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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023

or

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number 001-39312

PLBY Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware37-1958714
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
10960 Wilshire Blvd., Suite 2200
Los Angeles, California 90024
(Address of principal executive offices including zip code)
Registrant’s telephone number, including area code: (310) 424-1800
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.0001 par value per sharePLBYNasdaq Global Market
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer£Accelerated filer
Non-accelerated filer£Smaller reporting company
Emerging growth company£
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒
The number of shares of Registrant’s Common Stock outstanding as of November 3, 2023 was 74,061,787.


TABLE OF CONTENTS
Page
i


Part I. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements.
PLBY Group, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
Net revenues$33,282 $45,706 $103,586 $140,647 
Costs and expenses:
Cost of sales(10,909)(25,302)(43,545)(62,833)
Selling and administrative expenses(25,514)(34,988)(99,693)(113,774)
Contingent consideration fair value remeasurement gain219 1,371 486 29,310 
Impairments(7,674)(277,197)(155,864)(283,496)
Gain on sale of the aircraft 5,802  5,802 
Other operating expense, net(740) (491) 
Total operating expense(44,618)(330,314)(299,107)(424,991)
Operating loss(11,336)(284,608)(195,521)(284,344)
Nonoperating (expense) income:
Interest expense(6,620)(4,306)(17,586)(12,439)
(Loss) gain on extinguishment of debt (220)6,133 (220)
Fair value remeasurement gain 9,149 6,505 10,903 
Other income (expense), net121 (551)621 (1,030)
Total nonoperating (expense) income(6,499)4,072 (4,327)(2,786)
Loss from continuing operations before income taxes(17,835)(280,536)(199,848)(287,130)
Benefit from income taxes1,442 43,653 13,062 46,301 
Net loss from continuing operations(16,393)(236,883)(186,786)(240,829)
Income (loss) from discontinued operations, net of tax 1,319 (27,814)149 (26,640)
Net loss(15,074)(264,697)(186,637)(267,469)
Net loss attributable to PLBY Group, Inc.$(15,074)$(264,697)$(186,637)$(267,469)
Net loss per share from continuing operations, basic and diluted$(0.22)$(5.05)$(2.65)$(5.18)
Net income (loss) per share from discontinued operations, basic and diluted0.02 (0.60) (0.58)
Net loss per share, basic and diluted$(0.20)$(5.65)$(2.65)$(5.76)
Weighted-average shares outstanding, basic and diluted73,891,105 46,889,983 70,611,492 46,472,607 
    
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1


PLBY Group, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)
(in thousands)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
Net loss$(15,074)$(264,697)$(186,637)$(267,469)
Other comprehensive loss:
Foreign currency translation adjustment(1,182)(10,321)(3,150)(25,040)
Other comprehensive loss(1,182)(10,321)(3,150)(25,040)
Comprehensive loss$(16,256)$(275,018)$(189,787)$(292,509)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2


PLBY Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share amounts)
September 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents$20,028 $31,640 
Receivables, net of allowance for credit losses5,396 14,214 
Inventories, net13,997 20,612 
Prepaid expenses and other current assets15,141 17,221 
Assets held for sale19,533 34,910 
Total current assets74,095 118,597 
Restricted cash1,940 3,809 
Property and equipment, net14,942 13,804 
Operating right-of-use assets28,123 28,082 
Goodwill53,720 123,217 
Other intangible assets, net163,329 236,137 
Contract assets, net of current portion9,070 13,680 
Other noncurrent assets14,552 15,137 
Total assets$359,771 $552,463 
Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity
Current liabilities:
Accounts payable$17,055 $14,090 
Accrued agency fees and commissions1,199 7,785 
Deferred revenues, current portion6,432 10,480 
Long-term debt, current portion304 2,050 
Operating lease liabilities, current portion6,906 6,278 
Other current liabilities and accrued expenses25,420 25,106 
Liabilities held for sale15,491 27,126 
Total current liabilities72,807 92,915 
Deferred revenues, net of current portion22,580 21,406 
Long-term debt, net of current portion187,905 191,125 
Deferred tax liabilities, net12,047 25,293 
Operating lease liabilities, net of current portion25,790 26,695 
Mandatorily redeemable preferred stock, at fair value 39,099 
Other noncurrent liabilities1,036 886 
Total liabilities322,165 397,419 
Commitments and contingencies (Note 13)
Redeemable noncontrolling interest(208)(208)
Stockholders’ equity:
Preferred stock, $0.0001 par value per share, 5,000,000 shares authorized, 50,000 shares designated Series A preferred stock, of which 0 shares were issued and outstanding as of September 30, 2023; 50,000 shares were issued and outstanding as of December 31, 2022
  
Common stock, $0.0001 par value per share, 150,000,000 shares authorized, 74,603,404 shares issued and 73,903,404 shares outstanding as of September 30, 2023; 47,737,699 shares issued and 47,037,699 shares outstanding as of December 31, 2022
7 5 
Treasury stock, at cost, 700,000 shares as of September 30, 2023 and December 31, 2022
(4,445)(4,445)
Additional paid-in capital689,580 617,233 
Accumulated other comprehensive loss(27,295)(24,145)
Accumulated deficit(620,033)(433,396)
Total stockholders’ equity37,814 155,252 
Total liabilities, redeemable noncontrolling interest and stockholders’ equity$359,771 $552,463 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3


PLBY Group, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands, except share amounts)

Three Months Ended September 30, 2023
Series A Preferred StockCommon Stock

SharesAmountSharesAmountTreasury StockAdditional
Paid-in Capital
Accumulated Other Comprehensive LossAccumulated DeficitTotal
Balance at June 30, 2023 $— 73,797,250 $7 $(4,445)$688,280 $(26,113)$(604,959)$52,770 
Shares issued in connection with equity incentive plans— — 106,154 — — — — — — 
Stock-based compensation expense and vesting of restricted stock units— — — — — 1,300 — — 1,300 
Other comprehensive loss— — — — — — (1,182)— (1,182)
Net loss— — — — — — — (15,074)(15,074)
Balance at September 30, 2023 $— 73,903,404 $7 $(4,445)$689,580 $(27,295)$(620,033)$37,814 
Three Months Ended September 30, 2022
Series A Preferred StockCommon Stock
SharesAmountSharesAmountTreasury StockAdditional
Paid-in Capital
Accumulated Other Comprehensive LossAccumulated DeficitTotal
Balance at June 30, 202225,000 $— 45,621,763 $4 $(4,445)$601,237 $(18,444)$(158,464)$419,888 
Shares issued in connection with options exercise, net exercised— — 142,021 — — 476 — — 476 
Shares issued in connection with equity incentive plans— — 15,029 — — — — — — 
Shares issued pursuant to a license, services and collaboration agreement— — 3,312 — — — — — — 
Shares issued in connection with preferred shares agreement25,000 — — — — — — — — 
Stock-based compensation expense and vesting of restricted stock units— — — — — 5,295 — — 5,295 
Other comprehensive loss— — — — — — (10,321)— (10,321)
Net loss— — — — — — — (264,697)(264,697)
Balance at September 30, 202250,000 $— 45,782,125 $4 $(4,445)$607,008 $(28,765)$(423,161)$150,641 












4


PLBY Group, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands, except share amounts)
Nine Months Ended September 30, 2023
Series A Preferred StockCommon Stock

SharesAmountSharesAmountTreasury StockAdditional
Paid-in Capital
Accumulated Other Comprehensive LossAccumulated DeficitTotal
Balance at December 31, 202250,000 $— 47,037,699 $5 $(4,445)$617,233 $(24,145)$(433,396)$155,252 
Issuance of common stock in rights offering— — 19,561,050 2 — 47,600 — — 47,602 
Issuance of common stock in registered direct offering— — 6,357,341 — — 13,890 — — 13,890 
Exchange of mandatorily redeemable preferred shares(50,000)— — — — — — — — 
Shares issued in connection with equity incentive plans— — 944,002 — — — — — — 
Shares issued pursuant to a license, services and collaboration agreement— — 3,312 — — — — — — 
Stock-based compensation expense and vesting of restricted stock units— — — — — 10,857 — — 10,857 
Other comprehensive loss— — — — — — (3,150)— (3,150)
Net loss— — — — — — — (186,637)(186,637)
Balance at September 30, 2023 $— 73,903,404 $7 $(4,445)$689,580 $(27,295)$(620,033)$37,814 

Nine Months Ended September 30, 2022
Series A Preferred StockCommon Stock
SharesAmountSharesAmountTreasury StockAdditional
Paid-in Capital
Accumulated Other Comprehensive LossAccumulated DeficitTotal
Balance at December 31, 2021 $— 42,296,121 $4 $(4,445)$586,349 $(3,725)$(155,692)$422,491 
Shares issued in connection with options exercise, net exercised— — 495,052 — — 1,925 — — 1,925 
Shares issued in connection with equity incentive plans— — 2,506,860 — — — — — — 
Shares issued pursuant to a license, services and collaboration agreement— — 27,599 — — — — — — 
Shares issued in connection with asset purchase— — 103,570 — — 1,333 — — 1,333 
Shares issued in connection with preferred shares agreement50,000 — — — — — — — — 
Shares issued in connection with the settlement of the performance holdback contingent consideration relating to the acquisition of GlowUp— — 352,923 — — 260 — — 260 
Stock-based compensation expense and vesting of restricted stock units— — — — — 17,141 — — 17,141 
Other comprehensive loss— — — — — — (25,040)— (25,040)
Net loss— — — — — — — (267,469)(267,469)
Balance at September 30, 202250,000 $— 45,782,125 $4 $(4,445)$607,008 $(28,765)$(423,161)$150,641 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5


PLBY Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
20232022
Cash Flows From Operating Activities
Net loss$(186,637)$(267,469)
Net loss from continuing operations$(186,786)$(240,829)
Income (loss) from discontinued operations, net of tax $149 $(26,640)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization5,332 10,444 
Stock-based compensation8,910 15,829 
Fair value measurement of liabilities(6,991)(40,213)
(Gain) loss on extinguishment of debt(6,133)220 
Gain on sale of aircraft (5,802)
Impairments155,864 283,496 
Inventory reserve charges6,084 5,902 
Amortization of right-of-use assets5,873 5,357 
Deferred income taxes(13,191)(48,567)
Other1,271 (883)
Changes in operating assets and liabilities:
Receivables, net(3,884)1,226 
Inventories3,194 (2,752)
Contract assets(83)665 
Prepaid expenses and other assets(922)(6,982)
Accounts payable3,038 (5,424)
Accrued agency fees and commissions(4,386)3,425 
Deferred revenues(2,955)(18,948)
Operating lease liabilities(4,326)(5,244)
Other3,338 (8,917)
Net cash used in operating activities from continuing operations(36,753)(57,997)
Net cash (used in) provided by operating activities from discontinued operations(4,616)1,063 
Net cash used in operating activities(41,369)(56,934)
Cash Flows From Investing Activities
Purchases of property and equipment(1,437)(5,701)
Proceeds from promissory note repayment1,300  
Proceeds from sale of aircraft 17,196 
Proceeds from sale of Yandy1,000  
Net cash provided by investing activities - continuing operations863 11,495 
Net cash used in investing activities - discontinued operations(97)(404)
Net cash provided by investing activities766 11,091 
Cash Flows From Financing Activities
Proceeds from issuance of common stock in rights offering, net47,600  
Proceeds from issuance of common stock in registered direct offering, net13,890  
Proceeds from issuance of long-term debt11,828  
Net proceeds from issuance of preferred stock 48,250 
Repayment of long-term debt(45,552)(10,452)
Payment of financing costs(508)(2,500)
Proceeds from exercise of stock options 1,925 
Settlement of the performance holdback contingent consideration (151)
Net cash provided by financing activities - continuing operations27,258 37,072 
Effect of exchange rate changes on cash and cash equivalents(136)(1,139)
Net decrease in cash and cash equivalents and restricted cash(13,481)(9,910)
Balance, beginning of year$35,449 $75,486 
Balance, end of period$21,968 $65,576 
Cash and cash equivalents and restricted cash consist of:
Cash and cash equivalents$20,028 $60,062 
Restricted cash1,940 5,514 
Total$21,968 $65,576 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6



PLBY Group, Inc.
Condensed Consolidated Statements of Cash Flows (continued)
(Unaudited)
(in thousands)

Nine Months Ended
September 30,
20232022
Supplemental Disclosures
Cash paid for income taxes$519 $4,971 
Cash paid for interest$13,981 $11,522 
Supplemental Disclosure of Non-cash Activities
Right-of-use assets in exchange for lease liabilities - continuing operations$4,334 $5,039 
Right-of-use assets in exchange for lease liabilities - discontinued operations$1,018 $4,359 
Shares issued in connection with asset purchase$ $1,333 
Shares issued in connection with the settlement of the performance holdback contingent consideration relating to the acquisition of GlowUp$ $260 
Shares issued pursuant to a license, services and collaboration agreement$ $950 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7


PLBY Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements



1. Basis of Presentation and Summary of Significant Accounting Policies
Description of Business
PLBY Group, Inc. (the “Company”, “PLBY”, “we”, “our” or “us”), together with its subsidiaries, through which it conducts business, is a global consumer and lifestyle company marketing the Playboy brand through a wide range of direct-to-consumer products, licensing initiatives, and digital subscriptions and content, in addition to the sale of direct-to-consumer products under its Honey Birdette and Lovers brands.
We have three reportable segments: Licensing, Direct-to-Consumer, and Digital Subscriptions and Content. Refer to Note 17, Segments.
Basis of Presentation
The interim condensed consolidated financial statements and accompanying notes were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).
As discussed in Note 3, Assets and Liabilities Held for Sale and Discontinued Operations, the Yandy Enterprises LLC (“Yandy”) and TLA Acquisition Corp. (“TLA”) disposal groups, previously included in the Direct-to-Consumer segment, continued to be classified as discontinued operations in the condensed consolidated statements of operations for all periods presented. Assets and liabilities of these businesses were classified as assets and liabilities held for sale of the condensed consolidated balance sheets for all periods presented. The sale of Yandy was completed on April 4, 2023. A stock purchase agreement for the sale of TLA was entered into on October 3, 2023, and the sale closed on November 3, 2023. Refer to Note 18, Subsequent Events for further details.
Principles of Consolidation
The interim condensed consolidated financial statements include our accounts and all majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.
The Company follows a monthly reporting calendar, with its fiscal year ending on December 31. Prior to the third quarter of 2022, Honey Birdette (Aust) Pty Limited (“Honey Birdette”), which the Company acquired in August 2021 had different fiscal quarter and year ends than the Company. Honey Birdette followed a fiscal calendar widely used by the retail industry which resulted in a fiscal year consisting of a 52- or 53-week period ending on the Sunday closest to December 31. Honey Birdette’s fiscal year previously consisted of four 13-week quarters, with an extra week added to each fiscal year every five or six years. Honey Birdette’s second fiscal quarter in 2022 consisted of 14 weeks. The difference in prior fiscal periods for Honey Birdette and the Company is immaterial and no related adjustments have been made in the preparation of these unaudited condensed consolidated financial statements.
Unaudited Interim Condensed Consolidated Financial Statements
The interim condensed consolidated balance sheet as of September 30, 2023, and the interim condensed consolidated statements of operations, comprehensive loss, cash flows, and stockholders’ equity for the three and nine months ended September 30, 2023 and 2022 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair statement of our financial position as of September 30, 2023 and our results of operations and cash flows for the three and nine months ended September 30, 2023 and 2022. The financial data and other financial information disclosed in these notes to the interim condensed consolidated financial statements related to the three and nine-month periods are also unaudited. The interim condensed consolidated results of operations for the nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future annual or interim period. The condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date. These interim condensed consolidated financial statements should be read in conjunction with our audited financial statements included in the Annual Report on Form 10-K as filed by us with the Securities and Exchange Commission on March 16, 2023.
Reclassifications
Certain prior period amounts in the condensed consolidated statements of operations and condensed consolidated balance sheet have been reclassified to conform with the current period presentation.
8


Use of 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 and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
We regularly assess these estimates, including but not limited to, valuation of our trademarks and trade names; valuation of our contingent consideration liabilities; valuation of our only authorized and issued preferred stock (our “Series A Preferred Stock”); pay-per-view and video-on-demand buys, and monthly subscriptions to our television and digital content; the adequacy of reserves associated with accounts receivable and inventory; unredeemed gift cards and store credits; licensing commission accruals; and stock-based compensation expense. We base these estimates on historical experience and on various other market-specific and relevant assumptions that we believe to be reasonable under the circumstances. Actual results could differ from these estimates and such differences could be material to the financial position and results of operations.
Concentrations of Business and Credit Risk
We maintain certain cash balances in excess of Federal Deposit Insurance Corporation insured limits. We periodically evaluate the credit worthiness of the financial institutions with which we maintain cash deposits. We have not experienced any losses in such accounts and do not believe that there is any credit risk to our cash. Concentration of credit risk with respect to accounts receivable is limited due to the wide variety of customers to whom our products are sold and/or licensed.
The following table represents receivables from our customers exceeding 10% of our total receivables, excluding receivables held for sale:
CustomerSeptember 30,
2023
December 31,
2022
Customer A*31 %
The following table represents revenue from our customers exceeding 10% of our total revenue, excluding revenues from discontinued operations:
Three Months Ended September 30,Nine Months Ended September 30,
Customer2023202220232022
Customer A16 %12 %16 %11 %
Restricted Cash
At September 30, 2023 and December 31, 2022, restricted cash was primarily related to a cash collateralized letter of credit we maintained in connection with the lease of our Los Angeles headquarters, as well as Honey Birdette’s term deposit in relation to certain of its leases.
Liquidity Assessment and Management’s Plans
Our revenues, results of operations and cash flows have been materially adversely impacted by negative macroeconomic factors beginning in the second quarter of 2022 and continuing through 2023. The persistently challenging macroeconomic and retail environments, including reduced consumer spending and increased price sensitivity in discretionary categories, has significantly impacted our licensees’ performance. Our net revenues from continuing operations for the three and nine months ended September 30, 2023 decreased by $12.4 million and $37.1 million, compared to the three and nine months ended September 30, 2022, respectively, and this decline, coupled with investments into our creator platform, drove our impairment charge, operating loss and net loss. For the three and nine months ended September 30, 2023, we reported a net operating loss from continuing operations of $11.3 million and $195.5 million, respectively, and negative operating cash flows from continuing operations of $36.8 million for the nine months ended September 31, 2023. As of September 30, 2023, we had approximately $20.0 million in unrestricted cash and cash equivalents.

As of September 30, 2023, we were in compliance with the covenants under our senior secured credit agreement; however, due to ongoing negative macroeconomic factors and their uncertain impacts on our business, results of operations and cash flows, we could experience further material decreases to net sales and operating cash flows and materially higher operating losses, and may experience difficulty remaining in compliance with such covenants. Refer to Note 10, Debt, for further details regarding the terms of our A&R Credit Agreement and the A&R Term Loans (as such terms are defined in Note 10).

9


Our management is required to perform an initial assessment of an entity’s ability to continue as a going concern. When conditions and events, in the aggregate, raise substantial doubt about an entity’s ability to continue as a going concern, management considers the mitigating effect of its plans to the extent it is probable that the plans will be effectively implemented within the assessment period and, when implemented, it is probable the plans will mitigate the relevant conditions or events and alleviate substantial doubt.

Our management’s plans are focused on improving its results of operations, operating cash flows and liquidity through expense reduction initiatives, including increased management of inventory purchasing, headcount, non-essential corporate spend (i.e. systems no longer needed for the streamlined business) and the timing and magnitude of capital expenditures, and capital raising transactions during the balance of fiscal year 2023 and fiscal year 2024. We continue to review our business model to identify actions that are expected to meaningfully reduce pre-tax costs and enable a more efficient and effective organization. Our management believes these plans are probable of being effectively implemented and, when implemented, that it is probable they will mitigate the negative impacts of the current ongoing negative macroeconomic conditions on our business.

Consequently, management believes that our cash on hand, cash flows from operations and the proceeds from dispositions of assets will result in adequate cash flows and capital to support our ongoing operations and to meet our obligations as they become due under the A&R Credit Agreement and our other obligations for at least one year following the date these interim financial statements are issued.

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
Advertising Costs
We expense advertising costs as incurred. Advertising expenses were $1.1 million and $3.0 million for the three months ended September 30, 2023 and 2022, respectively, excluding $0.4 million and $1.9 million, respectively, of advertising costs related to discontinued operations. Advertising expenses for the nine months ended September 30, 2023 and 2022 were $4.8 million and $10.9 million, respectively, excluding $2.7 million and $6.8 million, respectively, of advertising costs related to discontinued operations. We also have various arrangements with collaborators pursuant to which we reimburse them for a portion of their advertising costs in the form of co-op marketing which provide advertising benefits to us. The costs that we incur for such advertising costs are recorded as a reduction of revenue.
Intangible Assets and Goodwill
Indefinite-lived intangible assets that are not amortized but subject to annual impairment testing consist of Playboy-branded trademarks. We periodically perform a quantitative assessment to estimate the fair value of our Playboy-branded trademarks.
We evaluate the indefinite-lived Playboy-branded trademarks for impairment using the relief from royalty method. This valuation approach requires that we make a number of assumptions to estimate fair value, including projections of future revenues, market royalty rates, tax rates, discount rates and other relevant variables. The projections we use in the model are updated annually and will change over time based on the historical performance and changing business conditions. If the carrying value of the trademark exceeds its estimated fair value, an impairment charge is recognized for the excess amount.
We perform annual impairment testing on goodwill in the fourth quarter of each fiscal year or when events occur or circumstances change that would, more likely than not, reduce the fair value of a reporting unit below its carrying value. We may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine it is more likely than not that the fair value of the reporting unit is greater than its carrying amount, an impairment test is unnecessary. If an impairment test is necessary, we will estimate the fair value of a related reporting unit. If the carrying value of a reporting unit exceeds its fair value, the goodwill of that reporting unit is determined to be impaired, and we will proceed with recording an impairment charge equal to the excess of the carrying value over the related fair value. If we determine it is more likely than not that goodwill is not impaired, a quantitative test is not necessary.
In the second quarter of 2023, we experienced further declines in revenue and profitability, causing us to test the recoverability of our indefinite-lived assets, including goodwill, as of June 30, 2023. As a result, we recognized $65.5 million of impairment charges on the indefinite-lived Playboy-branded trademarks at the impairment date in the second quarter of 2023. Our valuation estimate was most sensitive to changes in royalty rates and the cost of capital. Impairment charges on our goodwill at the impairment date were $66.7 million in the second quarter of 2023. There were no impairment charges to goodwill and Playboy-branded trademarks to be recognized in the third quarter of 2023.
10


In the third quarter of 2022, as a result of macroeconomic factors, we experienced declines in revenue and profitability, causing us to test the recoverability of its goodwill and other intangible assets as of September 1, 2022. The quantitative test performed indicated that the fair value of our indefinite-lived Playboy-branded trademarks was less than their carrying value. Our valuation estimate was most sensitive to changes in royalty rates and the cost of capital. We recognized $116.0 million of impairment charges on our indefinite-lived assets at the impairment date in the third quarter of 2022. A quantitative impairment test performed on goodwill utilized the income approach, under which fair value was determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The quantitative test performed indicated that the carrying value of certain of our reporting units exceeded their fair value. As a result, we recognized $117.4 million of impairment charges on our goodwill in the third quarter of 2022, excluding $16.4 million of impairment charges related to discontinued operations.
Definite-lived intangible assets include distribution agreements, photo and magazine archives, licensing agreements, and trade names, which we recognized in connection with our business combinations. Because these assets were recognized as identifiable intangible assets in connection with our previous business combinations, we do not incur costs to renew or extend their terms. All of our definite-lived intangible assets are amortized using the straight-line method over their useful lives.
Impairment of Long-Lived Assets
The carrying amounts of long-lived assets, including property and equipment, stores, acquired intangible assets and right-of-use operating lease assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate over their remaining lives. If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to their fair value.
If the useful life is shorter than originally estimated, we amortize the remaining carrying value over the revised shorter useful life. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset.
We recognized $5.1 million of impairment charges on our trade names at the impairment date in the second quarter of 2023, and $45.8 million of impairment charges on our trade names and certain other assets at the impairment date in the third quarter of 2022, excluding $8.3 million of impairment charges related to discontinued operations. There were no impairment charges to our long-lived assets, including trade names to be recognized in the third quarter of 2023.
Assets and Liabilities Held for Sale and Discontinued Operations

We classify assets and liabilities as held for sale, collectively referred to as the disposal group, when management commits to a formal plan to actively market the assets for sale at a price reasonable in relation to fair value, it is unlikely that significant changes will be made to the plan, the assets are available for immediate sale in its present condition, an active program to locate a buyer and other actions required to complete the sale have been initiated, and the sale of the assets is expected to be completed within one year. A disposal group that is classified as held for sale is initially measured at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a disposal group until the date of sale. The fair value of a disposal group less any costs to sell is assessed each reporting period it remains classified as held for sale and any subsequent changes are reported as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale.
We account for discontinued operations when assets and liabilities of a disposal group are classified as held for sale, or have been sold, and only if the disposal represents a strategic shift that has or will have a meaningful effect on our operations and financial results. We aggregate the results of operations for discontinued operations into a single line item in the consolidated statements of operations for all periods presented. General corporate overhead is not allocated to discontinued operations. Refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations.
11


Recently Adopted Accounting Pronouncements
In December 2022, the Financial Accounting Standards Board issued Accounting Standard Update 2022-06 Reference Rate Reform (“Topic 848”) “Deferral of the Sunset Date of Topic 848”, which deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. Topic 848 provides optional expedients and exceptions for applying GAAP to contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The standard was effective upon issuance and we may apply the optional expedients and elections in Topic 848 prospectively through December 31, 2024. Upon amendment and restatement of our Credit Agreement on May 10, 2023, LIBOR was replaced with the Secured Overnight Financing Rate (“SOFR”) published by the Federal Reserve Bank of New York. Refer to Note 10, Debt. The provisions of this pronouncement did not have a material impact on our condensed consolidated financial statements.
Accounting Pronouncements Issued but Not Yet Adopted
We do not believe that there were any recently issued, but not yet effective, accounting pronouncements that would have a material effect on our financial statements.

2. Fair Value Measurements
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1 inputs: Based on unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 inputs: Based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 inputs: Based on unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities, and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.
For cash equivalents, receivables and certain other current assets and liabilities at September 30, 2023 and December 31, 2022, the amounts reported approximate fair value due to their short-term nature. For debt, based upon the amendment of our senior secured debt in August 2022, December 2022 and February 2023, as well as its amendment and restatement in May 2023, we believe that its carrying value approximates fair value, as such debt is variable-rate debt that reprices to current market rates frequently. Refer to Note 10, Debt, for additional disclosures about our debt. Our debt is classified within Level 2 of the valuation hierarchy.
Liabilities Measured and Recorded at Fair Value on a Non-recurring Basis
The following table summarizes the fair value of our financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):
September 30, 2023
Level 1Level 2Level 3Total
Liabilities
Contingent consideration liability$ $ $(349)$(349)
December 31, 2022
Level 1Level 2Level 3Total
Liabilities
Contingent consideration liability$ $ $(835)$(835)
Mandatorily redeemable preferred stock  (39,099)(39,099)
Total liabilities$ $ $(39,934)$(39,934)
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There were no transfers of Level 3 financial instruments during the periods presented.
Contingent consideration liability relates to the contingent consideration recorded in connection with the acquisition of GlowUp Digital Inc. (“GlowUp”), which represents the fair value for shares which may be issued and cash which may be paid to the GlowUp sellers, subject to certain indemnification obligations that remained unsettled as of September 30, 2023 and December 31, 2022.
We recorded the acquisition-date fair value of the contingent liability as part of the consideration transferred. The fair value of contingent and deferred consideration was estimated using either (i) a Monte Carlo simulation analysis in an option pricing framework, using revenue projections, volatility and stock price as key inputs or (ii) a scenario-based valuation model using probability of payment, certain cost projections, and either discounting (in the case of cash-settled consideration) or stock price (for share-settled consideration) as key inputs. The analysis approach was chosen based on the terms of each purchase agreement and our assessment of appropriate methodology for each case. The contingent payments and value of stock issuances are subsequently remeasured to fair value each reporting date using the same fair value estimation method originally applied with updated estimates and inputs as of September 30, 2023. We recorded $0.2 million and $1.4 million of fair value gain as a result of contingent liabilities fair value remeasurement in selling and administrative expenses for the three months ended September 30, 2023 and 2022, respectively, and $0.5 million and $29.3 million of fair value gain as a result of contingent liabilities fair value remeasurement for the nine months ended September 30, 2023 and 2022, respectively. We classified financial liabilities associated with the contingent consideration as Level 3 due to the lack of relevant observable inputs. Changes in assumptions described above could have an impact on the payout of contingent consideration.
Our Series A Preferred Stock liability, initially valued as of May 16, 2022 (the initial issuance date), and our subsequent Series A Preferred Stock liability, valued as of the August 8, 2022 (the final issuance date), were each calculated using a stochastic interest rate model implemented in a binomial lattice, in order to incorporate the various early redemption features. The fair value option was elected for Series A Preferred Stock liability, as we believe fair value best reflects the expected future economic value. Such liabilities are subsequently remeasured to fair value for each reporting date using the same valuation methodology as originally applied with updated input assumptions. In May 2023, in connection with the amendment and restatement of our Credit Agreement, the outstanding Series A Preferred Stock was exchanged for debt (and thereby eliminated). See Note 10, Debt, for further details. The fair value gain recorded in nonoperating income as a result of remeasurement of the fair value of our Series A Preferred Stock during the nine months ended September 30, 2023 was $6.5 million, and $9.1 million and $10.9 million during the three and nine months ended September 30, 2022, respectively. We classified financial liabilities associated with our Series A Preferred Stock as Level 3 due to the lack of relevant observable inputs.
The following table provides a roll-forward of the fair value of the liabilities categorized as Level 3 for the nine months ended September 30, 2023 (in thousands):
Contingent ConsiderationMandatorily Redeemable Preferred Stock LiabilityTotal
Balance at December 31, 2022$835 $39,099 $39,934 
Change in fair value(486)(6,505)(6,991)
Exchange of mandatorily redeemable preferred shares — (32,594)(32,594)
Balance at September 30, 2023$349 $ $349 
The decrease in the fair value of the contingent consideration for the nine months ended September 30, 2023 was primarily due to a decrease in a price per share of our common stock.
Assets and Liabilities Held for Sale
We initially measure an asset that is classified as held for sale at the lower of its carrying amount or fair value less costs to sell. We assess the fair value of an asset less costs to sell each reporting period that it remains classified as held for sale, and report any subsequent changes as an adjustment to the carrying amount of the asset. Assets are not depreciated or amortized while they are classified as held for sale.
The assumptions used in measuring fair value of assets and liabilities held for sale are considered Level 3 inputs, which include recent purchase offers and market comparables. During the three and nine months ended September 30, 2023, impairment charges recorded in relation to assets and liabilities held for sale were immaterial.

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Assets Measured and Recorded at Fair Value on a Non-recurring Basis
In addition to liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis. Generally, our non-financial instruments, which primarily consist of goodwill, intangible assets, including digital assets, right-of-use assets and property and equipment, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), non-financial instruments are assessed for impairment and, if applicable, written-down to and recorded at fair value, considering market participant assumptions. Recognized losses related to the impairment of our digital assets during the three and nine months ended September 30, 2023 were immaterial, and the fair value of our digital assets was immaterial as of September 30, 2023. Recognized losses related to the impairment of our digital assets during the three months ended September 30, 2022 were immaterial. During the nine months ended September 30, 2022 we recognized $4.9 million of losses related to the impairment of our digital assets, which had a fair value of $0.3 million as of December 31, 2022. Fair value of digital assets held are predominantly based on Level 1 inputs.
We use an income approach, using discounted cash flow and relief from royalty valuation models with Level 3 inputs, to measure the fair value of our non-financial assets, including goodwill, indefinite-lived trademarks and definite-lived trade names, and liabilities. With respect to goodwill, key assumptions applied in an income approach using the discounted cash flow valuation model include revenue growth rates and discount rates. With respect to indefinite-lived trademarks, key assumptions used in the income approach and the relief from royalty valuation model include revenue growth rates, royalty rates and discount rates. With respect to definite-lived trade names, key assumptions used in the relief from royalty valuation model include revenue growth rates, royalty rates and discount rates. Our cash flow projections represent management’s most recent planning assumptions, which are based on a combination of industry outlooks, views on general economic conditions, our expected pricing plans and expected future savings. Terminal values are determined using a common methodology of capturing the present value of perpetual cash flow estimates beyond the last projected period assuming a constant weighted-average cost of capital and long-term growth rates. Changes in key assumptions, namely discount rates, royalty rates, growth rates and projections, could have an impact on the fair value of our non-financial assets and liabilities. At the impairment date in the second quarter of 2023 and the third quarter of 2022, we recorded impairment charges on our intangible assets, including goodwill, indefinite-lived trademarks, trade names and certain other assets of $137.3 million and $279.2 million, respectively. Refer to Note 8, Intangible Assets and Goodwill, for further information.

3. Assets and Liabilities Held for Sale and Discontinued Operations

As of September 30, 2023, Yandy (which was sold in the second quarter of 2023) and TLA disposal groups met the criteria discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, to be classified as discontinued operations for all periods presented, as the divestiture of Yandy and TLA in the aggregate represents a strategic shift that has or will have a major effect on our operations and financial results. Their assets and liabilities are classified as current assets and liabilities held for sale in the condensed consolidated balance sheets for all periods presented. The sale of TLA was closed on November 3, 2023. Refer to Note 18, Subsequent events, for details.

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The following table summarizes the components of income (loss) from discontinued operations, net of tax in the accompanying condensed consolidated statements of operations (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
Net revenues$9,880 $17,918 $36,121 $57,769 
Costs and expenses:
Cost of sales(4,252)(11,512)(16,431)(30,939)
Selling and administrative expenses(4,313)(10,078)(19,329)(30,060)
Impairments (24,665) (24,665)
Total operating expense(8,565)(46,255)(35,760)(85,664)
Operating income (loss)1,315 (28,337)361 (27,895)
Nonoperating income (expense):
Other income (expense), net9 52 (190)134 
Total nonoperating income (expense)9 52 (190)134 
Income (loss) from discontinued operations before income taxes1,324 (28,285)171 (27,761)
(Expense) benefit from income taxes(5)471 (22)1,121 
Income (loss) from discontinued operations, net of tax $1,319 $(27,814)$149 $(26,640)
The major classes of assets and liabilities classified as held for sale in the accompanying condensed consolidated balance sheets were as follows (in thousands):
September 30,
2023
December 31,
2022
Assets
Receivables, net of allowance for credit losses$183 $4,206 
Inventories, net4,684 12,477 
Prepaid expenses and other current assets306 539 
Property and equipment, net1,531 3,571 
Operating right-of-use assets12,131 13,183 
Other intangible assets, net433 471 
Other noncurrent assets265 463 
Total assets held for sale$19,533 $34,910 
Liabilities
Accounts payable$1,760 $6,541 
Deferred revenues 282 
Operating lease liabilities11,494 13,682 
Other current liabilities and accrued expenses2,237 6,621 
Total liabilities held for sale$15,491 $27,126 
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4. Revenue Recognition
Contract Balances
Our contract assets relate to our Trademark Licensing revenue stream, where arrangements are typically long-term and non-cancelable. Contract assets are reclassified to accounts receivable when the right to bill becomes unconditional. Our contract liabilities consist of billings or payments received in advance of revenue recognition and are recognized as revenue when transfer of control to customers has occurred. Contract assets and contract liabilities are netted on a contract-by-contract basis. Contract assets were $10.4 million and $16.2 million as of September 30, 2023 and December 31, 2022, respectively. Contract liabilities were $29.0 million and $31.9 million as of September 30, 2023 and December 31, 2022, respectively, which excludes $0.3 million of contract liabilities included in liabilities held for sale in the condensed consolidated balance sheets as of December 31, 2022. The changes in such contract balances during the nine months ended September 30, 2023 primarily relate to (i) $31.5 million of revenues recognized that were included in gross contract liabilities at December 31, 2022, (ii) a $2.7 million increase in contract liabilities due to cash received in advance or consideration to which we are entitled remaining in the net contract liability balance at period-end, (iii) $25.1 million of contract assets reclassified into accounts receivable as the result of rights to consideration becoming unconditional, and (iv) a $6.6 million decrease in contract assets primarily due to impairment of certain trademark licensing contracts and certain contract modifications and terminations.
Contract assets were $16.7 million and $17.4 million as of September 30, 2022 and December 31, 2021, respectively. Accounts receivable as of September 30, 2022 and December 31, 2021 were $12.1 million and $13.3 million, respectively, which excludes assets held for sale of $0.5 million and $0.8 million, respectively. Contract liabilities were $33.5 million and $52.5 million as of September 30, 2022 and December 31, 2021, respectively, which excludes $0.8 million and $1.1 million of contract liabilities included in liabilities held for sale in the condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021, respectively. The changes in such contract balances, excluding changes recorded as discontinued operations in the condensed consolidated statements of operations, during the nine months ended September 30, 2022 primarily relate to (i) $41.0 million of revenues recognized that were included in gross contract liabilities at December 31, 2021, (ii) a $2.6 million increase in contract liabilities due to cash received in advance or consideration to which we are entitled remaining in the net contract liability balance at period-end, (iii) $18.5 million of contract assets reclassified into accounts receivable as a result of rights to consideration becoming unconditional, and (iv) a $1.3 million decrease in contract assets due to certain trademark licensing contract modifications and terminations.
Future Performance Obligations
In the third quarter of 2023, we further updated the revenue recognition for certain of our licensees pursuant to their contract modifications and expected collectability, which resulted in the impairment of corresponding assets of $7.7 million, net of a $1.0 million reduction in related commission accrual. For the nine months ended September 30, 2023, impairments of assets attributable to licensing contracts were $17.7 million, net of a $2.2 million reduction in related commission accrual. The decrease in revenue from such licensees was $4.0 million and $10.7 million during the three and nine months ended September 30, 2023, respectively, compared to the comparable prior year periods. Due to challenging economic conditions in China, collections from certain Chinese licensees there have slowed significantly. Future contract modifications and collectability issues could further impact the revenue recognized against our ongoing contract assets.
As of September 30, 2023, unrecognized revenue attributable to unsatisfied and partially unsatisfied performance obligations under our long-term contracts was $187.8 million, of which $181.0 million relates to Trademark Licensing, with $157.7 million attributable to long-term licenses with Chinese licensees, $5.2 million relates to Digital Subscriptions and Products, and $1.6 million relates to other obligations. In October 2023, we terminated licensing agreements with certain Chinese licensees, which comprised $154.2 million of the unrecognized Trademark Licensing revenue under our long-term contracts as of September 30, 2023. Revenue recognized in connection with the contracts that were subsequently terminated was $6.1 million and $19.9 million during the three and nine months ended September 30, 2023, respectively.
Unrecognized revenue of our Trademark Licensing revenue stream, excluding revenue from licensing agreements terminated in October 2023 as discussed in Note 1, Basis of Presentation, is expected to be recognized over the next seven years, of which 91% is expected to be recognized in the first five years. Unrecognized revenue of the Digital Subscriptions and Products revenue stream is expected to be recognized over the next five years, of which 42% is expected to be recognized in the first year. Unrecognized revenues under contracts disclosed above do not include contracts for which variable consideration is determined based on the customer’s subsequent sale or usage.
Disaggregation of Revenue
The following table disaggregates revenue by type (in thousands), excluding revenues from discontinued operations:
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Three Months Ended September 30, 2023Nine Months Ended September 30, 2023
LicensingDirect-to-Consumer
Digital Subscriptions and Content
OtherTotalLicensingDirect-to-Consumer
Digital Subscriptions and Content
OtherTotal
Trademark licensing$10,931 $ $ $ $10,931 $30,913 $ $ $ $30,913 
Digital subscriptions and products  3,359  3,359   9,145 4 9,149 
TV and cable programming  1,847  1,847   5,911  5,911 
Consumer products 17,145   17,145  57,613   57,613 
Total revenues$10,931 $17,145 $5,206 $ $33,282 $30,913 $57,613 $15,056 $4 $103,586 
Three Months Ended September 30, 2022Nine Months Ended September 30, 2022
LicensingDirect-to-Consumer
Digital Subscriptions and Content
OtherTotalLicensingDirect-to-Consumer
Digital Subscriptions and Content
OtherTotal
Trademark licensing$14,908 $ $ $ $14,908 $45,345 $ $ $ $45,345 
Magazine, digital subscriptions and products  2,403 42 2,445   7,050 720 7,770 
TV and cable programming  2,263  2,263   7,050  7,050 
Consumer products 26,090   26,090  80,482   80,482 
Total revenues$14,908 $26,090 $4,666 $42 $45,706 $45,345 $80,482 $14,100 $720 $140,647 
The following table disaggregates revenue by point-in-time versus over time (in thousands), excluding revenues from discontinued operations:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Point in time$18,306 $26,108 $60,450 $80,639 
Over time14,976 19,598 43,136 60,008 
Total revenues$33,282 $45,706 $103,586 $140,647 

5. Inventories, Net
The following table sets forth inventories, net, which are stated at the lower of cost (specific cost and first-in, first-out) and net realizable value (in thousands). The table excludes $4.7 million and $12.5 million of inventory, net, which is included in assets held for sale in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively. Refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations.
September 30,
2023
December 31,
2022
Editorial and other pre-publication costs$260 $690 
Merchandise finished goods13,737 19,922 
Total$13,997 $20,612 
At September 30, 2023 and December 31, 2022, reserves for slow-moving and obsolete inventory related to merchandise finished goods amounted to $4.9 million and $3.6 million, respectively. Reserves for slow-moving and obsolete inventory as of September 30, 2023 exclude an immaterial amount of inventory reserves included in assets held for sale in the condensed consolidated balance sheets as of September 30, 2023. Reserves for slow-moving and obsolete inventory as of December 31, 2022 exclude $1.4 million of inventory reserves included in assets held for sale in the condensed consolidated balance sheets as of December 31, 2022. Refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations.

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6. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the items set forth in the table below (in thousands). The table excludes $0.3 million and $0.5 million of assets included in assets held for sale in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively. Refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations.
September 30,
2023
December 31,
2022
Prepaid taxes$2,889 $3,150 
Deposits170 205 
Prepaid insurance705 1,074 
Contract assets, current portion1,348 2,559 
Prepaid software2,440 3,714 
Prepaid inventory not yet received5,313 3,397 
Prepaid platform fees434 1,126 
Other1,842 1,996 
Total$15,141 $17,221 
In the first quarter of 2023, we significantly restructured our technology expenses, and cost-excessive and under-utilized software packages were either terminated or not renewed upon expiration of applicable agreements. This resulted in a restructuring charge of $4.6 million recorded in selling and administrative expenses in the condensed consolidated results of operations for the nine months ended September 30, 2023, excluding $0.4 million of costs related to discontinued operations, out of which $1.5 million was the accelerated amortization of prepaid software.

7. Property and Equipment, Net
Property and equipment, net consists of the items set forth in the table below (in thousands). The table excludes $1.5 million and $3.6 million of property and equipment, net, included in assets held for sale in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively. Refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations.
September 30,
2023
December 31,
2022
Leasehold improvements$10,480 $9,096 
Construction in progress492 782 
Equipment3,665 3,704 
Internally developed software10,778 7,096 
Furniture and fixtures1,954 1,953 
Total property and equipment, gross27,369 22,631 
Less: accumulated depreciation(12,427)(8,827)
Total$14,942 $13,804 
The aggregate depreciation expense related to property and equipment included in loss from continuing operations was $1.6 million and $2.5 million for the three months ended September 30, 2023 and 2022, respectively, and $4.1 million and $4.4 million for the nine months ended September 30, 2023 and 2022, respectively. Depreciation expense related to property and equipment attributable to discontinued operations was immaterial for the three and nine months ended September 30, 2023 and 2022.

8. Intangible Assets and Goodwill
Intangible Assets
Our indefinite-lived intangible assets that are not amortized consisted of $150.8 million and $216.0 million of Playboy-branded trademarks and acquired trade names as of September 30, 2023 and December 31, 2022, respectively. Capitalized trademark costs include costs associated with the acquisition, registration and/or renewal of our trademarks. We expense certain costs associated with the defense of our trademarks. Registration and renewal costs that were capitalized during each of the three and nine months ended September 30, 2023 and 2022 were immaterial.
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As a result of ongoing impacts to our revenue, including declines in consumer demand and discontinued operations, we recorded non-cash asset impairment charges, at the impairment date in the second quarter of 2023, related to the write-down of goodwill of $66.7 million, to indefinite-lived trademarks of $65.5 million, and to trade names and other assets of $5.1 million. At the impairment date in the third quarter of 2022, we recorded non-cash asset impairment charges related to a write-down of goodwill by $117.4 million (excluding $16.4 million of impairment charges related to discontinued operations), a write-down of indefinite-lived trademarks by $116.0 million, and a write-down of trade names and other assets by $45.8 million (excluding $8.3 million of impairment charges related to discontinued operations).
The table below summarizes our intangible assets, net (in thousands). The table excludes $0.4 million and $0.5 million of other intangible assets, net included in assets held for sale in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively. Refer to Note 3, Assets and Liabilities Held for Sale and Discontinued Operations.
 September 30,
2023
December 31,
2022
Digital assets$5 $327 
Total amortizable intangible assets, net12,495 19,796 
Total indefinite-lived intangible assets150,829 216,014 
Total$163,329 $236,137 
Impairment charges related to our digital assets, which were comprised of the cryptocurrency “Ethereum” as of September 30, 2023 and December 31, 2022, were immaterial for the three and nine months ended September 30, 2023. Impairment charges related to our digital assets were immaterial for the three months ended September 30, 2022, and $4.9 million for the nine months ended September 30, 2022.
Our amortizable intangible assets, excluding assets classified as held for sale in the condensed consolidated balance sheets, consisted of the following (in thousands):
Weighted-Average Life (Years)Gross Carrying AmountAccumulated AmortizationAccumulated Impairments*Net Carrying Amount
September 30, 2023
Trade names12$65,409 $(7,659)$(45,854)$11,896 
Distribution agreements