formats such as streaming music and video services, management believes a growing market remains for collectible physical media, including vinyl records, specialty SteelBook® DVDs, CD box sets, and pop culture collectibles.
Alliance continues to invest in automated handling equipment in our Shepherdsville, KY warehouse resulting in reduced shipping times, streamlined order processing, and improved warehouse efficiency. In April 2024, we implemented a new piece of automation equipment from OPEX Sure Sort X® for the sortation of non-standard size products.
Technology: Alliance continues to improve its warehouse operations through targeted investments in automated handling equipment at its Shepherdsville, Kentucky facility. In April 2024, the Company implemented the OPEX Sure Sort X® system to automate the sortation of non-standard size products. This enhancement replaced manual sorting processes, reducing labor costs, accelerating processing times, and lowering the potential for product damage.
Through a series of acquisitions and organic growth, Alliance has expanded and strengthened its global footprint and product breadth, and greatly increased its service capabilities. Since its inception, Alliance has made ten accretive business acquisitions, including Phantom Sound and Vision, MSI Music, Infinity Resources, Alliance, ANconnect, Mecca Electronics, Distribution Solutions, Mill Creek, COKeM, and Think3Fold.
Founded in 1990 (formerly CD Listening Bar, Inc.), Alliance has grown through organic expansion and over ten accretive acquisitions, including Phantom Sound and Vision, MSI Music, Infinity Resources, ANconnect, Mecca Electronics, Distribution Solutions, Mill Creek, COKeM, Think3Fold, and Super D (Alliance Entertainment). This growth is supported by the Company’s scalable operating platform and experienced management team.
Item 1. Business. Alliance is a leading global wholesaler/retailer of entertainment products consisting of music, movies, gaming, collectables, and a key player in the entertainment industry. Alliance boasts of a diverse portfolio of owned retail brands, including Critics ’ Choice, Collectors ’ Choice, Movies Unlimited, DeepDiscount, popmarket, blowitoutahere, Fulfillment Express, importCDs, GamerCandy, WowHD, and others.
The Company’s unique position in the entertainment ecosystem is supported by a diverse portfolio of direct-to-consumer brands, including Critics’ Choice Video, Collectors’ Choice Music, Movies Unlimited, DeepDiscount, PopMarket, Blowitoutahere, Fulfillment Express, ImportCDs, GamerCandy, and WowHD. Alliance connects top content creators, including Universal Pictures, Warner Bros.
Alliance has over 4,000 customers shipping to over 35,000 storefronts and distributes to over 2,500 independent music and video retailers. 6 In most cases Alliance conducts business with our customers under our general terms and conditions, without minimum purchase requirements.
In most cases Alliance conducts business with our customers under our general terms and conditions, without minimum purchase requirements. It also has resale contracts with some of its reseller customers that are terminable at will after a reasonable notice period and have no minimum purchase requirements.
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This pivotal role extends to connecting these suppliers with domestic and international top-tier retail partners. Notable partners encompass giants like Walmart, Amazon, Best Buy, Barnes & Noble, Wayfair, Costco, Dell, Verizon, Kohl’s, Target, Shopify, and others. Employing an established multi-channel strategy, Alliance distributes physical media, entertainment products, hardware, and accessories across various platforms.
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Item 1. Business. Alliance Entertainment is a leading global distributor and retailer of physical entertainment and collectible products, including vinyl records, CDs, DVDs, Blu-rays, video games, electronics, and licensed fan merchandise.
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Currently, the company sells its products, permitted for export, to more than 70 countries worldwide. Alliance provides state-of-the-art warehousing and distribution technologies, operating systems, and services that seamlessly enable entertainment product transactions to better serve customers directly or through our distribution affiliates.
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Through its multi-channel distribution model, the Company serves more than 35,000 retail locations and over 200 online storefronts across more than 70 countries. The Company’s operations are supported by advanced warehouse automation and scalable logistics infrastructure, enabling Alliance to offer a broad product selection, high in-stock availability, and fast fulfillment across over 340,000 SKUs.
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These technology-led platforms with access to the Company’s in stock inventory of over 325,000 SKU products, consisting of vinyl records, video games, compact discs, DVD, Blu-Rays, toys, and collectables, combined with Alliance’s sales and distribution network, create a modern entertainment physical product marketplace that provides the discerning customer with enhanced options on efficient consumer-friendly platforms inventory.
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These include core physical media as well as toys, figures, limited-edition collectibles, and licensed memorabilia. Alliance also provides third-party logistics (3PL) and drop-ship fulfillment capabilities for major brands and retailers.
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Alliance is the retailers’ back office for in-store and e-commerce solutions. All electronic data interchange (“EDI”) and logistics are operational and ready for existing retail channels to add new products. Alliance was founded in 1990 (previously named CD Listening Bar, Inc.).
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To support its recent strategic expansion into collectibles and fan-focused categories, Alliance recently launched two new divisions: ■ Alliance Home Entertainment , the exclusive distributor of Paramount Pictures’ physical media content as of January 1, 2025, offering full-service support across production, marketing, and retail execution. ■ Alliance Authentic , a new division focused on licensed collectibles and branded merchandise, including partnerships with Handmade by Robots, Master Replicas, and Wētā Workshop.
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Management believes that Alliance’s ability to successfully integrate acquisitions is underpinned by its highly efficient operating systems and experienced leadership team. Alliance believes the three pillars of its business; Service, Selection, and Technology create a powerful competitive advantage that will protect the Company’s market leadership and propel its future growth into the evolving physical entertainment product segments.
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Alliance’s distribution business is built around three areas, where our marketplace value is created: Service, Selection and Technology. Service Alliance provides efficient, Omni-Channel expansion solutions for retailers, including: ● E-Commerce and Direct to Consumer (DTC) Alliance provides leading product and e-commerce distribution and inventory solutions.
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Alliance’s Business With more than thirty years of distribution experience, Alliance serves customers of every size, providing a suite of services to resellers and retailers worldwide. We believe that our efficient processing and essential seller tools noticeably reduce the costs associated with administrating multiple vendor relationships and streamline the overall purchasing experience.
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NCircle’s library includes many of the most loved and best-selling children’s brands including Gigantosaurus, The Cat in the Hat Knows a Lot About That!, Llama, The Octonauts, Sonic Boom, The Snowman and many more.
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Technology: Alliance’s technology platforms combine customer-friendly applications and efficient operating systems with access to the Company’s global content inventory across all current market segments. These platforms offer the Alliance marketplace stakeholders feature-rich tools and services for all aspects of consumer engagement, transaction processing and business development.
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In December 2022, Alliance implemented an AutoStore Automated Storage & Retrieval System, which improved warehouse speed, reliability, capacity, and accuracy. Together, these automation initiatives have contributed to operational efficiencies and cost savings. 3 Alliance’s technology platforms provide stakeholders with seamless access to the Company’s global inventory through a modern, user-friendly interface accessible on desktop, notebook, and mobile devices.
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Since most of these products were being manually sorted, the increased sortation capacity reduces labor cost and minimizes the potential for product damage. In December 2022, we implemented a state-of-the art AutoStore Automated Storage & Retrieval System (ASRS).
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Key features include: ● Advanced product search and personalized selection tools ● Integrated marketing and customer relationship management (CRM) tools supporting multi-channel retailer marketplaces ● Conversational commerce and Fintech solutions providing diverse payment options ● Self-service purchasing and 24/7 customer support These capabilities enhance transaction efficiency and engagement, supporting revenue growth and profitability relative to legacy distribution systems.
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This system significantly improved Alliance’s warehouse operations, allowing the Company to achieve increased levels of speed, reliability, capacity, and precision, resulting in significant cost savings. The Company’s platforms enable stakeholders to search and purchase personalized product selections efficiently.
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Nostalgia and collector-driven purchases remain a factor driving customer demand, with buyers valuing artwork, perceived audio quality, and the intrinsic value of limited-edition formats. As major retail chains reduce shelf space for physical media, management believes distributors with direct-to-consumer capabilities and fulfillment services for retail e-commerce platforms, such as Alliance, are increasingly well-positioned.
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Through a modern and intuitive user interface, customers access Alliance’s global inventory as well as integrated marketing tools, conversational commerce, Fintech solutions, self-service purchasing and 24/7 support. Current features of Alliance’s customer engaging technology features include seamless connectivity across desk-top, notebook and mobile devices.
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These capabilities allow retailers to expand product offerings without the need for incremental warehouse space or inventory carrying costs. Suppliers are also adapting to this shift. By partnering with distributors, such as Alliance, that serve both mass and niche channels, suppliers can reach broader consumer bases through a more efficient distribution model.
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Alliance’s newer platforms also incorporate tools and services that increase revenue and profitability when compared to legacy distribution systems. In addition to robust search, selection and purchase transaction tools and service support, the Company’s platforms currently incorporate a Fintech platform with an extensive selection of payment options.
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Exclusive and limited-edition releases allow suppliers to maintain premium pricing, and collaboration on marketing and promotional campaigns can further support product visibility and sell-through. The physical media market remains competitive as companies seek to serve a more targeted customer base. Management believes that long-term success in this environment requires differentiation through exclusive content, curated product offerings, and enhanced customer service.
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Further, Alliance’s technology offers a multi-channel marketing platform supporting retailer marketplace participants’ growth and business development with fully integrated product marketing and CRM tools.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIt is important that investors and stakeholders read this summary together with the more detailed description of each risk contained below: ● If Alliance fails to respond to or capitalize on the rapid technological development in the music, video, gaming, and entertainment industry, including changes in entertainment delivery formats, its business could be harmed. ● If Alliance does not successfully optimize and operate its fulfillment network, its business could be harmed. ● Disruptions in Alliance’s supply chain have increased product expenditures and could result in an adverse impact on results of operations. ● Inflation could cause Alliance’s product costs and operating and administrative expenses to grow more rapidly than net sales, which could result in lower gross margins and lower net earnings. ● Weakness in the economy, market trends and other conditions affecting the profitability and financial stability of Alliance’s customers could negatively impact Alliance’s sales growth and results of operations. ● Our expansion places a strain on our management, operational, financial, and other resources. ● Our expansion into new products, services, technologies, and geographic regions subjects us to additional business, legal, financial, and competitive risks; ● Our business will suffer if we are not successful in developing and expanding our partner brands across our consumer base. ● Consumer interests change rapidly and acceptance of products and entertainment offerings are influenced by outside factors; ● If we are unable to navigate through global supply chain challenges, our business may be harmed; ● If we are unable to adapt our business to the continued shift to ecommerce, our business may be harmed; ● Our business, including our costs and supply chain, is subject to risks associated with sourcing, manufacturing, warehousing, distribution and logistics, and the loss of any of our key suppliers or service providers could negatively impact our business; ● We face significant inventory risk; ● We rely on third-party suppliers, labels, studios, publishers, suppliers, retail and ecommerce partners and other vendors, and they may not continue to produce products or provide services that are consistent with our standards or applicable regulatory requirements, which could harm our brand, cause consumer dissatisfaction, and require us to find alternative suppliers of our products or services; ● Alliance’s existing and any future indebtedness could adversely affect its ability to operate its business; 11 ● Covenants and events of default under Alliance’s Credit Facility could limit our ability to undertake certain types of transactions and adversely affect our liquidity; ● Our indebtedness may limit our availability of cash, cause us to divert cash to fund debt service payments or make it more difficult to take certain other actions; ● If we were unable to obtain or service our other external financings, or if the restrictions imposed by such financing were too burdensome, our business would be harmed; ● Alliance has engaged in transactions with related parties, and such transactions present possible conflicts of interest that could have an adverse effect on our business and results of operations; ● Alliance has identified material weaknesses in its internal controls over financial reporting.
Biggest changeIt is important that investors and stakeholders read this summary together with the more detailed description of each risk contained below: ● If Alliance fails to respond to or capitalize on the rapid technological development in the music, video, gaming, and entertainment industry, including changes in entertainment delivery formats, its business could be harmed. ● If Alliance does not successfully optimize and operate its fulfillment network, its business could be harmed. ● Disruptions in Alliance’s supply chain have increased product expenditures and could result in an adverse impact on results of operations. ● Inflation could cause Alliance’s product costs and operating and administrative expenses to grow more rapidly than net sales, which could result in lower gross margins and lower net earnings. ● Weakness in the economy, market trends and other conditions affecting the profitability and financial stability of Alliance’s customers could negatively impact Alliance’s sales growth and results of operations. 12 ● Our expansion places a strain on our management, operational, financial, and other resources. ● Our expansion into new products, services, technologies, and geographic regions subjects us to additional business, legal, financial, and competitive risks; ● Our business will suffer if we are not successful in developing and expanding our partner brands across our consumer base. ● Consumer interests change rapidly and acceptance of products and entertainment offerings are influenced by outside factors; ● If we are unable to navigate through global supply chain challenges, our business may be harmed; ● If we are unable to adapt our business to the continued shift to ecommerce, our business may be harmed; ● Our business, including our costs and supply chain, is subject to risks associated with sourcing, manufacturing, warehousing, distribution and logistics, and the loss of any of our key suppliers or service providers could negatively impact our business; ● We face significant inventory risk; ● We rely on third-party suppliers, labels, studios, publishers, suppliers, retail and ecommerce partners and other vendors, and they may not continue to produce products or provide services that are consistent with our standards or applicable regulatory requirements, which could harm our brand, cause consumer dissatisfaction, and require us to find alternative suppliers of our products or services; ● Alliance’s existing and any future indebtedness could adversely affect its ability to operate its business; ● Covenants and events of default under Alliance’s Credit Facility could limit our ability to undertake certain types of transactions and adversely affect our liquidity; ● Our indebtedness may limit our availability of cash, cause us to divert cash to fund debt service payments or make it more difficult to take certain other actions; ● If we were unable to obtain or service our other external financings, or if the restrictions imposed by such financing were too burdensome, our business would be harmed; ● Alliance has engaged in transactions with related parties, and such transactions present possible conflicts of interest that could have an adverse effect on our business and results of operations; ● We might not be able to obtain or maintain the listing of our Class A common stock on the Nasdaq Capital Market; ● We are subject to risks arising from international trade policies, including the imposition of new or increased tariffs on imported goods. 13 Risks Related to Our Business and Industry If we fail to respond to or capitalize on the rapid technological development in the music, video, gaming, and entertainment industry, including changes in entertainment delivery formats, our business could be harmed.
In addition, an event of default under the Revolving Credit Facility could permit the lenders under the Revolving Credit Facility to terminate all commitments to extend further credit under the Revolving Credit Facility.
In addition, an event of default under the Revolving Credit Facility could permit the lenders under the Revolving Credit Facility to terminate all commitments to extend further credit under the Revolving Credit Facility.
Alliance has engaged in transactions with related parties, and such transactions present possible conflicts of interest that could have an adverse effect on our business and results of operations. Alliance has entered transactions with related parties, including our two principal stockholders. We have entered into transactions with companies owned by Bruce Ogilvie and Jeffrey Walker, including GameFly Holdings, LLC.
Alliance has engaged in transactions with related parties, and such transactions present possible conflicts of interest that could have an adverse effect on our business and results of operations. Alliance has entered into transactions with related parties, including our two principal stockholders. We have entered into transactions with companies owned by Bruce Ogilvie and Jeffrey Walker, including GameFly Holdings, LLC.
Our sales and operating results will also fluctuate for many other reasons, including due to risks described elsewhere in this section and the following: ● our ability to retain and increase sales to existing customers, attract new customers, and satisfy our customers’ demands; ● our ability to retain and expand our network of customers; ● our ability to offer products on favorable terms, manage inventory, and fulfill orders; ● the introduction of competitive stores, websites, products, services, price decreases, or improvements; 15 ● changes in usage or adoption rates of the Internet, e-commerce, electronic devices, and web services, including outside the U.S.; ● timing, effectiveness, and costs of expansion and upgrades of our systems and infrastructure; ● the success of our geographic, service, and product line expansions; ● the extent to which we finance, and the terms of any such financing for, our current operations and future growth; ● the outcomes of legal proceedings and claims, which may include significant monetary damages or injunctive relief and could have a material adverse impact on our operating results; ● variations in the mix of products and services we sell; ● variations in our level of merchandise and vendor returns; ● the extent to which we offer free shipping, continue to reduce prices worldwide, and provide additional benefits to our customers; ● factors affecting our reputation or brand image; ● the extent to which we invest in technology and content, fulfillment, and other expense categories; ● increases in the prices of fuel and gasoline, as well as increases in the prices of other energy products and commodities like paper and packing supplies; ● the extent to which our equity-method investees record significant operating and non-operating items; ● the extent to which operators of the networks between our customers and our stores successfully charge fees to grant our customers unimpaired and unconstrained access to our online services; ● our ability to collect amounts owed to us when they become due; ● the extent to which use of our services is affected by spyware, viruses, phishing and other spam emails, denial of service attacks, data theft, computer intrusions, outages, and similar events; ● terrorist attacks and armed hostilities; ● supply chain issues either in chip shortages; and ● long lead time in the manufacturing vinyl LP’s.
Our sales and operating results will also fluctuate for many other reasons, including due to risks described elsewhere in this section and the following: ● our ability to retain and increase sales to existing customers, attract new customers, and satisfy our customers’ demands; ● our ability to retain and expand our network of customers; ● our ability to offer products on favorable terms, manage inventory, and fulfill orders; ● the introduction of competitive stores, websites, products, services, price decreases, or improvements; ● changes in usage or adoption rates of the Internet, e-commerce, electronic devices, and web services, including outside the U.S.; ● timing, effectiveness, and costs of expansion and upgrades of our systems and infrastructure; ● the success of our geographic, service, and product line expansions; 17 ● the extent to which we finance, and the terms of any such financing for, our current operations and future growth; ● the outcomes of legal proceedings and claims, which may include significant monetary damages or injunctive relief and could have a material adverse impact on our operating results; ● variations in the mix of products and services we sell; ● variations in our level of merchandise and vendor returns; ● the extent to which we offer free shipping, continue to reduce prices worldwide, and provide additional benefits to our customers; ● factors affecting our reputation or brand image; ● the extent to which we invest in technology and content, fulfillment, and other expense categories; ● increases in the prices of fuel and gasoline, as well as increases in the prices of other energy products and commodities like paper and packing supplies; ● the extent to which our equity-method investees record significant operating and non-operating items; ● the extent to which operators of the networks between our customers and our stores successfully charge fees to grant our customers unimpaired and unconstrained access to our online services; ● our ability to collect amounts owed to us when they become due; ● the extent to which use of our services is affected by spyware, viruses, phishing and other spam emails, denial of service attacks, data theft, computer intrusions, outages, and similar events; ● terrorist attacks and armed hostilities; ● supply chain issues either in chip shortages; and ● long lead time in the manufacturing vinyl LP’s.
In addition to risks described elsewhere in this section, our international sales and operations are subject to a number of risks, including: ● local economic and political conditions; 16 ● government regulation and compliance requirements (such as regulation of our product and service offerings and of competition), restrictive governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs), nationalization, and restrictions on foreign ownership; ● restrictions on sales or distribution of certain products or services and uncertainty regarding liability for products, services, and content, including uncertainty as a result of less Internet- friendly legal systems, local laws, lack of legal precedent, and varying rules, regulations, and practices regarding the physical and digital distribution of media products and enforcement of intellectual property rights; ● business licensing or certification requirements, such as for imports, exports, web services, and electronic devices; ● limitations on the repatriation and investment of funds and foreign currency exchange restrictions; ● limited fulfillment and technology infrastructure; ● shorter payable and longer receivable cycles and the resultant negative impact on cash flow; ● laws and regulations regarding consumer and data protection, privacy, network security, encryption, payments, and restrictions on pricing or discounts; ● lower levels of consumer spending and fewer opportunities for growth compared to the U.S.; ● lower levels of credit card usage and increased payment risk; ● difficulty in staffing, developing, and managing foreign operations as a result of distance, language, and cultural differences. ● different employee/employer relationships and the existence of works councils and labor unions; ● compliance with the U.S.
In addition to risks described elsewhere in this section, our international sales and operations are subject to a number of risks, including: ● local economic and political conditions; ● government regulation and compliance requirements (such as regulation of our product and service offerings and of competition), restrictive governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs), nationalization, and restrictions on foreign ownership; 18 ● restrictions on sales or distribution of certain products or services and uncertainty regarding liability for products, services, and content, including uncertainty as a result of less Internet- friendly legal systems, local laws, lack of legal precedent, and varying rules, regulations, and practices regarding the physical and digital distribution of media products and enforcement of intellectual property rights; ● business licensing or certification requirements, such as for imports, exports, web services, and electronic devices; ● limitations on the repatriation and investment of funds and foreign currency exchange restrictions; ● limited fulfillment and technology infrastructure; ● shorter payable and longer receivable cycles and the resultant negative impact on cash flow; ● laws and regulations regarding consumer and data protection, privacy, network security, encryption, payments, and restrictions on pricing or discounts; ● lower levels of consumer spending and fewer opportunities for growth compared to the U.S.; ● lower levels of credit card usage and increased payment risk; ● difficulty in staffing, developing, and managing foreign operations as a result of distance, language, and cultural differences. ● different employee/employer relationships and the existence of works councils and labor unions; ● compliance with the U.S.
For more information, see the section titled “ Description of Securities — Certain Anti-Takeover Provisions of Delaware Law and the Existing Certificate of Incorporation and Bylaws .” 35 The Certificate of Incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will, subject to certain exceptions, be deemed to have consented to service of process on such stockholder’s counsel, which may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders.
For more information, see the section titled “ Description of Securities — Certain Anti-Takeover Provisions of Delaware Law and the Existing Certificate of Incorporation and Bylaws .” The Certificate of Incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will, subject to certain exceptions, be deemed to have consented to service of process on such stockholder’s counsel, which may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders.
The issuance of additional common stock or preferred shares: ● may significantly dilute the equity interest of holders of Class A common stock. ● may subordinate the rights of holders of shares of common stock if one or more classes of preferred stock are created, and such shares of preferred stock are issued, with rights senior to those afforded to Class A common stock. ● could cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and ● may adversely affect prevailing market prices for the Class A common stock and/or Warrants.
The issuance of additional common stock or preferred shares: ● may significantly dilute the equity interest of holders of Class A common stock. ● may subordinate the rights of holders of shares of common stock if one or more classes of preferred stock are created, and such shares of preferred stock are issued, with rights senior to those afforded to Class A common stock. ● could cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and ● may adversely affect prevailing market prices for the Class A common stock and/or Warrants. 41
Among other things, these provisions include: ● the limitation of the liability of, and the indemnification of, its directors and officers. ● a prohibition on actions by its stockholders except at an annual or special meeting of stockholders. ● a prohibition on actions by its stockholders by written consent; and ● the ability of the board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by the board of directors.
Among other things, these provisions include: ● the limitation of the liability of, and the indemnification of, its directors and officers. 39 ● a prohibition on actions by its stockholders except at an annual or special meeting of stockholders. ● a prohibition on actions by its stockholders by written consent; and ● the ability of the board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by the board of directors.
Consumer acceptance of our or our partners’ entertainment offerings is also affected by outside factors, such as critical reviews, promotions, the quality and acceptance of films and television programs, music, video games, and content released into the marketplace at or near the same time, the availability of alternative forms of entertainment and leisure time activities, general economic conditions and public tastes generally, all of which could change rapidly and most of which are beyond our control.
Consumer acceptance of our or our partners’ entertainment offerings is also affected by outside factors, such as critical reviews, promotions, the quality and acceptance of films and television programs, music, video games, collectibles and content released into the marketplace at or near the same time, the availability of alternative forms of entertainment and leisure time activities, general economic conditions and public tastes generally, all of which could change rapidly and most of which are beyond our control.
The trading market for our Class A common stock in the future could be subject to wide fluctuations in response to several factors, including, but not limited to: ● Actual or anticipated variations in our results of operations. ● Our ability or inability to generate revenues or profit. ● The relatively small number of shares in our public float, which could exacerbate stock price volatility. ● Increased competition.
The trading market for our Class A common stock in the future could be subject to wide fluctuations in response to several factors, including, but not limited to: ● Actual or anticipated variations in our results of operations. 38 ● Our ability or inability to generate revenues or profit. ● The relatively small number of shares in our public float, which could exacerbate stock price volatility. ● Increased competition.
The loss of any of our other significant suppliers, or the discontinuance of any preferential pricing or exclusive incentives they currently offer to us could have an adverse effect on our business, financial condition, results of operations and prospects. 19 We continually seek to expand our base of product suppliers, especially as we identify new markets.
The loss of any of our other significant suppliers, or the discontinuance of any preferential pricing or exclusive incentives they currently offer to us could have an adverse effect on our business, financial condition, results of operations and prospects. We continually seek to expand our base of product suppliers, especially as we identify new markets.
If any action, the subject matter of which is within the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of the Warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder. 32 This choice of forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits.
If any action, the subject matter of which is within the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of the Warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder. 36 This choice of forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits.
Similarly, if one or more of our suppliers were to offer these incentives, including preferential pricing, to our competitors, our competitive advantage would be reduced, which could have an adverse effect on our business, financial condition, results of operations and prospects. We face significant inventory risk.
Similarly, if one or more of our suppliers were to offer these incentives, including preferential pricing, to our competitors, our competitive advantage would be reduced, which could have an adverse effect on our business, financial condition, results of operations and prospects. 22 We face significant inventory risk.
The failure of our information systems or third-party hosted technology to perform as designed or our failure to implement and operate them effectively could disrupt our business, require significant capital investments to remediate a problem or subject us to liability. 26 If our electronic data is compromised our business could be significantly harmed.
The failure of our information systems or third-party hosted technology to perform as designed or our failure to implement and operate them effectively could disrupt our business, require significant capital investments to remediate a problem or subject us to liability. If our electronic data is compromised, our business could be significantly harmed.
Such a weakened economic and business climate, as well as consumer uncertainty created by such a climate, could significantly harm our revenues and profitability. 27 Our success and profitability not only depend on consumer demand for our products, but also on our ability to produce and sell those products at costs which allow us to make a profit.
Such a weakened economic and business climate, as well as consumer uncertainty created by such a climate, could significantly harm our revenues and profitability. Our success and profitability not only depend on consumer demand for our products, but also on our ability to produce and sell those products at costs which allow us to make a profit.
If the price of our Class A Common Stock remains below the respective Warrant exercise prices per share, warrant holders will unlikely cash exercise their Warrants, resulting in little or no cash proceeds to us. 33 In addition, we may lower the exercise price of the Warrants in accordance with the Warrant Agreement to induce the holders to exercise such warrants.
If the price of our Class A Common Stock remains below the respective Warrant exercise prices per share, warrant holders will unlikely cash exercise their Warrants, resulting in little or no cash proceeds to us. In addition, we may lower the exercise price of the Warrants in accordance with the Warrant Agreement to induce the holders to exercise such warrants.
We intend to satisfy our current and future debt service obligations with our then existing cash and cash equivalents. However, we may not have sufficient funds, and may be unable to arrange for additional financing, to pay the amounts due under the Revolving Credit Facility or any other debt instruments.
We intend to satisfy our current and future debt service obligations with our then existing cash. However, we may not have sufficient funds and may be unable to arrange for additional financing to pay the amounts due under the Revolving Credit Facility or any other debt instruments.
As a result, you would receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash. The receipt of cash proceeds from the exercise of our Warrants is dependent upon the market price exceeding the $11.50 exercise price and the Warrants being exercised for cash.
As a result, you would receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash. 37 The receipt of cash proceeds from the exercise of our Warrants is dependent upon the market price exceeding the $11.50 exercise price and the Warrants being exercised for cash.
We may not be able to manage growth effectively, which could damage our reputation, limit our growth, and negatively affect our operating results. 14 We may not realize the anticipated benefits of acquisitions or investments in our acquisitions or joint ventures, or those benefits may be delayed or reduced in their realization.
We may not be able to manage growth effectively, which could damage our reputation, limit our growth, and negatively affect our operating results. We may not realize the anticipated benefits of acquisitions or investments in our acquisitions or joint ventures, or those benefits may be delayed or reduced in their realization.
Alliance believes the amounts payable to GameFly are at fair market value. Although the agreement between Alliance and GameFly can be terminated by either party at any time, given Mr. Ogilvie’s and Mr. Walker’s positions with Alliance as Executive Chairman and Chief Executive Officer/Chief Financial Officer, respectively.
Alliance believes the amounts payable to GameFly are at fair market value. Although the agreement between Alliance and GameFly can be terminated by either party at any time, given Mr. Ogilvie’s and Mr. Walker’s positions with Alliance as Executive Chairman and Chief Executive Officer, respectively.
See “Certain Relationships and Related Party Transactions.” 25 Transactions with such related parties present potential for conflicts of interest, as the interests of the third-party owned related entity and its shareholders may not align with the interests of our stockholders with respect to the negotiation of, and certain other matters.
See “Certain Relationships and Related Party Transactions.” Transactions with such related parties present potential for conflicts of interest, as the interests of the third-party owned related entity and its shareholders may not align with the interests of our stockholders with respect to the negotiation of, and certain other matters.
These restrictive covenants may limit our future actions as well as our financial, operating, and strategic flexibility. 24 Not only may our financial performance impact our ability to access external financing sources, but significant disruptions to credit markets in general may also harm our ability to obtain financing.
These restrictive covenants may limit our future actions as well as our financial, operating, and strategic flexibility. Not only may our financial performance impact our ability to access external financing sources, but significant disruptions to credit markets in general may also harm our ability to obtain financing.
There can be no assurance that television programs and films, video games, video movies we distribute will obtain favorable reviews or ratings, that films, video games, video movies we distribute will be popular with consumers and perform well in our distribution channels.
There can be no assurance that television programs and films, video games, video movies and collectibles we distribute will obtain favorable reviews or ratings, that films, video games, video movies we distribute will be popular with consumers and perform well in our distribution channels.
Our future success also depends on the continued leadership of key executives, including Mr. Bruce Ogilvie, our Executive Chairman, and Mr. Jeff Walker, our Chief Executive Officer/Chief Financial Officer. The loss of any key members of our management team, including Mr. Ogilvie and Mr.
Our future success also depends on the continued leadership of key executives, including Mr. Bruce Ogilvie, our Executive Chairman, and Mr. Jeff Walker, our Chief Executive Officer. The loss of any key members of our management team, including Mr. Ogilvie and Mr.
If our products are not delivered in a timely fashion or are damaged or lost during the delivery process, our consumers could become dissatisfied and cease shopping on our site or retailer or third-party ecommerce sites, which could have an adverse effect on our business, financial condition, operating results, and prospects. 20 We are subject to risks related to online payment methods, including third-party payment processing-related risks.
If our products are not delivered in a timely fashion or are damaged or lost during the delivery process, our consumers could become dissatisfied and cease shopping on our site or retailer or third-party ecommerce sites, which could have an adverse effect on our business, financial condition, operating results, and prospects. 23 We are subject to risks related to online payment methods, including third-party payment processing-related risks.
Quality control problems could result in regulatory action, such as restrictions on importation, products of inferior quality or product stock outages or shortages, harming our sales and creating inventory write-downs for unusable products. 21 We have also outsourced minute portions of our fulfillment process, as well as certain technology-related functions, to third-party service providers.
Quality control problems could result in regulatory action, such as restrictions on importation, products of inferior quality or product stock outages or shortages, harming our sales and creating inventory write-downs for unusable products. 24 We have also outsourced minute portions of our fulfillment process, as well as certain technology-related functions, to third-party service providers.
If we are unable to successfully develop, maintain and expand key partner brands across our brand blueprint, our business performance will suffer. 17 Risks Related to Shifts in Consumer Demand Consumer interests change rapidly, and acceptance of products and entertainment offerings are influenced by outside factors.
If we are unable to successfully develop, maintain and expand key partner brands across our brand blueprint, our business performance will suffer. 19 Risks Related to Shifts in Consumer Demand Consumer interests change rapidly, and acceptance of products and entertainment offerings are influenced by outside factors.
We may have limited or no experience in our newer market segments, and our customers may not adopt our offerings. These offerings may present new and difficult technology challenges, and we may be subject to claims if customers of these offerings experience service disruptions or failures or other quality issues.
We may have limited or no experience in our newer market segments, including collectibles, and our customers may not adopt our offerings. These offerings may present new and difficult technology challenges, and we may be subject to claims if customers of these offerings experience service disruptions or failures or other quality issues.
Included on Alliance’s balance sheet as of June 30, 2024, and 2023, contained elsewhere in this Form 10-K, are derivative liabilities related to embedded features contained within the Warrants.
Included on Alliance’s balance sheet as of June 30, 2025, and 2024, contained elsewhere in this Form 10-K, are derivative liabilities related to embedded features contained within the Warrants.
Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”) provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statements of operations.
Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”) provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statements of income and comprehensive income.
As of the date of this Form 10-K, the executive officers and directors and their affiliates collectively beneficially owned, directly, or indirectly, excluding the Contingent Consideration Shares, approximately 97.9% of the outstanding Class A common stock.
As of the date of this Form 10-K, the executive officers and directors and their affiliates collectively beneficially owned, directly, or indirectly, excluding the Contingent Consideration Shares, approximately 99% of the outstanding Class A common stock.
We operate the business with an asset-based line of credit to fund working capital to support our Accounts Payable and our Inventory purchases. ● make it more difficult and/or costly for us to pay or refinance our debts as they become due, particularly during adverse economic and industry conditions, because a decrease in revenues or increase in costs could cause cash flow from operations to be insufficient to make scheduled debt service payments; ● require a substantial portion of our available cash to be used for debt service payments, thereby reducing the availability of our cash to fund working capital, capital expenditures, development projects, acquisitions or other strategic opportunities, dividend payments, share repurchases and other general corporate purposes; ● make it more difficult for us to raise capital to fund working capital, make capital expenditures, pay dividends, pursue strategic initiatives or for other purposes and result in higher interest expense, which could be further increased in case of current or future borrowings subject to variable rates of interest; ● require that materially adverse terms, conditions, or covenants be placed on us under our debt instruments, which could include, for example, limitations on additional borrowings or limitations on our ability to create liens, pay dividends, repurchase our common stock or make investments, any of which could hinder our access to capital markets or our flexibility in the conduct of our business and make us more vulnerable to economic downturns and adverse competitive industry conditions; and ● jeopardize our ability to pay our indebtedness if our business experienced a severe downturn.
We operate the business with an asset-based line of credit to fund working capital to support our Accounts Payable and our Inventory purchases. ● make it more difficult and/or costly for us to pay or refinance our debts as they become due, particularly during adverse economic and industry conditions, because a decrease in revenues or increase in costs could cause cash flow from operations to be insufficient to make scheduled debt service payments; ● require a substantial portion of our available cash to be used for debt service payments, thereby reducing the availability of our cash to fund working capital, capital expenditures, development projects, acquisitions or other strategic opportunities, dividend payments, share repurchases and other general corporate purposes; ● make it more difficult for us to raise capital to fund working capital, make capital expenditures, pay dividends, pursue strategic initiatives or for other purposes and result in higher interest expense, which could be further increased in case of current or future borrowings subject to variable rates of interest; ● require that materially adverse terms, conditions, or covenants be placed on us under our debt instruments, which could include, for example, limitations on additional borrowings or limitations on our ability to create liens, pay dividends, repurchase our common stock or make investments, any of which could hinder our access to capital markets or our flexibility in the conduct of our business and make us more vulnerable to economic downturns and adverse competitive industry conditions; and ● jeopardize our ability to pay our indebtedness if our business experienced a severe downturn. 27 If we were unable to obtain or service our other external financing, or if the restrictions imposed by such financing were too burdensome, our business would be harmed.
The music, video, gaming, and entertainment industry continues to experience frequent change driven by technological development, including developments with respect to the formats through which music, films, television programming, games, and other content are delivered to consumers. With rapid technological changes and dramatically expanded digital content offerings, the scale and scope of these changes have accelerated in recent years.
The music, video, gaming, entertainment and collectible industries continue to experience frequent change driven by technological development, including developments with respect to the formats through which music, films, television programming, games, and other content are delivered to consumers. With rapid technological changes and dramatically expanded digital content offerings, the scale and scope of these changes have accelerated in recent years.
For the year ended June 30, 2024, and 2023, Alliance made sales of new release movies, video games, and video game consoles to GameFly Holdings LLC in the amount of $8.4 million and $16.8 million, respectively. GameFly, a customer of Alliance, is equally owned by Bruce Ogilvie and Jeff Walker, the two shareholders of Alliance.
For the year ended June 30, 2025, and 2024, Alliance made sales of new release movies, video games, and video game consoles to GameFly Holdings LLC in the amount of $2.7 million and $8.4 million, respectively. GameFly, a customer of Alliance, is equally owned by Bruce Ogilvie and Jeff Walker, the two shareholders of Alliance.
Failure to make payments or comply with other covenants under our existing credit facility or such other debt instruments could result in an event of default and acceleration of amounts due, which would have a material adverse effect on our business.
Failure to make payments or comply with other covenants under our existing credit facility or such other debt instruments could result in an event of default and acceleration of amounts due, which would have a material adverse effect on our business. 26 A breach of the covenants under the Revolving Credit Facility could result in an event of default under the applicable indebtedness.
As a result of the seasonal nature of our business, we would be significantly and adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events such as a natural disaster, a terrorist attack, economic shock or pandemic that harms the retail environment or consumer buying patterns during our key selling season, or by events such as strikes or port delays or other supply chain challenges that interfere with the shipment of goods, particularly from the Far East, during the critical months leading up to the holiday shopping season. 28 Risks Related to Taxes and Government Related Matters We face additional tax liabilities and collection obligations.
As a result of the seasonal nature of our business, we would be significantly and adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events such as a natural disaster, a terrorist attack, economic shock or pandemic that harms the retail environment or consumer buying patterns during our key selling season, or by events such as strikes or port delays or other supply chain challenges that interfere with the shipment of goods, particularly from the Far East, during the critical months leading up to the holiday shopping season.
As of June 30, 2024, the Company had approximately $73 million outstanding under the Revolving Credit facility (see Note 8 to Notes to Consolidated Financial Statements) 22 Borrowings under the Revolving Credit Facility bear interest at the 30-day SOFR rate, subject to a floor rate of 2.00%, plus a margin of 4.50% to 4.75%, depending on the level of the Company’s utilization of the facility and consolidated fixed charge coverage ratio.
As of June 30, 2025, the Company had approximately $57 million outstanding under the Revolving Credit facility (see Note 8 to Notes to Consolidated Financial Statements) 25 Borrowings under the Revolving Credit Facility bear interest at the 30-day SOFR rate, subject to a floor rate of 2.00%, plus a margin of 4.5% to 4.75%, depending on the level of the Company’s utilization of the facility and consolidated fixed charge coverage ratio.
Unfavorable conditions in the economy in the United States and abroad may negatively affect the growth of our business and have affected our results of operations. For example, macroeconomic events, including inflation, interest rates, geopolitical issues, and uncertainty regarding the U.S. elections in the Fall of 2024 have led to economic uncertainty globally.
Unfavorable conditions in the economy in the United States and abroad may negatively affect the growth of our business and have affected our results of operations. For example, macroeconomic events, including inflation, interest rates, and geopolitical issues , have led to economic uncertainty globally.
The receipt of cash proceeds from our Warrants’ exercise depends on the market price exceeding the $11.50 exercise price and the Warrants being exercised for cash. The $11.50 exercise price per share of the Warrants is considerably higher than the $2.11 closing sale price of the Class A common stock on September 18, 2024.
The receipt of cash proceeds from our Warrants’ exercise depends on the market price exceeding the $11.50 exercise price and the Warrants being exercised for cash. The $11.50 exercise price per share of the Warrants is considerably higher than the $6.00 closing sale price of the Class A common stock on September 8, 2025.
Additionally supply chain disruptions can be the result of the bankruptcy or failure of trucking and other logistics businesses.
Additionally supply chain disruptions can be the result of the bankruptcy or failure of trucking and other logistics businesses. Labor shortages can also cause supply chain disruptions.
See “Certain Relationships and Related Party Transactions — Policies and Procedures for Related Party Transactions.” Nevertheless, we may have achieved more favorable terms if such transactions had not been entered into with related parties and these transactions, individually or in the aggregate, may have an adverse effect on our business and results of operations or may result in government enforcement actions or other litigation.
See “Certain Relationships and Related Party Transactions — Policies and Procedures for Related Party Transactions.” Nevertheless, we may have achieved more favorable terms if such transactions had not been entered into with related parties and these transactions, individually or in the aggregate, may have an adverse effect on our business and results of operations or may result in government enforcement actions or other litigation. 29 Risks Related to Our Technology and Intellectual Property Our business may be harmed if we are unable to protect our critical intellectual property rights.
Labor shortages can also cause supply chain disruptions. 13 These factors have resulted in higher product inventory cost positions in certain products as well as delays in delivering those products to Alliance’s distribution centers, branches or customers, and similar results may occur in the future.
These factors have resulted in higher product inventory cost positions in certain products as well as delays in delivering those products to Alliance’s distribution centers, branches or customers, and similar results may occur in the future.
We cannot be certain that the products and offerings of companies we may acquire, or acquire an interest in, will achieve or maintain popularity with consumers in the future or that any such acquired companies or investments will allow us to market our products more effectively, develop our competencies or grow our business.
Acquisitions can broaden and diversify our brand holdings and product offerings and allow us to build additional capabilities and competencies of the company. 16 We cannot be certain that the products and offerings of companies we may acquire, or acquire an interest in, will achieve or maintain popularity with consumers in the future or that any such acquired companies or investments will allow us to market our products more effectively, develop our competencies or grow our business.
This is often referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in our common stock that are not directly correlated to the performance or prospects of our Class A common stock and once investors purchase the shares of Class A common stock necessary to cover their short position the price of our Class A common stock may decline. 36 We may issue additional shares of Class A common stock or preferred shares under the 2023 Plan, which would dilute the interest of our stockholders.
This is often referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in our common stock that are not directly correlated to the performance or prospects of our Class A common stock and once investors purchase the shares of Class A common stock necessary to cover their short position the price of our Class A common stock may decline.
Alternatively, if a court were to find the choice of forum provision contained in the Certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm Alliance’s business, operating results and financial condition.
Alternatively, if a court were to find the choice of forum provision contained in the Certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm Alliance’s business, operating results and financial condition. 40 The Certificate of Incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law, subject to certain exceptions.
If we are not able to negotiate acceptable terms with these companies or they experience performance problems or other difficulties, it could negatively impact our operating results and customer experience.
We rely on several shipping companies to deliver inventory to us and complete orders to our customers. If we are not able to negotiate acceptable terms with these companies or they experience performance problems or other difficulties, it could negatively impact our operating results and customer experience.
We may issue a substantial number of additional shares of common stock or shares of preferred stock under the 2023 Plan. Pursuant to Alliance’s 2023 Omnibus Equity Incentive Plan, Alliance may issue an aggregate of up to 600,000 shares of Class A common stock, which amount may be subject to increase from time to time.
Pursuant to Alliance’s 2023 Omnibus Equity Incentive Plan, Alliance may issue an aggregate of up to 1,000,000 shares of Class A common stock, which amount may be subject to increase from time to time.
Our business, including our costs and supply chain, is subject to risks associated with sourcing, manufacturing, warehousing, distribution and logistics, and the loss of any of our key suppliers or service providers could negatively impact our business.
Furthermore, the failure or lack of success of a significant retail customer could negatively impact our revenues and profitability. 21 Our business, including our costs and supply chain, is subject to risks associated with sourcing, manufacturing, warehousing, distribution and logistics, and the loss of any of our key suppliers or service providers could negatively impact our business.
In addition, increased concentration among our customers could negatively impact our ability to negotiate higher sales prices for our products and could result in lower gross margins than would otherwise be obtained if there were less consolidation among our customers. Furthermore, the failure or lack of success of a significant retail customer could negatively impact our revenues and profitability.
In addition, increased concentration among our customers could negatively impact our ability to negotiate higher sales prices for our products and could result in lower gross margins than would otherwise be obtained if there were less consolidation among our customers.
Our businesses are rapidly evolving and competitive, and we have many competitors in different industries, including physical, e-commerce, and omni-channel retail, e-commerce services, digital content and electronic devices, web and infrastructure computing services, and transportation and logistics services, and across geographies, including cross-border competition.
If we are unable to compete effectively with existing or new competitors, our revenues, market share and profitability could decline Our businesses are rapidly evolving and competitive, and we have many competitors in different industries, including physical, e-commerce, and omni-channel retail, e-commerce services, digital content and electronic devices, web and infrastructure computing services, and transportation and logistics services, and across geographies, including cross-border competition.
Walker, or the failure to attract and retain talented individuals with the necessary skill sets for our diverse and evolving business could materially and adversely affect our operations and financial results. We cannot guarantee that we will successfully recruit, hire, or retain the personnel essential to our success.
Walker, or the failure to attract and retain talented individuals with the necessary skill sets for our diverse and evolving business could materially and adversely affect our operations and financial results.
Under some of our commercial agreements, we maintain the inventory of other companies, thereby increasing the complexity of tracking inventory and operating our fulfillment network. Our failure to properly handle such inventory or the inability of these other companies to accurately forecast product demand would result in unexpected costs and other harm to our business and reputation. We face competition.
Our failure to properly handle such inventory or the inability of these other companies to accurately forecast product demand would result in unexpected costs and other harm to our business and reputation. 14 We face competition.
Any of these circumstances could impair Alliance’s ability to meet customer demand for products and result in lost sales, increased supply chain costs, penalties, or damage to Alliance’s reputation. Any such increased product costs from supplier disruption could adversely impact the results of operations and financial performance.
Any of these circumstances could impair Alliance’s ability to meet customer demand for products and result in lost sales, increased supply chain costs, penalties, or damage to Alliance’s reputation.
Any compromise of the confidential data of our customers, consumers, suppliers, partners, employees or ourselves, or failure to prevent or mitigate the loss of or damage to this data through breach of our information technology systems or other means could substantially disrupt our operations, harm our customers, consumers, employees and other business partners, damage our reputation, violate applicable laws and regulations, subject us to potentially significant costs and liabilities and result in a loss of business that could be material.
Any compromise of the confidential data of our customers, consumers, suppliers, partners, employees or ourselves, or failure to prevent or mitigate the loss of or damage to this data through breach of our information technology systems or other means could substantially disrupt our operations, harm our customers, consumers, employees and other business partners, damage our reputation, violate applicable laws and regulations, subject us to potentially significant costs and liabilities and result in a loss of business that could be material. 30 Risks Related to Matters Outside our Control That May Impact Our Business Risks Related to International Trade Policies and Tariffs We are subject to risks arising from changes in international trade policies, including the imposition of new or increased tariffs on imported goods.
Unforeseen delays or difficulties in the development process, significant increases in the planned cost of development, or changes in anticipated consumer demand for our products and new brands may cause the introduction date for products to be later than anticipated, may reduce or eliminate the profitability of such products or, in some situations, may cause a product or new brand introduction to be discontinued.
Unforeseen delays or difficulties in the development process, significant increases in the planned cost of development, or changes in anticipated consumer demand for our products and new brands may cause the introduction date for products to be later than anticipated, may reduce or eliminate the profitability of such products or, in some situations, may cause a product or new brand introduction to be discontinued. 20 Risks Related to Our Supply Chain and Sales Channels Disruptions or inefficiencies in our supply chain or logistics network could adversely affect our ability to fulfill customer demand and may increase our costs.
If we fail to develop diverse top talent, we may be unable to compete, and our business may be harmed. To compete successfully, we must continuously develop a diverse group of talented people. We promote a diverse and inclusive work environment.
We cannot guarantee that we will successfully recruit, hire, or retain the personnel essential to our success. 28 If we fail to develop diverse top talent, we may be unable to compete, and our business may be harmed. To compete successfully, we must continuously develop a diverse group of talented people. We promote a diverse and inclusive work environment.
We are subject to various government regulations, violations of which could subject us to sanctions or otherwise harm our business. In addition, we could be the subject of future product liability suits or merchandise recalls, which could harm our business.
In addition, we could be the subject of future product liability suits or merchandise recalls, which could harm our business.
A breach of the covenants under the Revolving Credit Facility could result in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies.
Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies.
A breach of the covenants under the Revolving Credit Facility could result in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies.
Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies.
Furthermore, if we were unable to repay the amounts due and payable under the Revolving Credit Facility, those lenders could proceed against the collateral granted to them to secure that indebtedness.
Furthermore, if we were unable to repay the amounts due and payable under the Revolving Credit Facility, those lenders could proceed against the collateral granted to them to secure that indebtedness. In the event our lender accelerates the repayment of our borrowings, we may not have sufficient assets to repay that indebtedness.
These quotation services are generally considered to be less efficient, and to provide less liquidity, than the Nasdaq Capital Market. 34 If securities or industry analysts do not publish or cease publishing research or reports about Alliance, its business, or its market, or if they change their recommendations regarding Alliance’s securities adversely, the price and trading volume of Alliance’s securities could decline.
If securities or industry analysts do not publish or cease publishing research or reports about Alliance, its business, or its market, or if they change their recommendations regarding Alliance’s securities adversely, the price and trading volume of Alliance’s securities could decline.
Our Class A common stock was quoted on the OTC Pink Open Market until June 30, 2023, when we began trading on the Nasdaq Capital Market. Our Class A common stock shares are thinly traded, and we cannot predict when or if an active trading market will develop or how liquid that market might become.
Our Class A common stock shares are thinly traded, and we cannot predict when or if an active trading market will develop or how liquid that market might become.
Following the Business Combination, although Alliance has determined that the Public Warrants are treated as equity, Alliance is required to continue to recognize the changes in the fair value of the Private Warrants from the prior period, if any, in its operating results for the current period, which could have a material impact on Alliance’s financial position and operating results.
Following the Business Combination, although Alliance has determined that the Public Warrants are treated as equity, Alliance is required to continue to recognize the changes in the fair value of the Private Warrants from the prior period, if any, in its operating results for the current period, which could have a material impact on Alliance’s financial position and operating results. 35 Since Alliance currently qualifies as an “emerging growth company” and a “smaller reporting company” within the meaning of the Securities Act, it could make Alliance’s securities less attractive to investors and may make it more difficult to compare Alliance’s performance to the performance of other public companies.
Our quarterly and annual operating results may fluctuate due to seasonality in our business and union strikes impacting the availability of content. Sales of our music, video movies, video games and other entertainment products are seasonal, with an increase of retail sales occurring during the period from October through December for the holiday season.
Sales of our music, video movies, video games and other entertainment products are seasonal, with an increase of retail sales occurring during the period from October through December for the holiday season.
Inflation may continue to cause Alliance’s product costs and operating and administrative expenses to grow more rapidly than net sales, which could result in lower gross margins and lower net earnings .
Any such increased product costs from supplier disruption could adversely impact the results of operations and financial performance. 15 Inflation may continue to cause Alliance’s product costs and operating and administrative expenses to grow more rapidly than net sales, which could result in lower gross margins and lower net earnings .
The Certificate of Incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law, subject to certain exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
Similarly, our expenses can be significantly impacted, in U.S. dollar terms, by exchange rates, meaning the profitability of our business in U.S. dollar terms can be negatively impacted by exchange rate movements which we do not control. Depreciation in key currencies may have a significant negative impact on our revenues and earnings as they are reported in U.S. dollars.
Similarly, our expenses can be significantly impacted, in U.S. dollar terms, by exchange rates, meaning the profitability of our business in U.S. dollar terms can be negatively impacted by exchange rate movements which we do not control.
In addition, any product recall, regardless of direct costs of the recall, may harm the reputation of our products and have a negative impact on our future revenues and results of operations. 29 As a multinational corporation, we are subject to a host of governmental regulations throughout the world, including antitrust, employment, customs and tax requirements, anti-boycott regulations, environmental regulations, and the Foreign Corrupt Practices Act.
As a multinational corporation, we are subject to a host of governmental regulations throughout the world, including antitrust, employment, customs and tax requirements, anti-boycott regulations, environmental regulations, and the Foreign Corrupt Practices Act.
In the event our lender accelerates the repayment of our borrowings, we may not have sufficient assets to repay that indebtedness. 23 Covenants and events of default under Alliance’s Credit Facility could limit our ability to undertake certain types of transactions and adversely affect our liquidity.
Covenants and events of default under Alliance’s Credit Facility could limit our ability to undertake certain types of transactions and adversely affect our liquidity. A breach of the covenants under the Revolving Credit Facility could result in an event of default under the applicable indebtedness.
In addition, a failure to optimize inventory in our fulfillment network could result in lost sales from under inventory positions or extra costs of holding excess inventory or write-downs on inventory.
In addition, a failure to optimize inventory in our fulfillment network could result in lost sales from under inventory positions or extra costs of holding excess inventory or write-downs on inventory. Due to tight labor markets, we may be unable to staff our fulfillment network and customer service centers adequately or must increase wages to attract more employees.
Availability under the Revolving Credit Facility is limited by formula based on eligible accounts receivable and eligible inventory, subject to adjustment at the discretion of the lenders.
The Company did not reduce or terminate the facility, and as of June 30, 2025, the early termination fee provisions had expired. The Company remains subject to the unused commitment fee. Availability under the Revolving Credit Facility is limited by formula based on eligible accounts receivable and eligible inventory, subject to adjustment at the discretion of the lenders.
Changes in, or differing interpretations of, income tax laws and rules, and changes in our geographic operating results, may impact our effective tax rate. We are subject to a variety of taxes and tax collection obligations in the U.S. (federal and state) and numerous foreign jurisdictions.
Risks Related to Taxes and Government Related Matters We face additional tax liabilities and collection obligations. Changes in, or differing interpretations of, income tax laws and rules, and changes in our geographic operating results, may impact our effective tax rate.
These types of claims have been brought, sometimes successfully, against producers and distributors of media content. Any imposition of liability that is not covered by insurance or is in excess of insurance coverage could have a material adverse effect on our business, results of operation and financial condition.
Any imposition of liability that is not covered by insurance or is in excess of insurance coverage could have a material adverse effect on our business, results of operation and financial condition. 33 We are involved in litigation, arbitration or regulatory matters where the outcome is uncertain, and which could entail significant expense.
Pursuant to the Certificate of Incorporation, Alliance’s authorized capital stock consists of 490,000,000 shares of Class A common stock, 60,000,000 shares of Alliance Class E common stock and 1,000,000 shares of preferred stock. As of the date of this 10-K, we have 50,957,370 shares of Class A common Stock outstanding and no shares of preferred stock outstanding.
We may issue additional shares of Class A common stock or preferred shares under the 2023 Plan, which would dilute the interest of our stockholders. Pursuant to the Certificate of Incorporation, Alliance’s authorized capital stock consists of 490,000,000 shares of Class A common stock, 60,000,000 shares of Alliance Class E common stock and 1,000,000 shares of preferred stock.
Acquisitions and investments have been a component of our growth and the development of our business, such as our acquisition of COKeM in September 2020. Acquisitions can broaden and diversify our brand holdings and product offerings and allow us to build additional capabilities and competencies of the company.
Acquisitions and investments have been a component of our growth and the development of our business, such as our acquisition of Hand Made by Robots in December 2024 and COKeM in September 2020.
The effective interest rate for the period from execution of the Revolving Credit Facility through June 30, 2024, was 9.5%. The Credit Agreement is secured by a first priority security interest on the Company’s and the borrowers’ and other guarantors’ cash, accounts receivable, books and records and related assets.
The Company expects the reduction in the applicable interest rate range to decrease its interest expense in future periods. The Credit Agreement is secured by a first priority security interest on the Company’s and the borrowers’ and other guarantors’ cash, accounts receivable, books and records and related assets.
In fiscal year 2024, ecommerce sales represented approximately 24% of our top four customers overall sales as consumers increasingly purchased our products online as compared to through in-store shopping due to the continued transition to ecommerce accelerated by the shutdown and limited access to retail stores during the COVID-19 pandemic.
If we are unable to adapt our business to the continued shift to e-commerce, our business may be harmed. In fiscal year 2025, ecommerce sales represented approximately 45% of our top four customers overall sales as consumers increasingly purchased our products online as compared to through in-store shopping.
Release dates are determined by several factors, including the timing of holiday periods, geographical release dates and competition in the market. Additionally, the SAG AFTRA strike has created a lack of content for CDs, DVDs and other entertainment sectors. This could negatively affect our business.
Release dates are determined by several factors, including the timing of holiday periods, geographical release dates and competition in the market.
For the year ended June 30, 2023, our top customer accounted for 23% of our total net sales including all channels, market segments and lines of business.
For the year ended June 30, 2025, our top three customers generated approximately 40% of our net sales, and our largest customer accounted for approximately 15% of our total net sales. For the year ended June 30, 2024, our top customer accounted for 18% of total net sales.
Removed
While we have developed and implemented a remediation plan to address these material weaknesses, the remediation measures have not yet proven effective; ● Alliance’s management has limited experience in operating a public company; ● We might not be able to obtain or maintain the listing of our Class A common stock on the Nasdaq Capital Market; Risks Related to Our Business and Industry If we fail to respond to or capitalize on the rapid technological development in the music, video, gaming, and entertainment industry, including changes in entertainment delivery formats, our business could be harmed.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Board of Directors has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate those risks. The Board of Directors receives periodic updates on cybersecurity and information technology matters and related risk exposures from management. 37
Biggest changeOur Board of Directors has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate those risks. The Board of Directors receives periodic updates on cybersecurity and information technology matters and related risk exposures from management.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. Our principal executive offices are located at 8201 Peters Road, Suite 1000, Plantation, FL 33324, and our telephone number is (954) 255-4000. We have no long-term lease commitment.
Biggest changeItem 2. Properties. Our principal executive offices are located at 8201 Peters Road, Suite 1000, Plantation, FL 33324, and our telephone number is (954) 255-4000. We lease several distribution center facilities: ● Shepherdsville, Kentucky — A 662,087 square foot facility leased for $5.86 per square foot through January 31, 2031. with 3.25% annual increases to base rent.
Removed
We lease several distribution center facilities: ● Shepherdsville, Kentucky — A 672,087 square foot facility (including 30,000 square feet of cold storage) leased for $4.48 per square foot through November 30, 2024. We have revised the lease and extended the term through January 31, 2031, at a rate of $5.86 per square foot with 3.25% annual increases to base rent.
Added
In addition, we retain the right to extend for an additional term of five years at fair market rent. ● Shepherdsville, Kentucky (Additional Storage Facility) We have vacated our previous cold storage building and moved to a new facility that charges $11.00 per pallet with a $14,000 monthly minimum, which equates to 1,273 pallets.
Removed
In addition, we retain the right to extend for an additional term of five years at fair market rent. ● Shakopee, Minnesota — A 162,753 square foot facility leased for $4.43 per square foot with 2% annual escalations through May 31, 2024, at which time the lease was allowed to expire, and operations were consolidated in our Shepherdsville, KY location. ● Shakopee, Minnesota — A 29,688 square foot facility leased for $5.53 per square foot through September 30, 2025.
Added
This facility can accommodate up to 3,000 skids. There is no time limit set for this agreement ● Shakopee, Minnesota — A 29,688 square foot facility leased for $7.84 per square foot through September 30, 2025.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeDepending on the nature of the proceeding, claim, or investigation, the Company may be subject to monetary damage awards, fines, penalties, or injunctive orders. Furthermore, the outcome of these matters could materially adversely affect Alliance’s business, results of operations, and financial condition.
Biggest changeThese include proceedings, claims, and investigations relating to, among other things, regulatory matters, commercial matters, intellectual property, competition, tax, employment, pricing, discrimination, consumer rights, personal injury, and property rights. 42 Depending on the nature of the proceeding, claim, or investigation, the Company may be subject to monetary damage awards, fines, penalties, or injunctive orders.
(“COKeM”) in the United States District Court for the District of Minnesota alleging contributory trademark infringement, contributory false designation of origin and unjust enrichment relating to COKeM’s alleged] distribution of a specific video game, Cooking Mama: Cookstar. Plaintiff is seeking damages of no less $20,913,200, plus interest of 9% accruing from October 3, 2022.
On June 6, 2024, Office Create Corporation filed a complaint against COKeM International Ltd. (“COKeM”) in the United States District Court for the District of Minnesota alleging contributory trademark infringement, contributory false designation of origin and unjust enrichment relating to COKeM’s [alleged] distribution of a specific video game, Cooking Mama: Cookstar.
On August 29, 2024, COKeM filed a response denying all allegations. COKeM intends to vigorously defend the lawsuit. At this time, we are unable to estimate potential losses, if any, related to this lawsuit. On August 8, 2024, a class action complaint, Feller v. Alliance Entertainment, LLC and DirectToU, LLC , was filed under the Video Privacy Protection Act (“VPPA”).
On August 8, 2024, a class action complaint, Feller v. Alliance Entertainment, LLC and DirectToU, LLC , was filed under the Video Privacy Protection Act (“VPPA”).
Item 3. Legal Proceedings. Alliance is currently involved in, and may in the future be involved in, legal proceedings, claims, and government investigations in the ordinary course of business. These include proceedings, claims, and investigations relating to, among other things, regulatory matters, commercial matters, intellectual property, competition, tax, employment, pricing, discrimination, consumer rights, personal injury, and property rights.
Item 3. Legal Proceedings. Alliance is currently involved in, and may in the future be involved in, legal proceedings, claims, and government investigations in the ordinary course of business.
At this time, the potential outcome or range of financial impact cannot be reasonably estimated.
At this time, the potential outcome or range of financial impact cannot be reasonably estimated. Jonathan Hoang To v. DirectToU, LLC, United States District Court for the Northern District of California; Case No. 3:24-cv-06447; Douglas Feller, Jeffry Haise, and Joseph Mull v.
Removed
The outcomes of legal proceedings, claims, and government investigations are inherently unpredictable and subject to significant judgment to determine the likelihood and amount of loss related to such matters. On March 31, 2023, a class action complaint, titled Matthew McKnight v. Alliance Entertainment Holding Corp. f/k/a Adara Acquisition Corp., Adara Sponsor LLC, Thomas Finke, Paul G. Porter, Beatriz Acevedo-Greiff, W.
Added
Furthermore, the outcome of these matters could materially adversely affect Alliance’s business, results of operations, and financial condition. The outcomes of legal proceedings, claims, and government investigations are inherently unpredictable and subject to significant judgment to determine the likelihood and amount of loss related to such matters.
Removed
Tom Donaldson III, Dylan Glenn, and Frank Quintero, was filed in the Delaware Court of Chancery against our pre-Business Combination board of directors and executive officers and Adara Sponsor LLC, alleging breaches of fiduciary duties by purportedly failing to disclose certain information in connection with the Business Combination and by approving the Business Combination.
Added
Office Create Corporation is seeking damages of no less than $20,913,200, plus interest of 9% accruing from October 3, 2022. On August 29, 2024, COKeM filed a response denying all allegations. COKeM intends to vigorously defend the lawsuit. On September 12, 2024, COKeM filed a Third-Party Complaint against Planet Entertainment LLC and Steven Grossman asserting claims for indemnification and contribution.
Removed
On August 8, 2024, the Company entered into a settlement agreement regarding pending litigation. A settlement hearing is scheduled for November 25, 2024. The Company has accrued $511,000 and $150,000 as of June 30, 2024, and June 30, 2023, respectively, based on the expected loss. On June 6, 2024, Office Create Corporation filed a complaint against COKeM International Ltd.
Added
Mediation has been postponed. Office Create Corporation has filed an amended complaint impleading the former owner, chairman, CFO and SVP of Sales for COKeM seeking willful trademark infringement claims and civil conspiracy. Alliance filed an amended Answer insofar as any new claims pertain to COKeM directly on March 12, 2025.
Removed
While it is not possible to determine the outcomes, the Company believes based on its current knowledge that the resolution of all such pending matters will not, either individually or in the aggregate, have a material adverse effect on the business, results of operations, cash flows or financial condition.
Added
The Amended Complaint is now seeking damages in excess of $35MM. The court did schedule a settlement conference for August 11, 2025 but Office Create Corporation cancelled it with no new date scheduled. COKeM has offered a settlement amount of $330,000 which has been rejected by Office Create Corporation.
Added
COKeM believes that Office Create Corporation is relying on case law that has been overturned and precedent that is not-binding in the 8th Circuit. COKeM has some insurance coverage for this claim with CNA but the policy is capped at $2.5 million for all claims and also has to be shared with the VPPA class action claim(s) discussed below.
Added
Alliance Entertainment, LLC and DirectToU, LLC, United States District Court for the Southern District of Florida, Case No. 0:24-cv-61444; and Vivek Shah v.
Added
DirectToU, LLC, JAMS Arbitration, No. 5220006749.- On or about September 12, 2024, Jonathan Hoang To, who allegedly used the website www.deepdiscount.com; Douglas Feller and Jeffry Haise, who allegedly used the website www.ccvideo.com; Joseph Mull and Vivek Shah, who allegedly used the website www.moviesunlimited.com.
Added
The lawsuits also put at issue any other website owned or operated by Alliance Entertainment, LLC (“Alliance”) or one of its corporate affiliates, including the websites www.ccmusic.com and wowhd.co.uk.
Added
The lawsuits bring claims against DirectToU, LLC (“DirectToU”) and/or Alliance, alleging a violation of the Video Privacy Protection Act (“VPPA”) related to the alleged collection of, and alleged disclosure to Meta and other third parties, including data brokers, of alleged private information and user data regarding a user’s account information and video viewing/purchasing history from the respective Websites.
Added
Plaintiff Hoang To also alleges violations of California’s state VPPA equivalent, as well as violations of California’s Unfair Competition Law. DirectToU and Alliance dispute the allegations and will defend the lawsuits vigorously. The parties in the Hoang To matter have reached a settlement with respect to all potential class members.
Added
The settlement agreement has been submitted to the court for approval, slated for December 15, 2024. An approved settlement would cover the class members covered by the Feller matter, rendering such litigation moot. A motion to stay the Feller matter pending court approval of the settlement in Hoang To has been filed and granted.
Added
Counsel for the Feller parties filed a motion to intervene and stay the settlement in Hoang, which motions were rejected. The parties await final settlement approval. The settlement was rejected and the court has mandated the parties initiate discovery with respect to third-party data collection.
Added
The Alliance parties have filed a reply memorandum in support of its motion to compel arbitration on April 28, 2025. The parties reached a settlement on June 12, 2025, whereby COKeM will pay to the class a settlement amount of $1.577MM and COKeM’s insurance carrier CNA has approved to cover their part of the settlement amount.
Added
COKeM will have an estimated receivable of $1.377M. The company has accrued the liability in current liabilities and the receivables in current assets on the balance sheet as of June 30, 2025. The settlement approval before the court is pending and is expected to be ruled on in late October/early November 2025.
Added
Balabbo v Abysse America, Inc., Target Corporation, DirectToU, LLC (Prop 65): On or about December 11, 2024, DirectToU received a tender of defense from Target Corporation citing a possible violation of California Proposition 65 for a product sold by DirectToU allegedly containing lead. The product in question was supplied to Alliance by Abysse America. Alliance/DTU have tendered defense to Abysse.
Added
Abysse has engaged counsel to respond to the Prop 65 Violation Notice. At this time, Alliance/DTU have discontinued the product, but have documentation supplied by Abysse showing that the product was properly tested and was within allowable thresholds for lead and other substances. Algomus v.
Added
Alliance: Alliance received a cease and desist notice from Algomus on July 24, 2025, alleging that Alliance breached a non-solicitation provision of a Master Services Agreement between the parties when Alliance agreed to become the Category Advisor for Walmart. Alliance responded to the letter on August 8, 2025, asserting that Algomus’s position lacks merit.
Added
Alliance had been conducting business with Walmart prior to the Master Services Agreement, and Algomus and Walmart’s relationship is not governed by the language of the non-solicitation provision. On June 9, 2025, Sparkle Pop, LLC v. Alliance Entertainment Holding Corporation and Alliance Entertainment. LLC (U.S.
Added
Bankruptcy Court for MD-In Re Diamond Comic Distributors): Sparkle Pop has sued the Alliance entities in bankruptcy court alleging theft of trade secrets and tortious interference with contracts arising out of Alliance’s successful bid and subsequent termination of the Asset Purchase Agreement in the DCD bankruptcy matter.
Added
Alliance brought a motion to dismiss the original complaint with prejudice, but during the pendency of the motion plaintiff filed an Amended Complaint. Alliance will file a motion to dismiss the Amended Complaint shortly. McConigle v.
Added
Alliance/DirectToU, LLC: On December 29, 2024, McConigle filed a class action lawsuit against the Company in the United States District Court for the Southern District of Florida (Case No. 0:24-cv-62443-DSL), alleging violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”). On August 8, 2025, subsequent to year-end, the parties entered into a settlement agreement for $70,000.
Added
The Company did not record an accrual for this matter as of June 30, 2025, as the amount was not considered material to the consolidated financial statements. The Company does not expect any further material impact from this matter.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings We had no sales of unregistered equity securities during the period covered by this annual report that were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K. Item 6. Reserved.
Biggest changeRecent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings We had no sales of unregistered equity securities during the period covered by this annual report that were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
Market Information Our Class A common stock and warrants are quoted on the NASDAQ under the symbol “AENT.” Holders Although there are a larger number of beneficial owners, at June 30, 2024, there were [47] holders of record of our Class A common stock and [39] holders of record of our warrants.
Market Information Our Class A common stock and warrants are quoted on the NASDAQ under the symbol “AENT.” Holders Although there are a larger number of beneficial owners, at June 30, 2025, there were 28 holders of record of our Class A common stock and 34 holders of record of our warrants.
Added
Purchases of Equity Securities We have not repurchased any shares of our common stock during the fiscal year ended June 30, 2025. Item 6. Reserved.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear Ended Year Ended ($ in thousands) June 30, 2024 June 30, 2023 Net Income (Loss) $ 4,581 $ (35,404 ) Add back: Interest Expense 12,247 11,715 Income Tax (Benefit) Expense (2,728 ) (9,058 ) Depreciation and Amortization 5,880 6,629 EBITDA 19,980 (26,118 ) Adjustments IC-DISC - 2,833 Transaction Costs 2,086 5,014 Restructuring Costs 280 306 Stock-based Compensation Expense 1,386 216 Change in Fair Value of Warrants 41 1 Contingent Loss 461 150 Loss (Gain) on Disposal of PPE 33 (3 ) Adjusted EBITDA $ 24,267 $ (17,601 ) Adjusted EBITDA for the year ended June 30, 2023, included the following expenses: Excessive International Transportation Costs (Units Sold) 8,241 Excessive International Transportation Costs (On Hand) 7,100 Markdown for Arcades Sold 12,156 Incremental Storage Fees Arcades 4,643 Consumer Products Inventory Reserve 3,700 Total 35,840 44 LIQUIDITY AND CAPITAL RESOURCES Liquidity: On December 21, 2023, Alliance Entertainment Holding Corporation entered into a Revolving Credit Facility, which is a three-year $120 million senior secured asset-based credit facility with White Oak Commercial Finance, LLC.
Biggest changeYear Ended Year Ended ($ in thousands) June 30, 2025 June 30, 2024 Net Income $ 15,078 $ 4,581 Add back: Interest Expense 10,575 12,247 Income Tax Expense (Benefit) 3,630 (2,728 ) Depreciation and Amortization 5,334 5,880 EBITDA 34,617 19,980 Adjustments Transaction Costs 957 2,086 Restructuring Costs 73 280 Stock-based Compensation Expense 58 1,386 Change in Fair Value of Warrants 853 41 Contingent Loss - 461 (Gain) Loss on Disposal of PPE (15 ) 33 Adjusted EBITDA $ 36,543 $ 24,267 49 LIQUIDITY AND CAPITAL RESOURCES Liquidity: On December 21, 2023, Alliance Entertainment Holding Corporation entered into a Revolving Credit Facility, which is a three-year $120 million senior secured asset-based credit facility with White Oak Commercial Finance, LLC.
Intangible assets, such as customer relations and trade names, when identified, are separately recognized and amortized over their estimated useful lives, if considered definite lived. Acquisition costs are expensed as incurred and are included in the consolidated statements of operations and comprehensive income.
Intangible assets, such as customer relations and trade names, when identified, are separately recognized and amortized over their estimated useful lives, if considered definite lived. Acquisition costs are expensed as incurred and are included in the consolidated statements of income and comprehensive income.
Accordingly, we would not receive any proceeds from a cashless exercise of Warrants. Cash Flow: The following table summarizes our net cash provided by or used on operating activities, investing activities and financing activities for the periods indicated and should be read in conjunction with our consolidated financial statements for the year ended June 30, 2024 and 2023.
Accordingly, we would not receive any proceeds from a cashless exercise of Warrants. Cash Flow: The following table summarizes our net cash provided by or used on operating activities, investing activities and financing activities for the periods indicated and should be read in conjunction with our consolidated financial statements for the year ended June 30, 2025 and 2024.
As a result of the new credit facility, combined with these initiatives and the Company’s financial performance for the year ended June 30, 2024, the Company has concluded that it has sufficient cash to fund its operations and obligations (from its cash on hand, operations, working capital and availability on the credit facility) for at least twelve months from the issuance of these consolidated financial statements.
As a result of the new credit facility, combined with these initiatives and the Company’s financial performance for the year ended June 30, 2025, the Company has concluded that it has sufficient cash to fund its operations and obligations (from its cash on hand, operations, working capital and availability on the credit facility) for at least twelve months from the issuance of these consolidated financial statements.
These technology-led platforms with access to the Company’s in stock inventory of over 325,000 SKU products, consisting of vinyl records, video games, compact discs, DVD, Blu-Rays, toys, and collectables, combined with Alliance’s sales and distribution network, create a modern entertainment physical product marketplace that provides the discerning customer with enhanced options on efficient consumer-friendly platforms inventory.
These technology-led platforms with access to the Company’s in stock inventory of over 340,000 SKU products, consisting of vinyl records, video games, compact discs, DVD, Blu-Rays, toys, electronics and collectables, combined with Alliance’s sales and distribution network, create a modern entertainment physical product marketplace that provides the discerning customer with enhanced options on efficient consumer-friendly platforms inventory.
Alliance is a leading global wholesaler and a key player in the entertainment industry, boasts a diverse portfolio of owned brands, including Critics’ Choice, Collectors’ Choice, Movies Unlimited, DeepDiscount, popmarket, blowitoutahere, Fulfillment Express, importCDs GamerCandy, WowHD, and others.
Alliance is a leading global wholesaler and a key player in the entertainment industry, boasts a diverse portfolio of owned brands, including Critics’ Choice, Collectors’ Choice, Movies Unlimited, Heartland Music, DeepDiscount, popmarket, blowitoutahere, Fulfillment Express, importCDs GamerCandy, WowHD, and others.
For all product categories, the Company records any adjustments to net realizable value, if appropriate, based on historical sales, current inventory levels, anticipated customer demand, and general market conditions. For the year ended June 30, 2024, the Company continued to perform a net realizable value analysis to determine if a reserve or write-down was necessary for excess or obsolete inventory.
For all product categories, the Company records any adjustments to net realizable value, if appropriate, based on historical sales, current inventory levels, anticipated customer demand, and general market conditions. 51 For the year ended June 30, 2025, the Company continued to perform a net realizable value analysis to determine if a reserve or write-down was necessary for excess or obsolete inventory.
There was no impairment of goodwill or other intangible assets for the year ended June 30, 2024. 46 Given the inherent uncertainties in the macroeconomic environment, including interest rates and economic conditions, actual results could differ from management’s estimates, which could lead to future impairment charges.
There was no impairment of goodwill or other intangible assets for the year ended June 30, 2025. Given the inherent uncertainties in the macroeconomic environment, including interest rates and economic conditions, actual results could differ from management’s estimates, which could lead to future impairment charges.
Warrant Liability – The Company’s warrant liability is remeasured at fair value as of the reporting period balance sheet date. The fair value of the Private Warrant was measured using the Lattice model approach.
Warrant Liability – The Company’s warrant liability is remeasured at fair value as of the reporting period balance sheet date. The fair value of the Private Warrant was measured using the Black Scholes model approach.
Our primary sources of liquidity are existing cash and cash equivalents, cash provided by operating activities, and borrowings under our credit facility. As of June 30, 2024, in addition to the $1.1 million of cash, we carried a $73 million revolver balance on our $120 million credit facility under the Loan and Security Agreement with White Oak Commercial Finance, LLC.
Our primary sources of liquidity are existing cash provided by operating activities and borrowings under our credit facility. As of June 30, 2025, in addition to the $1.2 million of cash, we carried a $57 million revolver balance on our $120 million credit facility under the Loan and Security Agreement with White Oak Commercial Finance, LLC.
Cost of Revenues: Total cost of revenues, excluding depreciation and amortization, decreased from $1,055 million to $972 million ($83 million or 8%) year over year primarily due to the direct relation of product costs to sales volume. Gross Margin dollars increased $25 million year over year on lower sales and higher gross margins.
Cost of Revenues: Total cost of revenues, excluding depreciation and amortization, decreased from $972 million to $931 million ($41 million or 4%) year over year primarily due to the direct relation of product costs to sales volume. gross margin dollars increased $4 million year over year on lower sales and higher gross margins.
Income Tax: For the year ended June 30, 2024, an income tax benefit of $2.7 million was recorded compared to tax benefit of $9.1 million for the same period in the prior year. Alliance reported a pretax income of $1.9 million and pretax net loss of $(44.5) million for the years ended June 30, 2024, and 2023, respectively.
Income Tax: For the year ended June 30, 2025, an income tax provision of $3.6 million was recorded compared to tax benefit of $2.7 million for the prior year. Alliance reported a pretax income of $18.7 million and $1.9 million for the years ended June 30, 2025, and 2024, respectively.
Currently, the company sells its products, permitted for export, to more than 70 countries worldwide. Alliance provides state-of-the art warehousing and distribution technologies, operating systems and services that seamlessly enable entertainment product transactions to better serve customers directly or through our distribution affiliates.
Alliance provides state-of-the art warehousing and distribution technologies, operating systems and services that seamlessly enable entertainment product transactions to better serve customers directly or through our distribution affiliates.
Alliance is the retailers’ back office for in-store and e-commerce solutions. All electronic data interchange (“EDI”) and logistics are operational and ready for existing retail channels to add new products. Merger and Business Acquisition Alliance has a proven history of successfully acquiring and integrating competitors and complementary businesses.
Alliance is the retailers’ back office for in-store and e-commerce solutions. All electronic data interchange (“EDI”) and logistics are operational and ready for existing retail channels to add new products.
Balance Sheet Indicators: The Company views cash, product inventory, accounts payable, and working capital as key indicators of its financial position. 41 Alliance Entertainment Holding Corporation Results of Operations Year Ended June 30, 2024, Compared to Year Ended June 30, 2023 Year Ended Year Ended ($ in thousands) June 30, 2024 June 30, 2023 Net Revenues $ 1,100,483 $ 1,158,722 Cost of Revenues (excluding depreciation and amortization) 971,594 1,054,788 Operating Expenses Distribution and Fulfillment Expense 48,818 62,841 Selling, General and Administrative Expense 57,651 59,060 Depreciation and Amortization 5,880 6,629 Transaction Costs 2,086 5,014 IC DISC Commissions - 2,833 Restructuring Costs 280 306 Loss (Gain) on Disposal of Fixed Assets 33 (3 ) Total Operating Expenses 114,748 136,680 Operating Income (Loss) 14,141 (32,746 ) Other Expenses Change in Fair Value of Warrants 41 1 Interest Expense, Net 12,247 11,715 Total Other Expenses 12,288 11,716 Income (Loss) Before Income Tax Expense (Benefit) 1,853 (44,462 ) Income Tax (Benefit) (2,728 ) (9,058 ) Net Income (Loss) 4,581 (35,404 ) Other Comprehensive loss (2 ) - Total Comprehensive Income (Loss) 4,579 (35,404 ) Net Revenue: Year-over-year, total Net Revenues decreased from $1,159 million to $1,100 million (-$59 million, -5%) for the year ended June 30, 2024.
Balance Sheet Indicators: The Company views cash, product inventory, accounts payable, and working capital as key indicators of its financial position. 46 Alliance Entertainment Holding Corporation Results of Income Year Ended June 30, 2025, Compared to Year Ended June 30, 2024 Year Ended Year Ended ($ in thousands) June 30, 2025 June 30, 2024 Net Revenues $ 1,063,457 $ 1,100,483 Cost of Revenues (excluding depreciation and amortization) 930,605 971,594 Operating Expenses Distribution and Fulfillment Expense 40,375 48,818 Selling, General and Administrative Expense 55,992 57,651 Depreciation and Amortization 5,334 5,880 Transaction Costs 957 2,086 Restructuring Costs 73 280 (Gain) Loss on Disposal of Fixed Assets (15 ) 33 Total Operating Expenses 102,716 114,748 Operating Income 30,136 14,141 Other Expenses Change in Fair Value of Warrants 853 41 Interest Expense 10,575 12,247 Total Other Expenses 11,428 12,288 Income Before Income Tax Expense (Benefit) 18,708 1,853 Income Tax Expense (Benefit) 3,630 (2,728 ) Net Income 15,078 4,581 Other Comprehensive income (loss) 3 (2 ) Total Comprehensive Income 15,081 4,579 Net Revenue: Year-over-year, total net revenues slightly decreased from $1,100 million to $1,063 million (-$37 million, -3%) for the year ended June 30, 2025.
Risk Factors”. 40 Key Performance Indicators Management monitors and analyzes key performance indicators to evaluate financial performance, including: Net Revenue: To derive Net Revenue, the Company reduces total gross sales by customer returns, returns reserve, and allowances including discounts.
For further discussion of related risks, see Part I, Item 1A. ‘Risk Factors. Key Performance Indicators Management monitors and analyzes key performance indicators to evaluate financial performance, including: Net Revenue: To derive Net Revenue, the Company reduces total gross sales by customer returns, returns reserve, and allowances including discounts.
Since June 30, 2023, our available collateral decreased from $135 million to $117 million ($18 million, 13%); however, our availability increased from $2 million to $44 million, an increase of $42 million, as we converted accounts receivable and inventory to cash which was used to reduce the revolver from $133 million to $73 million ($60 million or 45%) year over year.
Since June 30, 2024, our availability increased from $44 million to $54 million, an increase of $10 million, as we converted accounts receivable and inventory to cash which was used to reduce the revolver from $73 million to $57 million ($16 million or 22%) year over year.
Significant inputs into the respective models at June 30, 2024 and June 30, 2023 are as follows: June 30, 2024 February 10, 2023 Stock Price $ 3.00 $ 2.55 Exercise price per share $ 11.50 $ 11.50 Risk-free interest rate 4.41 % 4.16 % Expected term (years) 3.6 4.6 Expected volatility 36.0 % 34.6 % Expected dividend yield — — The warrants are scheduled to expire on February 10, 2028.
Significant inputs into the respective models at June 30, 2025, and June 30, 2024, are as follows: June 30, 2025 June 30, 2024 Stock Price $ 3.77 $ 3.00 Exercise price per share $ 11.50 $ 11.50 Risk-free interest rate 3.63 % 4.41 % Expected term (years) 2.62 3.6 Expected volatility 47.1 % 36.0 % Expected dividend yield - — The warrants are scheduled to expire on February 10, 2028. 52 The significant assumptions using the Black Scholes model approach for valuation of the Private Placement Warrants and Representative Warrants were determined in the following manner: ● Risk-free interest rate: the risk-free interest rate is based on the U.S.
Operating Expenses: Total Operating Expenses declined 16% and decreased as a percentage of revenue from 11.8% to 10.4% (1.4 percentage points) year over year. Distribution and Fulfillment expenses declined in terms of absolute dollars and the percentage of revenue and Selling General and Administrative (SG&A) expenses declined in terms of absolute dollars as well.
Distribution and Fulfillment expenses declined in terms of absolute dollars and the percentage of revenue, and Selling General and Administrative (SG&A) expenses declined in terms of absolute dollars as well. Total Distribution and Fulfillment Expense, as a percentage of net revenue, decreased from 4.4% to 3.8% (.6 percentage point) for the year ended June 30, 2025, versus the prior year.
The annual effective tax rate (“ETR”) for the year ended June 30, 2024, was 147% due to an immaterial true up adjustment to deferred income taxes related to the net tax effects of temporary differences between the amount of assets and liabilities for accounting purposes and the amounts used for tax purposes. 43 Provision for income taxes, effective tax rate and statutory federal income tax rate for the years ended June 30, 2024, and 2023 were as follows: Year Ended Year Ended ($ in thousands) June 30, 2024 June 30, 2023 Income tax benefit $ (2,728 ) $ (9,058 ) Effective tax rate 147 % 21 % Statutory federal income tax rate 21 % 21 % Non-GAAP Financial Measures: For the year ended June 30, 2024, we had non-GAAP Adjusted EBITDA of $24.3 million compared with Adjusted EBITDA of $(17.6) million prior year or an improvement of $41.9 million year-over-year.
Provision for income taxes, effective tax rate and statutory federal income tax rate for the years ended June 30, 2025, and 2024 were as follows: Year Ended Year Ended ($ in thousands) June 30, 2025 June 30, 2024 Income tax provision (benefit) $ 3,630 $ (2,728 ) Effective tax rate 19 % 147 % Statutory federal income tax rate 21 % 21 % Non-GAAP Financial Measures: For the year ended June 30, 2025, we had non-GAAP Adjusted EBITDA of $36.5 million compared with Adjusted EBITDA of $24.3 million prior year or an improvement of $12.2 million year-over-year.
This pivotal role extends to connecting these manufacturers with top-tier retail partners both domestically and internationally. Notable partners encompass giants like Walmart, Amazon, Best Buy, Barnes & Noble, Wayfair, Costco, Dell, Verizon, Kohl’s, Target, Shopify, and others. 39 Employing an established multi-channel strategy, Alliance distributes physical media, entertainment products, hardware, and accessories across various platforms.
Notable partners encompass giants like Walmart, Amazon, Best Buy, Barnes & Noble, Wayfair, Costco, Dell, Verizon, BJ’s Wholesale Club, Rent A Center, Kohl’s, Target, Shopify, and others. 44 Employing an established multi-channel strategy, Alliance distributes physical media, entertainment products, hardware, and accessories across various platforms. Currently, the company sells its products, permitted for export, to more than 70 countries worldwide.
For the year ended June 30, 2024, the Company performed a quantitative assessment of goodwill at the entity level, which is considered a single reporting unit. Based on this analysis, the Company determined that the fair value of the reporting unit exceeded its carrying value, and no impairment was recognized.
The Company tests its goodwill for impairment when events or circumstances indicate that the fair value of the entity may be less than its carrying amount. For the year ended June 30, 2025, the Company performed a qualitative assessment of goodwill at the entity level, which is considered a single reporting unit.
Interest Expense: Interest Expense increased marginally from $11.7 million to $12.2 million ($0.5 million or 4.3%) for the year ended June 30, 2024, versus the prior year.
Interest Expense: Interest expense decreased from $12.2 million to $10.6 million ($1.6 million or 13.1%) for the year ended June 30, 2025, versus the prior year.
Along with other retailers and distributors in the United States, we are not immune to the macroeconomic headwinds caused by high interest rates and consumer spending discretion prompted by reduced buying power and geopolitical risks. Alliance Entertainment stands out as a value-added retail distributor with exclusive distribution rights for approximately 150 studios and labels in the film and music industry.
Like other U.S. retailers and distributors, we continue to face macroeconomic headwinds stemming from high interest rates, cautious consumer spending due to reduced purchasing power, and ongoing geopolitical uncertainties. Despite these challenges, Alliance Entertainment distinguishes itself as a value-added retail distributor with exclusive distribution rights for approximately 175 film and music studios and labels.
This extensive portfolio of unique content, combined with our deep inventory portfolio, enables us to cater to bulk B2B and direct-to-consumer (DTC) businesses with a vast selection of products unavailable through other distributors.
Our robust portfolio of exclusive content, coupled with deep inventory levels, positions us to effectively serve both bulk B2B customers and the direct-to-consumer (DTC) market with a broad selection of products not readily available through other distributors.
Intangible assets are carried at cost, less accumulated amortization, and are amortized over their estimated useful lives, which range from 5 to 15 years. The Company reviews these assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Based on this analysis, the Company determined that the fair value of the reporting unit exceeded its carrying value, and no impairment was recognized. Intangible assets are carried at cost, less accumulated amortization, if applicable. Definite-lived intangible assets are amortized over their estimated useful lives, which range from 5 to 15 years.
The average selling price of CDs increased by 12%, however, the decline in volume, partially due to the delay of some new K-Pop releases, offset some of the gains. Physical movie sales, which include DVDs, Blu-Ray, and Ultra HD, increased from $190 million to $204 million ($14 million, 8%) versus the same period last year.
This shift in product mix contributed to the overall decline in average selling price. 47 Physical movie sales, which include DVDs, Blu-Ray, and Ultra HD, increased from $204 million to $279 million (+$75 million, +37%) for the year ended June 30, 2025, versus the same period last year.
Year Ended ($ in thousands) June 30, 2024 June 30, 2023 Net Income (Loss) $ 4,581 $ (35,404 ) Net Cash (Used In) Provided By: Operating Activities 55,818 3,388 Investing Activities (162 ) (824 ) Financing Activities (55,390 ) (3,157 ) 45 For the year ended June 30, 2024, on a net income of $4.6 million, the Company’s cash provided by operating activities was $55.8 million versus $3.4 million for the year ended June 30, 2023.
Year Ended ($ in thousands) June 30, 2025 June 30, 2024 Net Income $ 15,078 $ 4,581 Net Cash (Used In) Provided By: Operating Activities 26,809 55,773 Investing Activities (8,134 ) (117 ) Financing Activities 18,571 (55,390 ) 50 For the year ended June 30, 2025, the Company generated $26.8 million in cash from operating activities on net income of $15.1 million, compared to $55.8 million in the prior year.
($in millions) June 30, 2024 June 30, 2023 Revolver Balance $ 73 $ 133 Availability 44 2 Our liquidity position has not changed significantly since the Merger, and we intend to principally rely on our borrowing capacity under the Revolving Credit Facility as well as any renewal of such facility.
($in millions) June 30, 2025 June 30, 2024 Revolver Balance $ 57 $ 73 Availability 54 44 The Company currently intends to continue relying primarily on its borrowing capacity under the Current Credit Facility, as well as any renewal or replacement of such facility, to fund working capital and other operational requirements.
Contributing to the decline of operating expenses was reduced Selling, Administrative, and General of $1.4 million or 2.3% for the year ended June 30, 2024, versus the same period prior year. SG&A expenses declined from $59.1 million to $57.7 million year-over- year.
Additionally, non-payroll fulfillment costs, including storage, declined significantly, reflecting continued efforts to optimize warehouse operations and improve cost structure. 48 A key contributor to the decline in operating expenses was a $1.7 million, or 2.9%, reduction in Selling, General, and Administrative (SG&A) expenses for the year ended June 30, 2025, compared to the prior year.
Product margins increased from 9.0% to 11.7% (+2.7percentage points) for the 12 months ended June 30, 2024 versus June 30, 2023. The gross margin improvement was primarily driven by reduced costs compared to the previous year, as a result of inventory adjustments to manage the high landed costs caused by supply chain disruptions during the pandemic.
Gross margins increased from 11.7% to 12.5% (+.8 percentage points) for the year ended June 30, 2025, versus June 30, 2024. The improvement in the gross margin was primarily driven by higher average selling prices and the successful launch of a new exclusive content partnership.
Since the exercise price of the Warrants of $11.50 per share is significantly greater than the current market price of the Class A common stock, we do not expect the Warrants to be exercised until such time, if ever, that the market price of the Class A common stock exceeds the exercise price of the Warrants.
Given that the market price of the Class A common stock was $3.77 as of June 30, 2025, the Company does not currently expect Warrants to be exercised unless and until the market price exceeds the exercise price.
Although the Company does not currently intend to do so, the Company may seek to raise additional capital through the sale of equity securities. The receipt of cash proceeds from the exercise of our Warrants is dependent upon the market price exceeding the $11.50 exercise price and the Warrants being exercised for cash.
Although the Company does not currently have any definitive plans to do so, it may seek to raise additional capital through the issuance of equity securities in the future, depending on market conditions, strategic opportunities and liquidity needs.
Net cash from financing activities was $55.4 million for the year ended June 30, 2024 versus cash used in financing activities of $3.2 million for the same period prior year.
For the year ended June 30, 2025, net cash used in financing activities totaled $19 million, compared to $55 million in the prior year. The current year’s financing activity primarily reflects net repayments on the revolving credit facility of $15.7 million, resulting from $986.1 million in payments and $970.4 million in borrowings.
Removed
The Company will continue to evaluate opportunities to identify targets that meet strategic and economic criteria. On July 1, 2022, Alliance purchased the assets and liabilities of Think3Fold, LLC, a collectables distribution company. This acquisition resulted in increased shelf space for our largest customer and expanded our product offerings.
Added
This pivotal role extends to connecting these manufacturers with top-tier retail partners both domestically and internationally.
Removed
On February 10, 2023, AENT Corporation (f/k/a Alliance Entertainment Holding Corporation) (“Legacy Alliance”), Adara Acquisition Corp. (“Adara”) and Adara Merger Sub, Inc. (“Merger Sub”) consummated the closing of the transactions contemplated by the Business Combination Agreement, dated as of June 22, 2022, by and among Adara, Merger Sub and Legacy Alliance.
Added
License Agreements In January 2025, Alliance entered into an exclusive home entertainment distribution agreement with Paramount Pictures, designating Alliance as the sole distributor of Paramount’s physical media – including DVDs, Blu-rays, and 4K UHD titles, across the United States and Canada.
Removed
Pursuant to the terms of the Business Combination Agreement, a business combination of Legacy Alliance and Adara was affected by the merger of Merger Sub with and into Alliance (the “Merger” or the “Business Combination”), with Alliance surviving the Merger as a wholly-owned subsidiary of Adara.
Added
This strategic partnership significantly enhances Alliance’s leadership in home entertainment distribution by providing direct access to Paramount’s extensive library of blockbuster films and iconic TV series. The collaboration has already yielded positive results. This partnership not only strengthens relationships with major retailers and collectors but also reinforces Alliance’s commitment to delivering high-quality entertainment products to consumers.
Removed
Following the Merger’s consummation on the closing of the Business Combination, Adara changed its name from Adara Acquisition Corp. to Alliance Entertainment Holding Corporation (the “Company”). While the legal acquirer in the Business Combination Agreement was Adara, for financial accounting and reporting purposes under U.S.
Added
Merger and Business Acquisition Alliance has a proven history of successfully acquiring and integrating competitors and complementary businesses. The Company will continue to evaluate opportunities to identify targets that meet strategic and economic criteria. On December 17, 2024, we acquired Handmade by Robots from Bensussen Deutsch & Associates, LLC for $7.6 million.
Removed
GAAP, Legacy Alliance was the accounting acquirer, and the Merger was accounted for as a “reverse recapitalization.” A reverse recapitalization (i.e., a capital transaction involving the exchange of stock by Adara for Legacy Alliance’s stock) does not result in a new basis of accounting, and the consolidated financial statements of the combined entity represent the continuation of the consolidated financial statements of Legacy Alliance in many respects.
Added
Handmade by Robots produces licensed vinyl figures that mimic the look of knitted or crocheted plush toys and feature characters from popular franchises such as DC Comics, Ghostbusters, Harry Potter, Star Trek, and Stranger Things.
Removed
Accordingly, the consolidated assets, liabilities, and results of Legacy Alliance operations became the company’s historical consolidated financial statements. Adara’s assets, liabilities, and operations results were consolidated with Legacy Alliance beginning on the acquisition date. Operations prior to the Merger are presented as those of Legacy Alliance in future reports.
Added
The acquisition was accounted for as an asset purchase, with the purchase price allocated to inventory, tooling equipment, and a trademark associated with the product line. The Handmade by Robots acquisition enhances our portfolio by adding an exclusive collectible line that expands our reach into licensed pop culture merchandise.
Removed
The net assets of Adara were recognized at historical cost (which was consistent with carrying value), with no goodwill or other intangible assets recorded. Upon consummation of the Merger, the most significant change in Legacy Alliance’s future reported financial position and results of operations was a decrease in net Equity of $787,000 compared to its consolidated balance sheet.
Added
While the financial contribution of Handmade by Robots since the acquisition date has not been material to our consolidated results for fiscal 2025, we expect this product line to provide incremental revenue growth opportunities in future periods.
Removed
As a result of the Merger, Alliance Entertainment became the successor to an SEC-registered company, which requires us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.
Added
On February 10, 2023, Alliance completed its business combination with Adara Acquisition Corp., which was accounted for as a reverse recapitalization with Alliance treated as the accounting acquirer. As a result of this transaction, the Company continues to recognize non-cash fair value remeasurement adjustments related to its outstanding warrants.
Removed
We expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources, including increased audit and legal fees.
Added
For the fiscal year ended June 30, 2025, the Company recorded a non-cash loss of $0.9 million related to changes in the fair value of its warrants, compared to a loss of $0.04 million for the fiscal year ended June 30, 2024.
Removed
Macroeconomic Uncertainties Unfavorable conditions in the economy in the United States and abroad may negatively affect the growth of our business and have affected our results of operations. For example, macroeconomic events, including inflation, interest rates, geopolitical issues, and uncertainty regarding the U.S. elections in the Fall of 2024 have led to economic uncertainty globally.
Added
These adjustments may create volatility in reported results; however, they do not impact cash flows from operations. 45 Macroeconomic Uncertainties Macroeconomic conditions, including persistent inflation, continued to influence our operating environment in fiscal 2025. Warehouse costs declined year-over-year, reflecting improved operating efficiencies, and interest expense under our credit facility decreased due to lower borrowings.
Removed
The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. If, however, economic uncertainty increases or the global economy worsens, our business, financial condition and results of operations may be harmed.
Added
At the same time, renewed tariff discussions on imported physical media and electronics present potential cost increases that could pressure future gross margins. While we did not experience material supply chain disruptions in fiscal 2025, we continue to monitor these factors and their potential impact on our business, financial condition, and results of operations.
Removed
For further discussion of the potential impacts of macroeconomic events on our business, financial condition, and operating results, see the section titled Part I “Item 1A.
Added
Our proprietary DTC distribution and inventory solutions—anchored by our consumer-direct subsidiary, DirectToU LLC which contributed approximately 37% of gross revenue for the year ended June 30, 2025, up from 36% in the prior year. Year over year, vinyl record sales increased from $329 million to $340 million ($11 million, 3%) for the year ending June 30, 2025.
Removed
Our unique DTC suite of distribution and inventory solutions for the e-commerce retail industry, including our consumer direct subsidiary DirectToU LLC, enabled approximately 36% of gross revenue for the 12 months ended June 30, 2024, versus 31% for the 12 months ended June 30, 2023. Physical music and movie products continue to show resilience.
Added
This growth was driven by a 3.8% increase in sales volume, partly offset by a 0.5% reduction in the average selling price. The modest decline in pricing was outweighed by higher unit demand, resulting in overall revenue growth. Robust early demand and pre-sales ahead of Record Store Day in April 2025 also supported performance.
Removed
Year over year, Vinyl record sales increased from $324 million to $329 million ($5 million, 2%) for the 12 months ended June 30, 2024. The average selling price of Vinyl was up 6% and partially offset by decreased volume resulting in net revenue improvement versus the prior year.
Added
We expect continued momentum from collectors and music enthusiasts drawn to the physical format and limited-edition releases.
Removed
We expect music enthusiasts and collectors to extend this upward trend because of their passion for music, their appreciation for the artwork, and a desire to enhance their physical collection. Likewise, music Compact Discs (CDs) sales increased from $128 million to $130 million ($2 million, 2%).
Added
Notable vinyl releases during the twelve months ended June 30, 2025, included Taylor Swift’s The Tortured Poets Department (including its Anniversary Anthology vinyl edition), Sabrina Carpenter’s deluxe Short n’ Sweet , Billy Idol’s Dream Into It (his first new album in over a decade), Lorde’s critically acclaimed Virgin , and Bruce Springsteen’s archival box set Tracks II: The Lost Albums.
Removed
The average selling price of physical film products increased 19% year over year and was partially offset by a decline in volume. Digital sales of our exclusive content increased approximately 135% over the same period prior year. The consistent flow of new theatrical releases, combined with 4K and collectable SteelBook content, continues to drive home video sales.
Added
Our leading vinyl distribution partners for the period included Walmart, Barnes & Noble, and Amazon. Music Compact Discs (CDs) sales slightly decreased from $130 million to $125 million (-$5 million, -4%) for the year ended June 30, 2025.
Removed
We expect the trend of higher price points to continue as brick & mortar retailers cater to the consumer preference for omnichannel shopping experiences and curated content versus inexpensive, mass market product offerings.
Added
The decline was primarily the result of a 4.5% reduction in average selling price, which more than offset a modest 0.4% increase in unit volume. While consumer demand showed slight improvement, pricing pressure weighed on overall revenue performance.
Removed
Alliance Entertainment’s ability to offer retailers in-store and on-line channels a deep, extensive library of both music and movies helps provide them the products for a cohesive shopping experience based on personal preference and engagement with their respective brands. 42 Year-over-year, gaming sales decreased from $391 million to $338 million (-$53 million, -14%) for the 12 months ended June 30, 2024.
Added
A key driver of the decline in average selling price for CD sales was increased pricing pressure and a shift in consumer purchases toward lower-priced formats. Throughout the year, interest in expanded anniversary re-issues, collector’s editions, and multi-disc box sets remained steady.
Removed
The average selling price of gaming products more than doubled for the period versus prior year but was offset by a decrease in unit volume. The revenue derived from a higher price point was the direct result of our success selling more hardware and retro arcades than prior periods.
Added
However, these premium formats represented a smaller share of total sales compared to prior years, as more consumers gravitated toward standard, lower-priced releases.
Removed
Gaming suppliers continue to transition to subscription-based models, and we expect to benefit from new hardware releases during the next year. We continue to proactively monitor gaming industry trends to ensure we have the right product mix to meet market demand and maximize profitability.
Added
Unit volume rose by 14.8% year over year, and an 18.8% increase in average selling price further amplified growth, resulting in strong overall revenue performance. The strong growth in physical movie sales was driven by a steady pipeline of theatrical releases and continued consumer interest in premium formats such as 4K Ultra HD and collectible SteelBooks.
Removed
For the 12 months ended June 30, 2024, Consumer Products revenue decreased from $80 million to $43 million (-$37 million, -46%) versus the same period prior year. The average selling price increased by approximately 28% this year and while volume declined, margins improved significantly as we rationalized our inventory.
Added
The launch of a new exclusive content partnership in January 2025 further strengthened our film portfolio, introducing a slate of high-profile titles that enhanced both our pricing power and retail visibility. This shift toward premium content significantly contributed to the increase in average selling price, even as overall volume declined.
Removed
The toys & collectables industry appears to have stabilized in the post- pandemic era and major trade shows have resumed their promotion of these unique products. The collectables market is an integral part of the entertainment market segment due to its mix of nostalgic, investment, and intrinsic value. As such, we believe there is continued profitable growth in this category.
Added
We expect this trend to continue, as brick-and-mortar retailers increasingly prioritize curated, high-value offerings to meet demand for omnichannel shopping experiences over lower-cost, mass-market inventory. With a robust content pipeline and strengthened retail partnerships, we are well-positioned to capitalize on evolving consumer preferences and deliver sustained growth across our physical media business.
Removed
In addition, business conditions allowed us to reduce our company sponsored marketing development funds (MDF) for arcades r elative to prior year. Since gaming products are largely non-returnable, the supply chain does not have an established practice and cadence for mark downs like the movie and music industries.
Added
Year-over-year, gaming sales decreased from $338 million to $255 million (-$83 million, -25%) for the 12 months ended June 30, 2025. Unit volume declined by 61.5%, reflecting limited hardware availability and delays in major game releases from key publishers.

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Other AENT 10-K year-over-year comparisons