Angel Studios (NYSE: ANGX) grows revenue to $226.8M but stays unprofitable
Angel Studios, Inc. reported Q2 2026 revenue of $111,705,930 and six‑month revenue of $226,810,996, up from $87,641,416 and $135,082,056 a year earlier. The company remained unprofitable, with a Q2 net loss of $23,794,026 and a six‑month net loss of $37,550,082, or $0.213 per basic and diluted share.
Cash and cash equivalents were $48,036,965 as of June 30, 2026, and operating activities provided $18,827,445 of cash for the first half. Total assets were $235,062,489 against total liabilities of $264,391,901, resulting in negative stockholders’ equity of $29,329,412. Notes payable had a carrying amount of $74,400,000, including a 15.00% convertible note and term loans bearing at least 13.50% interest. The company held 303.1 bitcoin with a carrying value of $17,747,262 and recorded a six‑month net loss on digital assets of $8,780,298.
Angel Guild memberships are the primary revenue driver, generating $174,063,193 in the first half and supporting $81,300,000 of related deferred revenue. Management expects existing capital, recurring membership revenues, access to debt facilities, and potential bitcoin sales to meet operating requirements for at least twelve months. The company continues to pursue content expansion through IP purchases, equity‑method investments, pending mergers for the Wingfeather Saga and Tuttle Twins franchises, and maintains film‑related guarantees with an Angel Backstop liability of $283,848 on $6,465,720 of guaranteed loans.
Positive
- Revenue grew to $111,705,930 for Q2 2026 and $226,810,996 for the first half, compared with $87,641,416 and $135,082,056 in the prior‑year periods.
- Operating cash flow improved to $18,827,445 provided in the first half of 2026, compared with $20,352,061 used in operating activities a year earlier.
Negative
- The company remains loss‑making, with a six‑month net loss of $37,550,082 and negative equity of $29,329,412 as of June 30, 2026.
- High‑cost debt and digital asset volatility add risk, including $78.0 million of principal value in notes payable and a $8,780,298 net loss on digital assets in the first half of 2026.
Key Figures
Key Terms
reverse recapitalization financial
Angel Guild financial
variable interest entities financial
Angel Backstop financial
Minimum Royalty Guarantees financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from _______ to ______
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(Address of principal executive offices) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
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Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | ☒ | |
Smaller reporting company | Emerging growth company | | |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Number of shares outstanding of the registrant’s
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Class A Common Stock:
Class B Common Stock:
Table of Contents
ANGEL STUDIOS, INC.
FORM 10-Q
June 30, 2026
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PART I – FINANCIAL INFORMATION | | ||
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Item 1. | Financial Statements | 3 | |
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28 | |
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Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 43 | |
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Item 4. | Controls and Procedures | 43 | |
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PART II – OTHER INFORMATION | | ||
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Item 1. | Legal Proceedings | 44 | |
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Item 1A. | Risk Factors | 44 | |
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 45 | |
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Item 3. | Defaults Upon Senior Securities | 45 | |
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Item 4. | Mine Safety Disclosures | 45 | |
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Item 5. | Other Information | 45 | |
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Item 6. | Exhibits | 46 | |
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SIGNATURES | | 48 | |
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
ANGEL STUDIOS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
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| | As of | ||||
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Assets | | | | | | |
Current assets: |
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Cash and cash equivalents | | $ | | | $ | |
Accounts receivable, net | |
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Current portion of licensing receivables, net | |
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Physical inventory | |
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Current portion of notes receivable | |
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Royalty advance | | | | | | |
Prepaid expenses and other | |
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Total current assets | |
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Licensing receivables, net | |
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Notes receivable, net of current portion | |
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Property and equipment, net | |
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Content, net | |
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Intangible assets, net | |
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Capitalized software, net | | | | | | |
Digital assets | |
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Investments in affiliates | |
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Operating lease right-of-use assets | |
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Other long-term assets | |
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Total assets | | $ | | | $ | |
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Liabilities and Stockholders’ Equity | |
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Current liabilities: | |
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Accounts payable | | $ | | | $ | |
Accrued expenses | |
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Current portion of accrued licensing royalties | |
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Current portion of notes payable | |
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Current portion of operating lease liabilities | |
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Deferred revenue | |
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Total current liabilities | |
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Accrued licensing royalties, long-term | |
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Notes payable, net of current portion | | | | | | |
Operating lease liabilities, net of current portion | |
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Other long-term liabilities | | | | | | — |
Total liabilities | | $ | | | $ | |
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Commitments and contingencies (Note 5) | |
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Stockholders’ equity: | |
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Common stock, $ | | $ | | | $ | |
Additional paid-in capital | |
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Noncontrolling interests | |
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Accumulated deficit | |
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Total stockholders’ equity | |
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Total liabilities and stockholders’ equity | | $ | | | $ | |
See accompanying notes to the condensed consolidated financial statements
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ANGEL STUDIOS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
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| Three Months Ended June 30, | | | Six Months Ended June 30, | ||||||||
| 2026 | | 2025 | | | 2026 | | 2025 | ||||
Revenues | $ | | | $ | | | | $ | | | $ | |
Operating expenses: |
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Cost of revenues |
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Selling and marketing |
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General and administrative |
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Research and development |
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Legal expense |
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Total operating expenses |
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Operating loss |
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Other income (expense): |
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Net gain (loss) on digital assets | | ( | | | | | | | ( | | | |
Interest expense |
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Interest income |
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Other income (expense) | | | | | ( | | | | | | | ( |
Total other income (expense), net |
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Loss before income tax benefit |
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Income tax benefit |
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Net loss | $ | ( | | $ | ( | | | $ | ( | | $ | ( |
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Net income (loss) attributable to noncontrolling interests |
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Net loss attributable to controlling interests | $ | ( | | $ | ( | | | $ | ( | | $ | ( |
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Net loss per common share - basic | $ | ( | | $ | ( | | | $ | ( | | $ | ( |
Net loss per common share - diluted | $ | ( | | $ | ( | | | $ | ( | | $ | ( |
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Weighted average common shares outstanding - basic |
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Weighted average common shares outstanding - diluted |
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See accompanying notes to the condensed consolidated financial statements
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ANGEL STUDIOS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
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| | Three Months Ended | ||||||||||||||||||||
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| | Common Stock | | Additional | | | | | |
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| | Class A | | Class B | | Paid-in | | Accumulated | | Noncontrolling | | Total | ||||||||||
| | Shares | | Amount | | Shares | | Amount | | Capital | | Deficit | | Interests | | Equity | ||||||
Balance as of March 31, 2026 | | | | $ | | | | | $ | | | $ | | | $ | ( | | $ | ( | | $ | ( |
Stock options exercised |
| - | | | - | | | | | | | | | | | - | | | - | | | |
Vesting of restricted stock units | | | | | | | - | | | - | | | ( | | | - | | | - | | | - |
Issuance of common stock, net of fees |
| | | | | | - | | | - | | | | | | - | | | - | | | |
Transfer of common stock |
| | | | | | ( | | | ( | | | - | | | - | | | - | | | - |
Repurchase of common stock |
| ( | | | ( | | ( | | | ( | | | ( | | | - | | | - | | | ( |
Stock-based compensation expense |
| - | | | - | | - | | | - | | | | | | - | | | - | | | |
Redemptions from noncontrolling interests | | - | | | - | | - | | | - | | | - | | | - | | | ( | | | ( |
Net loss |
| - | | | - | | - | | | - | | | - | | | ( | | | ( | | | ( |
Balance as of June 30, 2026 |
| | | $ | | | | | $ | | | $ | | | $ | ( | | $ | ( | | $ | ( |
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Balance as of March 31, 2025 |
| | | $ | | | | | $ | | | $ | | | $ | ( | | $ | | | $ | |
Stock options exercised |
| - | | | - | | | | | | | | | | | - | | | - | | | |
Issuance of common stock, net of fees |
| | | | | | - | | | - | | | | | | - | | | - | | | |
Transfer of common stock | | | | | | | ( | | | ( | | | - | | | - | | | - | | | - |
Repurchase of common stock | | ( | | | - | | ( | | | ( | | | ( | | | - | | | - | | | ( |
Stock-based compensation expense |
| - | | | - | | - | | | - | | | | | | - | | | - | | | |
Convertible note beneficial conversion feature | | - | | | - | | - | | | - | | | | | | - | | | - | | | |
Issuance of warrants | | - | | | - | | - | | | - | | | | | | - | | | - | | | |
Contributions from noncontrolling interests, net of fees | | - | | | - | | - | | | - | | | - | | | - | | | | | | |
Redemptions from noncontrolling interests | | - | | | - | | - | | | - | | | - | | | - | | | ( | | | ( |
Net income (loss) |
| - | | | - | | - | | | - | | | - | | | ( | | | | | | ( |
Balance as of June 30, 2025 | | | | $ | | | | | $ | | | $ | | | $ | ( | | $ | | | $ | |
See accompanying notes to the condensed consolidated financial statements
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ANGEL STUDIOS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
| | | | | | | | | | | | | | | | | | | | | | |
| | Six Months Ended | ||||||||||||||||||||
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| | Common Stock | | Additional | | | | | |
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| | Class A | | Class B | | Paid-in | | Accumulated | | Noncontrolling | | Total | ||||||||||
| | Shares | | Amount | | Shares | | Amount | | Capital | | Deficit | | Interests | | Equity | ||||||
Balance as of December 31, 2025 | | | | $ | | | | | $ | | | $ | | | $ | ( | | $ | | | $ | ( |
Stock options exercised |
| - | | | - | | | | | | | | | | | - | | | - | | | |
Vesting of restricted stock units | | | | | | | - | | | - | | | ( | | | - | | | - | | | - |
Issuance of common stock, net of fees |
| | | | | | - | | | - | | | | | | - | | | - | | | |
Transfer of common stock |
| | | | | | ( | | | ( | | | - | | | - | | | - | | | - |
Repurchase of common stock |
| ( | | | ( | | ( | | | ( | | | ( | | | - | | | - | | | ( |
Stock-based compensation expense |
| - | | | - | | - | | | - | | | | | | - | | | - | | | |
Issuance of warrants | | - | | | - | | - | | | - | | | | | | - | | | - | | | |
Redemptions from noncontrolling interests | | - | | | - | | - | | | - | | | - | | | - | | | ( | | | ( |
Net income (loss) |
| - | | | - | | - | | | - | | | - | | | ( | | | | | | ( |
Balance as of June 30, 2026 |
| | | $ | | | | | $ | | | $ | | | $ | ( | | $ | ( | | $ | ( |
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Balance as of December 31, 2024 |
| | | $ | | | | | $ | | | $ | | | $ | ( | | $ | | | $ | |
Stock options exercised |
| - | | | - | | | | | | | | | | | - | | | - | | | |
Issuance of common stock, net of fees |
| | | | | | - | | | - | | | | | | - | | | - | | | |
Transfer of common stock | | | | | | | ( | | | ( | | | - | | | - | | | - | | | - |
Repurchase of common stock | | ( | | | - | | ( | | | ( | | | ( | | | - | | | - | | | ( |
Stock-based compensation expense |
| - | | | - | | - | | | - | | | | | | - | | | - | | | |
Convertible note beneficial conversion feature | | - | | | - | | - | | | - | | | | | | - | | | - | | | |
Issuance of warrants | | - | | | - | | - | | | - | | | | | | - | | | - | | | |
Digital assets market value adjustment | | - | | | - | | - | | | - | | | - | | | | | | - | | | |
Contributions from noncontrolling interests, net of fees | | - | | | - | | - | | | - | | | - | | | - | | | | | | |
Redemptions from noncontrolling interests | | - | | | - | | - | | | - | | | - | | | - | | | ( | | | ( |
Net income (loss) |
| - | | | - | | - | | | - | | | - | | | ( | | | | | | ( |
Balance as of June 30, 2025 | | | | $ | | | | | $ | | | $ | | | $ | ( | | $ | | | $ | |
See accompanying notes to the condensed consolidated financial statements
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ANGEL STUDIOS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
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| | Six Months Ended June 30, | ||||
| | 2026 | | 2025 | ||
Cash flows from operating activities: | | | | | | |
Net loss | | $ | ( | | $ | ( |
Adjustments to reconcile net loss to net cash and cash equivalents provided by (used in) operating activities: | | | | | | |
Depreciation and amortization |
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Amortization of content assets | | | | | | |
Amortization of right-of-use assets | | | | | | |
Stock-based compensation expense |
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Net loss (gain) on digital assets | | | | | | ( |
Impairment of failed acquisition | | | — | | | |
Investments in affiliates gain |
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Non-cash interest expense | | | | | | |
Paid-in-kind interest | | | | | | — |
Bad debt recovery | | | ( | | | — |
Change in operating assets and liabilities: | | | | | | |
Accounts receivable |
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Physical inventory |
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Royalty advance | | | ( | | | — |
Prepaid expenses and other current assets |
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Licensing receivables |
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Other long-term assets |
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Accounts payable and accrued expenses |
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Accrued licensing royalties |
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Operating lease liabilities |
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Deferred revenue |
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Net cash and cash equivalents provided by (used in) operating activities | | | | | | ( |
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Cash flows from investing activities: | | | | | | |
Purchases of property and equipment |
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Issuance of notes receivable |
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Collections of notes receivable |
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Advances to acquisition target |
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Sale of digital assets | | | — | | | |
Additions to internal-use software | | | ( | | | ( |
Purchase of content | | | ( | | | ( |
Investments in affiliates |
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Return on investments in affiliates | | | | | | — |
Net cash and cash equivalents used in investing activities |
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Cash flows from financing activities: | | | | | | |
Repayment of notes payable |
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Repayment of loan guarantee | | | — | | | ( |
Receipt of notes payable |
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Repayment of accrued settlement costs | | | — | | | ( |
Exercise of stock options |
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Issuance of common stock |
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Contribution of equity in noncontrolling interests | | | — | | | |
Redemption of equity in noncontrolling interests | | | ( | | | ( |
Fees related to issuance of common stock and minority interest | | | ( | | | ( |
Repurchase of common stock |
| | ( | | | ( |
Debt financing fees |
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Net cash and cash equivalents provided by (used in) financing activities |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period | | $ | | | $ | |
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Supplemental disclosure of cash flow information: | | | | | | |
Cash paid for interest | | $ | | | $ | |
| | | | | | |
Supplemental schedule of noncash financing activities: | | | | | | |
Adoption of ASU No. 2023-08 | | $ | — | | $ | |
Change from digital assets to digital assets receivable | | | — | | | |
Operating lease right-of-use assets and liabilities | | | — | | | |
See accompanying notes to the condensed consolidated financial statements
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Angel Studios, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
The financial information presented in these unaudited financial statements is condensed and should be read in conjunction with the entity’s latest annual audited financial statements. Interim disclosures generally do not repeat those in the annual statements.
1.Description of Organization and Summary of Significant Accounting Policies
Organization
The company comprises Angel Studios, Inc., a Delaware corporation, and its subsidiaries and affiliates (collectively, the “Company”) (f/k/a Southport Acquisition Corporation or “Southport”). The Company’s mission is to share stories with the world that amplify light. This is done by aligning the Company’s interests with those of the creators and the audience and utilizing the wisdom of crowds to help guide decisions on the content that gets created.
Business Combination
On September 10, 2025, the Company consummated the previously announced Business Combination (as defined below) pursuant to that certain Agreement and Plan of Merger, dated as of September 11, 2024 (as amended, the “Merger Agreement”), by and among the Company, Sigma Merger Sub, Inc., a Delaware corporation and direct wholly-owned subsidiary of the Company (“Merger Sub”), and Angel Studios Legacy, Inc. (f/k/a Angel Studios, Inc.), a Delaware corporation (“Angel Legacy”).
Pursuant to the terms of the Merger Agreement, a merger was effected in which Merger Sub merged with and into Angel Legacy, the separate corporate existence of Merger Sub ceased to exist and Angel Legacy survived as the surviving company and direct wholly-owned subsidiary of the Company (the “Merger” and, collectively with the other transactions described in the Merger Agreement, the “Business Combination”). On the Closing Date (as defined in the Merger Agreement), and prior to the Effective Time (as defined in the Merger Agreement), the Company changed its name from “Southport Acquisition Corporation” to “Angel Studios, Inc.” Angel Legacy subsequently merged up and into Angel Studios, Inc., with Angel Studios, Inc. as the surviving entity.
Notwithstanding the legal form of the Business Combination pursuant to the Merger Agreement, the Business Combination has been accounted for as a reverse recapitalization in accordance with United States generally accepted accounting principles (“GAAP”) because Angel Legacy is the operating company and has been determined to be the accounting acquirer, while Southport is a blank check company.
Under the reverse recapitalization model, the Business Combination was treated as Angel Legacy issuing equity for the net assets of Southport, with no goodwill or intangible assets recorded.
While Southport was the legal acquirer in the Business Combination, because Angel Legacy was deemed the accounting acquirer, the historical financial statements of Angel Legacy became the historical financial statements of the combined company upon the consummation of the Business Combination. As a result, the condensed consolidated financial statements reflect (i) the historical operating results of Angel Legacy prior to the Business Combination; (ii) the combined results of Southport and Angel Legacy following the closing of the Business Combination; (iii) the assets and liabilities of Angel Legacy at their historical cost; and (iv) the Company’s equity structure for all periods presented.
In accordance with the applicable guidance, the equity structure within these quarterly financial statements has been retroactively restated in all comparative periods up to the closing date, to reflect the number of shares of the Company’s Common Stock (as defined below) issued to Angel Legacy common shareholders. As such, the shares and corresponding capital amounts and earnings per share related to Angel Legacy common stock prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination, which is
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Basis of Presentation
The condensed consolidated financial statements include the accounts of the Company. All significant intercompany balances and transactions have been eliminated in consolidation.
The unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been reflected in these unaudited condensed consolidated financial statements. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2026. The balance sheet at December 31, 2025 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read together with the annual audited consolidated financial statements and related notes for the fiscal year ended December 31, 2025 included in the Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 12, 2026.
As comprehensive income equals net income, separate statements of comprehensive income were not included in the accompanying condensed consolidated financial statements.
Reclassifications
Certain prior period balances have been reclassified to conform to the current period presentation in the condensed consolidated financial statements and the accompanying notes.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Estimates are based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Regularly, the Company evaluates the assumptions, judgments, and estimates. Actual results may differ from these estimates.
Fair Value Measurements
The Company applies the accounting provisions related to fair value measurements given in ASC 820, Fair Value Measurements. These provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. They also establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy. The hierarchy gives the highest priority to quoted prices in active markets (Level 1 measurements) and the lowest priority to unobservable data (Level 3 measurements), such as the reporting entity’s own data. These provisions also provide valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flows), and the cost approach (cost to replace the service capacity of an asset or replacement cost).
An asset or liability’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of the valuation hierarchy are defined as follows:
Level 1: Observable inputs such as quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2: Inputs other than quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3: Unobservable inputs that reflect the Company’s own assumptions.
Digital Assets
In 2021, the Company saw a need to further diversify and maximize returns on cash balances that are not required to maintain adequate operating liquidity. As such, the Company implemented a policy that would allow for the investment in bitcoin (digital assets) under this policy. The Company believes its bitcoin holdings are highly liquid. However, digital assets may be subject to volatile market prices, which may be unfavorable at the time when the Company wants or needs to liquidate them. The Company has ownership of and control over its digital assets and may use third-party custodial services to secure them. The digital assets are initially recorded at cost and are subsequently remeasured on the condensed consolidated balance sheet at fair value.
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The Company accounts for its digital assets, which are comprised solely of bitcoin, as indefinite-lived intangible assets. Subsequent to the Company’s adoption of ASU 2023-08 on January 1, 2025, bitcoin assets are measured at fair value as of each reporting period. The Company determines the fair value of its bitcoin based on quoted (unadjusted) prices on the BitGo exchange, the active exchange that the Company has determined is its principal market for bitcoin (Level 1 inputs). Changes in fair value are recognized as incurred, within “Net gain (loss) on digital assets”, in the Company’s condensed consolidated statements of operations.
See Note 3, Digital Assets, for further information regarding digital assets.
Liquidity
The condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern within one year from the date of issuance of these condensed consolidated financial statements. For the six months ended June 30, 2026, the Company incurred a net loss of approximately $
Management is working to increase revenues through the growth of Angel Guild memberships, the Company’s pipeline of theatrical releases during the second half of 2026 and additional streaming agreements. During the six months ended June 30, 2026, the Company generated approximately $
Additionally, the Company has raised capital through the sale of its Common Stock, generating $
Accounts Receivable
The Company records its accounts receivable at sales value less an allowance for doubtful accounts receivable. Management determines the allowance for doubtful accounts receivable in accordance with ASC 326 by segmenting the receivables portfolio and using historical experience, market conditions and account aging to determine an allowance for each segment.
Account balances are written off against the allowance when the potential for recovery is remote. Recoveries of receivables previously written off are recorded when payment is received. As of June 30, 2026, the allowance for doubtful accounts receivable was $
Licensing Receivables
Licensing receivables consist of amounts due from customers under the Company’s multi-year content licensing arrangements. These receivables arise from the licensing of content to third parties, typically over terms ranging from several months to up to
For licensing arrangements where payments are due over a longer period, the Company assesses the need to recognize a significant financing component when the expected time between the satisfaction of the Company’s performance obligations and the receipt of payment exceeds one year. In such cases, the licensing receivable is recorded at the present value of the future payments, discounted at a rate reflective of a separate financing transaction between the Company and the customer at contract inception. When no significant
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financing component is deemed to be present (e.g., when payments are expected within one year), the receivable is recorded at the transaction price, without adjustment for the time value of money.
The Company monitors licensing receivables for collectability and assesses credit risk at each reporting period. Any expected credit losses are recognized in accordance with the Company’s allowance for doubtful accounts policy.
Physical Inventory
Physical inventory consists of apparel, DVDs, Blu-rays, books, and other merchandise purchased for resale, related to content the Company is distributing. Physical inventory is recorded at average cost. The Company periodically reviews the physical inventory for excess supply, obsolescence, and valuations above estimated realization amounts, and provides a reserve to cover these items. Management determined that
Prepaid Expenses and Other
Prepaid expenses primarily represent payments made in advance for services and goods to be received in future periods. These include, but are not limited to, prepayments for insurance, software, rent, fees and future advertising. As the benefits are consumed or utilized, the prepaid assets are recognized as expenses on the condensed consolidated statements of operations.
Content
The Company produces content for Dry Bar Comedy shows that are recorded and streamed through various channels. The Company capitalizes costs associated with the production, including development costs, direct costs, and production overhead. The Company amortizes the content assets in cost of revenues on the condensed consolidated statements of operations over the period of use, which is estimated to be
In May 2025, the Company agreed to purchase the IP for Sketch from Wonder Project Inc. With this purchase, Angel Studios now controls the rights, title, and interest in the film, including any subsequent productions. The Company amortizes this content asset in cost of revenues on the condensed consolidated statements of operations over the period of use, which is estimated to be
Royalty Advances
From time to time, the Company advances cash to its partners as prepayments of future royalty earnings. These advances are recoupable from future royalties otherwise payable to the partner and are collected by the Company prior to the distribution of other earnings or settlement of other obligations.
Intangible Assets
Intangible assets consist of domain names the Company has acquired and prepaid content rights and are stated at cost less accumulated amortization. Amortization for the domain names is calculated using the straight-line method over the estimated economic useful lives of the domain names of approximately
In July 2025, the Company entered into a First Look Agreement with an artist granting the Company the right of first refusal on the artist’s future projects. As part of the arrangement, the Company paid a nonrefundable $
Internal-Use Software
The Company follows Accounting Standards Codification (“ASC”) 350-40, as amended by ASU 2025-06, to account for development costs incurred for the costs of computer software developed or obtained for internal use. ASC 350-40 requires such costs to be capitalized once certain criteria are met. Capitalized internal-use software costs are primarily comprised of direct labor and technology related expenses. ASC 350-40 includes specific guidance on costs not to be capitalized, such as overhead, general and administrative, and training costs. Internal-use software includes software utilized for cloud-based solutions as well as software for internal systems and tools. Costs are capitalized once the project is defined, funding is committed, and it is confirmed the software will be used for its intended
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use. Capitalization of these costs concludes once the project is complete and the software is ready for its intended purpose. Post-configuration training and maintenance costs are expensed as incurred.
Impairment of Long-Lived Assets
Investments in Affiliates
Investments in affiliates represent the Company’s investments in noncontrolling interests. The Company’s investments where the Company has significant influence, but does not control, and joint ventures which are variable interest entities (“VIE”) in which the Company is not the primary beneficiary, are recorded under the equity method of accounting in the accompanying condensed consolidated financial statements. The Company’s investments where the Company has little or no influence and which the Company is not the primary beneficiary, are accounted for using the measurement alternative, which is cost, less any impairment, in the accompanying condensed consolidated financial statements.
Under the equity method, the Company’s investment is stated at cost and adjusted for the Company’s share of net earnings or losses and reduced by distributions. Equity in earnings is recognized based on the Company’s ownership interest in the earnings of the VIE. Under the measurement alternative, the Company’s investment is stated at cost and will be reduced by any distributions received.
The Company also holds variable interests in one or more entities through guarantee arrangements, whereby the Company guarantees repayment of third-party loans made to one or more independent film production company. The Company evaluated the film production companies under ASC 810, Consolidation, and determined that they are variable interest entities in which the Company holds a variable interest. The Company concluded that it is not the primary beneficiary because it does not have the power to direct the activities that most significantly impact the Borrower's economic performance, which are driven by the filmmaker's creative and production decisions in making the film. Accordingly, the film production companies are not consolidated in the Company's condensed consolidated financial statements.
Notes Receivable
The Company enters into various notes receivable with filmmakers for marketing and other purposes. The Company records its notes receivable based on actual amounts loaned or paid for on behalf of the filmmaker. The Company also has a note receivable from the disposition of a business in 2021. The Company establishes specific reserves for those customer accounts identified with collection problems due to insolvency or other issues. The Company’s notes receivable are considered past due when payment has not been received within
Notes receivable balances are charged off against the allowance for doubtful notes when the potential for recovery is remote. Recoveries of notes receivable previously charged off are recorded when payment is received. The allowance for doubtful notes receivable was $
Other Long-Term Assets
Other long-term assets consist primarily of payments made to certain partners that the Company has determined are probable of being acquired, which payments are being used to fund content development that eventually will be on Angel's streaming platform. Once the acquisition closes, the asset will be converted to Content and begin amortizing once the content is released on the platform. Any impairment in other long-term assets is recognized in the condensed consolidated statements of operations.
Accrued Expenses
Accrued expenses represent liabilities for goods or services received by the Company as of the reporting date but for which invoices have not been received or processed. These expenses are recognized when all of the following conditions are met: there is a present obligation resulting from a past event (i.e., goods or services have been received), it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and the amount of the obligation can be reliably measured.
Accrued expenses are recognized and measured based on the best estimate of the amount owed at the reporting date. Estimates are based on available information and historical experience, taking into consideration any known uncertainties. Where necessary, accruals are adjusted in subsequent periods to reflect changes in circumstances or estimates.
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Accrued Licensing Royalties
Accrued licensing royalties represent amounts owed by the Company to filmmakers based on the contractual terms agreed upon with the filmmaker. Estimates are made based on available information and historical experience, taking into consideration any known uncertainties. Where necessary, accruals are adjusted in subsequent periods to reflect changes in circumstances or estimates.
Deferred Revenue
Deferred revenue represents payments received in advance of the Company fulfilling its performance obligations under various arrangements, including Angel Guild memberships, content licensing, theatrical ticket presales and other deferred revenue. The Company recognizes deferred revenue when cash is received before the related revenue recognition criteria are met, and such amounts are recognized as revenue when the related performance obligations are satisfied.
Angel Guild Memberships
Angel Guild membership fees, which include multiple membership options, are recorded as deferred revenue when received. As of June 30, 2026 and December 31, 2025, the Company had $
Other Deferred Revenue
As of June 30, 2026 and December 31, 2025, the Company had $
As of December 31, 2025, the Company had $
Revenue Recognition
The Company recognizes revenue when a customer obtains control of promised products or services. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for these products or services. The Company applies the following five steps: 1) Identify the contract with the customer; 2) Identify the performance obligations in the contract; 3) Determine the transaction price; 4) Allocate the transaction price to performance obligations in the contract; and 5) Recognize revenue when or as the Company satisfies a performance obligation. The following components represent the most significant portions of revenue being recognized:
| | | | | | | | | | | |
| For the three months ended June 30, | | For the six months ended June 30, | ||||||||
| 2026 | | 2025 | | 2026 | | 2025 | ||||
Angel Guild | $ | | | $ | | | $ | | | $ | |
Theatrical | | | | | | | | | | | |
Content licensing |
| | |
| | |
| | |
| |
Merchandise | | | | | | | | | | | |
Other | | | | | | | | | | | |
Total Revenue | $ | |
| $ | | | $ | |
| $ | |
Angel Guild Revenue
The Angel Guild is a paid membership that gives certain benefits, such as early access to certain content and the ability to vote on future content. Premium memberships receive additional benefits, such as complimentary theatrical tickets and merchandise discounts. Members have the option to pay either on a monthly or annual basis. The payments for memberships are initially recorded as deferred revenue and allocated to three different performance obligations: 1) memberships – recognized on a straight-line basis over the membership period, 2) complimentary theatrical tickets – allocated only in periods of theatrical releases by the Company and recognized as tickets are redeemed during the month of membership and 3) merchandise – recognized as the benefit is used.
Theatrical Release Revenue
Prior to the digital release of licensed content, the Company might provide the option to release content as part of a theatrical release. Revenue from these events is recognized at a point in time – when the theatrical showing takes place. The Company will negotiate the terms of the theatrical distribution window (ranging from a few weeks to a few months), profit
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sharing percentage, and collection terms with the theater owners prior to the release. Theatrical release revenue fluctuates depending on the timing and scale of theatrical showings.
Content Licensing Revenue
The Company’s content licensing arrangements include fixed fee and minimum guarantee arrangements, and sales or usage based royalties. The Company’s fixed fee or minimum guarantee licensing arrangements may, in some cases, include multiple titles, multiple license periods (windows), rights to exploitation in different media, or rights to exploitation in multiple territories, which may be considered distinct performance obligations. When these performance obligations are considered distinct, the fixed fee or minimum guarantee in the arrangement is allocated to the title, window, media right or territory as applicable, based on estimates of relative standalone selling prices. The amounts related to each performance obligation (i.e., title, window, media or territory) are recognized when the content has been delivered, and the window for the exploitation right in that territory has begun, which is the point in time at which the customer is able to begin to use and benefit from the content.
Sales or usage based royalties represent amounts due to the Company based on the “sale” or “usage” of its content by the customer, and revenues are recognized at the later of when the subsequent sale or usage occurs, or the performance obligation
to which some or all the sales or usage-based royalty has been allocated has been satisfied (or partially satisfied). Generally, when the Company licenses completed content (with standalone functionality, such as a movie, or television show), its performance obligation will be satisfied prior to the sale or usage. The actual amounts due to the Company under these arrangements are typically not reported to the Company until several months after the close of the reporting period. The Company records revenue under these arrangements for the amounts due and not yet reported to the Company based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. Such estimates are based on information from the Company’s customers, historical experience with similar titles in that market or territory, the performance of the title in other markets and/or available data in the industry. While the Company believes these estimates are reasonable estimates of the amounts due under these arrangements, such estimated amounts could differ from the actual amounts to be subsequently reported by the customer, which could be higher or lower than the Company’s estimates, and could result in an adjustment to revenues in future periods. Any adjustments booked during the three and six months ended June 30, 2026 and 2025 have been immaterial.
For certain multi-year licensing arrangements, payments may be due over a longer period. When the Company expects the period between fulfillment of its performance obligation and the receipt of payment to be greater than a year, a significant financing component is present. In these cases, such payments are discounted to present value based on a discount rate reflective of a separate financing transaction between the customer and the Company, at contract inception. The Company does not assess contracts with deferred payments for significant financing components if, at contract inception, the Company expects the period between fulfillment of the performance obligation and subsequent payment to be one year or less.
Content licensing arrangements can last between several months and up to
Merchandise Revenue
The Company has partnered with creators to distribute the creators’ licensed original content and related merchandise. Merchandise revenue represents apparel, DVDs, Blu-rays, books and other intellectual property. Revenue is recognized upon shipment of the merchandise and is recognized at a point in time, when physically shipped.
Other Revenue
Other revenue consists of tickets to Dry Bar Comedy shows and other events, concession sales, general and administrative management fees and in-app advertising. Other revenue is recognized when the services are performed or when the event takes place.
The Company's remaining performance obligations consist primarily of Angel Guild memberships, for which unrecognized amounts are reflected in deferred revenue above.
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The Company does not disclose revenue by geography as it is impracticable to do so. The Company’s business operations involve complex, interconnected revenue streams that are not easily attributable to specific geographic regions. Revenue is often generated through multi-region engagements, global contracts and shared operational resources, making geographic segmentation inaccurate or misleading. As a result, providing such information would not reflect the true nature of the Company’s business and could lead to misinterpretation.
Cost of Revenues
Cost of revenues represents the direct costs incurred by the Company in generating its revenue. These costs include expenses directly associated with the goods or services sold during the reporting period. Cost of revenues is recognized in the condensed consolidated statements of operations in the period in which the related revenue is recognized, following the matching principle.
Components of cost of revenues include licensing royalty expense, free theatrical tickets for premium Guild members, content amortization, film delivery costs, hosting, merchandise costs, credit card fees, freight and shipping costs, and costs of services provided.
Selling and Marketing Expenses
Selling and marketing expenses represent costs incurred by the Company in promoting and selling its products or services. These expenses are recognized in the condensed consolidated statements of operations in the period in which they are incurred.
Components of selling and marketing expenses include advertising and promotional activities, salaries and benefits for sales and marketing personnel, travel and entertainment expenses related to sales and marketing activities, and costs of marketing materials. It also includes costs incurred by the Company to purchase movie tickets for giving away, which costs are offset by the Pay it Forward receipts the Company receives from customers who Pay it Forward for others to see the show. The total amount of Pay it Forward receipts that were offset against selling and marketing costs for the three months ended June 30, 2026, and 2025, were $
General and Administrative Expenses
General and administrative expenses represent costs incurred by the Company that are not directly attributable to the production of goods or services. These expenses include, but are not limited to, salaries and benefits of administrative staff, office rent, utilities, office supplies, insurance, legal fees and other overhead costs necessary to support the operations of the business.
General and administrative expenses are recognized in the condensed consolidated statements of operations in the period in which they are incurred. Expenses are measured at the fair value of the consideration given in exchange for goods or services received.
Research and Development Expenses
Research and development expenses consist primarily of payroll, software and other related expenses for research and development personnel responsible for making improvements to the Company’s service offerings, including testing and maintaining and modifying the user interface and infrastructure. Under ASC 350-40, as amended by ASU 2025-06 and as discussed in the Internal-Use Software section above, certain of these expenses are capitalized and amortized over the useful life. The amortization of these expenses is included in research and development expenses. For expenses that do not qualify for capitalization, the expenses are recognized in the condensed consolidated statements of operations in the period in which they are incurred.
Legal Expenses
Legal expenses include costs incurred in connection with legal proceedings, regulatory matters, compliance obligations, and corporate governance. Legal expenses may fluctuate based on the nature, timing, and complexity of matters encountered by the Company.
Stock-Based Compensation
Stock-based payments made to employees, including grants of employee stock options, are measured using a fair value-based method. The related expense is recorded in the condensed consolidated statements of operations over the period of service.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the condensed consolidated financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the tax bases of assets and liabilities. The deferred taxes represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred income tax assets are reviewed periodically for recoverability, and valuation allowances are provided when it is more likely than not that some or all of the deferred income tax assets may not be realized.
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The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open tax years based on an assessment of many factors including experience and interpretations of tax laws applied to the facts of each matter. The Company files income tax returns in the U.S. federal jurisdiction and certain state jurisdictions.
As of June 30, 2026 and December 31, 2025, the Company had $
Basic and Diluted Earnings (Loss) Per Share
Basic earnings (loss) per share attributable to the Company is computed by dividing income (loss) attributable to the Company by the weighted-average number of shares outstanding during the period. Diluted earnings (loss) per share attributable to the Company gives effect to all dilutive potential shares that are outstanding during the period (if any) and excludes stock options that are anti-dilutive as a result of any net losses during the period.
Operating Leases
The Company leases several office spaces, warehouses, and servers, which are accounted for as operating leases. Lease payments are due monthly and are based on the fixed terms of the leases. The lease terms expire at various dates through 2029 and provide for renewal options ranging from
The Company determines if an arrangement is a lease at its inception. A rate implicit in the lease when readily determinable is used in arriving at the present value of lease payments. As the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on information available at lease commencement date for all of its leases. Lease expense for operating leases is recognized on a straight-line basis.
Segment Reporting
The Company operates as a single reportable segment. The Chief Operating Decision Maker (“CODM”), Neal Harmon, the Chief Executive Officer, evaluates the Company’s financial performance and allocates resources based on consolidated financial results. The Company does not manage its operations or prepare financial information on a disaggregated basis beyond the consolidated level for internal reporting purposes.
The CODM reviews consolidated operating results, primarily focusing on revenue, operating income (loss), and key expense categories to assess performance and make strategic decisions. The single reportable segment derives its revenue as described above, primarily from Angel Guild revenue, theatrical release revenue, content licensing, merchandise revenue and other revenue. Segment profit or loss is measured consistently with the consolidated operating income (loss) presented in the condensed consolidated statements of operations.
The significant expense categories regularly provided to the CODM as part of the consolidated financial review include cost of revenue, selling and marketing, research and development, legal and general and administrative expenses. The amounts for these categories are included in the condensed consolidated statements of operations. These expenses represent the primary financial measures used by the CODM to evaluate operational efficiency and resource needs. No other significant expense categories or performance metrics are regularly provided to the CODM on a disaggregated basis.
Convertible Notes and Warrants
The Company accounts for warrants and convertible features of debt as either equity-classified or liability-classified instruments based on an assessment of the financial instrument’s specific terms.
The assessment for the convertible features of debt considers whether the convertible debt instrument is issued at a substantial premium. The Company has determined that a premium of
The assessment for the warrants considers whether the warrants are freestanding financial instruments, meet the definition of a liability, and whether the warrants meet all the requirements for equity classification, including whether the warrants are indexed to the Company’s own stock and whether the warrant holders could potentially require “net cash settlement”, among other conditions for equity classification.
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The Company has determined that all outstanding warrants and convertible features of debt meet the criteria for equity classification. The warrants and the convertible features of the debt are recorded as a component of additional paid-in capital on the condensed consolidated statements of stockholders’ equity at the time of issuance.
The fair value of the warrants and the convertible features of the debt are estimated using the Black-Scholes option pricing model at the time of issuance.
Guarantees of Third-Party Indebtedness
The Company guarantees repayment of certain third-party loans made to independent film production companies. At the inception of each guarantee, the Company recognizes a guarantee liability measured at fair value in accordance with ASC 460, Guarantees, using a probability-weighted present value of expected cash outflows (Level 3 under ASC 820, Fair Value Measurement). The offsetting debit is recorded in other long-term assets, representing the expected economic recovery through revenue generated from the distribution of the film (“Producer Royalty Rights”). The guarantee liability and other long-term assets are reduced pro-rata as Producer Royalty Rights are applied to the outstanding loan balance over the guarantee term, with no income statement impact as long as full recovery is projected. If a shortfall becomes probable and estimable, the Company recognizes guarantee expense for the net unrecoverable amount, writes off the other long-term assets, and recognizes a royalty recoverable asset for the estimated post-term royalty recovery under ASC 926-20. See Note 5, Commitments and Contingencies, for further information.
Minimum Royalty Guarantees
The Company enters into agreements with certain filmmakers that guarantee minimum royalty payments over a specified term, regardless of the box office, streaming, or other performance of the underlying content (“Minimum Royalty Guarantees”). Unlike Guarantees of Third-Party Indebtedness discussed above, Minimum Royalty Guarantees do not involve a guarantee of a third party's indebtedness and are not accounted for under ASC 460. The Company recognizes royalty expense and a corresponding liability as royalties are earned under the applicable royalty formula, with cash payments reducing the liability. If the Company determines that royalties expected to be earned over the guarantee term will not be sufficient to satisfy the guaranteed minimum, the Company recognizes the estimated shortfall as expense, with a corresponding liability, in the period the shortfall becomes probable and estimable. See Note 5, Commitments and Contingencies, for further information regarding amounts outstanding under these arrangements.
Recent Accounting Pronouncements
Recently Issued Accounting Pronouncements Not Yet Adopted
ASU 2025-12
In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-12, Codification Improvements, which addresses stakeholder suggestions through technical corrections, clarifications, and minor improvements across various Codification Topics, applying to all entities within affected guidance. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-12.
ASU 2025-11
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-11.
ASU 2024-03
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which improves the disclosures about a public business entity’s expenses and addresses requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, SG&A, and research and development). Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all
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prior periods presented in the financial statements. The Company will review the guidance in ASU 2024-03 and will adopt disclosures as applicable in the fiscal year ended December 31, 2027.
Recently Adopted Accounting Pronouncements
ASU 2025-06
In September 2025, the FASB issued ASU 2025-06, which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The ASU makes targeted improvements to ASC 350-40 but does not fully align the framework for accounting for internally developed software costs that are subject to ASC 350-40 with the framework applied to software to be sold or marketed externally that is subject to ASC 985-20. The ASU also does not amend the guidance on costs of software licenses that are within the scope of ASC 985-20. The amendments supersede the guidance on Web site development costs in ASC 350-50 and relocate that guidance, along with the recognition requirements for development costs specific to Web sites, to ASC 350-40. This ASU becomes effective for annual periods beginning in 2028, including interim periods, with early adoption permitted. The Company has adopted this standard with its annual period beginning on January 1, 2025 and applied it retrospectively. The adoption of this standard required the capitalization of software costs not previously capitalized under the old standard; therefore, it required an adjustment to the Company’s opening accumulated deficit balance as of January 1, 2025 to recognize the cumulative effect of initially applying the change in accounting principle to previous periods. The adjustment subsequently made was a decrease in the accumulated deficit for the year ended December 31, 2024 of $
| 2. | Recapitalization |
As discussed in Note 1, following the closing of the Business Combination, Angel Legacy was deemed the accounting acquirer and the transaction was accounted for as a reverse recapitalization.
Transaction Proceeds
Upon the closing of the Business Combination, the Company received
| | | | | |
Cash-trust and cash, net of redemptions | | | | $ | - |
Add: other assets | | | | | - |
Less: accounts payable and accrued expenses | | | | | ( |
Reverse recapitalization, net | | | | $ | ( |
In connection with the Business Combination, the Company incurred $
The number of shares of common stock immediately following the consummation of the Business Combination were:
| | | | | |
Southport common stock, outstanding prior to Business Combination | | | | | |
Angel Legacy Shares, converted | | | | | |
Shares issued to Angel Legacy convertible noteholders | | | | | |
Common stock immediately after the Business Combination | | | | | |
| 3. | |
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| 3. | Digital Assets |
The table below summarizes the digital assets shown on the Company’s condensed consolidated balance sheets as of:
| | | | | |
| June 30, 2026 | | December 31, 2025 | ||
Digital assets held: | | | | | |
Approximate number of bitcoin held | | | | | |
Digital asset cost basis | $ | | | $ | |
Digital asset carrying value | $ | | | $ | |
The cost basis is determined using the first-in, first-out methodology. The following table summarizes the Company’s digital asset purchases, dispositions, and gains (losses) on digital assets as calculated for the periods indicated:
| | | | | | | | | | | |
| For the three months ended June 30, | | For the six months ended June 30, | ||||||||
| 2026 | | 2025 | | 2026 | | 2025 | ||||
Approximate number of bitcoin acquired | | — | | | — | | | — | | | |
Approximate number of bitcoin dispensed | | — | | | — | | | — | | | ( |
Digital asset additions | $ | — | | $ | — | | $ | — | | $ | — |
Digital asset dispositions | $ | — | | $ | — | | $ | — | | $ | |
Unrealized gains (losses), net | $ | ( | | $ | | | $ | ( | | $ | |
| 4. | |
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4.Debt
Notes Payable
The following table summarizes the Company’s debt facilities as of June 30, 2026 and December 31, 2025 (in millions):
| | | | | | | | | | | | | | | | | | |
| | June 30, 2026 | | | December 31, 2025 | | | | | | | | | | | | ||
Type of Facility | | Principal Value | | | Principal Value | | | Original Principal Amount | | | Interest Rate | | | Repayment Terms | ||||
May 2024 P&A loans | | $ | | | $ | | | $ | | | % | | | For detailed terms, see (1) | ||||
May 2025 convertible note | | | | | | | | | | | | | | | For detailed terms, see (2) | |||
September 2025 note with warrants | | | | | | | | | | | | | | | For detailed terms, see (2) | |||
February 2026 note with warrants | | | | | | — | | | | | | | | | | For detailed terms, see (2) | ||
Revolving P&A loans (See Note 7, Related-Party Transactions) | | | | | | | | | | | | | | | For detailed terms, see (3) | |||
Total | | | | | | | | | | | | | | | | | ||
Less: discounts and issuance costs, net of amortization | | | ( | | | | ( | | | | | | | | | | | |
Total notes payable balance | | $ | | | $ | | | | | | | | | | | | ||
*The interest rates for these loans are calculated as simple interest, where the amount of interest is a fixed amount of the principal.
| (1) | The maturity date is dependent on the timing of cash collections from theatrical sales, licensing revenue, merchandise sales and other revenue. The balance is expected to be fully paid within the next twelve months. |
| (2) | See the Notes with convertible features and/or warrants section below. |
| (3) | The current notes mature in September 2026. |
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Notes with convertible features and/or warrants
May 2025 convertible note with warrants
In May 2025, the Company entered into a note and warrant purchase agreement with an unaffiliated third party, providing for the private placement of a subordinated convertible promissory note and warrant to purchase
September 2025 note with warrants
In September 2025, the Company entered into a loan and security agreement with certain lenders, which provides for up to a $
The Company’s obligations under the credit facility will be secured by substantially all of the Company’s assets, but shall exclude the equity held by the Company in, and the assets of, the subsidiaries of the Company that are formed from time to time for the primary purpose of raising capital under Regulation A of the Securities Act of 1933. Borrowings under the credit facility will bear interest at a variable rate equal to the greater of (x) the Prime Rate (as defined under the credit facility) plus
The credit facility contains representations, warranties and covenants that are typical for these types of facilities. These covenants include restrictions on mergers or sales of assets and secured debt borrowings, subject to exceptions and limitations. The credit facility also requires the Company to maintain a minimum liquidity level and contains events of default applicable to the Company that are customary for agreements of this type. In connection with the credit facility, the Company issued each lender thereunder a warrant to purchase an aggregate amount of
February 2026 note with warrants
In February 2026, the Company drew the second tranche from the term loan discussed in the September 2025 note with warrants section above. The terms are identical to the September 2025 note. This tranche was for aggregate principal amount equal to $
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The following table summarizes further details of the outstanding notes with convertible features and/or warrants as of June 30, 2026:
| | | | | | | | | | |
Notes | | Issuance Date | | Maturity Date | | Principal Amount | | Coupon Interest Rate | ||
May 2025 convertible note | | May 2, 2025 | | May 1, 2027 | | $ | | | | % |
September 2025 note with warrants | | September 8, 2025 | | October 1, 2030 | | | | | | |
February 2026 note with warrants | | February 17, 2026 | | October 1, 2030 | | | | | | |
Components and Fair Value of the Convertible Notes
The convertible note consisted of the following components as of June 30, 2026 and December 31, 2025. The principal shown in the table below consists of the principal amount of the note as well as the interest (which is paid-in-kind each month):
| | | | | | | | | | | |
| June 30, 2026 | ||||||||||
| Outstanding Principal Amount | | Less: Discounts, Net of Amortization | | Net Carrying Amount | | Fair Value (1) | ||||
May 2025 convertible note | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | |
| December 31, 2025 | ||||||||||
| Outstanding Principal Amount | | Less: Discounts, Net of Amortization | | Net Carrying Amount | | Fair Value (1) | ||||
May 2025 convertible note | $ | | | $ | | | $ | | | $ | |
| (1) | The estimated fair value of the convertible note is determined using a market-based discount rate reflective of the Company’s credit risk and current market conditions for similar instruments (Level 3 input within the fair value hierarchy established under ASC 820). |
Interest Expense of the Convertible Notes
The following table summarizes interest expenses related to the convertible notes for the three and six months ended June 30, 2026 and 2025:
| | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2026 | | Six Months Ended June 30, 2026 | ||||||||||||||
| Contractual Interest Expense | | Amortization of Debt Discount | | Total | | Contractual Interest Expense | | Amortization of Debt Discount | | Total | ||||||
May 2025 convertible note | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2025 | | Six Months Ended June 30, 2025 | ||||||||||||||
| Contractual Interest Expense | | Amortization of Debt Discount | | Total | | Contractual Interest Expense | | Amortization of Debt Discount | | Total | ||||||
May 2025 convertible note | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
5.Commitments and Contingencies
Legal Proceedings
The Company currently is, and from time to time might again become, involved in litigation arising in the normal course of business.
Litigation is necessary to defend the Company. The results of any current or future complex litigation matters cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact because of defense and settlement costs, distraction of management and resources, and other factors. Additionally, these matters may change in the future as the litigation and factual discovery unfolds. Legal fees are expensed as incurred. Insurance recoveries associated with legal costs incurred are recorded when they are received.
The Company assesses whether there is a reasonable possibility that a loss, or additional losses beyond those already accrued, may be incurred (“Material Loss”). If there is a reasonable possibility that a Material Loss may be incurred, the Company discloses an estimate
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or range of the amount of loss, either individually or in the aggregate, or discloses that an estimate of loss cannot be made. If a Material Loss occurs due to an unfavorable outcome in any legal matter, this may have an adverse effect on the consolidated financial position, results of operations, and liquidity of the Company. The Company records a provision for each liability when determined to be probable, and the amount of the loss may be reasonably estimated. These provisions are reviewed quarterly and adjusted as additional information becomes available. Management, after consultation with legal counsel, believes that the outcome of these proceedings will not have a material impact on the Company’s consolidated financial position, results from operations or liquidity. The actual amounts from the resolution of these matters could vary from management’s estimate.
Disney Litigation and the Preliminary Injunction
On December 12, 2016, the U.S. District Court for the Central District of California granted a preliminary injunction against the Company (formerly VidAngel) for copyright infringement and Digital Millennium Copyright Act (“DMCA”) violations involving works from Disney Enterprises, Inc., Lucasfilm Ltd., Twentieth Century Fox Film Corporation, Warner Bros. Entertainment, Inc., and their subsidiaries. The plaintiffs alleged that the Company unlawfully decrypted and infringed
In August 2020, the Company entered into a settlement agreement with the plaintiffs as part of its reorganization plan (“Reorganization Plan”), effectively resolving the litigation. Among other things, the plan allowed the Company to continue as a going concern, ensuring full payment to creditors while equity holders retained their interests. The Company committed to not infringing the studios' copyrights, including prohibitions on decrypting, reproducing, streaming, or distributing their works. Additionally, the Company agreed not to sue the studios or lobby to amend the Family Movie Act for
Under the settlement, the Company was to pay $
The foregoing summary of certain provisions of the Reorganization Plan and related settlement agreement is not complete and are subject to and qualified in their entirety by reference to the Reorganization Plan and Disney Settlement Agreement, copies of which can be found in the Angel Legacy Report on Form 1-U filed on September 15, 2020, under “Item 2.1, Exhibits,” and the terms of which are incorporated by reference herein.
Mergers and Acquisitions
In May 2025, the Company agreed to purchase the IP for Sketch from Wonder Project Inc. for $
In October 2025, the Company entered into a Term Sheet with 2521 Entertainment, LLC (“2521”, together with the Company, the “JV Partners”) that sets forth the principal terms and conditions governing the joint venture between the JV Partners, through Giant Slayer Media. The Term Sheet, pursuant to its terms, became binding on October 7, 2025, upon the execution of that certain Asset Purchase Agreement by and between Slingshot and Giant Slayer Media, also dated as of October 7, 2025. Under the Term Sheet, and by means of the Asset Purchase Agreement, Giant Slayer Media will acquire substantially all of the assets of Slingshot related to the animated feature film, DAVID, the associated works and certain other ancillary rights and obligations. The Company does not have a majority of voting interest or a controlling financial interest in Giant Slayer. The Company does, however, have significant influence over the decisions made by Giant Slayer. As such, the Company will not consolidate Giant Slayer and will treat its investment as an equity method investment. Pursuant to the Term Sheet, the Company contributed $
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On November 14, 2025, the Company entered into an agreement and plan of merger (“Homestead Merger Agreement”) pursuant to which the Company will acquire directly or indirectly all of the equity interests of Black Autumn Show, Inc. (“Black Autumn”), which owns the rights to the Homestead movie and series. Under the terms of the Homestead Merger Agreement, if the merger is completed, at the effective time of the merger, the following consideration will be payable: at the effective time, each holder of issued and outstanding shares of Black Autumn Stock will be entitled to receive (a) that number of shares of the Company’s Class A Common Stock equal to (i)(A) the Homestead Per Share Merger Consideration multiplied by (B) the number of shares of Black Autumn Common Stock, par value $
On November 14, 2025, the Company entered into an agreement and plan of merger (as amended and restated on June 29, 2026, the “TCP Merger Agreement”) pursuant to which the Company will acquire directly or indirectly all of the equity interests of Toothy Cow Productions, LLC (“TCP”), which owns the rights to the Wingfeather Saga series. Under the terms of the TCP Merger Agreement, if the merger is completed, at the effective time of the merger, the following consideration will be payable: at the effective time of the merger, all of the issued and outstanding TCP Units will be cancelled and extinguished and converted automatically into the right to receive a portion of the TCP Aggregate Stock Consideration equal to the TCP Aggregate Stock Consideration multiplied by such TCP Unitholder’s TCP Adjusted Percentage Interest at the effective time of the merger. All capitalized terms used in this paragraph are used as defined in the TCP Merger Agreement, which is referenced as an exhibit to this Form 10-Q. In connection with the pending acquisition and pursuant to rights established under the existing distribution agreement, the Company has committed to fund the production of additional seasons of The Wingfeather Saga (the "Wingfeather Production Funding"). The Company has determined that the Wingfeather Production Funding constitutes a transaction separate from the acquisition and is accounted for independently under applicable GAAP. Accordingly, production costs funded by the Company are capitalized as content costs. As of June 30, 2026, the Company has capitalized approximately $
On November 14, 2025, the Company entered into an agreement and plan of merger (as amended and restated on June 29, 2026, the “TTS Merger Agreement”) pursuant to which the Company will acquire directly or indirectly all of the equity interests of Tuttle Twins Show, LLC (“TTS”), which owns the rights to the Tuttle Twins series. Under the terms of the TTS Merger Agreement, if the merger is completed, at the effective time of the merger, the following consideration will be payable: at the effective time of the merger, all of the issued and outstanding TTS Units will be cancelled and extinguished and converted automatically into the right to receive the TTS Merger Consideration, consisting of, as applicable, (a) for TTS Investors, an amount per TTS Investor Unit in cash equal to the TTS Investor Per Unit Cash Consideration and a number of shares of the Company’s Class A Common Stock per TTS Investor Unit equal to the TTS Investor Per Unit Stock Consideration and (b) for TTS Key Operators, a number of shares of Company Class A Common Stock per TTS Key Operator Unit equal to the TTS Key Operator Per Unit Stock Consideration. All capitalized terms used in this paragraph are used as defined in the TTS Merger Agreement, which is referenced as an exhibit to this Form 10-Q. In connection with the pending acquisition and pursuant to rights established under the existing distribution agreement, the Company has committed to fund the production of additional seasons of The Tuttle Twins Show (the "Tuttle Twins Production Funding"). The Company has determined that the Tuttle Twins Production Funding constitutes a transaction separate from the acquisition and is accounted for independently under applicable GAAP. Accordingly, production costs funded by the Company are capitalized as content costs. As of June 30, 2026, the Company has capitalized approximately $
Guarantees of Third-Party Indebtedness
The Company guarantees repayment of certain third-party loans made to independent film production companies. The Company acts as the film distributor and collection account manager, remitting the royalties from the distribution of the film, the Producer Royalty Rights, directly to lender as the primary source of loan repayment during the loan term. If the Producer Royalty Rights remitted over the guaranteed term are insufficient to repay the loan in full and the film production company is unable to cover the balance of the loan, the Company is obligated to fund the remaining balance to the lender under a contractual payment undertaking (the "Angel Backstop"). The Angel Backstop is an unconditional and irrevocable guarantee of the Borrower's loan repayment obligation.
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The Angel Backstop is recognized as a guarantee liability at a Day 1 fair value in accordance with ASC 460, Guarantees, using the probability-weighted present value methodology described in Note 1. The offsetting debit was recorded as a deferred guarantee cost, presented within other long-term assets on the condensed consolidated balance sheet, representing the expected economic recovery of the guarantee obligation through Producer Royalty Rights. After initial recognition, the guarantee liability and deferred guarantee cost are reduced pro-rata as Producer Royalty Rights are applied to the outstanding loan balance.
The following table presents information about the Angel Backstop as of June 30, 2026:
| | |
| June 30, 2026 | |
Outstanding loan balance guaranteed (undiscounted) | $ | |
Maximum potential undiscounted future payments (1) | | |
Angel Backstop liability (carrying value) (2) | | |
Deferred Guarantee Cost (carrying value) (2) | | |
| (1) | Represents the full outstanding loan balance as of the balance sheet date, which is the maximum amount the Company could be required to fund to the lender assuming no Producer Royalty Rights are received over the remainder of the guarantee term. Presented gross and undiscounted and has not been reduced by projected royalty recoveries. No collateral is held by the Company in connection with the Angel Backstop. |
| (2) | The Angel Backstop liability represents the unamortized Day 1 fair value of the Company's stand-ready guarantee obligation, measured at inception under ASC 460 and subsequently reduced pro-rata as Producer Royalty Rights are applied to the outstanding loan balance. The Deferred Guarantee Cost is the corresponding asset, carried within other long-term assets on the condensed consolidated balance sheet, and is reduced in tandem with the liability. |
The Company assesses the probability of being required to make payments under the Angel Backstop based on current projections of film revenue performance relative to the outstanding loan balance. As of June 30, 2026, the Company has assessed the payment risk as low.
In the event the Company is required to make a payment under the Angel Backstop, it retains the contractual right to receive post-term Producer Royalty Rights from the Borrower to the extent earned in subsequent periods, representing a potential recovery of amounts funded. No collateral is held by the Company in connection with this guarantee.
Minimum Royalty Guarantees
The Company has entered into agreements with filmmakers that guarantee minimum royalty payments over specified periods, generally not expected to result in a shortfall given anticipated royalties. The Company recognizes royalty expense and a corresponding liability as royalties are earned, with cash payments reducing the liability.
| | | |
Year Ending December 31, | | | |
Remainder of 2026 | | $ | |
2027 | |
| |
2028 | | | |
2029 | | | — |
2030 | | | — |
Thereafter | | | |
Total | | $ | |
During the three and six months ended June 30, 2026, royalties earned and credited against these guarantees reduced the aggregate remaining commitment by $
With respect to the Company's minimum royalty guarantee arrangements, the Company has determined that a shortfall between royalties expected to be earned and the guaranteed minimums is reasonably possible, based on box office, licensing deals, and streaming performance of certain films relative to the original projections. The Company continues to project that royalties earned over the remaining terms of these arrangements will be sufficient to satisfy the guaranteed minimum, and no shortfall has been deemed probable as of June 30, 2026. Given the various stages of the distribution windows and in some cases limited performance data to date, the Company is unable to reasonably estimate the amount of any potential shortfall at this time. The Company will continue to monitor the
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performance of the underlying content and will record a liability for each estimated shortfall in the period in which it becomes probable and reasonably estimable.
6.Common Stock
The Company has authorized Common Stock consisting of
Warrant Offerings
In May 2025, the Company entered into a note and warrant purchase agreement with an unaffiliated third party, providing for the private placement of a subordinated convertible promissory note with a principal balance of $
In September 2025, the Company entered into
The Company determined that the outstanding warrants meet the criteria for equity classification. Therefore, the warrants are recorded as a component of additional paid-in capital on the condensed consolidated statements of stockholders’ equity at the time of issuance. The fair value of the warrants was estimated using the Black-Scholes option pricing model at the time of issuance and will not be remeasured throughout their life, pursuant to ASC 815-40.
For more information regarding the note and warrant purchase agreements, refer to Note 4, Debt.
Common Stock Offering
In April 2026, the Company entered into an underwriting agreement with an unaffiliated third party for the issuance and sale of
Loss per Share
The following table represents the Company’s loss per share for the three and six months ended June 30, 2026 and 2025:
| | | | | | | | | | | |
| For the three months ended June 30, | | For the six months ended June 30, | ||||||||
| 2026 | | 2025 | | 2026 | | 2025 | ||||
Numerator: | | |
| | | | | |
| | |
Net loss attributable to controlling interests | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| | | | | | | | | | | |
Denominator: |
| | |
| | |
| | |
| |
Weighted average basic shares outstanding |
| | |
| | |
| | |
| |
Effect of dilutive shares |
| — | |
| — | |
| — | |
| — |
Weighted average diluted shares |
| | |
| | |
| | |
| |
| | | | | | | | | | | |
Basic loss per share | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Diluted loss per share | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Basic loss per share includes no dilution and is computed by dividing net income available to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share is calculated similarly to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential
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common shares had been issued and if the common shares were dilutive. All potential common shares were anti-dilutive as a result of the Company’s net losses during the three and six months ended June 30, 2026 and 2025.
The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted loss per share as their inclusion would be anti-dilutive, for three and six months ended June 30, 2026 and 2025:
| | | | | |
| Three and Six Months Ended June 30, | ||||
| 2026 | | 2025 | ||
Stock options to purchase common stock | | | | | |
Unvested restricted stock awards | | | | | — |
Convertible securities to acquire common stock | | | | | |
Warrants to purchase common stock |
| | |
| |
Total outstanding potentially dilutive securities |
| | |
| |
7.Related-Party Transactions
The Company has a marketing services contract with an entity owned by one or more of the Company’s directors, officers, and stockholders. During the three months ended June 30, 2026 and 2025, the Company incurred expenses of $
In February 2024, the Company entered into a revolving P&A loan agreement with Angel P&A, LLC, a Delaware limited liability company (“Angel P&A”) that is
In May 2025, the Company entered into a note and warrant purchase agreement with an unaffiliated third party, providing for the private placement of a subordinated convertible promissory note. In September 2025, Steve Sarowitz, who is the controlling person of this unaffiliated third party, became a member of the Company’s board of directors. See Note 4, Debt for additional details.
On October 22, 2025, Benton Crane joined the Company’s Board of Directors. Mr. Crane is an executive producer and board member at Black Autumn Show, Inc., the creator of the Homestead film and television series, and Tuttle Twins Show LLC. The Company has a distribution agreement with the Homestead film and series resulting in payments of $
8.Subsequent Events
Subsequent events have been evaluated through August 4, 2026, which is the date the condensed consolidated financial statements were issued.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion of the historical results of operations and liquidity and capital resources of Angel Studios, Inc. (“Angel Studios,” “we,” “our,” “us,” or the “Company”). You should read the following discussion and analysis in conjunction with the accompanying condensed consolidated financial statements of the Company and the notes thereto, as well as with the Company’s Annual Report on Form 10-K, including the audited consolidated financial statements and the related notes included therein.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements.
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. The forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Such forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties, which are more fully described in the “Risk Factors” section of the Company’s Annual Report on Form 10-K filed on March 12, 2026, include but are not limited to the following risks, uncertainties and other factors:
| ● | the Company’s ability to achieve and maintain profitability in the future; |
| ● | the Company’s ability to successfully monetize projects; |
| ● | the Company’s success in retaining or recruiting its officers, key employees or directors; |
| ● | officers and directors allocating their time to other businesses and potentially having conflicts of interest with the Company’s business; |
| ● | the Company’s ability to attract and maintain an adequate customer base; |
| ● | the Company’s ability to create and distribute content that is popular with consumers and affiliates; |
| ● | the Company’s reliance on a number of partners to make its service available on their devices; |
| ● | the Company’s ability to continue to develop and enhance its existing technology; |
| ● | any significant disruption in or unauthorized access to the Company’s computer systems or those of third parties that the Company utilizes in its operations, including those relating to cybersecurity or arising from cyber-attacks; |
| ● | the Company’s ability to successfully, or profitably, compete with current and new competitors; |
| ● | the Company’s ability to consummate any interim financing, and the ability of the Company to raise additional capital, if necessary; |
| ● | the Company’s ability to successfully defend litigation or investigations; |
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| ● | the ability to maintain the listing of the Company’s Common Stock on the NYSE; |
| ● | the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; |
| ● | changes in applicable laws or regulations; |
| ● | geopolitical events and general economic conditions; |
| ● | the Company’s ability to complete the mergers described herein on the terms of the respective merger agreements and the ability to realize the synergies and other perceived advantages resulting from the mergers; |
| ● | the Company’s ability to obtain required regulatory approvals; and |
| ● | other risks and uncertainties set forth in the section entitled “Risk Factors” in this Quarterly Report. |
The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a values-based media distribution company that uses technology to empower a vibrant and growing community to replace the Hollywood gatekeeper system and champion stories that amplify light for mainstream audiences.
Our community, known as the Angel Guild, is at the heart of this mission.
1) The Angel Guild votes to select film and TV shows.
2) The Angel Guild rallies in theaters to support film releases.
3) The Angel Guild funds future films and TV shows with their membership.
As of June 30, 2026, through the Angel Guild, approximately 2.61 million paying members help decide what film and TV projects we will market and distribute.
Pledge to Amplify Light
All Guild members make a written pledge stating: “When I vote, I pledge to help choose excellent entertainment that is true, honest, noble, just, authentic, lovely or admirable.”
Components of Results of Operations
Revenue
We primarily generate revenue from the following sources:
| ● | Angel Guild revenue comes from monthly or annual membership fees. Currently there are three possible tiers for membership, Basic with Ads, Basic, and Premium. All memberships allow voting for every Angel Studios release, give early access for streaming, and help fund our original films, increasing new content releases. The Basic and Premium tiers have no ads during shows and the Premium tier includes two complimentary tickets to every Angel Studios theatrical release and a discount for all merchandise. |
| ● | Theatrical Distribution revenue comes from releasing our original films with our exhibitor partners. Every time a moviegoer purchases a ticket from the partner theaters, we receive a percentage of the box office revenue. For most international theaters, the percentage of box office revenue is first paid to a distributor who then pays us. |
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| ● | Content Licensing revenue comes from licensing our films and TV shows to other distributors such as Amazon, Apple and Netflix. Our future plans include licensing the rights to our films and TV shows for other experiences such as derivative shows, video games, theme parks and Broadway-style plays. |
| ● | Other revenue is generated from sales of merchandise related to our films and series, as well as physical DVD sales. We also offer a direct online store for Angel Studios themed products and wholesale products to retail partners. |
Founding
We were founded in 2013 by our Chief Executive Officer, Neal Harmon, along with his brothers Daniel, Jeffrey and Jordan, and their cousin, Benton Crane.
Bitcoin Treasury Strategy: Seeking to Empower the Angel Guild for Generations
As of June 30, 2026, we held an aggregate of approximately 303.1 bitcoin. This equates to 1.6252 bitcoin per million shares of our Common Stock. We plan to continue to acquire and hold bitcoin as a strategic treasury asset as an adjunct to our core film and TV distribution business. The continued implementation of our bitcoin treasury strategy aims to support our mission-driven approach of funding the world’s best filmmakers in producing stories that amplify light for generations to come. The overall strategy contemplates that we may (i) enter into capital raising transactions that are collateralized by our bitcoin holdings, (ii) consider pursuing strategies to create income streams or otherwise generate funds using our bitcoin holdings and (iii) periodically sell bitcoin for general corporate purposes, including to generate cash to meet our operating requirements.
Financings and Recent Developments
Common Stock Offering – April 2026
In April 2026, the Company entered into an underwriting agreement with an unaffiliated third party for the issuance and sale of 16,445,000 shares of its Class A Common Stock at a price to the public of $2.10 per share. The Company received net proceeds of approximately $32.5 million, after underwriting discounts, commissions, and estimated offering expenses.
Regulation A Offerings
From time to time, we conduct offerings under Regulation A of the Securities Act, the proceeds of which we use for working capital and other general corporate purposes.
In September 2025, we sold an aggregate of 6,688,077 shares of our Class A Common Stock, pursuant to an offering under Regulation A. The price of the Class A Common Stock was $8.23 per share, and the Regulation A Offering generated gross proceeds of approximately $55.0 million. We used the proceeds from the Regulation A Offering to manage our business and provide working capital for our operations, as well as expenses relating to salaries and other compensation to our officers and employees.
At the Market Offering
On December 5, 2025, we entered into an equity distribution agreement (the “Equity Distribution Agreement”), dated as of December 5, 2025, with Oppenheimer & Co. Inc., TCBI Securities, Inc., doing business as Texas Capital Securities, Maxim Group LLC and Roth Capital Partners, LLC (each, a “Sales Agent,” and together, the “Sales Agents”), providing for the offer and sale to or through the Sales Agents, from time to time, shares of our Class A Common Stock, par value $0.0001 per share, having an aggregate offering price of up to $150,000,000. During the year ended December 31, 2025, we sold an aggregate of 196,348 shares of our Class A Common Stock, generating gross proceeds of $1.0 million. During the six months ended June 30, 2026, we sold no shares of our Class A Common Stock from the equity distribution agreement.
In accordance with the terms of the Equity Distribution Agreement, we may offer and sell shares of our Common Stock at any time and from time to time through the Sales Agents. Sales of the shares, if any, will be made by means of transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, including block trades and sales made in ordinary brokers’ transactions on the NYSE or otherwise at market prices prevailing at the time of the sale, at prices related to prevailing market prices or at negotiated prices.
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The Sales Agents will receive from us a commission of up to 3.0% of the gross sales price per share for any shares sold through it under the Equity Distribution Agreement. The net proceeds we receive from the sale of our Common Stock in this offering will be the gross proceeds received from such sales less the commissions and any other costs we may incur in issuing the shares. Subject to the terms and conditions of the Equity Distribution Agreement, the Sales Agents are not required to sell any specific number or dollar amount of shares but will use their commercially reasonable efforts to sell on our behalf any shares to be offered under the Equity Distribution Agreement. Under the terms of the Equity Distribution Agreement, we also may sell shares to the Sales Agents as principals for their own account to the extent permitted under the Securities Act and the Exchange Act.
Loan and Security Agreement with Warrant Offering
On September 8, 2025, we entered into a Loan and Security Agreement with certain lenders, which provides us with an up to $100.0 million term loan with a delayed draw feature, which is composed of four committed tranches: (i) the first tranche in an aggregate principal amount of $40.0 million, which was funded on the closing date; (ii) the second tranche in an aggregate principal amount equal to $20.0 million, which was drawn in February 2026; (iii) the third tranche in an aggregate principal amount equal to $20.0 million, which may be drawn by December 31, 2026 and (iv) the fourth tranche in an aggregate principal amount equal to $20.0 million, which may be drawn by June 30, 2027. The availability of each tranche will be subject to achievement by us of certain conditions, including, without limitation, achievement of a specified minimum annualized recurring revenue and receipt by us of a minimum of net cash proceeds from the sale or issuance of equity. Borrowings under the credit facility will be used to pay off certain of our existing indebtedness, as well as for general working capital purposes and business operations.
In connection with the credit facility, we issued each lender thereunder a warrant to purchase an aggregate amount of 1,462,682 shares of our Class A Common Stock with an exercise price per share of $7.29. The warrants vest and become exercisable in proportion to and in conjunction with the advancement of each tranche under the credit facility. The warrants will expire on September 11, 2030. As part of the initial draw, the lenders received warrants to purchase 585,072 shares of the Company’s Class A Common Stock. As part of the second tranche draw, the lenders received warrants to purchase 292,537 shares of the Company’s Class A Common Stock.
Homestead Merger
On November 14, 2025, we entered into an Agreement and Plan of Merger (“Homestead Merger Agreement”), by and among the Company, Angel Black Autumn Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company, Black Autumn Show, Inc., a Delaware corporation (“Black Autumn”) and the Stockholder Representative (as defined in the Homestead Merger Agreement), pursuant to which we will acquire directly or indirectly all of the equity interests of Black Autumn, which owns the rights to the Homestead movie and series. Under the terms of the Homestead Merger Agreement, if the merger is completed, at the effective time of the merger, the following consideration will be payable: at the effective time, each holder of issued and outstanding shares of Black Autumn Stock will be entitled to receive (a) that number of shares of our Class A Common Stock equal to (i)(A) the Homestead Per Share Merger Consideration multiplied by (B) the number of shares of Homestead Stock held by such holder as of immediately prior to the Effective Time, divided by (ii) $6.13, plus (b) such holder’s Homestead Pro Rata Share of the Homestead Royalty Shares. All capitalized terms used in this paragraph are used as defined in the Homestead Merger Agreement. See further discussion of related party in Note 7 to the condensed consolidated financial statements.
Toothy Cow Productions Merger
On November 14, 2025, we entered into an Agreement and Plan of Merger (as amended and restated on June 29, 2026, the “TCP Merger Agreement”), by and among Angel TCP Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company, Toothy Cow Productions, LLC, a Tennessee limited liability company (“TCP”), and the unitholder representative, pursuant to which we will acquire directly or indirectly all of the equity interests of TCP, which owns the rights to the Wingfeather Saga series. Under the terms of the TCP Merger Agreement, if the merger is completed, at the effective time of the merger, the following consideration will be payable: at the effective time, all of the issued and outstanding TCP Units will be cancelled and extinguished and converted automatically into the right to receive a portion of the TCP Aggregate Stock Consideration equal to the TCP Aggregate Stock Consideration multiplied by such TCP Unitholder’s TCP Adjusted Percentage Interest at the effective time of the merger. All capitalized terms used in this paragraph are used as defined in the TCP Merger Agreement. In connection with the pending acquisition and pursuant to rights established under the existing distribution agreement, the Company has committed to fund the production of additional seasons of The Wingfeather Saga (the "Wingfeather Production Funding"). The Company is contractually obligated to complete the TCP Merger before October 31, 2026, subject to the receipt of regulatory approvals and the satisfaction of customary closing conditions. As of the date of this Form 10-Q, the TCP Merger has not closed.
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Tuttle Twins Show Merger
On November 14, 2025, we entered into an agreement and plan of merger (as amended and restated on June 29, 2026, the “TTS Merger Agreement”) pursuant to which we will acquire directly or indirectly all of the equity interests of Tuttle Twins Show, LLC (“TTS”), which owns the rights to the Tuttle Twins series. Under the terms of the TTS Merger Agreement, if the merger is completed, at the effective time of the merger, the following consideration will be payable: at the effective time of the merger, all of the issued and outstanding TTS Units will be cancelled and extinguished and converted automatically into the right to receive the TTS Merger Consideration, consisting of, as applicable, (a) for TTS Investors, an amount per TTS Investor Unit in cash equal to the TTS Investor Per Unit Cash Consideration and a number of shares of the Company’s Class A Common Stock per TTS Investor Unit equal to the TTS Investor Per Unit Stock Consideration and (b) for TTS Key Operators, a number of shares of Company Class A Common Stock per TTS Key Operator Unit equal to the TTS Key Operator Per Unit Stock Consideration. All capitalized terms used in this paragraph are used as defined in the TTS Merger Agreement. In connection with the pending acquisition and pursuant to rights established under the existing distribution agreement, the Company has committed to fund the production of additional seasons of The Tuttle Twins Show (the "Tuttle Twins Production Funding"). The Company is contractually obligated to complete the TTS Merger before October 31, 2026, subject to the receipt of regulatory approvals and the satisfaction of customary closing conditions. As of the date of this Form 10-Q, the TTS Merger has not closed.
Asset Purchase Agreement
The Company entered into a term sheet (the “Term Sheet”) with 2521 Entertainment, LLC (“2521”, together with the Company, the “JV Partners”) that sets forth the principal terms and conditions governing the joint venture between the JV Partners, through Giant Slayer Media LLC (“Giant Slayer Media” or the “JV”). The Term Sheet, pursuant to its terms, became binding on October 7, 2025, upon the execution of that certain Asset Purchase Agreement by and between Slingshot USA LLC (“Slingshot”) and Giant Slayer Media, also dated as of October 7, 2025 (the “Asset Purchase Agreement”). The Term Sheet will remain in effect until the earlier of (a) the execution of the definitive Limited Liability Company Agreement for the JV (the “LLCA”) and a distribution agreement between the Company (or one of its affiliates) and Giant Slayer Media (the “Distribution Agreement”) or (b) the mutual agreement of the JV Partners to terminate the Term Sheet.
Pursuant to the Term Sheet, the Company contributed $31,366,686 and 2521 contributed $46,550,473 in cash to the JV. Moreover, the Company was credited, as a capital contribution, an amount equal to $2,342,277 on account of a previous investment with Slingshot, which resulted in the Company’s total initial capital contribution of $33,708,963. Following the cash contribution by the JV Partners, the equity split in the JV became 42% to the Company and 58% to 2521.
Separately, under the Term Sheet, the JV Partners agreed to negotiate in good faith and execute definitive agreements to implement the terms of the Term Sheet, including the Asset Purchase Agreement, the LLCA and the Distribution Agreement, each in form and substance reasonably acceptable to the JV Partners. The LLCA became effective on October 2, 2025, and the Distribution Agreement became effective on November 19, 2025.
Under the Term Sheet, and by means of the Asset Purchase Agreement, Giant Slayer Media acquired substantially all of the assets of Slingshot related to the animated feature film, DAVID, the associated works and certain other ancillary rights and obligations, for an aggregate purchase price of $77,917,159 in cash. Further, except as may be otherwise provided in the Distribution Agreement: (a) Giant Slayer Media acquired ownership of the Purchased Assets under the Asset Purchase Agreement; (b) each of the JV Partners agreed to assign, and caused its affiliates and personnel to assign, to Giant Slayer Media all rights, title and interest in and to any derivative works, sequels, prequels, spinoffs or other works based on or derived from the Purchased Assets and (c) all such rights will automatically vest in Giant Slayer Media without further action. The Company or its relevant affiliate is acting as the distributor of the Purchased Assets under the Distribution Agreement, which contains specific payment terms, events of default and guaranty terms. The relationship of the JV Partners in the JV is governed by the LLCA, which contain specific terms regarding the distribution of proceeds received from the Company under the Distribution Agreement and other terms relating to the management of the JV.
In addition to the consummation of the transactions contemplated in the Term Sheet, the Asset Purchase Agreement also provided for, upon the closing of the transactions contemplated therein, the revocation by Slingshot of its deemed termination of the distribution agreement between the Company and Slingshot and the dismissal of the current lawsuit, brought by Slingshot against Angel Studios Licensing, LLC, the Company’s affiliate, pursuant to a Confidential Dismissal Agreement and Mutual Release effective as of October 7, 2025, by and between Angel Studios Licensing, LLC and Slingshot. The Dismissal Agreement resolved in full the action titled
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Slingshot USA, LLC v. Angel Studios Licensing, LLC, Case No. 250401064, in the Fourth Judicial District Court, Utah County, State of Utah, and any and all claims arising from or relating to the parties’ prior content distribution agreement concerning DAVID and Young David. Slingshot dismissed the Lawsuit with prejudice on October 8, 2025.
P&A Subsidiaries
Over the past year, we have formed several subsidiaries (each, a “P&A Subsidiary”) to exploit the commercial potential of specific films. Generally, a P&A Subsidiary enters into a distribution agreement with a filmmaker/production company to license the rights to market and distribute a film. The P&A Subsidiary then executes a services agreement with us to market the film’s theatrical release. The P&A Subsidiary also sublicenses the film to us for distribution via the Angel App and our website, as well as to other distribution networks. In exchange for our right to distribute the film, we retain a share of revenue generated by our distribution of the film to the Guild.
P&A Subsidiaries have dual class voting structures: preferred shares, which are offered to investors under Regulation A; and common shares, which we purchase at formation and which are the sole voting shares of a P&A Subsidiary. Typically, the preferred shares have a ‘Stated Value’ of 115-120% of the price at which the shares are sold. A P&A Subsidiary’s board of directors may, upon determining that the company has sufficient available funds, pay the Stated Value to preferred shareholders. Payments are made from receipts generated by the film’s theatrical release, after movie theaters have taken their negotiated share. If revenue generated from a film’s theatrical release is insufficient to pay the Stated Value, P&A Subsidiaries may pay the Stated Value from revenue generated by the film’s distribution, merchandising sales, and other commercial exploitation. Upon full payment of the Stated Value, a P&A Subsidiary’s preferred shares are automatically redeemed, and we become the entity’s sole owner. After a P&A Subsidiary has redeemed its preferred shares, the subsidiary splits remaining revenue with the filmmaker according to the terms of the Distribution Agreement.
We are legally distinct from the P&A Subsidiaries, and investments in them are distinct from an investment in us. A P&A Subsidiary is formed solely to exploit the commercial potential of a single film, and proceeds generated from a subsidiary’s offering of preferred shares are used to market and distribute that one film. A P&A Subsidiary has no other business or assets other than its exploitation of the rights to the film. The subsidiary’s shareholders do not have any rights to our assets or securities if a film does not perform well financially.
Investors in our common stock are investing in us and our business, which is broader than the marketing of a single film. Investors in our Common Stock do not have any right to payment of any amounts from the receipts of a film’s theatrical release prior to dividend payments made to the shareholders of the P&A Subsidiaries.
P&A Subsidiaries are required to file current and periodic reports with the SEC pursuant to Rule 257(b) of Regulation A. Unlike us, P&A Subsidiaries do not have reporting obligations under Section 15(d) of the Exchange Act.
Financial Operations Overview
Revenues
Historically, we have primarily generated revenue from the Angel Guild, theatrical distribution, content licensing and other. See “Revenue” for more information.
Cost of Revenues
Cost of revenues represents the direct costs incurred by us in generating our revenue. These costs include expenses directly associated with the goods or services sold during the reporting period. Components of cost of revenues include licensing royalty expense, hosting, merchandise costs, credit card fees, freight and shipping costs and costs of services provided.
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Operating Expenses
Selling and Marketing: Selling and marketing expenses include the promotion of the Angel Guild and increasing memberships, as well as current and future theatrical releases. As we continue to bring on additional content, drive Angel Guild memberships and promote future theatrical releases, this cost is expected to continue to rise.
Research and Development: Research and development expenses consist of the addition of personnel necessary to continue our focus on improving existing products, optimizing existing services and developing new technology to better meet the needs of our customers and partners.
General and Administrative: General and administrative expenses consist of the increased support staff necessary to manage the continued and expected growth of the business, including payroll and related expenses for executive, finance, content acquisition and administrative personnel, as well as recruiting, professional fees and other general corporate expenses.
Legal: Legal expenses include costs incurred in connection with legal proceedings, regulatory matters, compliance obligations, and corporate governance. Legal expenses may fluctuate based on the nature, timing, and complexity of matters encountered by us.
Non-GAAP Financial Measures
Adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”), a non-GAAP measure used by management to assess operating performance, is defined as net income/(loss), excluding interest expense, net, income tax expense, depreciation and amortization, stock-based compensation, and the (gain)/loss on digital assets, as well as exceptional items. Management uses Adjusted EBITDA as a supplemental measure of operating performance to evaluate the performance of the Company’s business operations, to facilitate comparisons of operating results across reporting periods, and to assist in planning and forecasting future periods. Adjusted EBITDA is presented as a supplemental measure of the Company’s operating performance and should not be considered in isolation or as a substitute for net income/(loss) or any other measure of financial performance calculated in accordance with GAAP.
We present Adjusted EBITDA in this filing because we believe it assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our ongoing operating performance. Period-to-period comparison of Adjusted EBITDA helps our management identify additional trends in our company’s financial results that may not be shown solely by period-to-period comparison of net income/(loss). In addition, we believe that providing Adjusted EBITDA, together with a reconciliation of Adjusted EBITDA to net income/(loss), helps investors make comparisons between our company and other companies that may have different capital structures, different capitalized asset values, different forms of employee compensation and different strategic nonrecurring projects. Adjusted EBITDA has its limitations as an analytical tool because of the excluded items, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include:
| ● | Adjusted EBITDA does not reflect interest expense and interest income because these items are not directly attributable to the performance of our business operations and may vary over time due to a variety of financing transactions that we have entered into or may enter into in the future. |
| ● | Adjusted EBITDA does not reflect certain non-cash items, including depreciation and amortization, stock-based compensation expense, and the (gain)/loss on digital assets. We believe that excluding the effect of these expenses from Adjusted EBITDA assists management and investors in making period-to-period comparisons in our company’s operating performance because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. |
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A reconciliation between net income/(loss) and Adjusted EBITDA for the three and six months ended June 30, 2026 and 2025 is presented below:
| | | | | | |
| | For the three months ended June 30, | ||||
| | 2026 | | 2025 | ||
Reconciliation of net loss to non-GAAP Adjusted EBITDA | | | | | | |
Net loss | | $ | (23,794,026) | | $ | (15,706,671) |
Interest expense, net | |
| 2,549,512 | |
| 1,334,702 |
Depreciation and amortization | |
| 3,083,526 | |
| 2,212,851 |
Stock-based compensation | |
| 3,541,895 | |
| 2,126,929 |
Net loss (gain) on digital assets | | | 2,935,243 | | | (7,452,328) |
Adjusted EBITDA | | $ | (11,683,850) | | $ | (17,484,517) |
| | | | | | |
| | For the six months ended June 30, | ||||
| | 2026 | | 2025 | ||
Reconciliation of net loss to non-GAAP Adjusted EBITDA | | | | | | |
Net loss | | $ | (37,550,082) | | $ | (53,036,803) |
Interest expense, net | |
| 7,873,833 | |
| 1,774,166 |
Depreciation and amortization | |
| 6,183,955 | |
| 4,439,035 |
Stock-based compensation | |
| 7,013,855 | |
| 4,759,765 |
Net loss (gain) on digital assets | | | 8,780,298 | | | (4,153,223) |
Adjusted EBITDA | | $ | (7,698,141) | | $ | (46,217,060) |
Results of Operations
The following represents our performance highlights for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025:
| | | | | | | | | | | | |
| | For the three months ended June 30, | | Change |
| |||||||
| | 2026 | | 2025 | | 2026 vs. 2025 |
| |||||
Revenues | | $ | 111,705,930 | | $ | 87,641,416 | | $ | 24,064,514 | | 27 | % |
Cost of revenues | |
| 51,749,499 | |
| 27,286,383 | |
| 24,463,116 |
| 90 | % |
Selling and marketing | |
| 61,141,780 | |
| 61,510,343 | |
| (368,563) |
| (1) | % |
General and administrative | |
| 12,408,923 | |
| 9,838,725 | |
| 2,570,198 |
| 26 | % |
Research and development | |
| 4,000,891 | |
| 3,644,278 | |
| 356,613 |
| 10 | % |
Legal expense | | | 916,221 | | | 6,685,984 | |
| (5,769,763) |
| (86) | % |
Operating loss | |
| (18,511,384) | |
| (21,324,297) | |
| 2,812,913 |
| 13 | % |
Net gain (loss) on digital assets | |
| (2,935,243) | |
| 7,452,328 | |
| (10,387,571) |
| (139) | % |
Interest expense | |
| (3,094,406) | |
| (2,742,902) | |
| (351,504) |
| (13) | % |
Interest income | |
| 544,894 | |
| 1,408,200 | |
| (863,306) |
| (61) | % |
Other income (expense) | | | 202,113 | | | (500,000) | | | 702,113 |
| 140 | % |
Loss before income tax benefit | |
| (23,794,026) | |
| (15,706,671) | |
| (8,087,355) |
| (51) | % |
Income tax benefit | |
| — | |
| — | |
| — |
| — | % |
Net loss | | $ | (23,794,026) | | $ | (15,706,671) | | $ | (8,087,355) |
| (51) | % |
Revenues
The following represents our revenue by type for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025:
| | | | | | | | | | | | |
| | For the three months ended June 30, | | Change | | |||||||
| | 2026 | | 2025 | | 2026 vs. 2025 | | |||||
Angel Guild | | $ | 90,720,582 | | $ | 46,803,621 | | $ | 43,916,961 | | 94 | % |
Theatrical | | | 2,795,742 | | | 32,579,632 | |
| (29,783,890) | | (91) | % |
Content licensing | | | 15,096,293 | | | 6,565,573 | |
| 8,530,720 | | 130 | % |
Merchandise | |
| 2,442,633 | |
| 1,126,830 | |
| 1,315,803 | | 117 | % |
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Other | | | 650,680 | | | 565,760 | | | 84,920 | | 15 | % |
Total Revenue | | $ | 111,705,930 | | $ | 87,641,416 | | $ | 24,064,514 |
| 27 | % |
During the three months ended June 30, 2026, compared to the three months ended June 30, 2025, the increase in revenues was largely due to: 1) an increase in Angel Guild revenue by $43.9 million as a result of increased Angel Guild members from 1.31 million to 2.61 million from June 30, 2025 to June 30, 2026, 2) an increase in content licensing revenue, which increased by $8.5 million as a result of larger licensing deals being entered into from our 2026 theatrical releases, compared to smaller deals in the prior year period, and 3) an increase in merchandise revenue of $1.3 million largely due to DVD sales in Q2 2026. This increase was partially offset by a decrease in theatrical revenue of $29.8 million largely due to the release of two larger releases in Q2 2025, as compared to a single smaller release in Q2 2026.
Cost of Revenues
The following represents our cost of revenues by type for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025:
| | | | | | | | | | | | |
| | For the three months ended June 30, | | Change | | |||||||
| | 2026 | | 2025 | | 2026 vs. 2025 | | |||||
Angel Guild | | $ | 11,327,496 | | $ | 9,509,049 | | $ | 1,818,447 | | 19 | % |
Theatrical | | | 1,035,250 | | | 2,233,525 | |
| (1,198,275) | | (54) | % |
Royalties | |
| 35,200,769 | |
| 11,196,058 | |
| 24,004,711 | | 214 | % |
Other | | | 4,185,984 | | | 4,347,751 | | | (161,767) | | (4) | % |
Total Cost of Revenues | | $ | 51,749,499 |
| $ | 27,286,383 | | $ | 24,463,116 |
| 90 | % |
During the three months ended June 30, 2026, cost of revenues was $51.7 million compared to $27.3 million in the same quarter in the prior year. The increase in Angel Guild cost of revenues by $1.8 million was largely a result of increased memberships and the transaction fees of $3.5 million related to that growth, partially offset by a decrease in the amount of free movie tickets for premium Angel Guild members for Angel theatrical releases of $2.7 million. The increase in royalties of $24.0 million was a result of royalties earned by filmmakers from higher net revenue earned from the Angel Guild. These increases were partially offset by a decrease in theatrical cost of revenues of $1.2 million as a result of reduced spending on distributing theatrical releases in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.
Selling and Marketing
The following represents our selling and marketing expenses by type for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025:
| | | | | | | | | | | | |
| | For the three months ended June 30, | | Change | | |||||||
| | 2026 | | 2025 | | 2026 vs. 2025 | | |||||
Angel Guild | | $ | 47,945,200 | | $ | 33,517,876 | | $ | 14,427,324 | | 43 | % |
Theatrical | | | 10,899,152 | | | 25,117,584 | |
| (14,218,432) | | (57) | % |
Other | |
| 2,297,428 | |
| 2,874,883 | |
| (577,455) | | (20) | % |
Total Selling and Marketing | | $ | 61,141,780 |
| $ | 61,510,343 | | $ | (368,563) |
| (1) | % |
During the three months ended June 30, 2026, compared to the three months ended June 30, 2025, selling and marketing expenses remained relatively consistent. The increase in Angel Guild sales and marketing expenses of $14.4 million was a result of the promotion of the Angel Guild in an effort to increase memberships. This was partially offset by a decrease in Theatrical sales and marketing expenses of $14.2 million as a result of reduced spending on promoting theatrical releases in the three-months ended June 30, 2026 as compared to June 30, 2025. As we continue to bring on additional content, drive Angel Guild memberships and promote future theatrical releases, this cost is expected to fluctuate, but overall remain high and be a significant component of our operating expenses.
Other Operating Expenses
For the three months ended June 30, 2026, higher general and administrative costs of $2.6 million were primarily related to: 1) additional employee costs of $1.2 million during 2026 related to the support staff necessary to manage the continued and expected growth of the
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business, and 2) additional equity issuance costs of $1.4 million during 2026 due to an increase in options and RSUs granted to employees in the last 12 months and their related fair value on the grant date.
For the three months ended June 30, 2026, research and development costs remained relatively consistent, with no large increases or decreases in personnel or software costs associated with research and development.
For the three months ended June 30, 2026, compared to the three months ended June 30, 2025, the decrease in legal expense of $5.8 million was largely a result of legal costs in the prior year from the anticipated Merger with Merger Sub with no comparable transactions in the three months ended June 30, 2026.
Other Income and Expense
The increase in the loss on digital assets of $10.4 million during the three months ended June 30, 2026 was a result of measuring our digital assets at fair value at the end of each reporting period per Accounting Standards Update (“ASU”) No. 2023-08 and the value of bitcoin decreasing during the three months ended June 30, 2026 by a greater amount as compared to the three months ended June 30, 2025.
Results of Operations
The following represents our performance highlights for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025:
| | | | | | | | | | | | |
| | For the six months ended June 30, | | Change |
| |||||||
| | 2026 | | 2025 | | 2026 vs. 2025 |
| |||||
Revenues | | $ | 226,810,996 | | $ | 135,082,056 | | $ | 91,728,940 | | 68 | % |
Cost of revenues | |
| 95,751,845 | |
| 46,766,587 | |
| 48,985,258 |
| 105 | % |
Selling and marketing | |
| 117,738,343 | |
| 112,035,657 | |
| 5,702,686 |
| 5 | % |
General and administrative | |
| 23,654,381 | |
| 17,205,979 | |
| 6,448,402 |
| 37 | % |
Research and development | |
| 8,084,829 | |
| 6,889,196 | |
| 1,195,633 |
| 17 | % |
Legal expense | | | 2,759,153 | | | 7,100,497 | | | (4,341,344) | | (61) | % |
Operating loss | |
| (21,177,555) | |
| (54,915,860) | |
| 33,738,305 |
| 61 | % |
Net gain (loss) on digital assets | |
| (8,780,298) | |
| 4,153,223 | |
| (12,933,521) |
| (311) | % |
Interest expense | |
| (9,127,015) | |
| (4,307,057) | |
| (4,819,958) |
| (112) | % |
Interest income | |
| 1,253,182 | |
| 2,532,891 | |
| (1,279,709) |
| (51) | % |
Other income (expense) | | | 281,604 | | | (500,000) | | | 781,604 | | 156 | % |
Loss before income tax benefit | |
| (37,550,082) | |
| (53,036,803) | |
| 15,486,721 |
| 29 | % |
Income tax benefit | |
| — | |
| — | |
| — |
| — | % |
Net loss | | $ | (37,550,082) | | $ | (53,036,803) | | $ | 15,486,721 |
| 29 | % |
Revenues
The following represents our revenue by type for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025:
| | | | | | | | | | | | |
| | For the six months ended June 30, | | Change | | |||||||
| | 2026 | | 2025 | | 2026 vs. 2025 | | |||||
Angel Guild | | $ | 174,063,193 | | $ | 81,501,139 | | $ | 92,562,054 | | 114 | % |
Theatrical | | | 20,770,747 | | | 40,307,838 | |
| (19,537,091) | | (48) | % |
Content licensing | |
| 25,260,304 | |
| 9,162,077 | |
| 16,098,227 | | 176 | % |
Merchandise | | | 5,575,505 | | | 2,070,674 | |
| 3,504,831 | | 169 | % |
Other | | | 1,141,247 | | | 2,040,328 | | | (899,081) | | (44) | % |
Total Revenue | | $ | 226,810,996 |
| $ | 135,082,056 | | $ | 91,728,940 |
| 68 | % |
During the six months ended June 30, 2026, compared to the six months ended June 30, 2025, the increase in revenues was largely due to: 1) an increase in Angel Guild revenue by $92.6 million as a result of increased Angel Guild members from 1.31 million to 2.61
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million from June 30, 2025 to June 30, 2026, 2) an increase in content licensing revenue, which increased by $16.1 million as a result of larger licensing deals being entered into from our Q4 2025 and Q1 2026 theatrical releases, compared to smaller deals in the prior year period, and 3) an increase in merchandise revenue of $3.5 million largely due to increased DVD sales in 2026 as compared to the prior year period. This increase was partially offset by a decrease in Theatrical revenue by $19.5 million, largely due to the release of King of Kings in Q2 2025, as compared to smaller releases in the current period.
Cost of Revenues
The following represents our cost of revenues by type for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025:
| | | | | | | | | | | | |
| | For the six months ended June 30, | | Change | | |||||||
| | 2026 | | 2025 | | 2026 vs. 2025 | | |||||
Angel Guild | | $ | 24,893,379 | | $ | 16,050,145 | | $ | 8,843,234 | | 55 | % |
Theatrical | | | 2,374,115 | | | 3,291,246 | |
| (917,131) | | (28) | % |
Royalties | |
| 59,015,229 | |
| 19,450,496 | |
| 39,564,733 | | 203 | % |
Other | | | 9,469,122 | | | 7,974,700 | | | 1,494,422 | | 19 | % |
Total cost of revenues | | $ | 95,751,845 |
| $ | 46,766,587 | | $ | 48,985,258 |
| 105 | % |
During the six months ended June 30, 2026, cost of revenues was $95.8 million compared to $46.8 million for the six months ended June 30, 2025. The increase in Angel Guild cost of revenues by $8.8 million was largely a result of increased memberships and the transaction fees of $8.3 million related to that growth. The increase in royalties of $39.6 million was a result of royalties earned by filmmakers from higher net revenue earned from the Angel Guild. These increases were partially offset by a decrease in Theatrical cost of revenues of $0.9 million as a result of reduced spending on distributing theatrical releases in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.
Selling and Marketing
The following represents our selling and marketing expenses by type for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025:
| | | | | | | | | | | | |
| | For the six months ended June 30, | | Change | | |||||||
| | 2026 | | 2025 | | 2026 vs. 2025 | | |||||
Angel Guild | | $ | 84,413,755 | | $ | 67,375,467 | | $ | 17,038,288 | | 25 | % |
Theatrical | | | 28,471,025 | | | 39,300,773 | |
| (10,829,748) | | (28) | % |
Other | | | 4,853,563 | | | 5,359,417 | | | (505,854) | | (9) | % |
Total selling and marketing | | $ | 117,738,343 |
| $ | 112,035,657 | | $ | 5,702,686 |
| 5 | % |
During the six months ended June 30, 2026, compared to the six months ended June 30, 2025, the increase in selling and marketing expenses was largely due to an increase in Angel Guild sales and marketing expenses of $17.0 million as a result of the promotion of the Angel Guild in an effort to increase memberships. This was partially offset by a decrease in theatrical sales and marketing expenses of $10.8 million as a result of reduced spending on promoting theatrical releases in the six-months ended June 30, 2026 as compared to the six months ended June 30, 2025. As we continue to bring on additional content, drive Angel Guild memberships and promote future theatrical releases, this cost is expected to fluctuate, but overall remain high and be a significant component of our operating expenses.
Other Operating Expenses
For the six months ended June 30, 2026, higher general and administrative costs of $6.4 million were primarily related to: 1) additional employee costs of $2.2 million during 2026 related to the support staff necessary to manage the continued and expected growth of the business, 2) additional equity issuance costs of $2.3 million during 2026 due to an increase in options and RSUs granted to employees in the six months ended June 30, 2026 and their related fair value on the grant date, and 3) amortization expense of $1.5 million related to a new three-year first-look agreement with a filmmaker, which provides the Company with priority rights to review and bid on the filmmaker's future projects.
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For the six months ended June 30, 2026, the increase in research and development costs of $1.2 million primarily related to additional employee costs during 2026 related to the support staff necessary to manage the continued and expected growth of the business.
For the six months ended June 30, 2026, compared to the six months ended June 30, 2025, the decrease in legal expense of $4.3 million was largely a result of legal costs in the prior year from the anticipated Merger with Merger Sub, partially offset by the legal fees associated with the Homestead, Toothy Cow Productions, and Tuttle Twins Show pending acquisitions.
Other Income and Expense
The increase in the loss on digital assets of $12.9 million during the six months ended June 30, 2026 was a result of measuring our digital assets at fair value at the end of each reporting period per ASU No. 2023-08 and the value of bitcoin decreasing during the six months ended June 30, 2026 by a greater amount as compared to the six months ended June 30, 2025.
The increase in interest expense of $4.8 million is related to a higher dollar amount of P&A and other notes entered into and outstanding during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, as can be seen on our condensed consolidated statements of cash flows and condensed consolidated balance sheets.
Liquidity and Capital Resources
Operating and Capital Expenditure Requirements
| | | | | | | | | | | | |
| | As of | | Change |
| |||||||
| | June 30, 2026 | | December 31, 2025 | | 2026 vs. 2025 |
| |||||
Cash and cash equivalents | | $ | 48,036,965 | | $ | 44,083,233 | | $ | 3,953,732 | | 9 | % |
Notes payable | |
| 74,364,129 | |
| 97,166,069 | |
| (22,801,940) |
| (23) | % |
Cash and cash equivalents increased by $4.0 million in the six months ended June 30, 2026, primarily due to cash provided by operating activities of $18.8 million, partially offset by cash used in investing activities of $13.8 million and cash used in financing activities of $1.1 million.
To date, we have funded a significant portion of our operations through private and public offerings of our common stock and raise of money through notes payable. As of June 30, 2026, we had cash on hand of approximately $48.0 million. Notes payable currently consists of 1) P&A notes in the amount of $12.0 million with amounts due based on timing of certain cash proceeds, but which amounts are expected to be paid within the next twelve months, 2) financing of a convertible note in the amount of $6.0 million, which will become due, if not converted into equity beforehand, by May 1, 2027, and 3) a financing facility in the amount of $100.0 million, of which $60.0 million is currently drawn as of the date of this report, with interest payable monthly and principal installments starting in November 2027 and a final maturity of October 1, 2030.
Evaluation of Going Concern
The condensed consolidated financial statements have been prepared assuming we will continue to operate as a going concern within one year from the date of issuance of these condensed consolidated financial statements. For the six months ended June 30, 2026, we incurred a net loss of approximately $37.6 million and had cash provided by operating activities of approximately $18.8 million. We have an accumulated deficit of approximately $279.1 million as of June 30, 2026. Marketing expense was our largest expense for the period ended June 30, 2026 as our intent is to increase Angel Guild memberships and support our theatrical releases. We anticipate that as we continue to grow the business, we will incur operating losses and use cash in operating activities during 2026.
We are working to increase revenues through the growth of Angel Guild memberships, our pipeline of theatrical releases during the second half of 2026 and additional streaming agreements. We have historically financed marketing activities for theatrical releases through two primary methods: 1) Regulation A offerings that are tailored to raise money for the print and advertising costs (“P&A”) for specific theatrical releases and 2) P&A loan agreements with individual and institutional investors. During the three months ended June 30, 2026, the Company did not raise any money from Regulation A offerings and received $10.0 million from P&A loans. During the year ended December 31, 2025, the Company raised $13.2 million from Regulation A offerings and received $84.0 million from P&A loans. During the six months ended June 30, 2026, the Company paid $57.6 million for the repayments of P&A loans, including interest and paid $5.9 million as a redemption of shares for Regulation A investors, from the proceeds collected from the theatrical
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releases and other revenues earned. During the year ended December 31, 2025, the Company paid $43.5 million for the repayments of P&A loans, including interest and paid $15.8 million as a redemption of shares for Regulation A investors, from the proceeds collected from the theatrical releases and other revenues earned.
Additionally, the Company has raised capital through the sale of its Common Stock, generating $104.1 million of cash during the year ended December 31, 2025. During the six months ended June 30, 2026, the Company issued Common Stock through a public offering for aggregate proceeds of $34.5 million and generated approximately $190.5 million in cash from Angel Guild paid memberships. As we continue to grow, we expect that our existing capital resources, including cash, accounts receivables, licensing receivables, recurring revenues from our membership base, the ability to draw on our existing debt facility, and the ability to sell our digital assets if necessary, will be sufficient to meet our operating requirements for at least the next twelve months. While there is no assurance of success, management remains committed to its plans to grow revenues and manage expenses.
Discussion of Operating, Investing, Financing Cash Flows
Operating Activities. Cash flows provided by (used in) operating activities for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, were as follows:
| | | | | | | | | |
| | For the six months ended June 30, | | | | ||||
| | 2026 | | 2025 | | Net Change | |||
Net cash and cash equivalents provided by (used in) operating activities | | $ | 18,827,445 | | $ | (20,352,061) | | $ | 39,179,506 |
Cash flows provided by operating activities for the six months ended June 30, 2026 was $18.8 million compared to cash flows used in operating activities of $20.4 million for the six months ended June 30, 2025, an increase of $39.2 million. This increase was primarily attributable to 1) growth in net Angel Guild cash received, which is due to increased Guild membership, and 2) lower marketing spend as a percentage of revenue. The increase in cash is also a result of the collection of theatrical receipts related to David in the first quarter of 2026.
Investing Activities. Cash flows used in investing activities for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, were as follows:
| | | | | | | | | |
| | For the six months ended June 30, | | | | ||||
| | 2026 | | 2025 | | Net Change | |||
Purchases of property and equipment | | $ | (189,070) | | $ | (118,942) | | $ | (70,128) |
Issuance of notes receivable | |
| (14,684) | |
| (974,176) | |
| 959,492 |
Collections of notes receivable | |
| 143,578 | |
| 440,643 | |
| (297,065) |
Advances to acquisition target | |
| (8,193,364) | |
| — | |
| (8,193,364) |
Sale of digital assets | | | — | | | 99,118 | | | (99,118) |
Additions to internal-use software | | | (5,478,477) | | | (4,346,719) | | | (1,131,758) |
Purchase of content | | | (207,499) | | | (4,274,150) | | | 4,066,651 |
Investments in affiliates | |
| — | |
| (2,982,032) | |
| 2,982,032 |
Return on investments in affiliates | | | 137,170 | | | — | | | 137,170 |
Net cash and cash equivalents used in investing activities | | $ | (13,802,346) | | $ | (12,156,258) | | $ | (1,646,088) |
Cash flows used in investing activities for the six months ended June 30, 2026 was $13.8 million compared to cash flows used in investing activities of $12.2 million for the six months ended June 30, 2025. The increase of cash flows used was largely due to the advances to certain acquisition targets for $8.2 million, partially offset by the decrease of the purchase of content of $4.1 million and the decrease of investment in affiliates of $3.0 million.
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Financing Activities. Cash flows provided by (used in) financing activities for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, were as follows:
| | | | | | | | | |
| | For the six months ended June 30, | | | | ||||
| | 2026 | | 2025 | | Net Change | |||
Repayment of notes payable | | $ | (57,630,657) | | $ | (24,338,861) | | $ | (33,291,796) |
Repayment of loan guarantee | | | — | | | (6,000,000) | | | 6,000,000 |
Receipt of notes payable | |
| 30,000,000 | |
| 48,891,000 | |
| (18,891,000) |
Repayment of accrued settlement costs | | | — | | | (136,660) | | | 136,660 |
Exercise of stock options | |
| 1,293,476 | |
| 190,733 | |
| 1,102,743 |
Issuance of common stock | |
| 34,534,500 | |
| 38,503,670 | |
| (3,969,170) |
Contribution of equity in noncontrolling interests | | | — | | | 8,731,422 | | | (8,731,422) |
Redemption of equity in noncontrolling interests | | | (5,883,724) | |
| (11,750,000) | |
| 5,866,276 |
Fees related to issuance of common stock and minority interest | | | (2,024,388) | | | (398,660) | | | (1,625,728) |
Repurchase of common stock | | | (1,160,574) | | | (132,940) | | | (1,027,634) |
Debt financing fees | |
| (200,000) | |
| (263,532) | |
| 63,532 |
Net cash and cash equivalents provided by (used in) financing activities | | $ | (1,071,367) | | $ | 53,296,172 | | $ | (54,367,539) |
Cash flows used in financing activities for the six months ended June 30, 2026 were $1.1 million compared to cash flows provided by financing activities of $53.3 million for the six months ended June 30, 2025. During the six months ended June 30, 2026, we raised $30.0 million in notes payable and $34.5 million through issuance of Common Stock in a public offering. This was partially offset by the repayment of $57.6 million for P&A related notes and a $5.9 million redemption paid for equity in noncontrolling interests. During the six months ended June 30, 2025, we raised $38.5 million with issuance of our common stock, $8.7 million in equity from noncontrolling interests, and $48.9 million in notes payable. These were partially offset by the repayment of $25.5 million for P&A related notes, a $11.8 million redemption paid for equity in noncontrolling interests and a $6.0 million payment related to a loan guarantee.
Trends and Key Factors Affecting Our Performance
Angel Guild
We launched the Angel Guild in the second quarter of 2023. Since that time the Angel Guild grew to approximately 2.00 million Angel Guild members as of December 31, 2025, accounting for 65.2% of our total revenue in 2025. The Angel Guild grew to approximately 2.61 million Angel Guild members as of June 30, 2026, accounting for 76.7% of our total revenue in 2026. As of June 30, 2026, filmmakers have earned $289.6 million in cumulative royalties.
We attribute the Angel Guild growth to many factors including, but not limited to, new and exclusive content being added regularly to the Angel Guild and marketing optimization and upselling to the Angel App user base. For the six months ended June 30, 2026, the trailing twelve months average revenue per member was $13.63 per month.
Critical Accounting Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reported periods. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and results of operations, and which require a company to make its most difficult and subjective judgments. Based on this definition, we have identified the critical accounting policies and judgments addressed below. Estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
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Long-lived Assets
Intangible assets with finite lives and property, plant and equipment are amortized or depreciated over their estimated useful life on a straight-line basis. We monitor conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization or depreciation period. We test these assets for potential impairment whenever our management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable. The original estimate of an asset’s useful life and the impact of an event or circumstance on either an asset’s useful life or carrying value involve significant judgment regarding estimates of the future cash flows associated with each asset.
Capitalized internal-use software costs are primarily comprised of direct labor and technology related expenses. Internal-use software includes software utilized for cloud-based solutions as well as software for internal systems and tools. Costs are capitalized once the project is defined, funding is committed, and it is confirmed the software will be used for its intended use. Capitalization of these costs concludes once the project is complete and the software is ready for its intended purpose. Post-configuration training and maintenance costs are expensed as incurred.
Income Taxes
We account for income taxes under the liability method, whereby deferred tax asset or liability account balances are determined based on the difference between the financial statement and the tax bases of assets and liabilities using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets when we expect the amount of tax benefit to be realized is less than the carrying value of the deferred tax asset.
Accounting for income taxes involves uncertainty and judgment on how to interpret and apply tax laws and regulations within our annual tax filings. Such uncertainties from time to time may result in a tax position that may be challenged and overturned by a tax authority in the future which could result in additional tax liability, interest charges and possibly penalties.
Stock-Based Compensation
We account for stock-based compensation by measuring and recognizing as compensation expense the fair value of all share-based payment awards made to employees based on estimated grant date fair values. The determination of fair value involves a number of significant estimates. We use the Black-Scholes option pricing model or the Monte Carlo pricing model to estimate the value of employee stock options which require a number of assumptions to determine the model inputs. These include the expected volatility of our stock and employee exercise behavior, which are based on historical data as well as expectations of future developments over the term of the option. As stock-based compensation expense is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Management’s estimate of forfeitures is based on historical experience but actual forfeitures could differ materially as a result of voluntary employee actions and involuntary actions which would result in significant change in our stock-based compensation expense amounts in the future. The fair value of the Common Stock underlying the employee stock options is estimated using closing market price.
Other Estimates
See “Note 1” to the accompanying condensed consolidated financial statements included herein for further discussion.
Off-Balance Sheet Arrangements
As of June 30, 2026, our off-balance sheet arrangements consisted of guarantees of repayment of third-party loans made to independent film production companies that are unconsolidated variable interest entities in which we hold a variable interest but are not the primary beneficiary. Our maximum potential undiscounted future payments under these guarantees were $6.5 million, against which we have recorded a guarantee liability of $0.3 million, and we have assessed the payment risk as low. We had no other off-balance sheet arrangements as of June 30, 2026 that have, or are reasonably likely to have, a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources that is material to investors. See Note 1, Description of Organization and Summary of Significant Accounting Policies, and Note 5, Commitments and Contingencies, to the condensed consolidated financial statements.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are subject to market risks in the ordinary course of our business, including changes in interest rates. Historically, fluctuations in interest rates have not had a significant impact on our operating results. As of June 30, 2026, we have not utilized any derivative financial instruments such as futures contracts, options and swaps, forward foreign exchange contracts or interest rate swaps and futures. In addition, any sales we make that are denominated in a foreign currency will be subject to risks associated with changes in currency exchange rates. These risks include the possibility of significant fluctuations in the foreign currency markets, the imposition or modification of foreign exchange controls and potential illiquidity in the secondary market. These risks will vary depending upon the currency or currencies involved. Our exposure to interest rate risk and foreign currency exchange rate changes is increasing but we do not believe it to be material under current accounting guidance.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) and Rule 15d-15(b) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated, as of June 30, 2026, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2026 to provide reasonable assurance that information required to be disclosed by us in this report filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
We believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Internal Control over Financial Reporting Readiness
As of June 30, 2026, the last business day of the Company's most recently completed second fiscal quarter, the aggregate market value of the Company's common equity held by non-affiliates exceeded the $75 million threshold under Rule 12b-2 of the Exchange Act. As a result, the Company will be classified as an accelerated filer beginning with its Annual Report on Form 10-K for the fiscal year ending December 31, 2026. In addition, the Company will cease to qualify as an emerging growth company effective with that same Annual Report. Management is responsible for establishing and maintaining adequate internal control over financial reporting and has designed its control framework based on the COSO internal control framework.
As a result of the foregoing, the Company will be required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes‑Oxley Act beginning with its Annual Report on Form 10‑K for the fiscal year ending December 31, 2026. In preparation for this transition, management has commenced a formal internal control readiness program, which includes enhanced documentation of business processes, risk identification, and testing of key controls.
While these efforts are intended to improve the reliability of the Company’s financial reporting, the implementation and testing of internal controls is an ongoing process subject to refinement. Accordingly, management cannot assure that identified deficiencies, if any, will be remediated on a timely basis or that internal control over financial reporting will be effective when auditor attestation is required.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We currently are, and from time to time might again become, involved in litigation. Litigation has the potential to cause us to incur unexpected losses, some of which might not be covered by insurance but can materially affect our financial condition and our ability to continue business operations.
Item 1A. Risk Factors
Except as set forth below, there have been no material changes to the risk factors disclosed in Item 1A, “Risk Factors,” in the Form 10-K for the period ended December 31, 2025.
A failure to maintain an effective system of internal control over financial reporting could result in material misstatements of our financial statements in future periods and may impair our ability to comply with the accounting and reporting requirements applicable to public companies. Furthermore, our business, financial position, and results of operations could be adversely affected.
As a public company, we are subject to reporting and other obligations under the Exchange Act, including the requirements of the Sarbanes-Oxley Act of 2002, or SOX, Section 404, which require annual management assessments of the effectiveness of our internal control over financial reporting.
The rules governing the standards that must be met for management to determine that our internal control over financial reporting is effective are complex and require significant documentation, testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by SOX. These reporting and other obligations place significant demands on our management and administrative and operational resources, including accounting resources.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Any failure to maintain effective internal controls could also have an adverse effect on our business, financial position and results of operations.
We have issued a financial guarantee in connection with a royalty-backed guarantee, which could require us to make cash payments if the guaranteed film does not generate sufficient revenue. Under this arrangement, we unconditionally guarantee repayment of a third-party loan made to an independent film production company to the extent that Producer Royalty Rights from the distribution of the film are insufficient to repay the loan in full by the end of the guarantee term. The commercial performance of the film is subject to uncertainty and factors outside our control, including audience reception, critical response, competitive releases, and broader economic conditions. If the film underperforms, we could be required to make a cash payment to the lender, which could affect our liquidity, cash flows, and results of operations. We may in the future enter into additional similar arrangements, which would increase our aggregate exposure. Although we currently assess the payment risk as low, there can be no assurance that actual film revenue will meet projections or that we will not be required to make payments under the guarantee.
We have entered into agreements with certain filmmakers and content creators that guarantee minimum royalty payments over specified periods, regardless of the actual box office, streaming, or other performance of the underlying content, and we may enter into similar arrangements in the future. We recognize royalty expense and a corresponding liability as royalties are earned under these agreements, and we do not currently expect any of these guarantees to result in a shortfall between royalties earned and the guaranteed minimum; however, that expectation depends on projections of future box office receipts, streaming performance, and other revenue-generating activity for the underlying content, which are inherently uncertain and may not prove accurate. If any content subject to these guarantees underperforms relative to our expectations, we would be required to recognize the estimated shortfall as an expense with a corresponding liability, potentially with limited advance notice, which could be material and could affect our results of operations in the period recognized.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no sales of unregistered securities to report which have not been previously included in an Annual Report on Form 10-K or a Current Report on Form 8-K.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
5(a):
None.
5(b):
None.
5(c):
During the three months ended June 30, 2026, none of our
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Item 6. Exhibits
| | |
Exhibit | | Exhibit Description |
2.1 | | Amended and Restated Agreement and Plan of Merger, dated as of November 14, 2025 as amended on June 29, 2026, by and among Angel Studios, Inc., Angel TCP Merger Sub, LLC, Toothy Cow Productions, LLC and Shining Isle Productions LLC (incorporated by reference to Exhibit 2.3 of the Company’s Registration Statement on Form S-4). |
2.2 | | Amended and Restated Agreement and Plan of Merger, dated as of November 14, 2025 as amended on June 29, 2026, by and among Angel Studios, Inc., Angel Tuttle Merger Sub, LLC, Tuttle Twins Show, LLC and Daniel Harmon (incorporated by reference to Exhibit 2.4 of the Company’s Registration Statement on Form S-4). |
3.1 | | Third Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-41150) filed on June 18, 2026). |
3.2 | | Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (File No. 333-290281) filed on September 16, 2025). |
10.1 | | Underwriting Agreement dated April 10, 2026, between the Company and Roth Capital Partners, LLC, as representative of the several underwriters named therein, incorporated by reference to Exhibit 1.1 of the Company’s Current Report on Form 8-K, filed on April 13, 2026. |
10.2 | | Form of TCP Key Operator Stock Restriction Agreement with Shining Isle Productions (incorporated by reference to Exhibit 10.17 of the Company’s Registration Statement on Form S-4). |
10.3 | | Form of TCP Key Operator Stock Restriction Agreement with Brock Starnes and Garrett Taylor, respectively (incorporated by reference to Exhibit 10.18 of the Company’s Registration Statement on Form S-4). |
31.1* | | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* | | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1* | | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002. |
101 | | The following materials are filed herewith: (i) Inline XBRL Instance, (ii) Inline XBRL Taxonomy Extension Schema, (iii) Inline XBRL Taxonomy Extension Calculation, (iv) XBRL Taxonomy Extension Labels, (v) XBRL Taxonomy Extension Presentation, and (vi) Inline XBRL Taxonomy Extension Definition. |
104 | | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
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*Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | |
| | ANGEL STUDIOS, INC. | |
| | | |
DATE: August 4, 2026 | | | /s/ Neal Harmon |
| | | Neal Harmon |
| | | Chief Executive Officer |
| | | (Principal Executive Officer) |
| | | |
| | | |
DATE: August 4, 2026 | | | /s/ Scott Klossner |
| | | Scott Klossner |
| | | Chief Financial Officer |
| | | (Principal Financial Officer, Principal Accounting Officer) |
| | | |
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