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What changed in Playboy, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Playboy, Inc.'s 2022 and 2023 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 2023 report.

+452 added−487 removedSource: 10-K (2024-03-29) vs 10-K (2023-03-16)

Top changes in Playboy, Inc.'s 2023 10-K

452 paragraphs added · 487 removed · 300 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

51 edited+11 added−13 removed18 unchanged
Biggest changeThe Trust then sold to Playboy, and Playboy redeemed, all of the common stock in Playboy held by the Trust for a total of $35 million. 7 On February 10, 2021, we consummated the transactions contemplated by that certain Agreement and Plan of Merger, dated as of September 30, 2020 (the “Merger Agreement”), by and among Mountain Crest Acquisition Corp (“MCAC”), MCAC Merger Sub Inc.
Biggest changeOn February 10, 2021, pursuant to an Agreement and Plan of Merger, dated as of September 30, 2020 (the “Merger Agreement”), Playboy consummated a merger transaction with a wholly-owned subsidiary of a special purpose acquisition company, Mountain Crest Acquisition Corp (“MCAC”), as a result of which Playboy survived the merger as a wholly-owned subsidiary of MCAC (the “Business Combination”).
And we fiercely believe that our diversity positions us for greater success and impact in the world. Embrace the Next Challenge . We have a growth mindset. We don’t let ourselves get too comfortable. We are constantly questioning our existing knowledge and recognize that our blind spots are bigger than we think. We actively seek out opportunities to learn.
We fiercely believe that our diversity positions us for greater success and impact in the world. Embrace the Next Challenge . We have a growth mindset. We don’t let ourselves get too comfortable. We are constantly questioning our existing knowledge and recognize that our blind spots are bigger than we think. We actively seek out opportunities to learn.
Securities and Exchange Commission (the "SEC") on a regular basis, and are required to disclose certain material events in a Current Report on Form 8-K. The SEC maintains a website that contains our periodic reports, proxy and information statements and other information regarding us that we file electronically with the SEC. The SEC’s website is located at http://www.sec.gov.
Securities and Exchange Commission (the “SEC”) on a regular basis, and are required to disclose certain material events in a Current Report on Form 8-K. The SEC maintains a website that contains our periodic reports, proxy and information statements and other information regarding us that we file electronically with the SEC. The SEC’s website is located at http://www.sec.gov.
We help others feel confident and comfortable doing the same. We take initiative. We don’t wait for things to happen to us or wait to be told. We are willing to wear many hats and roll our sleeves up when others need help, even if it means working outside our job description. We lead by example. 8 Stay Playful .
We help others feel confident and comfortable doing the same. We take initiative. We don’t wait for things to happen to us or wait to be told. We are willing to wear many hats and roll our sleeves up when others need help, even if it means working outside our job description. We lead by example. Stay Playful .
Our mission — to create a culture where all people can pursue pleasure — builds upon almost seven decades of creating groundbreaking media and hospitality experiences and fighting for cultural progress rooted in the core values of equality, freedom of expression and the idea that pleasure is a fundamental human right.
Our mission—to create a culture where all people can pursue pleasure—builds upon seven decades of creating groundbreaking media and hospitality experiences and fighting for cultural progress rooted in the core values of equality, freedom of expression and the idea that pleasure is a fundamental human right.
We create a safe and encouraging environment for others to do the same, bringing their authentic selves forward. We welcome and value varying perspectives and opinions, and we assume best intentions. We celebrate and bring out the best in each other. We pay attention to others discomfort. We respect boundaries.
We create a safe and encouraging environment for others to do the same, bringing their authentic selves forward. We welcome and value varying perspectives and opinions, and we assume the best intentions. We celebrate and bring out the best in each other. We pay attention to others’ discomfort. We respect boundaries.
Our Competition We operate in the consumer goods space across a variety of different industries and face competition from broad direct-to-consumer platforms such as Amazon, as well as brands and retailers that are more targeted to particular markets.
Our Competition We operate in the consumer goods space across a variety of different industries and face competition from broad direct-to-consumer platforms such as Amazon and Douyin, as well as brands and retailers that are more targeted to particular markets.
These offerings are primarily delivered by our strategic licensing partners, and some products are offered for resale on playboy.com .
These offerings are primarily delivered by our strategic licensing partners, and some products are offered for resale on shop.playboy.com .
Today, we approach this category through the lens of confidence, providing our consumers with products and content that inspire body positivity and creative expression. With strong adjacency to Sexual Wellness, Beauty and Grooming offerings include men's and women’s skincare, haircare, bath and body, grooming, cosmetics and fragrance.
Today, we approach this category through the lens of confidence, providing our consumers with products and content that inspire body positivity and creative expression. With strong adjacency to Sexual Wellness, Beauty and Grooming offerings include skincare, haircare, bath and body, grooming, cosmetics and fragrance.
We make available, free of charge, on our investor relations website, www.plbygroup.com/investors, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We make available, free of charge, on our investor relations website, www.plbygroup.com/investors, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We pride ourselves in being able to pick ourselves up, be positive about our mistakes (while learning from them) and move forward. We celebrate creativity and the importance of trying new things out. We know you to have a good time and we understand boundaries. We celebrate each other. We value our time both in and out of work.
We pride ourselves in being able to pick ourselves up, be positive about our mistakes (while learning from them) and move forward. We celebrate creativity and the importance of trying new things out. We know how to have a good time and we understand boundaries. We celebrate each other.
Foreign Corrupt Practices Act, the UK Bribery Act and other similar anti-bribery and anti- kickback laws and regulations that generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business; and • federal, state and foreign anticorruption, data protection, privacy, consumer protection, content regulation and other laws and regulations, including without limitation, GDPR and the CCPA.
Foreign Corrupt Practices Act, the UK Bribery Act and other similar anti-bribery and anti- kickback laws and regulations that generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business; and • federal, state and foreign anticorruption, data protection, privacy, consumer protection, content regulation and other laws and regulations, including without limitation, the General Data Protection Regulation (the “GDPR”) and the California Consumer Privacy Act (the “CCPA”).
We provide consumers around the world with products, content and experiences that help them lead happier, healthier and more fulfilling lives. Our flagship consumer brand, Playboy, is one of the most recognizable brands in the world, driving billions of dollars annually in global consumer spending with products and content available in approximately 180 countries.
We provide consumers around the world with products, content and experiences that help them lead happier, healthier and more fulfilling lives. Our flagship consumer brand, Playboy, is one of the most recognizable brands in the world, with products and content available in approximately 180 countries.
We will continue to use our licensing business as a marketing tool and brand builder, in particular through our high-end designer collaborations and our large-scale partnerships with partners such as PacSun. Second, investing in our Playboy digital platform as we return to our roots as a place to see and be seen for creators and up and coming cultural influencers.
In the U.S., we will continue to use our licensing business as a marketing tool and brand builder, in particular through our high-end designer collaborations and our large-scale partnerships. Second, investing in our Playboy digital platform as we return to our roots as a place to see and be seen for creators and up-and-coming cultural influencers.
We report on our business operations in three segments: • Licensing , including licensing our brand to third parties for products, services, venues, online gaming and events. • Direct-to-Consumer , including sales of third-party products through our owned-and-operated e-commerce platforms, and sales of our proprietary products through our platforms and/or third-party retailers; and • Digital Subscriptions and Content , including revenues generated from the sales of creator offerings to consumers on playboy.com , the sale of subscriptions to Playboy programming, which is distributed through various channels, including websites and domestic and international TV, and the sales of tokenized digital art and collectibles.
We report on our business operations in three segments: 5 • Direct-to-Consumer , through our owned-and-operated e-commerce platform, retail stores and sales of our proprietary products through third-party retailers; • Licensing , including licensing our brand to third parties for products, services, venues, online gaming and events; and • Digital Subscriptions and Content , including revenues generated from the sales of creator offerings to consumers through the Playboy Club, and the sale of subscriptions to Playboy programming, which is distributed through various channels, including websites and domestic and international TV.
We are entering into a joint venture, Playboy China Limited, with Charactopia Licensing Limited, a Fung Retailing brand management company, representing many global brands in China, to jointly own and operate the Playboy licensed business in China (including Hong Kong and Macau).
In 2023, we also entered into a joint venture, Playboy China Limited (the “China JV”), with Charactopia Licensing Limited, a Fung Retailing brand management company, representing many global brands in China, to jointly own and operate the Playboy licensed business in China (including Hong Kong and Macau).
Government Regulation In connection with the products we provide, we must comply with various laws and regulations from federal, state, local and foreign regulatory agencies. We believe that we are in material compliance with regulatory requirements applicable to our business.
We value our time both in and out of work. 8 Government Regulation In connection with the products we provide, we must comply with various laws and regulations from federal, state, local and foreign regulatory agencies. We believe that we are in material compliance with regulatory requirements applicable to our business.
We created these values with the goal of holding ourselves accountable, of preserving what is special, and to inspire and guide ourselves moving forward as we grow and take on new challenges. We believe staying true to these values will drive the long-term value we create in consumers’ lives.
We created these values with the goals of holding ourselves accountable, preserving what is special about Playboy, and inspiring and guiding ourselves to move forward as we grow and take on new challenges. We believe staying true to these values will drive the long-term value we create in consumers’ lives.
We employ multiple business models, including brand licensing, direct-to-consumer and third-party retail sales, and digital sales and subscriptions, to help maximize the value of our assets and promote long-term revenue and profitability growth.
Our Business Segments We generate revenue through the sales of our products and content services to consumers around the world. We employ multiple business models, including brand licensing, direct-to-consumer and third-party retail sales, and digital sales and subscriptions, to help maximize the value of our assets and promote long-term revenue and profitability growth.
During the year ended December 31, 2022, our Direct-to-Consumer segment contributed $186.6 million in revenue and $207.0 million in operating loss, of which $184.8 million was due to non-cash impairment charges on certain of our intangible assets, including goodwill, in the third quarter of 2022.
During the year ended December 31, 2023, our Direct-to-Consumer segment contributed $78.0 million in revenue and $98.9 million in operating loss, of which $72.6 million was due to non-cash impairment charges on certain of our intangible assets, including goodwill.
Each of the foregoing categories represent very large and growing markets, providing us with significant opportunities for growth from the increased sales of our current products, as well as through the introduction of new products within these categories. 5 Our Business Segments We generate revenue through the sales of our products to consumers around the world.
Each of the foregoing categories represent very large and growing markets, providing us with significant opportunities for growth from the increased sales of our current products and content, as well as through the introduction of new products and content within these categories.
Our Employees As of December 31, 2022, we had 497 full-time and full-time-equivalent employees and 566 part-time employees. None of the employees are represented by a labor union. Our team values support our employee relations, which we believe to be positive and productive.
Our Employees As of December 31, 2023, we had a total of 628 employees, of whom 249 were full-time and full-time-equivalent employees and 379 were part-time employees. None of our employees are represented by a labor union. Our team values support our employee relations, which we believe to be positive and productive.
Over the following decades, Playboy grew into a leader and pioneer in the entertainment, hospitality, and licensing businesses. From 1973 to 2011, Playboy's stock was publicly traded on the New York Stock Exchange. Playboy’s current corporate entity, Playboy Enterprises, Inc., was incorporated in the State of Delaware in April 1998.
Over the following decades, Playboy grew into a leader and pioneer in the entertainment, hospitality, and licensing businesses. From 1973 to 2011, Playboy’s stock was publicly traded on the New York Stock Exchange.
We expect the Playboy China joint venture to invigorate our China-market Playboy apparel business, including online and offline retail strategies, product design and assortment, and brand marketing to its multi-generational audience.
The China JV is working to reinvigorate our China-market Playboy apparel business, including online and offline retail strategies, product design and assortment, and brand marketing to its multi-generational audience.
Creative Artists Agency, a brand agency with significant global reach and infrastructure, acts as our exclusive licensing agent for the Playboy brand trademarks and intellectual property for consumer products in a broad range of categories in most of the world.
In addition, we license the sale of certain proprietary products by third parties across major retailers in certain markets. Creative Artists Agency, a brand agency with significant global reach and infrastructure, acts as our exclusive licensing agent for the Playboy brand trademarks and intellectual property for consumer products in a broad range of categories in most of the world.
Our Strategy We aim to build the leading pleasure and leisure lifestyle platform for all people around the world. In 2021 and 2022, we built up our direct-to-consumer business, including expanding our licensing categories, and developed our digital capabilities, including launching our creator platform.
Our Strategy We aim to build the leading pleasure and leisure lifestyle platform for all people around the world. In 2021 and 2022, we expanded our licensing categories, and developed our digital capabilities, including launching our creator platform, which has become the Playboy Club.
Over the past several years, we have undertaken a process of transforming and streamlining our business model to transition Playboy’s primary business from a print and digital media entity, generating advertising and sponsorship revenues, to our primarily commerce business which markets consumer products and digital content.
The publicly traded parent company, MCAC, changed its name to “PLBY Group, Inc.” upon consummation of the Business Combination. 7 Over the past several years, we have undertaken a process of transforming and streamlining our business model to transition Playboy’s primary business from a print and digital media entity, generating advertising and sponsorship revenues, to our primarily commerce business which markets consumer products and digital content.
As of 2023, we will pursue a commercial strategy that relies on a more capital-light model focused on revenue streams with higher margin and higher growth potential. We will do this by leveraging our flagship Playboy brand to attract best-in-class strategic partners and scale our creator platform with influencers who embody our brands aspirational lifestyle.
In 2023, we began pursuing a commercial strategy that relies on a more capital-light model focused on revenue streams with higher margin, lower working capital requirements and higher growth potential. We intend to do this by leveraging our flagship Playboy brand to attract best-in-class strategic partners and scale the Playboy Club with creators who embody Playboy’s aspirational lifestyle.
Pursuant to its agreements with the MSOs, Playboy programs the Playboy TV and typically receives a royalty based on the numbers of subscribers to the service. 6 During the year ended December 31, 2022, our Digital Subscriptions and Content segment contributed $18.7 million in revenue and $13.0 million of operating loss, of which $4.9 million was related to non-cash impairment of our crypto assets and certain other assets.
Pursuant to its agreements with the MSOs, Playboy provides programs for Playboy TV and typically receives a royalty based on the numbers of subscribers to the service. 6 During the year ended December 31, 2023, our Digital Subscriptions and Content segment contributed $20.7 million in revenue and $2.4 million of operating loss.
In addition, Playboy TV is offered through leading MSOs (multiple-system operators) around the globe, including U.S. MSOs DIRECTV, Comcast, Dish, Charter, Cox, Altice, and Mediacom.
Digital Subscriptions and Content Our Digital Subscriptions and Content today comprise the Playboy Club, our creator-led platform on playboy.com , and Playboy’s adult content offerings, including playboyplus.com and playboy.tv . In addition, Playboy TV is offered through leading MSOs (multiple-system operators) around the globe, including U.S. MSOs DIRECTV, Comcast, Dish, Charter, Cox, Altice, and Mediacom.
During the year ended December 31, 2022, our Licensing segment contrib uted $60.9 millio n in revenue and $74.0 million in operating loss, which was due to $116.0 million of non-cash impairment charges on Playboy-branded trademarks in the third quarter of 2022.
During the year ended December 31, 2023, our Licensing segment contributed $44.3 million in revenue and $46.9 million in operating loss, which was due to $71.3 million of non-cash impairment charges on Playboy-branded trademarks in the second half of 2023.
We will refocus our three key growth pillars: first, strategically expanding our licensing business in key categories and territories. Our Playboy China joint venture is expected to invigorate our China-market Playboy apparel business, building on Playboy’s current roster of licensees and online storefronts by adding new licensees.
We are refocusing on two key growth pillars. First, strategically expanding our licensing business in key categories and territories. Our China JV is intended to reinvigorate our China-market Playboy apparel business through expanding Playboy’s reach and online storefronts by adding new licensees.
Our style and apparel offerings build on seven decades of standing for free expression. • Digital Entertainment and Lifestyle is a category that encompasses all the ways we stand for sophisticated, fun and leisure-filled living. Our content creator platform on playboy.com lets customers interact directly with influencers and other creators that generate their own array of content.
Our style and apparel offerings build on seven decades of standing for free expression and a rich archive of heritage intellectual property assets. • Digital Entertainment and Lifestyle is a category that encompasses all the ways we stand for sophisticated, fun and leisure-filled living.
Driven by our cause of “Pleasure for All,” our goal is to build the leading pleasure and leisure lifestyle platform for all people around the world. For the fiscal years ended December 31, 2022 and 2021, our consolidated revenue was $266.9 million and $246.6 million, respectively, and our consolidated net loss was $277.7 million and $77.7 million, respectively.
We seek to build the leading pleasure and leisure lifestyle platform for all people around the world. For the fiscal years ended December 31, 2023 and 2022, our consolidated revenue was $143.0 million and $185.5 million, respectively, and our consolidated net loss was $180.4 million and $277.7 million, respectively.
See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations--Key Factors and Trends Affecting Our Business, for additional matters that affect our consumer products business, including seasonality.
See “Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations--Key Factors and Trends Affecting Our Business”, for additional matters that affect our consumer products business, including seasonality. Licensing We license the Playboy name, Rabbit Head Design, and other trademarks and related properties to partners around the world.
Our offerings help consumers around the world look good, feel good, and enjoy their lives.
Our Products & Services Our products and content delivery services connect consumers to a lifestyle of pleasure and leisure. Our offerings help consumers around the world look good, feel good and enjoy their lives.
We believe that creating a respectful and inclusive environment where team members can be themselves and be supported is critical to attracting, developing and retaining talent. A set of fundamental values guide our thinking and actions both inside the company and as we pursue our mission through our interaction with our consumers and our partners around the world.
A set of fundamental values guide our thinking and actions both inside the company and as we pursue our mission through our interaction with our consumers and our partners around the world.
Item 1. Business Unless otherwise indicated or the context otherwise requires, references in this section to the “Company”, “we”, “us”, “our” and other similar terms refer to Playboy Enterprises, Inc.
Item 1. Business Unless otherwise indicated or the context otherwise requires, references to the “Company”, “PLBY”, “we”, “us”, “our” and other similar terms refer to PLBY Group, Inc. and its consolidated subsidiaries. Overview We are a pleasure and leisure company.
We compete with much larger companies, including the brands referenced above, that have significantly greater financial and operational resources and pose meaningful competitive challenges.
Our proprietary digital content and services compete with social media sites, creator-led platforms, distributors of paid and free adult content, and providers of digital art and collectibles. We compete with much larger companies, including the brands referenced above, that have significantly greater financial and operational resources and pose meaningful competitive challenges.
Our consolidated net loss for the year ended December 31, 2022 was largely driven by non-cash asset impairment charges of $308.2 million related to the write-down of goodwill, trademarks and certain other assets in the third quarter of 2022. Our Products Our products and content connect consumers to a lifestyle of pleasure and leisure.
Our consolidated net loss for the year ended December 31, 2023 was largely driven by non-cash asset impairment charges of $154.9 million related to the write-down of intangible assets, including goodwill, and impairment of certain of our licensing contracts during the year of 2023.
Our failure to comply with applicable laws and regulations could adversely affect the Company. See “Item 1A. Risk Factors” for additional information regarding regulatory risks to the Company.
Our failure to comply with applicable laws and regulations could adversely affect the Company. See “Item 1A. Risk Factors” for additional information regarding regulatory risks to the Company. Intellectual Property We own various trademarks, copyrights and software comprising our intellectual property holdings, including, without limitation, the “Playboy” name, the “RABBIT HEAD DESIGN” logo and the “Honey Birdette” name.
Direct-to-Consumer Our owned digital commerce retail platforms include playboy.com, honeybirdette.com and Honey Birdette retail stores (as of August 9, 2021), yandy.com , and loversstores.com and Lovers retail stores (as of March 1, 2021).
Direct-to-Consumer In 2022, our owned and operated digital commerce retail platforms included playboy.com, honeybirdette.com and Honey Birdette retail stores, yandy.com , and loversstores.com and Lovers retail stores. In April 2023, we sold our Yandy business, and in November 2023, we sold our Lovers business. We also licensed operation of our Playboy retail platform as of July 2023.
Collaborations with strategic partners in the nightlife, hospitality, metaverse, and digital casino and online gaming industries allow our customers to further experience the Playboy lifestyle in-person and from their electronic devices. • Beauty and Grooming builds on our long role serving as a platform for beauty and the brand’s commercial success in the fragrance category.
Collaborations with strategic partners in the nightlife, hospitality, and digital casino and online gaming industries and the metaverse allow our customers to further experience the Playboy lifestyle in-person and from their electronic devices. • Sexual Wellness encompasses products, content and experiences that enable a state of physical, emotional, mental, and social sexual health and fulfillment.
Our sexual wellness offerings today include lingerie, intimates and other adult products. • Style and Apparel includes a variety of apparel and accessories products for men and women globally, including one of the leading men’s apparel brands in China, and collaborations with fashion and streetwear brands such as PacSun, Yves Saint Laurent and Lids available to consumers in the US and UK.
Our offerings are focused on four areas: • Style and Apparel includes a variety of apparel and accessories products for men and women globally, including one of the leading licensed lifestyle brands worldwide, featuring high profile brand collaborations with fashion and streetwear brands such as PacSun, OVO, PSD, Culture Kings, Miss Papp and Lids, which are available to consumers in the United States and in a variety of international markets.
Our top five license agreements range from three to ten years in length and generated approximately $46.8 million for the year ended December 31, 2022. As of December 31, 2022, our licensing contracts included future royalty guarantee payments of approximately $345.5 million through 2031, assuming no renewals of such contracts.
Our top five active license agreements range from three to six years in length and generated approximately $7.0 million of revenue for the year ended December 31, 2023, excluding $25.3 million of revenue from terminated licensing agreements.
Creators’ fans can subscribe or pay to view exclusive content, message with Playboy creators directly, and receive special access to their daily lives in a manner they cannot do anywhere else. Top creators earn special opportunities throughout the Playboy ecosystem including Playboy photo shoots, fashion design collaborations and the opportunity to serve as Playboy fashion ambassadors.
Top creators earn special opportunities throughout the Playboy ecosystem including Playboy photo shoots, fashion design collaborations and the opportunity to serve as Playboy brand ambassadors.
Playboy programming distributed through various websites and domestic and international TV providers offers on-demand entertainment. Our spirits joint venture, Playboy Spirits, offers premium spirits under the Rare Hare brand, while playboy.com sells a variety of home goods and personal accessories.
Our spirits joint venture, Playboy Spirits, offers premium spirits under the Rare Hare brand and ready-to-drink cocktails under the Play Hard brand, and shop.playboy.com also sells a variety of Playboy-branded goods.
Our digital products and services compete with social content and creator-led platforms and providers of digital art, collectibles and paid and free adult content, and our digital games compete with other real-money and social casino-style games available in the iOS and Android app stores.
Our licensed digital products and games compete with other real-money and social casino-style games available in the iOS and Android app stores, while our venues licensing partner that operates award-winning beer gardens and clubs across India competes with other premium hospitality venues.
Offerings include products that enhance sexual experience, lingerie, bedroom accessories and intimacy products, as well as offerings that improve sexual health.
Offerings include products that enhance sexual experience and help to improve sexual health. Our sexual wellness offerings include lingerie, bedroom accessories, intimacy products and other adult products. • Beauty and Grooming builds on our long role serving as a platform for beauty and the brand’s commercial success in the fragrance category.
In the men’s apparel space in China, we compete with other leading men’s apparel brands such as Uniqlo, Semir, Levi’s, Nautica and Lacoste on the breadth and quality of our products, and in Western markets, our apparel collaborations and owned and operated e-commerce business compete with retailers and brands more focused on lingerie, costumes, accessories and streetwear.
In the men’s apparel space in China, we compete with other leading men’s apparel brands such as Semir, Bosideng and Metersbonwe and such global brands as Levi’s, Lacoste and Jack & Jones, which we have also collaborated with in the China market.
In December 2019, we acquired the assets of yandy.com , a leading online retailer of lingerie, dresses, costumes and accessories, as part of the expansion of our proprietary sales platform. In March 2021, we acquired TLA Acquisition Corp., the parent company of the Lovers family of stores, a leading omni-channel online and brick-and-mortar sexual wellness chain.
Accordingly, in 2023, we entered into the China JV in March, sold our Yandy business (an online retailer of lingerie, dresses, costumes and accessories) in April, licensed operation of our Playboy e-commerce platform in July and sold our Lovers business (an online and brick-and-mortar sexual wellness chain) in November.
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(“Playboy”) and its consolidated subsidiaries prior to Playboy's February 10, 2021 business combination with Mountain Crest Acquisition Corp (the “Business Combination”), and to PLBY Group, Inc. and its consolidated subsidiaries after giving effect to the Business Combination. Overview We are a pleasure and leisure company.
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Our content creator platform on playboy.com (“Playboy Club”) lets customers interact directly with influencers and other creators that generate their own array of content. Playboy programming distributed through various websites and domestic and international TV providers offers on-demand entertainment.
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Our offerings are focused on areas where nearly 70 years of building consumer trust give us a unique position to lead: • Sexual Wellness is a category that encompasses products, content and experiences that enable a state of physical, emotional, mental, and social sexual health and fulfillment.
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As of December 31, 2023, our licensing contracts included future royalty guarantee payments of approximately $41.5 million through 2031, assuming no renewals or modifications of such contracts.
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Licensing We license the Playboy name, Rabbit Head Design, and other trademarks and related properties to partners around the world.
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This represents a significant drop from prior years, due to challenging economic conditions in China in 2023, which resulted in reduced collections from Chinese licensees, the termination of certain licensing agreements and the impairment of corresponding assets.
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In addition to our owned channels, we have actively expanded the third-party sales of our proprietary products across major retailers in Western markets.
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In October 2023, we terminated licensing agreements with certain Chinese licensees due to ongoing, uncured breaches of their licenses, which comprised $152.2 million of unrecognized licensing revenue under our long-term contracts as of the termination date and resulted in a decrease in licensing revenue of $16.6 million in 2023. See Note 4, Revenue Recognition, for further information.
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Digital Subscriptions and Content Our Digital Subscriptions and Content today comprise our creator-led platform on playboy.com (initially launched in December 2021), non-fungible token (“NFTs”) art and collectibles offerings (initially launched in early 2021), and Playboy’s adult content offerings, including playboyplus.com and playboy.tv . Playboy-branded digital content offerings reach more than 150,000 subscribers and users across Playboy-managed digital platforms.
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We are working to replace terminated licensees, including through our China JV (as defined below).
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Third, building upon Honey Birdette’s existing high margin retail business by expanding the brand in the United States. Our content creator-led platform dedicated to creative freedom, artistic expression and sex positivity, is the cornerstone of our digital strategy.
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The Playboy Club, which is dedicated to creative freedom, artistic expression and sex positivity, is the cornerstone of our digital strategy. Creators’ fans can subscribe or pay to view exclusive content, message with Playboy creators directly, and receive special access to their daily lives.
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In the sexual wellness industry, we compete with lingerie brands and e-commerce businesses such as La Perla, Fleur du Mal, Victoria’s Secret and AdoreMe, and other suppliers of products in this fragmented and rapidly growing space, as well as with Sexual Wellness e-commerce platforms and brick and mortar retail chains, such as Lovehoney, Fashion Nova and Adam & Eve.
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As we have shifted to a more capital-light business model, we signed new license agreements for e-commerce, lingerie, underwear and costumes. Such licensed Playboy-branded products and our Honey Birdette brand compete with Skims, Fleur du Mal, Victoria’s Secret, Fashion Nova and other brands and retailers.
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On March 4, 2011, Icon Merger Sub, Inc., a wholly owned subsidiary of Icon Acquisition Holdings, L.P. (“Icon”), an affiliate of Rizvi Traverse Management, LLC, successfully completed its offer to purchase all of the issued and outstanding shares of Playboy, which was further reorganized effective August 14, 2018.
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Our Playboy-branded collection of toys (under license in the sexual wellness category in North America and Europe), Playboy condoms in Mexico, and Playboy fragrances (pursuant to a global license with broad distribution across Europe, the Americas and southeast Asia) compete with sexual wellness e-commerce platforms and brick and mortar retail chains, such as Lovehoney and Adam & Eve.
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As part of the restructuring, Icon was dissolved and liquidated its equity interest in Playboy to its members, consisting of RT-ICON Holdings LLC (with its affiliates, "RT") and the Hugh M. Hefner 1991 Trust (the “Trust”), resulting in RT holding 3,034,192 shares of common stock in Playboy and the Trust holding 1,868,910 shares of common stock in Playboy.
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In 2011, an affiliate of Rizvi Traverse Management, LLC (which, together with its affiliates, is our largest stockholder), successfully completed a transaction that resulted in Playboy becoming a private company again and further reorganized the Playboy corporate structure. Playboy Enterprises, Inc. (“Playboy”) became the Playboy organization’s top-level corporate operating entity.
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(“Merger Sub”), and Playboy, and Suying Liu. Pursuant to the terms of the Merger Agreement, Playboy merged with and into Merger Sub, with Playboy surviving the merger as a wholly-owned subsidiary of MCAC, and MCAC changed its name to “PLBY Group, Inc.” upon consummation of the Business Combination.
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Following a series of acquisitions from 2019 through 2021, including the August 2021 acquisition of the luxury lingerie brand Honey Birdette and the October 2021 acquisition of a content creator platform which has since been redeveloped into the new Playboy Club, we made the business decision to pursue a commercial strategy that relies on a more capital-light business model focused on revenue streams with higher margin, lower working capital requirements and higher growth potential.
Removed
In August 2021, we acquired Honey Birdette (Aust) Pty Limited, owner of the luxury lingerie brand Honey Birdette. In October 2021, we acquired GlowUp Digital Inc., owner of the Dream platform that was redeveloped as the technology foundation for our curated and creator-led platform on playboy.com , which initially launched in December 2021 under the Centerfold name.
Added
Our Team We seek to recruit, retain, and incentivize highly talented existing and future employees. We believe that creating a respectful and inclusive environment where team members can be themselves and be supported is critical to attracting, developing and retaining talent.
Removed
We are entering into a Playboy-controlled joint venture, Playboy China Limited, for the operation of the Playboy licensed business in China (including Hong Kong and Macau). Our Team We seek to recruit, retain, and incentivize highly talented existing and future employees.
Removed
Intellectual Property We own various trademarks, copyrights and software comprising our intellectual property holdings including, without limitation, the “Playboy” name, the “RABBIT HEAD DESIGN” logo, the “Yandy” name, the “Lovers” name and the “Honey Birdette” name.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

165 edited+82 added−63 removed196 unchanged
Biggest changeSummary of Risk Factors We have in the past been adversely affected by certain of, and may in the future be materially and adversely affected by, the following risks: • our ability to maintain the value and reputation of the Playboy brand; • operating in highly competitive industries; • our ability to anticipate changes in the market for our products and rapidly adapt; • our ability to obtain, maintain and protect our intellectual property rights, in particular trademarks and copyrights; • business constraints, negative publicity, lawsuits and boycotts as a result of our business involving the provision of products with adult or sexually explicit content; • material weaknesses identified with respect to our internal controls over financial reporting; • potential impairments of our intangible assets; • potential limitations on the use of our net operating losses; • various taxation related risks in multiple jurisdictions; • potential systems failures or network access challenges experienced by our digital operations; • our exposure to data security and privacy risks; • compliance with payment processor requirements and government regulations; • challenges relating to operations and expansion outside of the U.S.; • litigation expenses and potential adverse results; • the costs to the Company and management's time needed to comply with public company requirements; • our ability to attract and retain key employees and hire qualified management and personnel; • difficulties in pursuing and completing corporate transactions on economically acceptable terms; • realizing the business benefits of our strategic objectives, including through joint ventures, dispositions or other strategic transactions; • integration risks relating to corporate transactions and other strategic opportunities; • limitations imposed by our debt and other financial obligations; • our ability to attract and retain new customers and subscribers through our marketing efforts; 10 • the demand for our products; • the COVID-19 pandemic; • changing global economic conditions and standards, including with respect to interest rates; • our ability to manage the various licensing and selling models in our operations; • the concentration of a substantial portion of our licensing revenue with a limited number of licensees and retail partners; • our dependence on third parties to help operate certain aspects of our e-commerce business; • regulatory, cybersecurity and impairment risks related to the holding of digital assets; • the adoption, implementation and performance of new enterprise systems; • increasing competition for and changing dynamics in the marketplace for our adult content, digital and consumer products; • our ability to maintain our agreements with multiple system operators and direct-to-home operators on favorable terms; • our ability to identify, fund investment in and commercially exploit new technology; • shifts in consumer behavior as a result of technological innovations and changes in the distribution and consumption of content; and • our ability to meet the listing requirements to be listed on the Nasdaq Stock Market and maintain the listing of our securities in the future.
Biggest changeSummary of Risk Factors We have in the past been adversely affected by certain of, and may in the future be materially and adversely affected by, the following risks: • our ability to maintain the value and reputation of the Playboy brand; • operating in highly competitive industries; • our ability to anticipate changes in the market for our products and services and rapidly adapt; • our ability to obtain, maintain and protect our intellectual property rights, in particular trademarks and copyrights; • business constraints, negative publicity, lawsuits and boycotts as a result of our business involving the provision of products with adult or sexually explicit content; • material weaknesses identified with respect to our internal controls over financial reporting; • potential impairments of our intangible assets; • potential limitations on the use of our net operating losses; • various taxation related risks in multiple jurisdictions; • potential systems failures or network access challenges and our exposure to cybersecurity and data privacy risks; • compliance with payment processor requirements and government regulations; • interest rate risk that could cause our debt service obligations to increase significantly; • foreign exchange rate and other operational risks related to the significant portion of our business outside the U.S.; • challenges relating to operations and expansion outside of the U.S.; • litigation expenses and potential adverse results; • the costs to the Company and management’s time needed to comply with public company requirements; • our ability to attract and retain key employees and hire qualified management and personnel; • difficulties in pursuing and completing corporate transactions on economically acceptable terms; • realizing the business benefits of our strategic objectives, including through joint ventures, dispositions or other strategic transactions; • limitations imposed by our debt and other financial obligations; • our ability to attract and retain new customers and subscribers through our marketing efforts; • the demand for our products and services; • changing global economic conditions and standards, including with respect to international trade tensions; • our ability to manage the various licensing and selling models in our operations; 10 • the concentration of a substantial portion of our licensing revenue with a limited number of licensees and retail partners; • supply chain risk to us and our licensees; • our dependence on third parties to help operate certain aspects of our e-commerce business; • the adoption, implementation and performance of new enterprise systems; • increasing competition for and changing dynamics in the marketplace for our adult content, digital and consumer products; • our ability to maintain our agreements with multiple system operators and direct-to-home operators on favorable terms; • challenges in growing our Playboy Club business, including through the sale of digital memberships; • our ability to identify, fund investment in and commercially exploit new technology; • shifts in consumer behavior as a result of technological innovations and changes in the distribution and consumption of content; • our ability to meet the listing requirements to be listed on the Nasdaq Stock Market and maintain the listing of our securities in the future; • the limited liquidity, significant volatility and potential for further dilution of our common stock; and • our need for additional capital, and constraints to obtaining it, to fund future operations.
Further, applicable law may provide only limited and uncertain protection, particularly in emerging markets, such as China. Furthermore, we may not apply for, or be unable to obtain, intellectual property protection for certain aspects of our business.
Further, applicable law may provide only limited and uncertain protection, particularly in emerging markets, such as China. Furthermore, we may not apply for, or we may be unable to obtain, intellectual property protection for certain aspects of our business.
Any such claims, whether or not successful, could be costly to defend, may not be sufficiently covered by any indemnification provisions to which we are party, divert management’s attention and resources, damage our reputation and brands, and adversely impact our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities.
Any such claims, whether or not successful, could be costly to defend, may not be sufficiently covered by any indemnification provisions to which we are party, divert management’s attention and resources, damage our reputation and brands, and adversely impact our business, prospects, financial condition, results of operations or cash flows, as well as the trading price of our securities.
The occurrence of any of these events may have a material adverse effect on our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities. 12 Our success depends on our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property of third parties.
The occurrence of any of these events may have a material adverse effect on our business, prospects, financial condition, results of operations or cash flows, as well as the trading price of our securities. 12 Our success depends on our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property of third parties.
Our business includes the provision of sexually explicit content which can create negative publicity, lawsuits and boycotts. Our business includes providing adult-oriented, sexually explicit and provocative products worldwide. Many people regard such business as unwholesome.
Our business includes the provision of sexually explicit content which can create negative publicity, lawsuits and boycotts. Our business includes providing adult-oriented, sexually explicit and provocative content and products worldwide. Many people regard such business as unwholesome.
Ineffective internal controls could also cause investors to lose confidence in our financial reporting, which could have a negative effect on our stock price, business strategies and ability to raise capital. Even after the remediation of our material weaknesses, our management does not expect that our internal controls ever will prevent or detect all errors and all fraud.
Ineffective internal controls could also cause investors to lose confidence in our financial reporting, which could have a negative effect on our stock price, business strategies and ability to raise capital. Even after the remediation of our material weaknesses, our management does not expect that our internal controls will ever prevent or detect all errors and all fraud.
The covenants restrict our ability to, among other things: • incur or guarantee additional indebtedness; • make loans and investments; • enter into agreements restricting our subsidiaries’ abilities to pay dividends; • create liens; 21 • sell or otherwise dispose of assets; • enter new lines of business; • merge or consolidate with other entities; and • engage in transactions with affiliates.
The covenants restrict our ability to, among other things: • incur or guarantee additional indebtedness; 21 • make loans and investments; • enter into agreements restricting our subsidiaries’ abilities to pay dividends; • create liens; • sell or otherwise dispose of assets; • enter new lines of business; • merge or consolidate with other entities; and • engage in transactions with affiliates.
Changes to these business models include the increasing presence of user-generated content, streaming platforms and the greater video consumption through time-delayed or time-shifted viewing of television programming through social media and content creation sites, streaming platforms, on-demand platforms, and digital video recorder, or DVRs.
Changes to these business models include the increasing presence of user-generated content, streaming platforms and greater video consumption through time-delayed or time-shifted viewing of television programming through social media and content creation sites, streaming platforms, on-demand platforms, and digital video recorder, or DVRs.
Our access to transponders may also be restricted or denied if: • we or the satellite transponder providers are indicted or otherwise charged as a defendant in a criminal proceeding; • the Federal Communications Commission issues an order initiating a proceeding to revoke the satellite owner’s authorization to operate the satellite; • the satellite transponder providers are ordered by a court or governmental authority to deny us access to the transponder; • we are deemed by a governmental authority to have violated any obscenity law; or • the satellite transponder providers fail to provide the required services.
Our access to transponders may also be restricted or denied if: 29 • we or the satellite transponder providers are indicted or otherwise charged as a defendant in a criminal proceeding; • the Federal Communications Commission issues an order initiating a proceeding to revoke the satellite owner’s authorization to operate the satellite; • the satellite transponder providers are ordered by a court or governmental authority to deny us access to the transponder; • we are deemed by a governmental authority to have violated any obscenity law; or • the satellite transponder providers fail to provide the required services.
If one or more MSOs or DTH operators terminate or do not renew these agreements, or do not renew them on terms as favorable as those of current agreements, our business, financial condition or results of operations could be materially adversely affected. 29 In addition, competition among television programming providers is intense for both channel space and viewer spending.
If one or more MSOs or DTH operators terminate or do not renew these agreements, or do not renew them on terms as favorable as those of current agreements, our business, financial condition or results of operations could be materially adversely affected. In addition, competition among television programming providers is intense for both channel space and viewer spending.
Federal NOL carryforwards generated by us before January 1, 2018 will continue to have a twenty-year carryforward period and will not be subject to the taxable income limitation. We are subject to taxation related risks in multiple jurisdictions. We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions.
Federal NOL carryforwards generated by us before January 1, 2018 will continue to have a twenty-year carryforward period and will not be subject to the taxable income limitation. 14 We are subject to taxation related risks in multiple jurisdictions. We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions.
For example, negligent operations by employees could result in serious injury or property damage, and sexual harassment or racial and gender discrimination could result in legal claims and adversely impact our reputation. 34 If we are unable to attract and retain key employees and hire qualified management and personnel our ability to compete could be adversely impacted.
For example, negligent operations by employees could result in serious injury or property damage, and sexual harassment or racial and gender discrimination could result in legal claims and adversely impact our reputation. If we are unable to attract and retain key employees and hire qualified management and personnel our ability to compete could be adversely impacted.
We are subject to payment processing risk. Our customers pay for our products using a variety of different payment methods, including credit and debit cards, gift cards, prepaid cards, direct debit, online wallets and direct carrier and partner billing. We rely on internal systems as well as those of third parties to process payment.
We are subject to payment processing risk. Our customers pay for our products and services using a variety of different payment methods, including credit and debit cards, gift cards, prepaid cards, direct debit, online wallets and direct carrier and partner billing. We rely on internal systems as well as those of third parties to process payment.
We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, our board committees or as executive officers.
We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors (the “Board”), our Board committees or as executive officers.
Furthermore, we may not be successful in identifying appropriate strategic transaction candidates or consummating transactions on terms favorable or acceptable to us or at all. When we pursue new strategic opportunities or corporate transactions, our due diligence reviews are subject to inherent uncertainties and may not reveal all potential risks.
Furthermore, we may not be successful in identifying appropriate strategic transaction candidates or consummating transactions on terms favorable or acceptable to us or at all. 20 When we pursue new strategic opportunities or corporate transactions, our due diligence reviews are subject to inherent uncertainties and may not reveal all potential risks.
In addition, an adverse resolution of any lawsuit or claim against us could negatively impact our reputation and our brand image and could have a material adverse effect on our business. In addition, we rely on our employees, consultants and sub-contractors to conduct our operations in compliance with applicable laws and standards.
In addition, an adverse resolution of any lawsuit or claim against us could negatively impact our reputation and our brand image and could have a material adverse effect on our business. 35 In addition, we rely on our employees, consultants and sub-contractors to conduct our operations in compliance with applicable laws and standards.
Increased scrutiny by regulatory agencies, such as the Federal Trade Commission and state agencies, of the use of customer information could also result in additional expenses if we are obligated to reengineer systems to comply with new regulations or to defend investigations of our privacy practices.
Increased scrutiny by regulatory agencies, such as the Federal Trade Commission and state agencies, of the use of employee and customer information could also result in additional expenses if we are obligated to reengineer systems to comply with new regulations or to defend investigations of our privacy practices.
Furthermore, to the extent network operators create tiers of internet access service and either charge us for or prohibit us from being available through these tiers, our business could be negatively impacted. 15 Most network operators that provide consumers with access to the internet also provide these consumers with multichannel video programming.
Furthermore, to the extent network operators create tiers of internet access service and either charge us for or prohibit us from being available through these tiers, our business could be negatively impacted. Most network operators that provide consumers with access to the Internet also provide these consumers with multichannel video programming.
In addition, some investors, investment banks, market makers, lenders and others in the investment community may refuse to participate in the market for our common stock, financings or other activities due to the nature of our adult business. These refusals may negatively impact the value of our common stock and our opportunities to attract market support.
In addition, some investors, banks, market makers, lenders and others in the investment community may refuse to participate in the market for our common stock, financings or other financial activities due to the nature of our adult business. These refusals may negatively impact our business, the value of our common stock and our opportunities to attract market support.
We provide physical, e-commerce, and omnichannel retail and other products and content to businesses through commercial agreements, strategic alliances, and business relationships. These arrangements are complex and require substantial infrastructure capacity, personnel, and other resource commitments, which may limit the amount of business we can service.
We provide physical and e-commerce retail and other products and content to businesses through commercial agreements, strategic alliances, and business relationships. These arrangements are complex and require substantial infrastructure capacity, personnel, and other resource commitments, which may limit the amount of business we can service.
In addition, we may not achieve the full economic benefits anticipated to result from such transactions. 20 Further, dispositions and strategic transactions may distract our management’s time and attention and disrupt our ongoing business operations or relationships with customers, employees, suppliers or other parties.
In addition, we may not achieve the full economic benefits anticipated to result from such transactions. Further, dispositions and strategic transactions may distract our management’s time and attention and disrupt our ongoing business operations or relationships with customers, employees, suppliers or other parties.
In the event we need to engage a new agency to act as our global products licensing agent, the transition from the current licensing agent to a new global products licensing agent may be subject to delays, as the new global agent may lack institutional knowledge of our consumer brand licensing business, and there may be unanticipated issues arising from the new relationship and the transition.
In the event we need to engage a new agency to act as our products licensing agent, the transition from the current licensing agent to a new products licensing agent may be subject to delays, as the new agent may lack institutional knowledge of our consumer brand licensing business, and there may be unanticipated issues arising from the new relationship and the transition.
The tube sites, social media platforms and other content-creator sites may materially affect the revenues we generate from our websites and other adult content offerings. It is uncertain what affect tube sites, other free internet adult websites and competing content-creator sites will have on our on-going operations and our future financial results.
The tube sites, social media platforms and other content-creator sites may materially affect the revenues we generate from our websites and other adult content offerings. It is uncertain what effect tube sites, other free internet adult websites and competing content-creator sites will have on our on-going operations and our future financial results.
Our consumer business and our licensees face numerous risks in doing business outside the U.S., including: (i) unusual or burdensome foreign laws or regulatory requirements or unexpected changes to those laws or requirements; (ii) tariffs, trade protection measures, import or export licensing requirements, trade embargoes, sanctions and other trade barriers; (iii) competition from foreign companies; (iv) longer accounts receivable collection cycles and difficulties in collecting accounts receivable; (v) less effective and less predictable protection and enforcement of intellectual property rights; (vi) changes in the political or economic condition of a specific country or region (including, without limitation, as a result of political unrest), particularly in emerging markets or jurisdictions where political events may strongly influence consumer spending; (vii) fluctuations in the value of foreign currency versus the U.S. dollar, the cost of currency exchange and compliance with exchange controls; (viii) potentially adverse tax consequences; and (ix) cultural differences in the conduct of business.
Our consumer business and our licensees face numerous risks in doing business outside the U.S., including: (i) unusual or burdensome foreign laws or regulatory requirements or unexpected changes to those laws or requirements; (ii) tariffs, trade protection measures, import or export licensing requirements, trade embargoes, sanctions and other trade barriers; (iii) competition from foreign companies; (iv) longer accounts receivable collection cycles and difficulties in collecting accounts receivable; (v) less effective and less predictable protection and enforcement of intellectual property rights; (vi) changes in the political or economic condition of a specific country or region (including, without limitation, as a result of political unrest and wars and other armed conflicts), particularly in emerging markets or jurisdictions where political events may strongly influence consumer spending; (vii) fluctuations in the value of foreign currency versus the U.S. dollar, the cost of currency exchange and compliance with exchange controls; (viii) potentially adverse tax consequences; and (ix) cultural differences in the conduct of business.
While we are not able to reliably predict particular regulatory developments that could affect us adversely, those regulations related to adult content, the Internet, consumer products and commercial advertising illustrate some of the potential difficulties we face. Adult content.
While we are not able to reliably predict particular regulatory developments that could affect us adversely, those regulations related to adult content, the Internet, consumer products and commercial advertising illustrate some of the potential difficulties we face. 17 Adult content.
There has been a shift in consumer behavior as a result of technological innovations and changes in the distribution of content, which may affect our viewership and the profitability of our content business in unpredictable ways. Technology and business models in our industry continue to evolve rapidly.
There has been a shift in consumer behavior as a result of technological innovations and changes in the distribution of content, which may affect our viewership and the profitability of our content business in unpredictable ways. Technology and business models in the digital content industry continue to evolve rapidly.
Future sales of a substantial number of shares of our common stock in the public market, or the perception that such sales might occur, could depress the market price of our common stock and could impair its ability to raise capital through the sale of additional equity securities.
Future sales of a substantial number of shares of our common stock in the public market, or the perception that such sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.
Government regulations could adversely affect our business, financial condition or results of operations. Our businesses are regulated by governmental authorities in the countries in which we operate. Because of our international operations, we must comply with diverse and evolving regulations.
Government regulations could adversely affect our business, financial condition or results of operations. Our businesses are regulated by governmental authorities in the countries in which we operate. Because of our international operations, we must comply with diverse and evolving regulations in many countries.
Our wholesale licensing arrangements subject us to a number of risks. We have entered into several arrangements in connection with our licensing strategy. Although we believe our licensing arrangements may have certain benefits, these arrangements are subject to a number of risks and our beliefs could turn out to be wrong.
Our licensing arrangements subject us to a number of risks. We have entered into several arrangements in connection with our licensing strategy. Although we believe our licensing arrangements may have certain benefits, these arrangements are subject to a number of risks and our beliefs could turn out to be wrong.
For paid marketing, we intend to leverage a broad array of advertising channels, including billboards, radio, social media platforms, planes, affiliates and paid and organic search, and other digital channels, such as search and mobile display.
For paid marketing, we intend to leverage a broad array of advertising channels, including billboards, radio, social media platforms, affiliates and paid and organic search, and other digital channels, such as search and mobile display.
In addition, we may in certain circumstances be liable for the actions of our joint venture or strategic partners. 19 We may seek strategic opportunities in industries or sectors that may be outside of our management’s areas of expertise.
In addition, we may in certain circumstances be liable for the actions of our joint venture or strategic partners. We may seek strategic opportunities in industries or sectors that may be outside of our management’s areas of expertise.
If we fail to satisfy any of the foregoing covenants, the lenders could declare the outstanding principal amount of our senior secured credit agreement, including accrued and unpaid interest and all other amounts owing and payable thereunder, to be immediately due and payable, which could have a material adverse effect on our business, financial condition and operating results.
If we fail to satisfy any of the foregoing covenants, the lenders could declare the outstanding principal amount of our loans under our senior secured credit agreement, including accrued and unpaid interest and all other amounts owing and payable thereunder, to be immediately due and payable, which could have a material adverse effect on our business, financial condition and operating results.
Finally, claims against us relating to any transaction may necessitate our seeking claims against counterparties for which they may not indemnify us or that may exceed the scope, duration or amount of their indemnification obligations. The success of our business may depends in part on achieving our strategic objectives, including through strategic transactions, dispositions and new initiatives.
Finally, claims against us relating to any transaction may necessitate our seeking claims against counterparties for which they may not indemnify us or that may exceed the scope, duration or amount of their indemnification obligations. The success of our business may depend in part on achieving our strategic objectives, including through strategic transactions, dispositions and new initiatives.
Under the terms of an Investor Rights Agreement we entered into with RT, RT has the right, but not the obligation, to nominate to the Company's board of directors (the "Board") a number of designees equal to (i) three directors, if and so long as RT and its affiliates beneficially own, in the aggregate, 50% or more of the shares of our common stock, (ii) two directors, in the event that RT and its affiliates beneficially own, in the aggregate, 35% or more, but less than 50%, of the shares of common stock and (iii) one director, in the event that RT and its affiliates beneficially own, in the aggregate, 15% or more, but less than 35%, of the shares of our common stock (in each case, subject to proportional adjustment in the event that the size of the Board is increased or decreased following the Closing).
Under the terms of an Investor Rights Agreement we entered into with RT, RT has the right, but not the obligation, to nominate to the Board a number of designees equal to (i) three directors, if and so long as RT and its affiliates beneficially own, in the aggregate, 50% or more of the shares of our common stock, (ii) two directors, in the event that RT and its affiliates beneficially own, in the aggregate, 35% or more, but less than 50%, of the shares of common stock and (iii) one director, in the event that RT and its affiliates beneficially own, in the aggregate, 15% or more, but less than 35%, of the shares of our common stock (in each case, subject to proportional adjustment in the event that the size of the Board is increased or decreased).
If we are unable to maintain our fraud and chargeback rate at acceptable levels, card networks may impose fines, our card approval rate may be impacted and we may be subject to additional card authentication requirements. The termination of our ability to process payments on any major payment method would significantly impair our ability to operate our business.
If we are unable to maintain our fraud and chargeback rate at acceptable levels, card networks may impose fines, our card approval rate may be impacted and we may be subject to additional card authentication requirements. The termination of our ability to process payments on any major payment method could significantly impair our ability to operate our business.
We anticipate that Suhail Rizvi, our current chairman of the Board and a manager of the RT entities, will continue to serve as RT's designee on the Board and chairman of the Board. On January 30, 2023, we entered into a standstill agreement (the “Standstill Agreement”) with RT in connection with the Company’s rights offering that closed in February 2023.
We anticipate that Suhail Rizvi, our current chairman of the Board and a manager of the RT entities, will continue to serve as RT’s designee on the Board and chairman of the Board. 31 On January 30, 2023, we entered into a standstill agreement (the “Standstill Agreement”) with RT in connection with the Company’s public rights offering that closed in February 2023.
Adverse developments affecting economies throughout the world, including a general tightening of the availability of credit, decreased liquidity in certain financial markets, increased interest rates, foreign exchange fluctuations, increased energy costs, acts of war or terrorism, transportation disruptions, natural disasters, declining consumer confidence, sustained high levels of unemployment or significant declines in stock markets, as well as concerns regarding pandemics, epidemics and the spread of contagious diseases, could lead to a further reduction in discretionary spending. • Continued volatility in the availability and prices for commodities and raw materials we use in our products and in our supply chain (such as cotton or petroleum derivatives) could have a material adverse effect on our costs, gross margins and profitability. • If retailers of our products experience declining revenues or experience difficulty obtaining financing in the capital and credit markets to purchase our products, this could result in reduced orders for our products, order cancellations, late retailer payments, extended payment terms, higher accounts receivable, reduced cash flows, greater expense associated with collection efforts and increased bad debt expense. • If licensees or retailers of our products experience severe financial difficulty, including becoming insolvent or ceasing business operations, this could negatively impact the sale of our products to consumers and the ability of such licensees or retailers to make required payments to us. • Our business is particularly sensitive to reductions from time to time in discretionary consumer spending.
Adverse developments affecting economies throughout the world, including a general tightening of the availability of credit, decreased liquidity in certain financial markets, increased interest rates, foreign exchange fluctuations, increased energy costs, acts of war or terrorism, transportation disruptions, natural disasters, declining consumer confidence, sustained high levels of unemployment or significant declines in stock markets, as well as concerns regarding pandemics, epidemics and the spread of contagious diseases, could lead to a further reduction in discretionary spending. • Continued volatility in the availability and prices for commodities and raw materials we use in our products and in our supply chain (such as cotton or petroleum derivatives) could have a material adverse effect on our costs, gross margins and profitability. • If retailers of our licensed products experience declining revenues or experience difficulty obtaining financing in the capital and credit markets to purchase our products, this could result in late licensee payments, extended payment terms, higher accounts receivable, reduced cash flows, greater expense associated with collection efforts and increased bad debt expense. • If licensees or retailers of our products experience severe financial difficulty, including becoming insolvent or ceasing business operations, this could negatively impact the sale of our products to consumers and the ability of such licensees or retailers to make required payments to us. 23 • Our business is particularly sensitive to reductions from time to time in discretionary consumer spending.
Although certain of the intellectual property we use is registered in the U.S. and in many of the foreign countries in which we operate, there can be no assurances with respect to the continuation of such intellectual property rights, including our ability to further register, use or defend key current or future trademarks.
Although certain of the intellectual property we use is registered in the U.S. and in many foreign countries, there can be no assurances with respect to the continuation of such intellectual property rights, including our ability to further register, use or defend key current or future trademarks.
In addition, third parties may distribute and sell counterfeit (or grey market) versions of our products, which may be inferior or pose safety risks and could confuse consumers or customers, which could cause them to refrain from purchasing our brands in the future or otherwise damage our reputation.
In addition, third parties may distribute and sell counterfeit (or gray market) versions of our products, which may be inferior or pose safety risks and could confuse consumers or customers, which could cause them to refrain from purchasing our brands in the future or otherwise damage our reputation.
GAAP accounting standards, goodwill and indefinite life intangible assets, including some of our trademarks, are not amortized, but instead are subject to impairment evaluation based on related estimated fair values, with such testing to be done at least annually.
Under current GAAP accounting standards, goodwill and indefinite life intangible assets, including some of our trademarks, are not amortized, but instead are subject to impairment evaluation based on related estimated fair values, with such testing to be done at least annually.
The market price of Company’s common stock is likely to be highly volatile and may be subject to wide fluctuations in response to a variety of factors, including the following: • the impact of COVID-19 pandemic on our business; • the inability to obtain or maintain the listing of our shares of common stock on Nasdaq; • the inability to recognize the anticipated benefits of any strategic opportunities or corporate transactions, which may be affected by, among other things, competition, our ability to grow and manage growth profitably, and our ability to retain our key employees; • changes in applicable laws or regulations; • risks relating to the uncertainty of our projected financial information; and • risks related to the organic and inorganic growth of our business and the timing of expected business milestones.
The market price of the Company’s common stock is likely to be highly volatile and may be subject to wide fluctuations in response to a variety of factors, including the following: • the inability to obtain or maintain the listing of our shares of common stock on Nasdaq; • the inability to recognize the anticipated benefits of any strategic opportunities or corporate transactions, which may be affected by, among other things, competition, our ability to grow and manage growth profitably, and our ability to retain our key employees; • changes in applicable laws or regulations; • risks relating to the uncertainty of our projected financial information; and • risks related to the organic and inorganic growth of our business and the timing of expected business milestones.
The availability of these free adult videos and creator-specific subscriptions may diminish the demand for our paid video offerings on our proprietary websites, including our content creator platform on playboy.com , playboy.tv and playboyplus.com , and for our other content products, and has diluted the market presence of our website.
The availability of these free adult videos and creator-specific subscriptions may diminish the demand for our paid video offerings on our proprietary websites, including our Playboy Club on playboy.com , playboy.tv and playboyplus.com , and for our other content products, and has diluted the market presence of our website.
The consumer products, digital entertainment and creator content platform markets in which we operate are highly competitive.
The consumer products, licensing, digital entertainment and creator content platform markets in which we operate are highly competitive.
The failure of licensees to adequately produce, market, import and sell products bearing Playboy’s trademarks in their license categories, continue their operations, renew their license agreements or pay their obligations under their license agreements could result in a decline in the results of operations of our business.
The failure of licensees to adequately produce, market, import and sell products bearing Playboy’s trademarks in their license categories, continue their operations, renew their license agreements or pay their obligations under their license agreements has resulted in, and could continue to result in, a decline in the results of operations of our business.
Additionally, many of our competitors, including apparel and personal goods retailers, large entertainment and media enterprises and well-established social media and other creator content platforms have greater technical, operational, financial and human resources than we do.
Additionally, many of our competitors, including apparel and personal goods brand licensors and retailers, large entertainment and media enterprises and well-established social media and other creator content platforms have greater technical, operational, financial and human resources than we do.
Any near or long-term economic disruptions in markets where we sell our products, particularly in the United States, China or other key markets, may adversely impact our sales, profitability and financial condition and our prospects for growth.
Any near or long-term economic disruptions in markets where we sell our products and content, particularly in the United States, Australia, China or other key markets, may adversely impact our sales, profitability and financial condition and our prospects for growth.
Our future success will depend, in part, on our ability to adapt to rapidly changing technologies, to enhance existing product offerings and to develop and introduce a variety of new products and content to address changing demands of our consumers.
Our future success will depend, in part, on our ability to adapt to rapidly changing technologies, to enhance existing product offerings and to develop and introduce a variety of new products, strategic partnerships and content to address changing demands of our consumers.
Demand for our products can be significantly adversely affected in the U.S., globally or in specific regions as a result of a variety of factors beyond our control, including: adverse weather conditions arising from short-term weather patterns or long-term change, catastrophic events or natural disasters (such as excessive heat or rain, hurricanes, typhoons, floods, tsunamis and earthquakes); health concerns, such as pandemics; international, political or military developments; and terrorist attacks.
Demand for our products can be significantly adversely affected in the U.S., globally or in specific regions as a result of a variety of factors beyond our control, including: adverse weather conditions arising from short-term weather patterns or long-term change, catastrophic events or natural disasters (such as excessive heat or rain, hurricanes, typhoons, floods, tsunamis and earthquakes); health concerns, such as pandemics; international, political or military developments, including wars and other armed conflicts; and terrorist attacks.
Defending these claims, even those without merit, could cause us to incur significant legal expenses and divert financial and management resources. These claims could also result in significant settlement amounts, damages, fine or other penalties.
Defending these claims, even those without merit, could cause us to incur significant legal expenses and divert financial and management resources. These claims could also result in significant settlement amounts, damages, fines or other penalties.
Moreover, our acquisition targets and other businesses in which we may make strategic investments are often smaller or younger companies with less robust intellectual property clearance practices, and we may face challenges on the use of their trademarks and other proprietary rights.
Moreover, past or future acquisition targets and other businesses in which we may make strategic investments are often smaller or younger companies with less robust intellectual property clearance practices, and we may face challenges on the use of their trademarks and other proprietary rights.
We currently anticipate we will retain future earnings for the development, operation and expansion of our business and does not anticipate declaring or paying any cash dividends for the foreseeable future.
We currently anticipate we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future.
There is no guarantee that economic downturns, any further decrease in economic growth rates or an otherwise uncertain economic outlook in China will not persist in the future, that they will not be protracted or that governments will respond adequately to control and reverse such conditions, any of which could materially and adversely affect our business, financial condition and results of operations.
There is no guarantee that economic downturns, any further decrease in economic growth rates or an otherwise uncertain economic outlook for the global economy will not persist in the future, that they will not be protracted or that governments will respond adequately to control and reverse such conditions, any of which could materially and adversely affect our business, financial condition and results of operations.
Our strategy to grow our online and “brick and mortar” retail businesses depend on many factors, including, among others, our ability to develop and maintain effective e-commerce platforms, identify desirable store locations, negotiate acceptable lease terms, hire, train and retain a reliable workforce of sales, distribution and other operational personnel, successfully integrate stores into our existing control structure, enterprise systems and operations, including our information technology systems, and coordinate well with our digital platforms and wholesale customers to minimize the competition within our sales channels.
Our strategy to grow our online and “brick and mortar” retail businesses depends on many factors, including, among others, our ability to develop and maintain effective e-commerce platforms, enter into advantageous licenses, identify desirable store locations, negotiate acceptable lease terms, hire, train and retain a reliable workforce of sales, distribution and other operational personnel, successfully integrate stores into our existing control structure, enterprise systems and operations, including our information technology systems, and coordinate well with our digital platforms, licensees and wholesale customers to minimize the competition within our sales channels.
The Tax Cuts and Jobs Act (the "Tax Act"), which was enacted on December 22, 2017, changed the rules governing U.S. federal NOL carryforwards.
The Tax Cuts and Jobs Act (the “Tax Act”), which was enacted on December 22, 2017, changed the rules governing U.S. federal NOL carryforwards.
We are subject to periodic claims and litigation that could result in unexpected expenses and could ultimately be resolved against us. From time to time, we are involved in litigation and other proceedings and litigation arising in the ordinary course of business, such as the matters described in “ Legal Proceedings ” of this Annual Report on Form 10-K.
We are subject to periodic claims and litigation that could result in unexpected expenses and could ultimately be resolved against us. From time to time, we are involved in litigation and other proceedings and litigation arising in the ordinary course of business, such as the matters described in “Item 3, Legal Proceedings” of this Annual Report on Form 10-K.
Children’s Online Privacy Protection Act (COPPA) also regulates the collection, use and disclosure of personal information from children under 13-years of age.
Children’s Online Privacy Protection Act (“COPPA”) also regulates the collection, use and disclosure of personal information from children under 13-years of age.
Our expansion into new products, technologies, and geographic regions subjects us to additional risks. We may have limited or no experience in our newer market segments, and our customers may not adopt our product or content offerings.
Any expansion into new products, technologies, and geographic regions may subject us to additional risks. We may have limited or no experience in our newer market segments, and our customers may not adopt our product or content offerings.
Our amended and restated certificate of incorporation also provides that the federal district courts of the Unites States will be the exclusive forum for the resolution of any complaint asserting a cause of action against us or any of our directors, officers, employees or agents and arising under the Securities Act.
Our amended and restated certificate of incorporation also provides that the federal district courts of the Unites States will be the exclusive forum for the resolution of any complaint asserting a cause of action against us or any of our directors, officers, employees or agents and arising under the Securities Act of 1933, as amended (the “Securities Act”).
Item 1A. Risk Factors An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this Annual Report, before making a decision to invest in our securities.
Item 1A. Risk Factors An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this Annual Report on Form 10-K, before making a decision to invest in our securities.
We have a material amount of goodwill and other intangible assets, including our trademarks, recorded on our balance sheet.
We have a material amount of goodwill and other intangible assets, including our trademarks and right-of-use assets, recorded on our balance sheet.
If any such attempts are materially successful in the future, we could be subject to liability which could negatively impact our financial condition and damage our business.
If any such attempts are successful in the future and materially impact our business, employees and/or customers, we could be subject to liability which could negatively impact our financial condition and damage our business.
These events and others, such as fluctuations in travel and energy costs and computer virus attacks, intrusions or other widespread computing or telecommunications failures, may also damage our ability to provide our products or to obtain insurance coverage with respect to these events.
These events and others, such as fluctuations in travel and energy costs and cyberattacks, intrusions or other widespread computing or telecommunications failures, may also damage our ability to provide our products or to obtain insurance coverage with respect to these events.
Because we are dependent on these licensees for a significant portion of our licensing revenue, if any of these licensees were to have financial difficulties affecting their ability to make payments, cease operations, or if any of these licensees decides not to renew or extend any existing agreements, or to significantly reduce its sales of licensed products under any agreement, we could be required to adjust how we account for revenue pursuant to such licenses, and our revenue and cash flows could be reduced substantially, which could have a material adverse effect on our financial condition, results of operations or business.
Because we are dependent on these licensees for a significant portion of our licensing revenue, if any of our material licensees have financial difficulties affecting their ability to make payments, cease operations, or if any such licensees do not renew or extend any existing agreements, or significantly reduce their sales of licensed products under any agreement, we were, and could continue to be, required to adjust how we account for revenue pursuant to such licenses, and our revenue and cash flows were, and could continue to be, reduced substantially, which has had, and could continue to have, a material adverse impact on our financial condition, results of operations and business.
Our inability to access or advertise on such platforms could make it more difficult for us to reach a broad audience, which could limit sales of our products, and reduce the value of our brand.
Our inability to access or advertise on such platforms has made, and could continue to make, it more difficult for us to reach a broad audience, which could limit sales of our products and services, and reduce the value of our brand.
Any failure by our management team to perform as expected may have a material adverse effect on our business, prospects, financial condition and results of operations. Geopolitical risks, such as those associated with Russia’s invasion of Ukraine, could result in a decline in the outlook for the U.S. and global economies.
Any failure by our management team to perform as expected may have a material adverse effect on our business, prospects, financial condition and results of operations. Geopolitical risks, such as those associated with Russia’s war with Ukraine and armed conflicts in the Middle East, could result in a decline in the outlook for the U.S. and global economies.
Some companies that operate websites and offline media, including search engines and social media platforms, on which we would like to advertise our products, and provide direct purchasing capabilities, may be reluctant or refuse to allow such advertising due to the adult nature of certain of our products and the history of our brand.
Some companies that operate websites and offline media, including search engines and social media platforms, on which we would like to advertise our products and services, and provide direct purchasing capabilities, have been, and may continue to be, reluctant or unwilling to allow such advertising due to the adult nature of certain of our products and services and the history of our brand.
For example, our licensing business under our consumer products business have historically experienced higher receipts in its first and third fiscal quarters due to the licensing fee structure in our licensing agreements, which typically require advance payment of such fees during those quarters, but such payments can be subject to extensions or delays.
For example, our licensing business has historically experienced higher receipts in its first and third fiscal quarters due to the licensing fee structure in our licensing agreements, which typically require advance payment of such fees during those quarters, but such payments can be subject to variations, extensions or delays.
We also cannot assure you that an investment in our securities will not ultimately prove to be less favorable to investors than a direct investment, if an opportunity were available, in a strategic transaction counterparty. Our expansion places a significant strain on our management, operational, financial, and other resources.
We also cannot assure you that an investment in our securities will not ultimately prove to be less favorable to investors than a direct investment, if an opportunity were available, in a strategic transaction counterparty. Any expansion of our businesses may place a significant strain on our management, operational, financial, and other resources.
In addition, due to the NOL carryforward provision, tax authorities continue to have the ability to adjust the amount of our carryforward. Furthermore, as discussed below, the limitations on the use of the NOLs under Section 382 could affect our ability to use NOLs to offset future taxable income.
In addition, due to NOL carryforward provisions, tax authorities continue to have the ability to adjust the amount of our carryforward. Furthermore, as discussed below, the limitations on the use of NOLs under Internal Revenue Code Section 382 could affect our ability to use NOLs to offset future taxable income.
There can be no assurance, however, that our viewers will respond to our DTC products and services or that our DTC strategy will be successful, particularly given the increase in DTC products and platforms on the market.
There can be no assurance, however, that our consumers will respond to our digital products and services or that our digital strategy will be successful, particularly given the increase in digital products and platforms on the market.
If we are unable to provide a retail experience that aligns with consumer expectations and preferences, it could have an adverse impact on our revenues, business and results of operations. We often make advance commitments to purchase products, which may make it more difficult for us to adapt to rapidly-evolving changes in consumer preferences.
If we are unable to provide retail and digital experiences that align with consumer expectations and preferences, it could have an adverse impact on our revenues, business and results of operations. 25 We often make advance commitments to purchase products, which may make it more difficult for us to adapt to rapidly-evolving changes in consumer preferences.
Since becoming a public company, ensuring that we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis has become costly and a time-consuming effort.
Since becoming a public company, ensuring that we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis has been, and will continue to be, costly and a time-consuming effort.
As we expand into new geographic areas, we need to successfully identify and satisfy the consumer preferences in these areas. In addition, we need to address competitive, merchandising, marketing, distribution and other challenges encountered in connection with any expansion.
Should we expand into new geographic areas, we will need to successfully identify and satisfy the consumer preferences in those areas. In addition, we will need to address competitive, merchandising, marketing, distribution and other challenges encountered in connection with any expansion.
As of December 31, 2022, goodwill was $123.2 million, or approximately 22% of our total consolidated assets, and trademarks and other intangible assets were $236.3 million, or approximately 43% of our total consolidated assets.
As of December 31, 2022, goodwill was $123.2 million, or approximately 22% of our total consolidated assets, and trademarks and other intangible assets represented approximately $236.1 million, or approximately 43% of our total consolidated assets.
We have entered into, and may enter into further, joint ventures and strategic partnerships, in some of which we may not hold controlling interests or operating control. Even if we legally control such ventures, there may be circumstances under which we would not exercise sole decision-making authority regarding their business.
We have entered into the China JV and a spirits-related joint venture and may enter into further joint ventures and strategic partnerships, in some of which we may not hold controlling interests or operating control. Even if we legally control such ventures, there may be circumstances under which we would not exercise sole decision-making authority regarding their business.
In addition, the rapid growth of our operations has created a need for additional resources within the accounting and finance functions in order to produce timely financial information and to ensure the level of segregation of duties customary for a U.S. public company.
In addition, the rapid changes in our operations and corporate structure have created a need for additional resources within the accounting and finance functions in order to produce timely financial information and to ensure the level of segregation of duties customary for a U.S. public company.
Further, if one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline. Volatility in our share price could subject us to securities class action litigation.
Due to such stoppage of analyst coverage, and if further analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline. Volatility in our share price could subject us to securities class action litigation.
If analysts publish target prices for our common stock that are below the historical sales prices for our common stock on a securities exchange or the then-current public price of our common stock, it could cause our stock price to decline significantly.
If analysts publish target prices for our common stock that are below the historical sales prices for our common stock on a securities exchange or the then-current public price of our common stock, it could cause our stock price to decline significantly. In 2023, multiple investment analysts ceased coverage of our stock.
Our brand and reputation could be adversely affected if we fail to achieve these objectives, if our public image was to be tarnished by negative publicity, which could be amplified by social media, if we fail to deliver innovative and high-quality products and experiences acceptable to our customers, or if we face or mishandle a product recall.
Our brand and reputation could be adversely affected if our public image were to be tarnished by negative publicity, which could be amplified by social media, if we fail to deliver innovative and high-quality products and experiences acceptable to our customers, or if we face or mishandle a product recall or customer complaints.
Although we are currently developing new products and growing our content creator community, no assurance can be given that we will remain competitive in the industries we compete in.
Although we are currently developing new products, entering into new licenses and growing our content creator platform, no assurance can be given that we will remain competitive in the industries we compete in.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2022, Lovers operated 40 retail locations in five states, ranging in size between 1,472 and 15,000 square feet per location. The Lovers properties are used by our Direct-to-Consumer segment.
Biggest changeAs of December 31, 2023, Honey Birdette operated 62 retail locations in Australia, the U.S. and the U.K., ranging in size between approximately 400 and 1,200 square feet per location. The Honey Birdette properties are used by our Direct-to-Consumer segment. We believe our properties are suitable for the purposes for which they are being used and fit our needs.
Item 2. Properties Our corporate headquarters is located in Los Angeles, California, where we lease and occupy approximately 45,000 square feet of office space. Our Licensing, Direct-to-Consumer and Digital Subscriptions and Content segments all use our corporate headquarters.
Item 2. Properties Our corporate headquarters is located in Los Angeles, California, where we lease and occupy approximately 45,000 square feet of office space. Our Licensing, Direct-to-Consumer and Digital Subscriptions and Content segments all use our corporate headquarters. Through Honey Birdette, we also have over 15,000 square feet of leased office and warehouse space in the Sydney, Australia area.
Removed
We also lease and occupy approximately 52,000 square feet of combined office and warehouse space in Phoenix, Arizona, housing inventory management and fulfillment operations for our Direct-to-Consumer segment. Pursuant to our acquisition of Lovers in March 2021, we acquired over 25,000 square feet of leased office and warehouse space in Auburn, Washington.
Removed
Pursuant to our acquisition of Honey Birdette in August 2021, we also acquired over 15,000 square feet of leased office and warehouse space in the Sydney, Australia area. As of December 31, 2022, Honey Birdette operated 61 retail locations in Australia, the U.S. and the U.K., ranging in size between approximately 400 and 1,200 square feet per location.
Removed
The Honey Birdette properties are used by our Direct-to-Consumer segment. We believe our properties are suitable for the purposes for which they are being used and fit our needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOn April 25, 2022, Playboy filed a motion to dismiss the complaint. That motion was partially granted, and the court dismissed TNR’s claims under California franchise laws without leave to amend. The parties participated in a court-ordered mediation on February 3, 2023, which did not result in any settlement or resolution of the remaining claims asserted by TNR against Playboy.
Biggest changeOn April 25, 2022, PEII filed a motion to dismiss the complaint. That motion was partially granted, and the court dismissed TNR’s claims under California franchise laws without leave to amend. A trial date has been set for October 1, 2024. We believe TNR’s claims and allegations are without merit, and we will defend this matter vigorously.
On February 6, 2021, PEII received a letter from counsel to AVS alleging that the termination of the contract was improper, and that PEII failed to meet its contractual obligations, preventing AVS from fulfilling its obligations under the license agreement. 36 On February 25, 2021, PEII brought suit against AVS in Los Angeles Superior Court to prevent further unauthorized sales of PLAYBOY branded products and for disgorgement of unlawfully obtained funds.
On February 6, 2021, PEII received a letter from counsel to AVS alleging that the termination of the contract was improper, and that PEII failed to meet its contractual obligations, preventing AVS from fulfilling its obligations under the license agreement. 37 On February 25, 2021, PEII brought suit against AVS in Los Angeles Superior Court to prevent further unauthorized sales of Playboy-branded products and for disgorgement of unlawfully obtained funds.
TNR is seeking over $100 million in damages arising from the loss of expected profits, declines in the value of TNR’s business, unsalable inventory and investment losses. After Playboy indicated it would move to dismiss the complaint, TNR received two extensions of time from the court to file an amended complaint. TNR filed its amended complaint on March 16, 2022.
TNR is seeking over $100 million in damages arising from the loss of expected profits, declines in the value of TNR’s business, unsalable inventory and investment losses. After PEII indicated it would move to dismiss the complaint, TNR received two extensions of time from the court to file an amended complaint. TNR filed its amended complaint on March 16, 2022.
TNR Case On December 17, 2021, Thai Nippon Rubber Industry Public Limited Company, a manufacturer of condoms and lubricants and a publicly traded Thailand company (“TNR”), filed a complaint in the U.S. District Court for the Central District of California against Playboy and its subsidiary Products Licensing, LLC.
TNR Case On December 17, 2021, Thai Nippon Rubber Industry Public Limited Company, a manufacturer of condoms and lubricants and a publicly traded Thailand company (“TNR”), filed a complaint in the U.S. District Court for the Central District of California against PEII and its subsidiary Products Licensing, LLC.
TNR alleges a variety of claims relating to Playboy’s termination of a license agreement with TNR and the business relationship between Playboy and TNR prior to such termination. TNR alleges, among other things, breach of contract, unfair competition, breach of the implied covenant of good faith and fair dealing, and interference with contractual and business relations due to Playboy’s conduct.
TNR alleges a variety of claims relating to the termination of a license agreement with TNR and the business relationship between PEII and TNR prior to such termination. TNR alleges, among other things, breach of contract, unfair competition, breach of the implied covenant of good faith and fair dealing, and interference with contractual and business relations due to PEII’s conduct.
Except for the proceedings below, we are not currently a party to any other legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition, and results of operations.
Except for the proceedings below, we are not currently a party to any other legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition, and results of operations. AVS Case In March 2020, our subsidiary Playboy Enterprises International, Inc.
AVS is seeking to be excused from having to perform its obligations as a licensee, payment of the value for services rendered by AVS to PEII outside of the license, and damages to be proven at trial. We filed a motion for summary judgment, which is scheduled to be heard by the court on May 19, 2023.
AVS is seeking to be excused from having to perform its obligations as a licensee, payment of the value for services rendered by AVS to PEII outside of the license, and damages to be proven at trial. The court heard PEII’s motion for summary judgment on June 6, 2023, and dismissed six out of 10 of AVS’ causes of action.
Trial is set for January 22, 2024. The parties are currently engaged in discovery. We believe AVS’s claims and allegations are without merit, and we will defend this matter vigorously.
AVS’ contract-related claims remain to be determined at trial, which is set for September 30, 2024. The parties are currently engaged in discovery. We believe AVS’ remaining claims and allegations are without merit, and we will defend this matter vigorously.
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A trial date has been set for September 26, 2023. We believe TNR’s claims and allegations are without merit, and we will defend this matter vigorously. AVS Case In March 2020, our subsidiary Playboy Enterprises International, Inc.
Added
New Handong Arbitration On February 8, 2024, PEII and certain of its subsidiaries initiated arbitration in the Hong Kong International Arbitration Centre (the “Arbitration”) against PEII’s terminated China licensee, New Handong Investment (Guangdong) Co., Ltd. (“New Handong”). In October 2023, PEII’s subsidiary terminated its license agreement with New Handong due to ongoing, uncured material breaches by New Handong.
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Indian Harbor Case On October 15, 2018, Playboy Enterprises, Inc. filed a lawsuit in Los Angeles Superior Court (the “Court”) against its insurer, Indian Harbor Insurance Company (“Indian Harbor”), captioned Playboy Enterprises, Inc. v.
Added
PEII and its subsidiaries are seeking damages, including the payment of outstanding guaranteed minimum royalties, the payment of all guaranteed minimum royalties for the remainder of the term of the agreement, and other contractual damages for a variety of breaches, including unauthorized sales of products, underpayment of earned royalties, failing to use approved trademarks and affix official holograms to all products, and the use of unapproved sublicensees, as well as a declaration that the termination of the agreement was lawful and valid and an order requiring New Handong to refrain from any further manufacture, sale, distribution or other use of any Playboy intellectual property or products.
Removed
Indian Harbor Insurance Company, for breach of contract and breach of the covenant of good faith and fair dealing, and seeking declaratory relief, after Indian Harbor threatened to sue Playboy on an alleged theory of lack of coverage after Indian Harbor paid approximately $4.8 million towards the settlement of claims against Playboy made by Elliot Friedman.
Added
While PEII believes it has strong claims against New Handong, and that the facts of the matter support those claims, even in the event PEII were to obtain all the relief it seeks from the Arbitration, PEII can provide no assurance or guarantee that it will be able to enforce the results of the Arbitration against New Handong or recover any or all monetary awards from New Handong.
Removed
Among other things, we are seeking declaratory relief that the underlying claims asserted against Playboy are covered claims under Playboy’s insurance policies with Indian Harbor.
Added
Item 4. Mine Safety Disclosures Not applicable. 38 PART II
Removed
On December 14, 2018, Indian Harbor filed its answer to the complaint and filed counterclaims against Playboy for declaratory relief that it has no obligation to provide coverage for the underlying claims and that it is entitled to recoup the amounts it paid in the settlement, with interest.
Removed
Indian Harbor filed a motion for summary judgment, seeking, among other things, summary adjudication that (1) the insurance policy does not provide coverage because the underlying claim was allegedly first made before the policy period of the policy and (2) that Indian Harbor does not have to provide coverage because Playboy allegedly failed to provide timely notice of the claim.
Removed
On September 9, 2020, the Court denied Indian Harbor’s motion, in part, ruling as a matter of law that Playboy had properly reported the underlying claim under the correct policy; but granted the motion as to Playboy’s breach of contract and bad faith claims because Indian Harbor ultimately funded the settlement.
Removed
Based on the summary judgment ruling, the parties agreed to enter into a stipulated judgment in Playboy’s favor to advance the issues for appeal, with Indian Harbor intending to appeal the Court’s decision as to when the underlying claim was first made. The Court entered the parties’ stipulated judgment on July 26, 2021.
Removed
On October 15, 2021, Indian Harbor filed its notice of appeal. On December 13, 2021, Indian Harbor filed its opening appellate brief, and we filed our response on April 14, 2022. Indian Harbor filed its reply brief on July 1, 2022. The parties presented oral arguments in front of the appellate court on September 21, 2022.
Removed
On October 4, 2022, the California appellate court affirmed the Court’s ruling, dismissing Indian Harbor’s claims against Playboy. As such ruling was not appealed, this case was finally resolved in Playboy's favor. Item 4. Mine Safety Disclosures Not applicable. 37 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe used $40 million of the net proceeds from the rights offering for repayment of debt under our senior credit agreement, and we intend to use the remainder for other general corporate purposes.
Biggest changeWe used $45 million of the net proceeds from the rights offering for repayment of debt under our senior credit agreement, with the remainder for use on other general corporate purposes. Purchases of Equity Securities by the Issuer and Affiliated Purchasers The table below provides information regarding our share repurchases made by the Company during the fourth quarter of 2023.
We also completed a rights offering in February 2023, pursuant to which we issued 19,561,050 shares of common stock. We received net proceeds of approximately $47.5 million from the rights offering, after the payment of offering fees and expenses.
We also completed a rights offering in February 2023, pursuant to which we issued 19,561,050 shares of common stock. We received net proceeds of approximately $47.6 million from the rights offering, after the payment of offering fees and expenses.
Such shares were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended, as they were issued pursuant to a private placement to an accredited investor.
Such shares were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act, as they were issued pursuant to a private placement to an accredited investor.
Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 12 of this Form 10-K and Note 13, Stock-Based Compensation of the Notes to the Consolidated Financial Statements included herein for additional information required.
Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 12 of this Annual Report on Form 10-K and Note 14, Stock-Based Compensation of the Notes to the Consolidated Financial Statements included herein for additional information required.
The stock price performance of the graph above is not necessarily indicative of future stock price performance. 38 Recent Sales of Unregistered Securities On December 2, 2022, we issued 3,312 shares of our common stock to an independent contractor based on a price of $37.7444 per share as payment for services pursuant to the terms of a license, services and collaboration agreement.
Recent Sales of Unregistered Securities On March 3, 2023, we issued 3,312 shares of our common stock to an independent contractor based on a price of $37.7444 per share as payment for services pursuant to the terms of a license, services and collaboration agreement.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information PLBY's common stock trades on the Nasdaq Global Market under the symbol “PLBY”.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information PLBY’s common stock trades on the Nasdaq Global Market under the symbol “PLBY”. Holders As of March 22, 2024, there were 71 holders of record of our outstanding common stock.
Removed
Prior to February 10, 2021 and before the completion of the Business Combination with Mountain Crest Acquisition Corp, the common stock of Mountain Crest Acquisition Corp traded on the Nasdaq under the ticker symbol “MCAC”. Holders As of March 10, 2023, there were 60 holders of record of our outstanding common stock.
Added
All repurchased shares became treasury shares of the Company. 39 Month of Fourth Quarter of 2023 Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (3) October 1 through October 31 — $ — — $ — November 1 through November 30 810,463 0.49 810,463 49,589,252 December 1 through December 31 739,466 0.78 739,466 49,000,011 Total for Quarter 1,549,929 $ 0.69 1,549,929 $ 49,000,011 _________________ (1) Excludes commissions paid.
Removed
Stock Price Performance The graph above compares the cumulative total stockholder return on our common stock with the cumulative total return on the Standard & Poor’s (“S&P”) 500 index, the S&P 500 Consumer Discretionary Index and the Nasdaq Composite index.
Added
(2) Our 2022 Stock Repurchase Program (the “Repurchase Program”) was approved by the Board on May 14, 2022 and announced on May 17, 2022. The Repurchase Program authorizes the Company to purchase up to an aggregate of $50 million worth of its outstanding shares of common stock, and such authorization expires on May 31, 2024.
Removed
The graph assumes an initial investment of $100 in our common stock at the market close on August 27, 2020, which was the first day on which our common stock commenced trading on its own. Data for the S&P 500 indices and the Nasdaq Composite index assume reinvestment of dividends. Total return equals stock price appreciation plus reinvestment of dividends.
Added
(3) Amounts represent the approximate dollar value of the maximum dollar value of shares that may yet be purchased under the Repurchase Program as of the end of the applicable period, inclusive of any applicable commission costs paid during the period. Item 6. [Reserved] 40
Removed
Purchases of Equity Securities by the Issuer and Affiliated Purchasers As of December 31, 2022, we had not repurchased any shares of our common stock as authorized pursuant to the 2022 Stock Repurchase Program, which was authorized by the Board of Directors on May 14, 2022. Item 6. [Reserved] 39

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

2 edited+0 added−0 removed0 unchanged
Biggest changeFinancial Statements and Supplementary Data 58 Index to Consolidated Financial Statements 58 Report of Independent Registered Public Accounting Firm (BDO USA, LLP) 59 Report of Independent Registered Public Accounting Firm (Prager Metis CPAs LLP) 61 Consolidated Statements of Operations 62 Consolidated Statements of Comprehensive Loss 63 Consolidated Balance Sheets 64 Consolidated Statements of Stockholders’ Equity 65 Consolidated Statements of Cash Flows 66 Notes to the Consolidated Financial Statements 68
Biggest changeFinancial Statements and Supplementary Data 57 Index to Consolidated Financial Statements 57 Report of Independent Registered Public Accounting Firm (BDO USA, P.C.) 58 Consolidated Statements of Operations 60 Consolidated Statements of Comprehensive Loss 61 Consolidated Balance Sheets 62 Consolidated Statements of Stockholders’ Equity 63 Consolidated Statements of Cash Flows 64 Notes to the Consolidated Financial Statements 66
Item 6. [ Reserved] 39 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 39 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 56 Item 8.
Item 6. [ Reserved] 40 Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations 40 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 56 Item 8.

Item 7. Management's Discussion & Analysis

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

66 edited+52 added−94 removed34 unchanged
Biggest changeThe following table reconciles net loss to EBITDA (loss) and Adjusted EBITDA (loss) income (in thousands): Year Ended December 31, 2022 2021 Net loss $ (277,704) $ (77,676) Adjusted for: Interest expense 17,719 13,312 Loss on extinguishment of debt 1,266 1,217 Benefit from income taxes (58,059) (2,779) Depreciation and amortization 13,613 7,291 EBITDA (303,165) (58,635) Adjusted for: Stock-based compensation 20,540 58,446 Adjustments 12,124 9,413 Amortization of inventory step-up — 8,089 Gain on sale of the aircraft (5,689) — Contingent consideration fair value remeasurement (29,173) 2,369 Impairments 308,165 964 Management fees and expenses — 250 Preferred stock fair value remeasurement (9,401) — Acquisition related costs — 11,549 Adjusted EBITDA $ (6,599) $ 32,445 • Adjustments for the year ended December 31, 2022 are related to amortization of the previously capitalized fees allocated to the second issuance of our Series A Preferred Stock in August 2022, non-cash inventory reserve charges, severance, consulting, advisory and other costs relating to special projects, including the implementation of internal controls over financial reporting and adoption of accounting standards. • Gain on sale of the Company's aircraft for the year ended December 31, 2022 related to its sale in September 2022. 48 • Contingent consideration fair value remeasurement for the years ended December 31, 2022 and 2021 relates to non-cash fair value change due to contingent liabilities fair value remeasurement resulting from the acquisition of Honey Birdette and GlowUp. • Preferred stock fair value remeasurement for the year ended December 31, 2022 relates to non-cash fair value change due to preferred stock liability fair value remeasurement. • Impairments for the year ended December 31, 2022 relate to the impairments of digital assets and other intangible assets, including goodwill. • Adjustments for the year ended December 31, 2021 are primarily related to bonus payments in connection with the Business Combination, as well as consulting, advisory and other costs relating to other costs related to special projects, including, the implementation of internal controls over financial reporting, and executive search costs. • Amortization of inventory valuation step-up adjustment for the year ended December 31, 2021 relates to amortization of a non-cash inventory valuation step-up as part of the purchase accounting for the acquisitions of TLA and Honey Birdette. • Impairments for the year ended December 31, 2021 relate to the impairment of digital assets recognized in the fourth quarter of 2021. • Management fees and expenses adjustments for the year ended December 31, 2021 represent fees paid to one of our stockholders. • Acquisition related costs for the year ended December 31, 2021 include consulting and advisory costs related to acquisition activities.
Biggest changeInvestors should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business. 48 The following table reconciles net loss to EBITDA and Adjusted EBITDA (in thousands): Year Ended December 31, 2023 2022 Net loss $ (180,418) $ (277,704) Adjusted for: (Income) loss from discontinued operations, net of tax (6,030) 27,013 Net loss from continuing operations (186,448) (250,691) Adjusted for: Interest expense 23,293 17,719 (Gain) loss on extinguishment of debt (6,133) 1,266 Benefit from income taxes (13,770) (55,704) Depreciation and amortization 7,199 12,721 EBITDA (175,859) (274,689) Adjusted for: Stock-based compensation 9,597 20,540 Impairments 154,884 283,500 Contingent consideration fair value remeasurement (436) (29,173) Mandatorily redeemable preferred stock fair value remeasurement (6,505) (9,401) Recognition of prepaid royalty guarantees (5,084) — Write-down of capitalized software 5,051 — Inventory reserve charges 3,637 3,083 Gain on sale of the Aircraft — (5,689) Adjustments 7,415 7,335 Adjusted EBITDA $ (7,300) $ (4,494) • Impairments for the year ended December 31, 2023 relate primarily to the impairments of intangible assets, including goodwill, and impairments on certain of our licensing contracts, and impairments of certain Honey Birdette right-of-use assets and related leasehold improvements. • Impairments for the year ended December 31, 2022 relate to the impairments of digital assets and other intangible assets, including goodwill. • Contingent consideration fair value remeasurement for the year ended December 31, 2023 relates to non-cash fair value gain due to the fair value remeasurement of contingent liabilities related to our acquisition of GlowUp that remained unsettled as of December 31, 2023. • Contingent consideration fair value remeasurement for the year ended December 31, 2022 relates to non-cash fair value change due to contingent liabilities fair value remeasurement resulting from the acquisition of Honey Birdette and GlowUp. • Mandatorily redeemable preferred stock fair value remeasurement for the years ended December 31, 2023 and 2022 relates to the fair value remeasurement, non-cash fair value gain of the liability for our Series A Preferred Stock. • Recognition of prepaid royalty guarantees for the year ended December 31, 2023 relates to $5.1 million of prepaid royalty guarantees recognized as revenue in connection with termination of a licensing contract in the fourth quarter of 2023. • Write-down of capitalized software for the year ended December 31, 2023 relates to restructuring charges taken on direct-to-consumer cloud-based software in the first and fourth quarters of 2023, excluding $0.4 million of costs related to discontinued operations. • Inventory reserve charges for the year ended December 31, 2023 relate to non-cash inventory reserve charges, excluding certain ordinary inventory reserve items, recorded in the first quarter of 2023 to reflect the restructuring of the Playboy Direct-to-Consumer business. • Inventory reserve charges for the year ended December 31, 2022 relate to non-cash inventory reserve charges, excluding certain ordinary inventory reserve items, recorded in the third and fourth quarters of 2022 to reflect the restructuring of the Playboy Direct-to-Consumer business. 49 • Gain on sale of the Aircraft for the year ended December 31, 2022 related to its sale in September 2022. • Adjustments for the year ended December 31, 2023 are primarily related to consulting, advisory and other costs relating to corporate transactions and other strategic opportunities, as well as reorganization and severance costs resulting in the elimination or rightsizing of specific business activities or operations. • Adjustments for the year ended December 31, 2022 are related to amortization of the previously capitalized fees allocated to the second issuance of our Series A Preferred Stock in August 2022, severance, consulting, advisory and other costs relating to special projects, including the implementation of internal controls over financial reporting and adoption of accounting standards.
Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA in the same fashion.
Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because not all companies may calculate Adjusted EBITDA in the same fashion.
We believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance. 47 EBITDA and Adjusted EBITDA “EBITDA” is defined as net income or loss before interest, income tax expense or benefit, and depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation and other special items determined by management.
We believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance. EBITDA and Adjusted EBITDA “EBITDA” is defined as net income or loss before interest, income tax expense or benefit, and depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation and other special items determined by management.
While our significant accounting policies are described in the notes to our consolidated financial statements, we believe that the accounting policies below are most critical to understanding our financial condition and historical and future results of operations. Revenue Recognition We license trademarks under multi-year arrangements with consumer products, online gaming and location-based entertainment businesses.
While our significant accounting policies are described in the notes to our consolidated financial statements, we believe that the accounting policies below are most critical to understanding our financial condition and historical and future results of operations. Licensing Revenue Recognition We license trademarks under multi-year arrangements with consumer products, online gaming and location-based entertainment businesses.
Our performance-based restricted stock units ("PSUs") vest upon achieving each of certain PLBY's stock price milestones during the contractual vesting period. For milestones that have not been achieved, such PSUs vest over the derived requisite service period and the fair value of such awards is estimated on the grant date using Monte Carlo simulations.
Our performance-based restricted stock units (“PSUs”) vest upon achieving each of certain PLBY’s stock price milestones during the contractual vesting period. For milestones that have not been achieved, such PSUs vest over the derived requisite service period and the fair value of such awards is estimated on the grant date using Monte Carlo simulations.
Segments Our Chief Executive Officer is our Chief Operating Decision Maker (“CODM”). Our segment disclosure is based on its intention to provide the users of our consolidated financial statements with a view of the business from our perspective. We operate our business in three primary operating and reportable segments: Licensing, Direct-to-Consumer, and Digital Subscriptions and Content.
Segments Our Chief Executive Officer is our Chief Operating Decision Maker (“CODM”). Our segment disclosure is based on our intention to provide the users of our consolidated financial statements with a view of the business from our perspective. We operate our business in three primary operating and reportable segments: Direct-to-Consumer, Licensing and Digital Subscriptions and Content.
We receive fixed consideration shortly before the start of the subscription periods from these contracts, which are primarily sold in monthly, annual, or lifetime subscriptions. Revenues from lifetime subscriptions are recognized ratably over a five-year period, representing the estimated period during which the customer accesses the platforms.
We receive fixed consideration shortly before the start of the subscription periods from these contracts, which are primarily sold in monthly, annual, or lifetime subscriptions. Revenues from lifetime subscriptions are recognized ratably over a five-year period, representing the estimated period during which the customer accesses the platforms. Revenues from digital subscriptions are recognized ratably over the subscription period.
Digital Subscriptions and Content operations include the production, marketing and sales of programming under the Playboy brand name, which is distributed through various channels, including domestic and international television, sales of tokenized digital art and collectibles, and sales of creator content offerings to consumers on playboy.com .
Digital Subscriptions and Content operations include the production, marketing and sales of programming under the Playboy brand name, which is distributed through various channels, including domestic and international television, sales of tokenized digital art and collectibles, and sales of creator content offerings to consumers through the Playboy Club on playboy.com .
Benefit (Expense) from Income Taxes Benefit (expense) from income taxes consists of an estimate for U.S. federal, state, and foreign income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law.
Benefit from Income Taxes Benefit from income taxes consists of an estimate for U.S. federal, state, and foreign income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law.
Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measure is useful in evaluating our operational performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes.
Non-GAAP Financial Measures In addition to our results being determined in accordance with GAAP, we believe the following non-GAAP measure is useful in evaluating our operational performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes.
In the event that additional financing is required from third-party sources, we may not be able to raise it on acceptable terms or at all.
However, in the event that additional financing is required from third-party sources, we may not be able to raise it on acceptable terms or at all.
On August 8, 2022, we issued and sold the remaining 25,000 shares of Series A Preferred Stock to the Purchaser at a price of $1,000 per share (the "Second Drawdown"), resulting in additional gross proceeds to us of $25.0 million. We incurred approximately $0.5 million of fees associated with the Second Drawdown, which were netted against the gross proceeds.
On August 8, 2022, we issued and sold the remaining 25,000 shares of Series A Preferred Stock to the Purchaser at a price of $1,000 per share (the “Second Drawdown”), resulting in additional gross proceeds to us of $25.0 million. We incurred approximately $0.5 million of fees associated with the Second Drawdown, which were netted against the gross proceeds.
Leases Our principal lease commitments are for office space and operations under several noncancelable operating leases with contractual terms expiring from 2021 to 2033. Some of these leases contain renewal options and rent escalations.
Leases Our principal lease commitments are for office space and operations under several noncancelable operating leases with contractual terms expiring from 2023 to 2033. Some of these leases contain renewal options and rent escalations.
We may seek additional equity or debt financing in the future to satisfy capital requirements, respond to adverse developments such as the COVID-19 pandemic, changes in our circumstances or unforeseen events or conditions, or fund organic or inorganic growth opportunities.
We may seek additional equity or debt financing in the future to satisfy capital requirements, respond to adverse developments such as changes in our circumstances or unforeseen events or conditions, or fund organic or inorganic growth opportunities.
Our direct-to-consumer business have historically experienced higher sales in the fourth quarter due to the U.S. holiday season, including Halloween, but changing market conditions and demand could affect such sales. Historical seasonality of revenues may be subject to change as increasing pressure from competition and changes in economic conditions impact our licensees and consumers.
Our direct-to-consumer business has historically experienced higher sales in the fourth quarter due to the U.S. holiday season, but changing market conditions and demand could affect such sales. Historical seasonality of revenues may be subject to change as increasing pressure from competition and changes in consumer trends and economic conditions impact our licensees and consumers.
For example, our licensing business under our consumer products business have historically experienced higher receipts in its first and third fiscal quarters due to the licensing fee structure in our licensing agreements which typically require advance payment of such fees during those quarters, but such payments can be subject to extensions or delays.
For example, our licensing business historically experienced higher receipts in its first and third fiscal quarters due to the licensing fee structure in our licensing agreements, which typically require advance payment of such fees during those quarters, but such payments can be subject to variations, extensions or delays.
We reach consumers worldwide with products across four key market categories: Sexual Wellness, including lingerie and intimacy products; Style and Apparel, including a variety of apparel and accessories products; Digital Entertainment and Lifestyle, such as our creator platform, web and television-based entertainment, and our spirits and hospitality products; and Beauty and Grooming, including fragrance, skincare, grooming and cosmetics.
We reach consumers worldwide with products across four key market categories: Style and Apparel, including a variety of apparel and accessories products; Digital Entertainment and Lifestyle, including our creator platform, the Playboy Club, web and television-based entertainment, and our spirits and hospitality products; Sexual Wellness, including lingerie and intimacy products; and Beauty and Grooming, including fragrance, skincare, grooming and cosmetics.
This assessment considers, among other matters, the nature, frequency, and severity of current and cumulative losses, the duration of statutory carryforward periods, and tax planning alternatives. Playboy uses a two-step approach to recognizing and measuring uncertain tax positions.
This assessment considers, among other matters, the nature, frequency, and severity of current and cumulative losses, the duration of statutory carryforward periods, and tax planning alternatives. We use a two-step approach to recognizing and measuring uncertain tax positions.
The net proceeds received from the public offering were $202.9 million. 50 On May 16, 2022, we issued and sold 25,000 shares of Series A Preferred Stock to Drawbridge DSO Securities LLC (the "Purchaser") at a price of $1,000 per share, resulting in total gross proceeds to us of $25.0 million, and we agreed to sell to the Purchaser, and the Purchaser agreed to purchase from us, up to an additional 25,000 shares of Series A Preferred Stock on the terms set forth in the securities purchase agreement entered into by us and the Purchaser.
On May 16, 2022, we issued and sold 25,000 shares of Series A Preferred Stock to Drawbridge DSO Securities LLC (the “Purchaser”) at a price of $1,000 per share, resulting in total gross proceeds to us of $25.0 million, and we agreed to sell to the Purchaser, and the Purchaser agreed to purchase from us, up to an additional 25,000 shares of Series A Preferred Stock on the terms set forth in the securities purchase agreement entered into by us and the Purchaser.
Selling and Administrative Expenses Selling and administrative expenses primarily consist of corporate office and retail store occupancy costs, personnel costs, including stock-based compensation, and contractor fees for accounting/finance, legal, human resources, information technology and other administrative functions, changes in the fair value of contingent consideration, general marketing and promotional activities and insurance.
Selling and Administrative Expenses Selling and administrative expenses primarily consist of corporate office and retail store occupancy costs, personnel costs, including stock-based compensation, and contractor fees for accounting/finance, legal, human resources, information technology and other administrative functions, general marketing and promotional activities and insurance.
Estimates and judgments used in the preparation of our consolidated financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, such as demand for our products, economic conditions and other current and future events, such as the impact of the COVID-19 pandemic.
Estimates and judgments used in the preparation of our consolidated financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, such as demand for our products, economic conditions and other current and future events, such as the impact of international armed conflicts and geopolitical tensions.
Cost of Sales Cost of sales primarily consist of merchandise costs, warehousing and fulfillment costs, agency fees, marketplace traffic acquisition costs, website expenses, credit card processing fees, personnel costs, including stock-based compensation, Playboy Television operating expenses, costs associated with branding events, paper and printing costs, customer shipping and handling expenses, fulfillment activity costs and freight-in expenses.
Cost of Sales Cost of sales primarily consist of merchandise costs, warehousing and fulfillment costs, agency fees, website expenses, digital platform expenses, marketplace traffic acquisition costs, credit card processing fees, personnel and affiliate costs, including stock-based compensation, costs associated with branding events, customer shipping and handling expenses, fulfillment activity costs and freight-in expenses.
We received net proceeds of approximately $13.75 million from the registered direct offering. We also completed a rights offering in February 2023, pursuant to which we issued 19,561,050 shares of common stock. We received net proceeds of approximately $47.5 million from the rights offering, after the payment of offering fees and expenses.
We received $15 million in gross proceeds from the registered direct offering, and net proceeds of $13.9 million, after the payment of offering fees and expenses. 51 We also completed a rights offering in February 2023, pursuant to which we issued 19,561,050 shares of common stock.
Business Overview We are a large, global consumer lifestyle company marketing its brands through a wide range of direct-to-consumer products, licensing initiatives, digital subscriptions and content, and online and location-based entertainment.
Business Overview We are a large, global consumer lifestyle company marketing our brands through a wide range of direct-to-consumer products, licensing initiatives, and digital subscriptions and content.
Key Factors and Trends Affecting Our Business We believe that our performance and future success depends on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section of this Annual Report on Form 10-K titled “ Risk Factors .” Shifting to a Capital-Light Business Model As of 2023, we will pursue a commercial strategy that relies on a more capital-light business model focused on revenue streams with higher margin and higher growth potential.
Key Factors and Trends Affecting Our Business We believe that our performance and future success depends on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section of this Annual Report on Form 10-K titled “ Risk Factors .” Shifting to a Capital-Light Business Model In pursuit of a commercial strategy that relies on a more capital-light business model focused on revenue streams with higher margin, lower working capital requirements and higher growth potential, we continue to review the cost structure of our businesses and additional cost rationalization.
Components of Results of Operations Revenues We generate revenue from trademark licenses for third-party consumer products, online gaming and location-based entertainment businesses, sales of our tokenized digital art and collectibles, and sales of creator offerings to consumers on our creator-led platform on playboy.com (launched in December 2021), in addition to sales of consumer products sold through third-party retailers or online direct-to-customer and from the subscription of our programming which is distributed through various channels, including websites and domestic and international television.
Components of Results of Operations Revenues We generate revenue from sales of consumer products sold through our retail stores or online direct-to-customer, trademark licenses for third-party consumer products, online gaming and location-based entertainment businesses, and sales of creator offerings to consumers on our creator-led platform on playboy.com, in addition to subscriptions to our programming, which is distributed through various channels, including websites and domestic and international television.
The Digital Subscriptions and Content segment derives revenue from the subscription of Playboy programming, which is distributed through various channels, including websites and domestic and international TV, from sales of tokenized digital art and collectibles, and sales of creator content offerings to consumers on playboy.com .
Our Digital Subscriptions and Content segment derives revenue from subscriptions to Playboy programming and content, which is distributed through various channels, including websites and domestic and international TV, and sales of creator content offerings and memberships through the Playboy Club on playboy.com .
Revenues from digital subscriptions and Playboy magazine are recognized ratably over the subscription period. We discontinued publishing Playboy magazine in the first quarter of 2020. Revenues generated from the sales of creator offerings to consumers via our creator platform on playboy.com are recognized at the point in time when the sale is processed.
Revenues generated from the sales of creator offerings to consumers via our creator platform on playboy.com are recognized at the point in time when the sale is processed. Revenues generated from subscriptions to our creator platform are recognized ratably over the subscription period.
Earned royalties received in excess of the minimum guarantee (“Excess Royalties”) are typically payable quarterly. We recognize revenue for the total minimum guarantee specified in the agreement on a straight-line basis over the term of the agreement and recognizes Excess Royalties only when the annual minimum guarantee is exceeded.
We recognize revenue for the total minimum guarantee specified in the agreement on a straight-line basis over the term of the agreement and recognize Excess Royalties only when the annual minimum guarantee is exceeded. Generally, Excess Royalties are recognized when they are earned.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this Form 10-K. This section of this Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this Annual Report on Form 10-K.
We have three reportable segments: Licensing, Direct-to-Consumer, and Digital Subscriptions and Content. The Licensing segment derives revenue from trademark licenses for third-party consumer products, location-based entertainment businesses and online gaming. The Direct-to-Consumer segment derives its revenue from sales of consumer products sold directly to consumers through our own online channels, our retail stores or through third-party retailers.
We have three reportable segments: Direct-to-Consumer, Licensing and Digital Subscriptions and Content. Our Direct-to-Consumer segment derives its revenue from sales of consumer products sold directly to consumers through our own online channels and retail stores.
Other Operating Income, Net Other operating income, net primarily consists of gains on the sale of certain digital assets net of certain fees related to their sale. 43 Nonoperating (Expense) Income Interest expense Interest expense consists of interest on our long-term debt and the amortization of deferred financing costs.
Other Operating (Expense) Income, Net Other operating (expense) income, net primarily consists of gains on the sale of certain digital assets and the loss resulting from the settlement of a secured promissory note. 43 Nonoperating (Expense) Income Interest expense Interest expense consists of interest on our long-term debt and the amortization of deferred financing costs and debt discount.
Liquidity and Capital Resources Sources of Liquidity Our main source of liquidity is cash generated from operating and financing activities, which primarily includes cash derived from revenue generating activities, in addition to proceeds from our issuance of debt (as described further below), proceeds from public offerings and proceeds from the issuance and sale of Series A Preferred Stock.
Liquidity and Capital Resources Sources of Liquidity Our sources of liquidity are cash generated from operating activities, which primarily includes cash derived from revenue generating activities, from financing activities, including proceeds from our issuance of debt, and proceeds from stock offerings (as described further below), and from investing activities, which included the sale of assets in 2022 and 2023 (as described further below).
Generally, Excess Royalties are recognized when they are earned. 42 Consumer Products Revenue from sales of online apparel and accessories, including sales through third-party sellers, is recognized upon delivery of the goods to the customer. Revenue is recognized net of incentives and estimated returns.
Consumer Products Revenue from sales of online apparel and accessories, including sales through third-party sellers, is recognized upon delivery of the goods to the customer. Revenue from sales of apparel at our retail stores is recognized at the time of transaction. Revenue is recognized net of incentives and estimated returns.
In addition to adjusting for non-cash stock-based compensation, non-cash charges for the fair value remeasurements of certain liabilities and non-recurring impairment and inventory charges, we typically adjust for nonoperating expenses and income, such as management fees paid to our largest stockholder, merger related bonus payments, non-recurring special projects including the implementation of internal controls, expenses associated with financing activities, gain on the sale of assets, non-cash inventory reserve charges, acquisition related inventory step-up amortization and costs, the expense associated with asset impairments, reorganization and severance resulting in the elimination or rightsizing of specific business activities or operations as we transformed from a print and digital media business to a commerce centric business.
In addition to adjusting for non-cash stock-based compensation, non-cash charges for the fair value remeasurements of certain liabilities and non-recurring non-cash impairments, asset write-downs and inventory reserve charges, we typically adjust for nonoperating expenses and income, such as non-recurring special projects, including the implementation of internal controls, non-recurring gain on the sale of assets, expenses associated with financing activities, and reorganization and severance expenses that result from the elimination or rightsizing of specific business activities or operations.
We used $40 million of the net proceeds from the rights offering for repayment of debt under our senior credit agreement, and we intend to use the remainder for other general corporate purposes.
We received net proceeds of approximately $47.6 million from the rights offering, after the payment of offering fees and expenses. We used $45 million of the net proceeds from the rights offering for repayment of debt under our senior secured credit agreement, with the remainder to be used for other general corporate purposes.
As a result of the transaction, all of our authorized shares of Series A Preferred Stock were issued and outstanding as of August 8, 2022. On January 24, 2023, we issued 6,357,341 shares of our common stock in a registered direct offering to a limited number of investors.
On January 24, 2023, we issued 6,357,341 shares of our common stock in a registered direct offering to a limited number of investors.
As of December 31, 2022 and 2021, our fixed leases were $56.1 million and $49.8 million, with $10.0 million and $9.7 million due in the next 12 months, respectively.
As of December 31, 2023 and 2022, our fixed lease obligations were $31.6 million and $33.0 million, respectively, with $7.0 million and $6.3 million due in the next 12 months, respectively.
Loss on Extinguishment of Debt In the fourth quarter of 2022, we recorded a partial extinguishment of debt in the amount of $1.1 million related to the write-off of unamortized debt discount and deferred financing costs as a result of a $25 million mandatory prepayment of debt pursuant to the Third Amendment of our New Credit Agreement in December 2022 (see Liquidity and Capital Resources section for definitions and additional details).
In the first quarter of 2023, we recorded a loss on partial extinguishment of debt in the amount of $1.8 million related to the write-off of unamortized debt discount and deferred financing costs as a result of $45 million in prepayments of our debt pursuant to amendments of our senior secured credit agreement in December 2022 and February 2023.
Licensing operations include the licensing of one or more of our trademarks and/or images for consumer products, location-based entertainment and online gaming businesses. Direct-to-Consumer operations include consumer products sold through third-party retailers or online direct-to-customer.
Direct-to-Consumer operations include consumer products sold through brick-and-mortar retail stores and e-commerce sites. Licensing operations include the licensing of one or more of our trademarks, our Playboy retail platform operations effective July 2023, and/or images for consumer products and location-based entertainment businesses.
Other (Expense) Income, Net Other (expense) income, net consists primarily of other miscellaneous nonoperating items, such as bank charges and foreign exchange gains or losses as well as non-recurring transaction fees, such as amortization of previously capitalized fees allocated to the sale of a second tranche of our Series A Preferred Stock in August 2022.
Fair Value Remeasurement Gain Fair value remeasurement gain consists of changes to the fair value of mandatorily redeemable preferred stock liability related to its remeasurement. Other Income (Expense), Net Other income (expense), net consists primarily of other miscellaneous nonoperating items, such as bank charges and foreign exchange gains or losses as well as non-recurring transaction fees.
Loss on Extinguishment of Debt Loss on extinguishment of debt remained f lat, primarily due to a loss of $1.1 million on the partial extinguishment of debt related to a $25 million prepayment in the fourth quarter of 2022 and $0.2 million of loss on early extinguishment of the Aircraft Term Loan in the third quarter of 2022, compared to a loss of $1.2 million on debt extinguishment from our debt refinancing in 2021 as described in Note 9, Debt.
Gain (loss) on extinguishment of debt for the year ended December 31, 2022 was a loss of $1.1 million on the partial extinguishment of debt related to a $25 million prepayment in the fourth quarter of 2022 and $0.2 million of loss on early extinguishment of the Aircraft Term Loan in the third quarter of 2022.
Although consequences of the COVID-19 pandemic and ongoing macroeconomic uncertainty could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors, such as those discussed above, we believe our existing sources of liquidity will be sufficient to fund our operations, including lease obligations, debt service requirements, capital expenditures and working capital obligations for at least the next 12 months from the filing of this Annual Report.
Although consequences of ongoing macroeconomic uncertainty could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors, such as those discussed above, we believe our existing sources of liquidity, along with proceeds from asset dispositions and savings from cost reductions initiatives, will be sufficient to meet our obligations as they become due under the A&R Credit Agreement and our other obligations for at least one year following the date of the filing of this Annual Report on Form 10-K.
In addition to historical information, the following discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results and the timing of events could differ materially from those anticipated in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in Item 1A. Risk Factors .
This section of this Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. In addition to historical information, the following discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results and the timing of events could differ materially from those anticipated in the forward-looking statements.
In connection with the Second Amendment, $0.2 million of debt issuance costs were expensed as incurred, and $2.5 million of debt discount were capitalized.
As a result of the Restatement, fees of $0.3 million were expensed as incurred and $0.4 million of debt issuance costs were capitalized in the second quarter of 2023. In connection with the sale of TLA Acquisition Corp.
In connection with the sale of the Company's aircraft, the Aircraft Term Loan was repaid in full and all related liens discharged. A loss on early extinguishment of debt, which was comprised of the write-off of certain deferred financing costs and a prepayment penalty, was immaterial.
A loss on early extinguishment of such debt, which was comprised of the write-off of certain deferred financing costs and a prepayment penalty, was $0.2 million.
Trademark Licensing We license trademarks under multi-year arrangements to consumer products, online gaming and location-based entertainment businesses. Typically, the initial contract term ranges between one to ten years. Renewals are separately negotiated through amendments. Under these arrangements, we generally receive an annual non-refundable minimum guarantee that is recoupable against a sales-based royalty generated during the license year.
We periodically offer promotional incentives to customers, which include basket promotional code discounts and other credits, which are recorded as a reduction of revenue. 42 Trademark Licensing We license trademarks under multi-year arrangements to consumer products, online gaming and location-based entertainment businesses. Typically, the initial contract term ranges between one to ten years. Renewals are separately negotiated through amendments.
Cash Flows from Investing Activities Net cash provided by investing activities was $8.8 million for the year ended December 31, 2022, which was primarily due to the net proceeds from the sale of the Company's aircraft of $16.8 million, partially offset by the acquisition of property and equipment of $8.0 million.
Cash Flows from Investing Activities The increase in net cash provided by investing activities from continuing operations for the year ended December 31, 2023 over the prior year comparable period was due to $14.3 million of proceeds from the sale of TLA, $1.0 million of proceeds from the Yandy Sale and the $1.3 million payment of a related promissory note, and a $3.9 million decrease in purchases of property and equipment, partly offset by $16.8 million of proceeds from the sale of the Aircraft in the prior year comparable period.
Gain on Sale of the Aircraft Gain on sale of the aircraft represents the gain on the sale of the Company’s aircraft in September 2022.
Gain on Sale of the Aircraft Gain on sale of the aircraft represents the gain on the sale of our former corporate aircraft (the “Aircraft”).
Net loss was adjusted for non-cash charges of $249.3 million, primarily attributable to impairment of digital and other assets of $308.2 million, stock-based compensation expense of $20.5 million, loss on extinguishment of debt of $1.3 million, $13.6 million of depreciation and amortization expense, inventory reserve adjustments of $4.2 million and $10.1 million of amortization of right of use assets, partially offset by changes in the fair value of liabilities of $38.6 million, deferred income taxes of $64.4 million and gain on sale of the Company's aircraft of $5.7 million.
The change in non-cash charges compared to the change in the prior year comparable period was primarily driven by a $128.6 million decrease in non-cash impairment charges, a $10.9 million decrease in stock-based compensation expense, a $7.4 million change due to extinguishment of debt, and a $5.5 million decrease in depreciation and amortization, partly offset by a $31.6 million change in fair value remeasurement charges, a $44.8 million increase in deferred income taxes, a $3.8 million increase in inventory reserves, $1.8 million of capitalized payment-in-kind interest, the $5.7 million gain on sale of the Aircraft in the third quarter of 2022, and a $3.7 million increase in other non-cash charges, net.
For further information on our lease obligations, refer to Note 13 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. 53 Cash Flows The following table summarizes our cash flows for the periods indicated (in thousands): Year Ended December 31, 2022 2021 Net cash provided by (used in): Operating activities $ (59,609) $ (36,742) Investing activities 8,753 (273,176) Financing activities 11,559 370,474 Cash Flows from Operating Activities Net cash used in operating activities was $59.6 million, including a net loss of $277.7 million for the year ended December 31, 2022.
For further information on our lease obligations, see Note 15 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. 53 Cash Flows The following table summarizes our cash flows from continuing operations for the periods indicated (in thousands): Year Ended December 31, 2023 2022 $ Change % Change Net cash provided by (used in): Operating activities $ (42,788) $ (64,042) $ 21,254 (33) % Investing activities 13,060 9,377 3,683 39 Financing activities 26,184 11,559 14,625 127 Cash Flows from Operating Activities The decrease in net cash used in operating activities from continuing operations for year ended December 31, 2023 over the prior year comparable period was due to a $64.2 million decrease in net loss from continuing operations, as well as changes in assets and liabilities that had a current period cash flow impact, such as $17.8 million of changes in working capital, partly offset by $60.8 million of changes in non-cash charges.
As of December 31, 2022, our principal source of liquidity was our cash in the amount of $31.6 million which is primarily held in operating and deposit accounts. In June 2021, we completed a public offering in which 4,720,000 shares of our common stock were sold at a price of $46 per share.
As of December 31, 2023, our principal source of liquidity was our unrestricted cash in the amount of $28.1 million which is primarily held in operating and deposit accounts.
The Company was in compliance with the financial covenants under the New Credit Agreement as of December 31, 2021. Compliance with the Total Net Leverage Ratio covenant as of December 31, 2022 was waived pursuant to the terms of the Third Amendment.
The other terms of the A&R Credit Agreement will remain substantially unchanged from those prior to the A&R First Amendment. Compliance with the financial covenants as of December 31, 2023 and 2022 was waived pursuant to the terms of the A&R Credit Agreement and the third amendment of the Credit Agreement, respectively.
Related Party Expenses Related party expenses decreased by $0.3 million, or 100%, due to termination of our management agreement with an affiliate of one of our stockholders for management and consulting services in the first quarter of 2021 upon consummation of the Business Combination. 46 Impairments Impairments increased by $307.2 million, or 100%, primarily due to impairment charges on Playboy-branded trademarks, Honey Birdette’s and TLA’s trade names and goodwill recorded in the third quarter of 2022 of $301.8 million, higher impairment charges related to our digital assets of $3.9 million as a result of their fair value decreasing below their carrying value, and impairment of certain other assets of $1.4 million in the third quarter of 2022.
Impairments The decrease in impairments as compared to the prior year comparative period was primarily due to lower impairment charges of $132.3 million on Playboy-branded trademarks, Honey Birdette’s trade names and goodwill, $4.9 million of higher impairment charges related to our digital assets during the year ended December 31, 2022 as a result of their fair value decreasing below their carrying value, and the $2.4 million impairment of certain other assets in the second quarter of 2022, partly offset in 2023 by $8.7 million in impairments of certain licensing contracts and $2.3 million in impairments of certain Honey Birdette right-of-use assets and related leasehold improvements.
In the third quarter of 2022, in connection with the sale of the Company's aircraft (see Note 6, Property and Equipment, Net), the Aircraft Term Loan was repaid in full and all related liens discharged. A loss on early extinguishment of debt, which was comprised of the write-off of certain deferred financing costs and a prepayment penalty, was $0.2 million.
Gain (Loss) on Extinguishment of Debt In September 2022, in connection with the sale of the Aircraft, a related term loan obtained in connection with our acquisition of the Aircraft (the “Aircraft Term Loan”) was repaid in full and all related liens discharged.
As of the date of these consolidated financial statements, the full extent to which COVID-19 may impact our future financial condition or results of operations is uncertain. How We Assess the Performance of Our Business In assessing the performance of our business, we consider a variety of performance and financial measures.
Transitioning to a capital-light business model with a more streamlined consumer products business may further impact the seasonality of our business in the future. How We Assess the Performance of Our Business In assessing the performance of our business, we consider a variety of performance and financial measures.
The effective interest rate of the New Term Loan as of December 31, 2022 and December 31, 2021 was 12.27% and 7.1%, respectively. Our obligations pursuant to the New Credit Agreement are guaranteed by us and any of our current and future wholly-owned, domestic subsidiaries, subject to certain exceptions.
The effective interest rate of the term loan pursuant to the Credit Agreement as of December 31, 2022 was 12.3%.
Seasonality of Our Consumer Product Sales While we receive revenue throughout the year, our businesses have experienced, and may continue to experience, seasonality.
If we continue to experience declines in revenue or profitability, which could occur upon further declines in consumer demand or additional discontinued operations, we may record further non-cash asset impairment charges as of the applicable impairment testing date. Seasonality of Revenues While we receive revenue throughout the year, our businesses have experienced, and may continue to experience, seasonality.
Corporate Corporate expenses decreased by $92.2 million, or 74%, during 2022 compared to 2021, primarily due to $31.5 million of non-cash fair value change due to contingent liabilities fair value remeasurement relating to our 2021 acquisitions, lower stock-based compensation expense of $38.6 million, lower marketing and advertising costs of $2.6 million and lower professional services costs of $17.8 million, which includes $11.5 million of acquisition related costs and costs associated with our transition to a public company incurred in the prior year comparative period.
Corporate The increase in corporate expenses as compared to the prior year comparative period was primarily due to $28.5 million less in non-cash contingent liabilities fair value remeasurement gain relating to our 2021 acquisitions and a $5.7 million gain on the sale of the Aircraft recorded in September 2022, partly offset by $9.3 million of lower stock-based compensation expense, net of $2.3 million of additional stock-based compensation expense (due to the acceleration of certain equity awards in connection with severance payments), $4.6 million lower professional services costs, the elimination of $4.3 million of Aircraft costs following the sale of the Aircraft in the third quarter of 2022, $1.3 million of lower depreciation expense due to the sale of the Aircraft, the $1.1 million impairment of certain assets in the prior year comparative period, and $1.5 million and $1.7 million of lower payroll and recruiting expenses, respectively.
Net cash provided by financing activities was $370.5 million for the year ended December 31, 2021, which was primarily due to net proceeds from our June 2021 public offering, as well as issuance of long-term debt, net cash acquired from the Business Combination and PIPE Investment, partially offset by the repayment of borrowings and the payment of financing costs. 54 Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with US GAAP.
Cash Flows from Financing Activities The increase in net cash provided by financing activities from continuing operations for the year ended December 31, 2023 over the prior year comparable period was due to net proceeds of $13.9 million from our registered direct offering in January of 2023, net proceeds of $47.6 million from our rights offering in February 2023, gross proceeds of $11.8 million from the amendment and restatement of our senior secured credit agreement in the second quarter of 2023, and a $2.0 million decrease in the payment of financing costs, partly offset by $48.3 million of proceeds from the issuance of Series A Preferred Stock in the prior year comparable period, a $9.7 million increase in the repayment of long-term debt, the repurchase of $1.0 million of our outstanding common stock in the fourth quarter of 2023, and $1.9 million of proceeds from the exercise of stock options in the prior year comparable period. 54 Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with GAAP.
Due to cumulative losses, we maintain a valuation allowance against the definite-lived U.S. federal and state deferred tax assets. 44 Results of Operations Comparison of Fiscal Years Ended December 31, 2022 and 2021 The following table summarizes key components of Playboy’s results of operations for the periods indicated (in thousands): Year Ended December 31, 2022 2021 $ Change % Change Net revenues $ 266,933 $ 246,586 $ 20,347 8 % Costs and expenses: Cost of sales (129,642) (116,752) (12,890) 11 % Selling and administrative expenses (160,982) (197,472) 36,490 (18) % Related party expenses — (250) 250 (100) % Impairments (308,165) (964) (307,201) * Gain on sale of the aircraft 5,689 — 5,689 100 % Other operating income, net 482 — 482 100 % Total operating expense (592,618) (315,438) (277,180) 88 % Operating (loss) income (325,685) (68,852) (256,833) 373 % Nonoperating (expense) income: Interest expense (17,719) (13,312) (4,407) 33 % Loss on extinguishment of debt (1,266) (1,217) (49) 4 % Fair value remeasurement gain 9,401 — 9,401 100 % Other (expense) income, net (494) 2,926 (3,420) (117) % Total nonoperating expense (10,078) (11,603) 1,525 (13) % (Loss) income before income taxes (335,763) (80,455) (255,308) 317 % Benefit (expense) from income taxes 58,059 2,779 55,280 * Net loss (277,704) (77,676) (200,028) 258 % Net loss attributable to PLBY Group, Inc. $ (277,704) $ (77,676) $ (200,028) 258 % _________________ *Not meaningful 45 The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue for the periods indicated: Year Ended December 31, 2022 2021 Net revenues 100 % 100 % Costs and expenses: Cost of sales (48.6) (47.3) Selling and administrative expenses (60.3) (80.1) Related party expenses — (0.1) Impairments (115.4) (0.4) Gain on sale of the aircraft 2.1 — Other operating income, net 0.2 — Total operating expense (222.0) (127.9) Operating (loss) income (122.0) (27.9) Nonoperating (expense) income: Interest expense (6.6) (5.4) Loss on extinguishment of debt (0.5) (0.5) Fair value remeasurement gain 3.5 — Other (expense) income, net (0.2) 1.2 Total nonoperating expense (3.8) (4.7) (Loss) income before income taxes (125.8) (32.6) Benefit (expense) from income taxes 21.8 1.1 Net loss (104.0) (31.5) Net loss attributable to PLBY Group, Inc.
Due to cumulative losses, we maintain a valuation allowance against our U.S. federal and state deferred tax assets, as well as Australia, U.K. and China deferred tax assets. 44 Results of Operations Comparison of Fiscal Years Ended December 31, 2023 and 2022 The following table summarizes key components of our results of operations for the periods indicated (in thousands): Year Ended December 31, 2023 2022 $ Change % Change Net revenues $ 142,950 $ 185,536 $ (42,586) (23) % Costs and expenses: Cost of sales (54,777) (82,945) 28,168 (34) Selling and administrative expenses (123,554) (150,535) 26,981 (18) Impairments (154,884) (283,500) 128,616 (45) Contingent consideration fair value remeasurement gain 436 29,173 (28,737) (99) Gain on sale of the aircraft — 5,689 (5,689) (100) Other operating (expense) income, net (540) 482 (1,022) (212) Total operating expense (333,319) (481,636) 148,317 (31) Operating loss (190,369) (296,100) 105,731 (36) Nonoperating (expense) income: Interest expense (23,293) (17,719) (5,574) 31 Gain (loss) on extinguishment of debt 6,133 (1,266) 7,399 (584) Fair value remeasurement gain 6,505 9,401 (2,896) (31) Other income (expense), net 806 (711) 1,517 (213) Total nonoperating expense (9,849) (10,295) 446 (4) Loss from continuing operations before income taxes (200,218) (306,395) 106,177 (35) Benefit from income taxes 13,770 55,704 (41,934) (75) Net loss from continuing operations (186,448) (250,691) 64,243 (26) Income (loss) from discontinued operations, net of tax 6,030 (27,013) 33,043 (122) Net loss (180,418) (277,704) 97,286 (35) Net loss attributable to PLBY Group, Inc. $ (180,418) $ (277,704) $ 97,286 (35) % 45 The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue for the periods indicated: Year Ended December 31, 2023 2022 Net revenues 100 % 100 % Costs and expenses: Cost of sales (38.3) (44.7) Selling and administrative expenses (86.4) (81.1) Impairments (108.3) (152.8) Contingent consideration fair value remeasurement gain 0.3 15.7 Gain on sale of the aircraft — 3.1 Other operating (expense) income, net (0.4) 0.3 Total operating expense (233.1) (259.5) Operating loss (133.1) (159.5) Nonoperating (expense) income: Interest expense (16.3) (9.6) Gain (loss) on extinguishment of debt 4.3 (0.7) Fair value remeasurement gain 4.6 5.1 Other income (expense), net 0.6 (0.4) Total nonoperating expense (6.8) (5.6) Loss from continuing operations before income taxes (139.9) (165.1) Benefit from income taxes 9.6 30.0 Net loss from continuing operations (130.3) (135.1) Income (loss) from discontinued operations, net of tax 4.2 (14.6) Net loss (126.1) (149.7) Net loss attributable to PLBY Group, Inc.
Other (Expense) Income , Net Other (expense) income, net changed by $3.4 million, from $2.9 million in income to $0.5 million in expense, primarily due to amortization of previously capitalized fees of $0.6 million allocated to the second issuance of our Series A Preferred Stock in the third quarter of 2022, $0.7 million of gain in the prior year comparative period related to the gain from settlement of convertible promissory notes recognized during the first quarter of 2021 (as we settled the convertible promissory note payable to UTA at a 20% discount), and $1.7 million in gain recognized from litigation settlements in 2021.
Fair Value Remeasurement Gain The decrease in fair value remeasurement gain as compared to the prior year comparative period was due to the remeasurement of our mandatorily redeemable preferred stock liability to its fair value in 2023 upon its exchange (and thereby elimination) in connection with the A&R Credit Agreement in the second quarter of 2023. 47 Other Income (Expense), Net The decrease in other income (expense), net as compared to the prior year comparative period was primarily due to a $0.7 million increase in interest income, and the amortization of $0.6 million of previously capitalized fees allocated to an issuance of our mandatorily redeemable preferred stock in the third quarter of 2022.
Digital Subscriptions and Content Net revenues decreased by $12.6 million, or 40%, during 2022 compared to 2021, primarily due to a decrease in NFT revenue of $11.5 million, due to a sale of a collection of NFT "Rabbitars" in 2021 and a decrease in TV and cable programming revenue of $1.1 million, partly offset by revenues attributable to our creator platform of $0.5 million.
Digital Subscriptions and Content The increase in net revenues as compared to the prior year comparative period was primarily due to a $4.2 million increase in net revenues from our creator platform, partly offset by a $2.2 million decrease in other digital subscriptions and content revenue.
All Other Net revenues decreased by $0.6 million, or 44%, during 2022 compared to 2021. The decrease was primarily due to lower revenue recognized from the fulfillment of our remaining magazine subscription obligations as a result of the cessation of publishing the magazine in 2020.
All Other The decrease in both revenues and operating income was primarily attributable to the recognized revenues related to the fulfillment of magazine subscription obligations in the first quarter of 2022 that did not reoccur in the subsequent periods, as a result of the cessation of publishing of Playboy magazine.
We periodically offer promotional incentives to customers, which include basket promotional code discounts and other credits, which are recorded as a reduction of revenue. Digital Subscriptions and Magazine Digital subscription revenue is derived from subscription sales of playboyplus.com and playboy.tv , which are online content platforms.
In the event that the collection of any royalty becomes materially uncertain or unlikely, we recognize revenue from our licensees on a cash basis. Digital Subscriptions Digital subscription revenue is derived from subscription sales of playboyplus.com and playboy.tv , which are online content platforms.
Other Operating Income, Net Other operating income, net increased by $0.5 million, or 100%, due to gain recognized on the sale of digital assets during the fourth quarter of 2022.
Gain on Sale of the Aircraft The decrease in gain on sale of the Aircraft in 2023 was due to the $5.7 million gain on the sale of the Aircraft recognized in the third quarter of 2022.
Removed
Discussions of 2020 results and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, filed March 16, 2022.
Added
Factors that could cause or contribute to these differences include those discussed in Item 1A. Risk Factors. Unless otherwise indicated or the context otherwise requires, references to the “Company”, “PLBY”, “we”, “us”, “our” and other similar terms refer to PLBY Group, Inc. and its consolidated subsidiaries.
Removed
As used herein, “we”, “us”, “our”, the “Company” and “Playboy” refer to Playboy Enterprises, Inc. and its subsidiaries prior to the consummation of the Business Combination (defined below) and PLBY Group Inc. and its subsidiaries following the consummation of the Business Combination.
Added
Our former Lovers and Yandy direct-to-consumer businesses were classified as discontinued operations in the condensed consolidated statements of operations for all periods presented (see Note 3, Assets and Liabilities Held for Sale and Discontinued Operations). Our Licensing segment derives revenue from trademark licenses for third-party consumer products, location-based entertainment businesses and online gaming.
Removed
Merger with MCAC PLBY Group, Inc. was originally incorporated in the State of Delaware on November 12, 2019 as a special purpose acquisition company under the name Mountain Crest Acquisition Corp (“MCAC”), formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses.
Added
Disposition of Businesses See Note 3, Assets and Liabilities Held for Sale and Discontinued Operations for information regarding our business dispositions.
Removed
MCAC completed its initial public offering in June 2020. On February 10, 2021, pursuant to an agreement and plan of merger dated September 30, 2020 (the “Merger Agreement”), MCAC’s wholly-owned subsidiary merged with and into Playboy Enterprises, Inc., a Delaware corporation (“Legacy Playboy”), with Legacy Playboy surviving the merger as a wholly-owned subsidiary of MCAC (the “Business Combination”).
Added
We significantly restructured our technology expenses in the first and fourth quarters of 2023, and cost-excessive and under-utilized software packages were either terminated or not renewed upon expiration of applicable agreements. This resulted in a restructuring charge of $5.1 million for the year ended December 31, 2023, excluding $0.4 million of costs related to discontinued operations.
Removed
In connection with the consummation of the Business Combination, MCAC was renamed “PLBY Group, Inc.” and started trading under “PLBY” on the Nasdaq on February 11, 2021.
Added
In addition, we reduced headcount within the Playboy Direct-to-Consumer business and our corporate office during fiscal 2023, resulting in a severance charge of $3.5 million and a net increase of $0.1 million of stock-based compensation expenses, which was comprised of a $2.4 million reduction of stock-based compensation expenses due to forfeitures of equity grants during the third quarter of 2023, offset by additional stock-based compensation expense of $2.3 million due to acceleration of certain equity awards during the second quarter of 2023. 41 China Licensing Revenues Our revenues from China (including Hong Kong) as a percentage of our total revenues, excluding revenues from discontinued operations, were 20% and 23% for the years ended December 31, 2023 and 2022, respectively.
Removed
All of the outstanding equity of Legacy Playboy was exchanged for equity of PLBY Group, Inc., and PLBY Group, Inc. assumed certain Legacy Playboy debt, in each case in accordance with the terms of the Merger Agreement.
Added
Due to challenging economic conditions in China, collections from certain of our Chinese licensees slowed significantly, and we had to renegotiate terms of, or terminate, certain licenses.
Removed
The Business Combination was accounted for as a reverse recapitalization whereby MCAC, which was the legal acquirer, was treated as the “acquired” company for financial reporting purposes and Legacy Playboy was treated as the accounting acquirer.
Added
In October 2023, we terminated licensing agreements with certain Chinese licensees due to ongoing, uncured breaches of their licenses, which comprised $152.2 million of unrecognized Licensing revenue under our long-term contracts as of the termination date. Revenue recognized in connection with such contracts that were subsequently terminated was $27.1 million during the year ended December 31, 2023.

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Other PLBY 10-K year-over-year comparisons