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 ~~JUNE~~SEPTEMBER 30, 2023



☐	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: 000-55029

THE CHOSEN, INC.

(Exact name of registrant as specified in its charter)


Delaware	82-3246222
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4 S 2600 W, Suite 5 Hurricane, Utah	84737
(Address of principal executive offices)	(Zip Code)

(435) 767-1338

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

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, a 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 ☑

At ~~August~~November 14, 2023, 6,950,000 shares of the registrant’s Series A Common Stock, $0.001 par value per share, were issued and outstanding and 5,595,015 shares of the registrant’s Series B Common Stock, $0.001 par value per share, were issued and outstanding.

Table of Contents

Table of Contents


Part I - Financial Information	3
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Operations	4
Condensed Consolidated Statements of Equity	5
Condensed Consolidated Statements of Cash Flows	7
Notes to the Condensed Consolidated Financial Statements	8
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies	8
Note 2 - Revenue Recognition	9
Note 3 - Earnings per share	10
Note 4 - Balance Sheet Components	1011
Note 5 - Debt	1314
Note 6 - Equity	14
Note 7 - Income Taxes	14
Note 8 - Related Party Transactions	15
Note 9 - Commitments and Contingencies	15
Note 10 - Subsequent Events	1516
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1617
Item 3. Quantitative and Qualitative Disclosures About Market Risk	2223
Item 4. Controls and Procedures	2223
Part II - Other Information	2324
Item 1. Legal Proceedings	2324
Item 1A. Risk Factors	2324
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2324
Item 3. Default upon Senior Securities	2324
Item 4. Mine Safety Disclosures	2324
Item 5. Other Information	2324
Item 6. Exhibits	2425
Signatures	2627

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Table of Contents

CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS

THIS QUARTERLY REPORT ON FORM 10-Q (THIS “QUARTERLY REPORT”) MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE THIS FILING, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

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Table of Contents

Part I - Financial Information

Item 1. Financial Statements

The Chosen, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except par value)


	As of				As of
	June 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
		(Unaudited)				(Unaudited)
Assets
Cash	$	108,942	$	124,790	$	95,290	$	124,790
Accounts receivable, net of allowances of $158 and $0 at June 30, 2023 and December 31, 2022, respectively		6,058		8,983
Accounts receivable, net of allowances of $1,682 and $0 at September 30, 2023 and December 31, 2022, respectively						3,214		8,983
Inventory		7,978		6,110		10,179		6,110
Prepaid assets		2,812		754		6,714		754
Other current assets		1,733		864		1,243		864
Total current assets		127,523		141,501		116,640		141,501
Property and equipment, net		31,601		34,426		34,350		34,426
Film costs, net		50,808		33,276		63,813		33,276
Other assets		1,328		1,042		1,258		1,042
Total assets	$	211,260	$	210,245	$	216,061	$	210,245
Liabilities and Equity
Accounts payable	$	2,252	$	5,549	$	2,656	$	5,549
Accrued expenses and other current liabilities		6,791		12,827		9,423		12,827
Current portion of long-term debt and lease liabilities		2,527		2,463		2,572		2,463
Total current liabilities		11,570		20,839		14,651		20,839
Long-term debt and lease liabilities, net		142,860		143,377		142,844		143,377
Other noncurrent liabilities		3,069		2,571		4,453		2,571
Deferred tax liability, net		8,244		5,104		6,394		5,104
Total liabilities		165,743		171,891		168,342		171,891
Commitments and contingencies		—		—		—		—
Series A Preferred Stock, $0.001 par value; 120% dividend preference; 8,000 shares authorized; 0 and 4,341 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		—		5
Series A Common Stock, $0.001 par value; 10,900 shares authorized; 6,950 issued and outstanding at June 30, 2023 and December 31, 2022, respectively		7		7
Series B Common Stock, $0.001 par value; 25,000 shares authorized; 5,595 and 1,254 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		6		1
Series A Preferred Stock, $0.001 par value; 120% dividend preference; 8,000 shares authorized; 0 and 4,341 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively						—		5
Series A Common Stock, $0.001 par value; 10,900 shares authorized; 6,950 issued and outstanding at September 30, 2023 and December 31, 2022, respectively						7		7
Series B Common Stock, $0.001 par value; 25,000 shares authorized; 5,595 and 1,254 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively						6		1
Additional paid-in capital		10,237		10,237		10,237		10,237
Retained earnings		27,678		18,004		26,373		18,004
Noncontrolling interest		7,589		10,100		11,096		10,100
Total equity		45,517		38,354		47,719		38,354
Total liabilities and equity	$	211,260	$	210,245	$	216,061	$	210,245

See accompanying notes to the condensed consolidated financial statements.

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Table of Contents

The Chosen, Inc.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Revenues
Licensed content and merchandise revenues	$	12,476	$	2,650	$	28,463	$	7,933	$	8,508	$	5,262	$	36,971	$	13,195
Contribution revenues		14,259		—		22,985		—		5,978		—		28,963		—
Total revenues		26,735		2,650		51,448		7,933		14,486		5,262		65,934		13,195

Cost of revenues		5,519		262		11,429		649		4,279		301		14,317		950
Advertising		2,559		68		4,186		326		3,775		705		7,961		1,031
Amortization of film costs		4,688		535		8,676		1,389		2,608		667		11,284		2,056
Depreciation and amortization		2,232		65		4,377		96		2,192		1,237		6,569		1,333
General and administrative		6,888		2,507		13,372		4,215		7,846		2,317		21,218		6,532
Net operating income (loss)		4,849		(787)		9,408		1,258		(6,214)		35		4,585		1,293
Interest income (expense), net		210		—		765		—
Other income		5		—		21		—
Interest income										676		1		2,172		1
Interest expense										(369)		(2)		(1,100)		(2)
Other income (expense)										(46)		—		(25)		—
Net income (loss) before income taxes		5,064		(787)		10,194		1,258		(5,953)		34		5,632		1,292
Benefit (provision) for income taxes		(1,527)		192		(3,141)		(335)		1,851		(210)		(1,290)		(545)
Net income (loss)		3,537		(595)		7,053		923		(4,102)		(176)		4,342		747
Net loss attributable to noncontrolling interest		1,353		63		2,621		92		1,406		712		4,027		804
Net income (loss) attributable to The Chosen, Inc.	$	4,890	$	(532)	$	9,674	$	1,015	$	(2,696)	$	536	$	8,369	$	1,551
Less:
Contractual preferred distributions to participating securities		—		—		—		1,015		—		536		—		1,551
Income allocated to participating securities		—		—		—		—		—		—		—		—
Net income (loss) attributable to Common Stock/Common Units	$	4,890	$	(532)	$	9,674	$	—	$	(2,696)	$	—	$	8,369	$	—
Earnings (loss) per Common Stock/Common Units, basic and diluted⁽¹⁾	$	0.39	$	(0.07)	$	0.77	$	—	$	(0.21)	$	—	$	0.67	$	—
Weighted average Common Stock/Common Units outstanding, basic and diluted⁽¹⁾		12,545		7,190		12,545		7,190		12,545		7,190		12,545		7,190

⁽¹⁾

Represents earnings (loss) per share and weighted average issued and outstanding Series A Common Stock and Series B Common Stock for the period after the change in share structure as result of the Company’s conversion on November 29, 2022 (see Note 3 and Note 6).

See accompanying notes to the condensed consolidated financial statements.

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Table of Contents

The Chosen, Inc.

Condensed Consolidated Statements of Equity

(Unaudited, in thousands)


	Members’ Equity			Stockholders’ Equity											Members’ Equity			Stockholders’ Equity

		Class A		Series A		Series B		Series A		Additional		Non				Class A		Series A		Series B		Series A		Additional		Non
	Common	Preferred Units		Common Stock		Common Stock		Preferred Stock		Paid-In	Retained	controlling		Total	Common	Preferred Units		Common Stock		Common Stock		Preferred Stock		Paid-In	Retained	controlling		Total
Three and Six Months Ended June 30, 2023	Units	Units	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Capital	earnings	Interest		Equity
Balance as of March 31, 2023	—	—	—	6,950	7	5,595	6	—	—	10,237	22,788		8,942	41,980
Three Months Ended September 30, 2023															Units	Units	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Capital	earnings	Interest		Equity
Balance as of June 30, 2023															—	—	—	6,950	7	5,595	6	—	—	10,237	29,069		7,589	46,908
Contributions from noncontrolling interest	—	—	—	—	—	—	—	—	—	—	—		—	—	—	—	—	—	—	—	—	—	—	—	—		4,913	4,913
Net income (loss)	—	—	—	—	—	—	—	—	—	—	4,890		(1,353)	3,537	—	—	—	—	—	—	—	—	—	—	(2,696)		(1,406)	(4,102)
Balance as of June 30, 2023	—	—	—	6,950	7	5,595	6	—	—	10,237	27,678	$	7,589	45,517
Balance as of September 30, 2023															—	—	—	6,950	7	5,595	6	—	—	10,237	26,373	$	11,096	47,719

Nine Months Ended September 30, 2023
Balance as of December 31, 2022	—	—	—	6,950	7	1,254	1	4,341	5	10,237	18,004		10,100	38,354	—	—	—	6,950	7	1,254	1	4,341	5	10,237	18,004		10,100	38,354
Conversion to Series B Common Stock	—	—	—	—	—	4,341	5	(4,341)	(5)	—	—		—	—	—	—	—	—	—	4,341	5	(4,341)	(5)	—	—		—	—
Contributions from noncontrolling interest	—	—	—	—	—	—	—	—	—	—	—		110	110	—	—	—	—	—	—	—	—	—	—	—		5,023	5,023
Net income (loss)	—	—	—	—	—	—	—	—	—	—	9,674	$	(2,621)	7,053	—	—	—	—	—	—	—	—	—	—	8,369		(4,027)	4,342
Balance as of June 30, 2023	—	—	—	6,950	7	5,595	6	—	—	10,237	27,678	$	7,589	45,517
Balance as of September 30, 2023															—	—	—	6,950	7	5,595	6	—	—	10,237	26,373	$	11,096	47,719

See accompanying notes to the condensed consolidated financial statements.

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The Chosen, Inc.

Condensed Consolidated Statements of Equity

(Unaudited, in thousands)


	Members’ Equity			Stockholders’ Equity											Members’ Equity			Stockholders’ Equity

		Class A		Series A		Series B		Series A		Additional		Non				Class A		Series A			Series B		Series A		Additional		Non
	Common	Preferred Units		Common Stock		Common Stock		Preferred Stock		Paid-In	Retained	controlling		Total	Common	Preferred Units		Common Stock			Common Stock		Preferred Stock		Paid-In	Retained	controlling		Total
Three and Six Months Ended June 30, 2022	Units	Units	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Capital	earnings	Interest		Equity
Balance as of March 31, 2022	14,380	11,190	11,190	—	—	—	—	—	—	(940)	33,762		5,443	49,455
Three Months Ended September 30, 2022															Units	Units	Amount	Shares	Amount		Shares	Amount	Shares	Amount	Capital	earnings	Interest		Equity
Balance as of June 30, 2022															14,380	11,190	11,190	—	$	—	—	—	—	—	(940)	33,230		5,974	49,454
Contributions from noncontrolling interest	—	—	—	—	—	—	—	—	—	—	—		594	594	—	—	—	—		—	—	—	—	—	—	—		536	536
Net income (loss)	—	—	—	—	—	—	—	—	—	—	(532)		(63)	(595)	—	—	—	—		—	—	—	—	—	—	536		(712)	(176)
Balance as of June 30, 2022	14,380	11,190	11,190	—	—	—	—	—	—	(940)	33,230	$	5,974	49,454
Balance as of September 30, 2022															14,380	11,190	11,190	—	$	—	—	—	—	—	(940)	33,766	$	5,798	49,814

Nine Months Ended September 30, 2022
Balance as of December 31, 2021	14,380	11,190	11,190	—	—	—	—	—	—	(940)	32,215		1,914	44,379	14,380	11,190	11,190	—	$	—	—	—	—	—	(940)	32,215		1,914	44,379
Conversion to Series B Common Stock	—	—	—	—	—	—	—	—	—	—	—		—	—
Contributions from noncontrolling interest	—	—	—	—	—	—	—	—	—	—	—		4,152	4,152	—	—	—	—		—	—	—	—	—	—	—		4,688	4,688
Net income (loss)	—	—	—	—	—	—	—	—	—	—	1,015	$	(92)	923	—	—	—	—		—	—	—	—	—	—	1,551		(804)	747
Balance as of June 30, 2022	14,380	11,190	11,190	—	—	—	—	—	—	(940)	33,230	$	5,974	49,454
Balance as of September 30, 2022															14,380	11,190	11,190	—	$	—	—	—	—	—	(940)	33,766	$	5,798	49,814

See accompanying notes to the condensed consolidated financial statements.

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The Chosen, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

Six Months Ended

June 30,

2023

2022
Cash flows from operating activities

Net income

$
7,053

$
923
Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization expense

4,377

96
Amortization of film costs

8,676

1,389
Deferred income tax provision

3,141

613
Amortization of debt issuance costs

67

—
Non-cash lease expense

33

60
Allowance for doubtful accounts

(158)

—
Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable

2,937

12,949
(Increase) decrease in inventory

(1,868)

—
(Increase) decrease in prepaids and other current assets

(2,927)

1,286
(Increase) decrease in film costs

(26,437)

(13,265)
Increase (decrease) in accounts payable

(3,347)

(1,035)
Increase (decrease) in accrued expenses and other current liabilities

4,381

(184)
Increase (decrease) in other noncurrent liabilities

498

—
Net cash flows provided by (used in) operating activities

(3,574)

2,832
Cash flows from investing activities

Acquisition of property & equipment

(1,488)

(13,094)
Proceeds from sale of property & equipment

—

86
Net cash flows (used in) investing activities

(1,488)

(13,008)
Cash flows from financing activities

Contributions from noncontrolling interest member

110

4,152
Principal paid on finance lease

(9)

(7)
Principal paid on debt

(470)

—
Dividends paid

(10,417)

—
Net cash flows provided by (used in) financing activities

(10,786)

4,145
Net change in cash

(15,848)

(6,030)
Cash, beginning of period

124,790

15,932
Cash, end of period

$
108,942

$
9,902
Supplemental disclosure of cash flow information:

Cash paid for interest

$
731

$
1


	Nine Months Ended
	September 30,
	2023		2022
Cash flows from operating activities
Net income (loss)	$	4,342	$	747
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization expense		6,569		1,333
Amortization of film costs		11,284		2,056
Deferred income tax provision		1,290		820
Amortization of debt issuance costs		101		—
Non-cash lease expense		48		4
Allowance for doubtful accounts		1,682		—
Gain/loss on sale of assets		39		—
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		3,962		8,178
(Increase) decrease in inventory		(2,699)		(179)
(Increase) decrease in prepaids and other current assets		(6,139)		781
(Increase) decrease in film costs		(39,628)		(27,044)
Increase (decrease) in accounts payable		(3,922)		(985)
Increase (decrease) in accrued expenses and other current liabilities		4,028		463
Increase (decrease) in other noncurrent liabilities		1,882		—
Net cash flows provided by (used in) operating activities		(17,161)		(13,826)
Cash flows from investing activities
Acquisition of property & equipment		(6,677)		(21,748)
Acquisition of trademark		(3)		(61)
Proceeds from sale of property & equipment		184		—
Net cash flows provided by (used in) investing activities		(6,496)		(21,809)
Cash flows from financing activities
Contributions from noncontrolling interest member		5,023		6,630
Proceeds from issuance of debt		—		15,000
Principal paid on finance lease		(12)		(7)
Principal paid on debt		(437)		—
Dividends paid		(10,417)		—
Net cash flows provided by (used in) financing activities		(5,843)		21,623
Net change in cash		(29,500)		(14,012)
Cash, beginning of period		124,790		15,932
Cash, end of period	$	95,290	$	1,920
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,100	$	2
Purchase of property and equipment with accounts payable		22		2,600
Accounts payable and accrued expenses and other current liabilities related to film costs, net		2,422		—

See accompanying notes to the condensed consolidated financial statements.

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The Chosen, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Note 1 – Basis of Presentation and Summary of Significant Accounting Policies

The Chosen, Inc., a Delaware corporation, is an independent television and film production company, which was created to develop and produce an episodic television series entitled The Chosen (the “Series”). The Series is based on the gospels of the Bible and tells the story of the life of Jesus Christ primarily through the perspectives of those who met him throughout his life.

The condensed consolidated financial statements of The Chosen, Inc., its wholly owned subsidiaries, and its variable controlling interest in Impossible Math, LLC (collectively the “Company”), have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and are consistent in all material respects with those applied in the Company’s Annual Report for the year ended December 31, 2022 included in the Company’s amended registration statement on Form 10 filed with the U.S. Securities and Exchange Commission (the “SEC”) on ~~February 2, 2023 and amended on April 3, 2023 and~~ May 23, 2023 (as amended, the “Form 10”). The preparation of ~~the~~ condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the amortization of content assets and the recognition and measurement of income tax assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. On a regular basis, the Company evaluates the assumptions, judgments and estimates. Actual results may differ from these estimates.

The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Form 10. Interim results are not necessarily indicative of the results for a full year.

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report for the year ended December 31, 2022.

Revision of Previously Issued Financial Statements

In connection with the preparation of the Company’s condensed consolidated financial statements, certain prior period adjustments in previously issued interim financial statements ~~filed within~~were identified. The prior period misstatement related to estimates for and recognition of accrued compensation costs and capitalization of film costs as of and for the ~~Company’s Form 1-SA dated September~~three months ended June 30, ~~2022 were identified.~~2023. The Company evaluated the errors, both qualitatively and quantitatively, and concluded that the corrections did not have a material impact on, nor require amendment of, any previously issued financial statements. ~~The prior period misstatement related to Deferred tax liability, net in the Condensed Consolidated Balance Sheets as of June 30, 2022.~~

The correction of this misstatement resulted in an increase to ~~Deferred tax liability,~~Film costs, net ~~by $3,003~~of $1,790 thousand, and an increase to Accrued expenses and other current liabilities of $399 thousand in the Condensed Consolidated Balance Sheets as of June 30, ~~2022 and an increase~~2023, a decrease to ~~Provision for income taxes by $3,003~~Cost of revenues of $1,391 thousand in the Condensed Consolidated Statements of Operations for the three ~~months~~ and six months ended June 30, ~~2022. This correction decreased net income by $3,003~~2023 and an increase to Retained earnings of $1,391 thousand in the Condensed Consolidated Balance Sheets as of June 30, 2023 and in the Condensed Consolidated Statements of Equity for the three ~~months~~ and six months ended June 30, ~~2022.~~2023. This correction increased Net income (loss) by $1,391 thousand and increased Earnings (loss) per Common Stock/Common Units, basic and diluted by $0.11 for the three and six months ended June 30, 2023. The Company retrospectively corrected the misstatements and revised the Condensed Consolidated Balance Sheets as of June 30, 2023 and the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of ~~Operations.~~Equity as of and for the three and six months ended June 30, 2023. There is no impact to Cash flows provided by (used in) operating, investing, or financing activities in the in the Condensed Consolidated Statements of Cash Flow.

Accounts Receivable

Accounts receivable are carried at the original invoice amount less an allowance for doubtful accounts. Management determines the allowance for doubtful accounts by identifying accounts and by using historical experience applied to an aging of accounts. Accounts receivable are written off when deemed uncollectible. Even though management determines the allowance for doubtful accounts by

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identifying accounts and using historical experience applied to an aging of accounts, the Company remains committed to pursuing the balances. Recoveries of receivables previously written off are recorded when received. The Company does not charge interest on past due balances or require collateral on its accounts receivable. As of ~~June~~September 30, 2023 and December 31, 2022, the allowance for doubtful accounts was ~~$158~~$1,682 and $0, respectively.

As of September 30, 2023 the Company recognized a reserve of $1,639 thousand for accounts receivables from Angel Studios, Inc. (“Angel Studios”) due to the Company’s delivery of a Notice of Termination, effective on October 20, 2023, of the Content License Agreement between Angel Studios and the Company. Although the Company reserved for the Angel Studios Receivable, the Company intends to continue to pursue collection. Refer to Note 10 - ~~8 -~~Subsequent Events for further information.

~~Table~~Internal-Use Software

The Company capitalizes costs incurred to develop or obtain internal-use software and website development costs during the application development stage. Capitalization of ~~Contents~~software development costs occurs after the preliminary project stage is complete, management authorizes the project, it is probable that the project will be completed, and the software will be used for the function intended. The Company expenses costs incurred for training, data conversion, and maintenance, and in the post-implementation stage. A subsequent addition, modification or upgrade to internal-use software is capitalized only to the extent that it enables the software to perform a task it previously could not perform. The internal-use software is included in Software under Property and equipment, net in the Condensed Consolidated Balance Sheets once the software development is completed. The internal-use software is included in Construction in process under Property and equipment, net in the Condensed Consolidated Balance Sheets when the software is still in development. The Company amortizes internal-use software over its estimated useful life on a straight-line basis.

Concentrations of Credit Risk

The Company maintains its cash in bank deposit accounts which, at times, exceed federally insured limits. As of ~~June~~September 30, 2023 and December 31, 2022, the bank balance exceeded the federally insured limit by ~~$23,580~~$15,491 thousand and $124,293 thousand, respectively.

A major customer is considered to be one that comprises more than 10% of the Company’s accounts receivable or annual revenues. During the three months and ~~six~~nine months ended ~~June~~September 30, 2023, ~~86.7%~~56.6% and ~~78.3%~~73.6%, respectively, of the Company’s revenues were collectively with major customers: Lions Gate Television, Inc. (“Lions Gate”),Angel Studios ~~Inc. (“Angel Studios”)~~ and the Come and See Foundation, Inc. (“CAS”). During the three months and ~~six~~nine months ended ~~June~~September 30, 2022, ~~95.2%~~95.4% and ~~93.5%~~94.3%, respectively, of the ~~Company's~~Company’s revenues were with Angel Studios. As of ~~June~~September 30, 2023, ~~and~~50.6% of the Company’s accounts receivable was due from Lions Gate. As of December 31, 2022, ~~82.5% and~~ 92.0%~~, respectively,~~ of the Company’s accounts receivable was due from Angel Studios, and CAS.

Note 2 - Revenue Recognition

The Company primarily earns its revenue from licensing its intellectual property rights related to the Series. Licensed content revenues are primarily earned from royalties based on (i) ~~subscription video-on-demand usage for hours viewed,~~existing and emerging digital home entertainment platforms, including but not limited to Netflix, Hulu, and most VOD streaming platforms, as well as (ii) ~~video-on-demand (“VOD”),~~ physical media, ~~merchandise,~~including DVD and Blu-ray Discs, (iii) linear television, (iv) theatrical distribution of certain episodes or other content (v) books, ~~printed materials,~~ and ~~box office sales. Merchandise~~(vi) merchandise. Additionally, merchandise revenue is generated from online store and wholesale sales of The Chosen ~~merchandise and DVDs.~~merchandise.

The Company also generates revenues from funds received under a non-reciprocal agreement with CAS for donation proceeds received by CAS through The Chosen App to be used in furtherance of the charitable purposes of CAS, which include the production of the Series. Contributions received from voluntary donations pursuant to the agreement with CAS are reported as Contribution revenues in the Consolidated Statements of Operations in accordance with ASC Topic 958, Not-for-Profit Entities, being a core source of revenue from the Series and used to market, produce and distribute the Series.

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The following table presents the Company’s revenue disaggregated by licensed content and merchandise revenues as well as contribution revenues (in thousands):


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Licensed content	$	4,727	$	2,650	$	13,270	$	7,933	$	4,814	$	4,908	$	18,084	$	12,841
Merchandise		7,749		—		15,193		—		3,694		354		18,887		354
Licensed content and merchandise revenues	$	12,476	$	2,650	$	28,463	$	7,933	$	8,508	$	5,262	$	36,971	$	13,195
Contribution revenues		14,259		—		22,985		—		5,978		—		28,963		—
Total revenues	$	26,735	$	2,650	$	51,448	$	7,933
Revenues									$	14,486	$	5,262	$	65,934	$	13,195

Contract Assets and Liabilities

A contract asset is recorded when revenue is recognized in advance of the Company’s right to bill and receive consideration and that right is conditioned upon something other than the passage of time. The Company did not have any contract assets as of ~~June~~September 30, 2023 and December 31,2022.

Contract liabilities are recorded when consideration is received from a customer prior to fully satisfying a performance obligation in a contract. The Company’s contract liabilities consist of deferred revenue for cash received related to licensed content arrangements under which a payment has been received and the content has not yet been made available to the customer and cash received related to merchandise arrangements under which a payment has been received and the order is unfulfilled. These contract liabilities will be recognized as revenues when control of the related product or service is transferred to the customer.

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The following table presents contract liabilities included on the Condensed Consolidated Balance Sheets (in thousands):


	As of				As of
	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Accrued expenses and other current liabilities	$	896	$	165	$	1,277	$	165
Other noncurrent liabilities ⁽¹⁾		1,929		2,571		1,928		2,571
Total contract liabilities	$	2,825	$	2,736
Total					$	3,205	$	2,736

(1)

This amount reflects the cash payment received from the CAS transaction for performance obligations that were not satisfied as of ~~June~~September 30, 2023.

Revenue recognized during the three ~~months~~ and ~~six~~nine months ended ~~June~~September 30, 2023, from amounts included in total contract liabilities as of December 31, 2022, was ~~$165~~$0 and $0$165 thousand, respectively. There was no revenue recognized from amounts included in total contract liabilities for ~~the~~ three ~~months~~ and ~~six~~nine months ended ~~June~~September 30, 2022.

Note 3 – Earnings (loss) per share

Earnings (loss) per share (“EPS”) is calculated using the two-class method, which requires the allocation of earnings to each class of common stock outstanding and to participating securities with rights to earnings that would otherwise have been available to common stockholders. Except with respect to the number of votes per share, Series A Common Stock and Series B Common Stock have the same rights and preferences, including equal rights to participation in the dividends and other distributions of the Company (see Note 6). Accordingly, basic and diluted earnings per share is the same for both classes and EPS for the three months and ~~six~~nine months ended ~~June~~September 30, 2023 have been presented as a single class of common stock.

All Series A Preferred Stock were previously reflected as converted into Class B Common Stock for basic EPS as of December 31, 2022 following the declaration of the Dividend to Series A Preferred Stockholders (See Note 6 and the Company’s Annual Report for the year ended December 31, 2022 included in the amended Form 10). Diluted weighted average common stock outstanding for the three ~~months~~ and ~~six~~nine months ended ~~June~~September 30, 2022 does not include the effects of the conversion of the participating Series A Preferred

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Stock as the inclusion of these instruments would have been anti-dilutive. As of ~~June~~September 30, 2023, the Company does not have any potentially dilutive instruments outstanding.

Note 4 – Balance Sheet Components

Inventory

As of ~~June~~September 30, 2023 and December 31, 2022, inventory consisted of the following (in thousands):


	As of				As of
	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Raw materials	$	985	$	985	$	985	$	985
Finished goods		6,993		5,125		9,194		5,125
Inventory	$	7,978	$	6,110	$	10,179	$	6,110

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Property and Equipment

Property and Equipment and accumulated depreciation consisted of the following:


	As of					As of
	June 30,		December 31,		Estimated	September 30,		December 31,		Estimated
	2023		2022		Useful Lives	2023		2022		Useful Lives

	(in thousands)				(in years)	(in thousands)				(in years)
Land	$	90	$	90		$	90	$	90
Buildings and improvements		37,099		36,495	4 – 30		37,100		36,495	4 – 30
Equipment		771		290	3 – 15		781		290	3 – 15
Furniture and fixtures		74		16	5		74		16	5
Vehicles		758		758	8		484		758	8
Construction in process		395		—			5,546		—
Property and equipment, gross		39,187		37,649
PPE, gross							44,075		37,649
Accumulated depreciation		(7,586)		(3,223)			(9,725)		(3,223)
Property and equipment, net	$	31,601	$	34,426
PPE, net						$	34,350	$	34,426

No impairment of property and equipment was recorded during the three months and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.

Film Costs

The following table represents the components of film costs (in thousands):


	As of				As of
	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Released and completed film costs	$	47,612	$	47,362	$	47,612	$	47,362
Not released, in production film costs		28,589		2,250		43,591		2,250
In development or preproduction film costs		378		759		989		759
Film costs, gross		76,579		50,371		92,192		50,371
Accumulated amortization		(25,771)		(17,095)		(28,379)		(17,095)
Film costs, net of amortization	$	50,808	$	33,276	$	63,813	$	33,276

Amortization expense for film costs during the three months ended ~~June~~September 30, 2023 and 2022 was ~~$4,688~~$2,608 thousand and ~~$535~~$667 thousand, respectively. Amortization expense for film costs during the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 was ~~$8,676~~$11,284 thousand and ~~$1,389~~$2,056 thousand, respectively.

~~The future aggregate amounts of amortization expense expected to be recognized over the next five years related to released and completed film costs as of June 30, 2023 are as follows (in thousands):~~

Years Ending December 31:

Amount
Remainder of 2023

$
9,755
2024

5,231
2025

4,948
2026

1,567
2027

340
Total

$
21,841

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The future aggregate amounts of amortization expense expected to be recognized over the next five years related to released and completed film costs as of September 30, 2023 are as follows (in thousands):


Years Ending December 31:	Amount
Remainder of 2023	$	2,703
2024		7,158
2025		6,773
2026		2,129
2027		470
Total	$	19,233

Leases

The Company has operating and finance leases for some of the Company’s operating and office facilities and vehicles. The leases expire at various dates through 2027 and provide for renewal options ranging from one month to four terms of ten-years. In the normal course of business, it is expected that these leases will be renewed or replaced by leases on other properties.

The Company’s operating and finance right-of-use assets and lease liabilities consisted of the following (in thousands):


	June 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Right-of-use assets (1)
Operating leases	$	1,043	$	889	$	1,069	$	889
Finance leases		76		86		—		86
Total right-of-use assets	$	1,119	$	975	$	1,069	$	975

Short-term lease liabilities (2)
Operating leases	$	389	$	533	$	336	$	533
Finance leases		19		19		—		19
	$	408	$	552	$	336	$	552
Long-term lease liabilities (3)
Operating leases	$	440	$	338	$	534	$	338
Finance leases		59		68		—		68
	$	499	$	406	$	534	$	406

Total lease liabilities	$	907	$	958	$	870	$	958

(1)

Included in Other assets in the Condensed Consolidated Balance Sheets.

(2)

Included in Current portion of long-term debt and lease liabilities in the Condensed Consolidated Balance Sheets.

(3)

Included in Long-term debt and lease liabilities in the Condensed Consolidated Balance Sheets.

The components of lease costs consisted of the following (in thousands):


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Lease costs
Finance lease cost
Amortization of right-of-use assets	$	5	$	3	$	10	$	3	$	5	$	96	$	15	$	99
Interest on lease liabilities		1		1		2		1		1		9		3		10
Operating lease cost		185		32		361		63		201		504		562		567
Variable and short-term lease cost		623		317		814		317		1,710		517		2,524		834
Total lease cost	$	814	$	353	$	1,187	$	384	$	1,917	$	1,126	$	3,104	$	1,510

~~Cash paid during the period for amounts included in the measurement of lease liabilities consisted of the following (in thousands):~~

Six Months Ended

June 30,

2023

2022
Cash paid for amounts included in the measurement of lease liabilities:




Operating cash flows for finance leases

$
2

$
2
Operating cash flows for operating leases

330

3

Right-of-use assets obtained in exchange for lease obligations:

Operating leases

$
293

$
561
Finance leases

—

97

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Cash paid during the period for amounts included in the measurement of lease liabilities consisted of the following (in thousands):


	Nine Months Ended
	September 30,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases	$	3	$	9
Operating cash flows for operating leases		516		24

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	507	$	567
Finance leases		—		99

Supplemental balance sheet information related to leases consisted of the following (in thousands):


	June 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Weighted average remaining lease term (in years):
Operating leases	2.56 years		4.28 years		2.76 years		2.44 years
Finance leases	3.83 years		4.83 years		—		4.33 years
Weighted average discount rate:
Operating leases	6.06	%	6.35	%	5.60	%	4.71	%
Finance leases	4.26	%	4.26	%	—	%	4.26	%

Maturities of lease liabilities as of ~~June~~September 30, 2023 were as follows (in thousands):


	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Remainder of 2023	$	308	$	11	$	156	$	—
2024		220		22		286		—
2025		211		22		277		—
2026		151		22		217		—
2027		—		7		—		—
Thereafter		—		—		—		—
Total lease payments		890		84		936		—
Imputed interest		(61)		(6)		(66)		—
Total lease liability	$	829	$	78	$	870	$	—

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	As of				As of
	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022

Accrued participant royalties					$	3,223	$	1,383
Accrued compensation	$	1,729	$	273		2,642		273
Accrued participant royalties		1,384		1,383
Accrued contractor payments		1,005		—
Deferred revenues		896		165		1,277		165
Accrued inventory purchases		637		—		835		—

Credit card liabilities						853		—
Dividends payable		—		10,417		—		10,417
Other		1,140		589		593		589
Accrued expenses and other current liabilities	$	6,791	$	12,827	$	9,423	$	12,827

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Note 5 - Debt

On November 29, 2022, the Company entered into a financing agreement with CAS with an aggregate principal of $145,500 thousand. This loan has no maturity date with no fixed repayment schedule and is non-interest bearing for the first seven years, after which the loan accrues interest at the then-current applicable federal rate. The Company is required to repay the loan quarterly, based on a specified percentage of 5% applied to the proceeds received from certain of the Company’s licensed content and merchandise revenues, which continues to be paid to CAS after the aggregate principal balance is repaid. The loan is recorded applying the effective interest method based on the expected repayments and estimated timing and amount due upon a potential liquidity event. This financing agreement was subsequently amended on October 31, 2023. Refer to Note 10 - Subsequent Events for further information.

In addition, upon the occurrence of certain events, the ~~Company's~~Company’s repayment of the outstanding principal balance may be accelerated or be declared immediately due. Such events include voluntary or involuntary bankruptcy, change of control, corporate arrangement, or other customary events of default. The loan is secured by the intellectual property rights owned by the Company, whereby CAS receives a first-priority continuing senior security interest.

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The following table presents debt on the Condensed Consolidated Balance Sheets (in thousands):


	As of				As of
	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Long-term debt ⁽¹⁾	$	142,981	$	143,659	$	142,897	$	143,659
Current portion of long-term debt ⁽²⁾		2,119		1,911		2,236		1,911
Total long-term debt	$	145,100	$	145,570	$	145,133	$	145,570

(1)

Included in Long-term debt and lease liabilities, net in the Condensed Consolidated Balance Sheets.

(2)

Included in Current portion of long-term debt and lease liabilities in the Condensed Consolidated Balance Sheets.

Long-term debt is net of unamortized debt issuance costs of ~~$620~~$587 thousand and $688 thousand as of ~~June~~September 30, 2023 and December 31, 2022, respectively.

Note 6 - Equity

A dividend of $2.40 for each outstanding share of Series A Preferred Stock totaling $13,428 was declared on November 30, 2022, and the Company initiated the payment to stockholders on December 2, 2022. Upon receipt of payment of the dividend, each share of Series A Preferred Stock is converted into one share of Series B Common Stock. As of December 31, 2022, 1,254,391 shares of Series A Preferred Stock had been converted into Series B Common Stock. In March 2023, the Company paid the remaining dividend to holders of Series A Preferred Stock $10,417 thousand or $2.40 to all remaining Series A Preferred ~~Stock holders.~~Stockholders. As such, all Series A Preferred Stock have been converted to Series B Common Stock and as of ~~June~~September 30, 2023.

Each share of Series A Common Stock is entitled to ten votes per share, and each share of Series B Common Stock is entitled to one vote per share. Except with respect to the number of votes per share, Series A Common Stock and Series B Common Stock have the same rights and preferences, including equal rights to participation in the dividends and other distributions of the Company.

Note 7 - Income Taxes


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2023			2022			2023			2022			2023			2022			2023			2022
Benefit (provision) for income taxes	$	(1,527)		$	192		$	(3,141)		$	(335)
Deferred provision (benefit) for income tax													$	(1,850)		$	207		$	1,290		$	820
Current income taxes														(1)			3			—			(275)
Provision (benefit) for income taxes													$	(1,851)		$	210		$	1,290		$	545
Effective tax rate		30	%		24	%		31	%		27	%		31	%		618	%		23	%		42	%

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The effective tax rates for the three months and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 differed from the federal statutory rate primarily due to the impact from the net loss attributable to noncontrolling interest (“NCI”).

The ~~increase~~decrease in the effective tax rate of 6%587% for the three months ended ~~June~~September 30, 2023 as compared to 2022 was primarily due to the impact from the net loss attributable to NCI of ~~$1,290~~$694 thousand. The ~~increase~~decrease in the effective tax rate of 4%19% for the ~~six~~nine months ended ~~June~~September 30, 2023 as compared to 2022 was primarily due to the impact from the net loss attributable to NCI of ~~$2,529~~$3,223 thousand.

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Note 8 - Related Party Transactions

In 2018, the Company entered into an exclusive VOD and subscription licensing agreement with Angel Studios, which was a member of the Company, for distribution of the Company’s television series. This agreement was amended in November 2019 and September 2020 to refine certain terms (collectively, the “2018 Angel Studios License Agreement”). On October 18, 2022, the Company entered into a new agreement with Angel Studios which replaced the 2018 Angel Studios License Agreement and grants Angel Studios the right to a limited, non-exclusive and non-sublicensable license to distribute the Company’s television series solely on the Angel App. Any existing sublicensing rights that were granted to Angel Studios under the 2018 Angel Studios License Agreement shall be set to expire, and all rights thereafter shall be exclusively retained by the Company. In October 2022 the Company repurchased the Common Units previously held by Angel Studios and is no longer considered a related party.

The Company recognized revenue from transactions with related parties of $0 thousand and ~~$2,523~~$5,071 thousand during the three months ended ~~June~~September 30, 2023 and 2022, respectively. The Company recognized revenue from transactions with related parties of $0 thousand and ~~$7,417~~$12,488 thousand during the ~~six~~nine months ended ~~June~~September 30, 2023, and 2022, respectively. As of ~~June~~September 30, 2023 and December 31, 2022 there were no related party receivable balances.

Note 9 - Commitments and Contingencies

Commitments

Under the Company’s current license agreement with Angel Studios, the Company is required to remit payments to Angel Studios, in perpetuity, based on a specified percentage of certain of the Company’s revenues derived from the Series.

Refer to Note 4 Balance Sheet Components – Leases and Note 5 Debt for information related to the Company’s contractual commitments for leasing and financing arrangements.

Litigation

The Company is involved in legal proceedings from time to time arising in the normal course of business. Management, after consultation with legal counsel, believes that the outcome of these proceedings will not have a material impact on the Company’s financial position, results of operations, or liquidity. For further information on legal proceedings involving the Company, refer to Part II, Item 1 Legal Proceedings.

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Note 10 - Subsequent Events

Management has evaluated events and transactions for potential recognition or disclosure through ~~August~~November 14, 2023, the date the consolidated financial statements were available to be issued.

Angel Studios - The Company ~~concluded~~delivered to Angel Studios a Notice of Termination of the Content License Agreement, dated October 18, 2022, between Angel Studios and the Company (the “License Agreement”), due to Angel Studios’ previously noticed and uncured material breach, which the Company elected initially to hold in abeyance pending arbitration of such termination. Pursuant to the License Agreement, the Company grants Angel Studios a limited, non-exclusive license to, among other things, distribute the company’s television series, “The Chosen.” On October 15, 2023, the Company delivered to Angel Studios a second Notice of Termination of the License Agreement for material breach of contract for Angel Studios’ continued breach of the License Agreement due to, among other things, its impermissible use of the Company’s trademarks and copyrights, with such termination of the License Agreement to be effective on October 20, 2023. Accordingly, the September 30, 2023, Condensed Consolidated Balance Sheet includes an Allowance for Doubtful Accounts for receivables from Angel Studios of $1,639 thousand and related bad debt expense in general and administrative expenses of the Condensed Consolidated Statement of Operations.

Come and See Foundation, Inc. - On October 31, 2023, the Company entered into a Second Amendment to the Contribution Funding and Production Agreement with CAS. The Second Amendment, among other things, sets forth (1) certain payment terms as agreed between the Company and CAS, including, but not limited to, the interest on, and repayment obligations with respect to, amounts funded by CAS to the Company pursuant to the Contribution and Production Funding Agreement, (2) the payment terms for CAS’ non-profit rights in the Series, (3) cooperative terms with respect to certain tax matters, (4) a discontinuation of the right of CAS to receive a royalty from the Company with respect to certain commercial revenue generated by the Series, (5) a modification of certain defined liquidity events that ~~there were no material subsequent events requiring adjustment~~would require a payment from the Company to ~~or disclosure in these interim condensed consolidated financial statements.~~CAS and (6) procedures to clarify the obligations of either party owed to the other on a go-forward basis with respect to producing, delivering and financing the Series. The Company is still evaluating the accounting impact of this agreement.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations.

Forward-Looking Statements and Other Financial Information

For purposes of this discussion, the use of the words “we,” “us,” “Company,” or “our” refers to The Chosen, Inc. (f/k/a The Chosen, LLC) and its subsidiaries, except where the context otherwise requires.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Company’s registration statement on Form 10 filed with the SEC on February 2, 2023 and amended on April 3, 2023 and May 23, 2023 (as amended, the “Form 10”), including the audited consolidated financial statements and the related notes included therein and the condensed consolidated interim financial statements and related notes included elsewhere in this Quarterly Report. Our historical results are not necessarily indicative of the results to be expected for any future period, and results for any interim period are not necessarily indicative of the results to be expected for the full year.

In addition to our condensed consolidated interim financial statements, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. See “Cautionary Statement Concerning Forward-Looking Statements” and the “Risk Factors” set forth in Part II, Item 1A herein for a discussion of the uncertainties, risks and assumptions associated with these statements.

Results of Operations

Overview

The Company is an entertainment company, which develops, produces and licenses for distribution, domestically and internationally, an episodic television series entitled TheChosen (the “Series”). The Company collaborates with ~~content owners~~partners to market, source, curate and distribute the Series to targeted audiences through (i) existing and emerging digital home entertainment platforms, including but not limited to Netflix, Hulu, and most VOD streaming platforms, as well as (ii) physical media, including DVD and ~~Blue-ray~~Blu-ray Discs, (iii) linear television, (iv) theatrical distribution of certain episodes or other content, (v) books, and ~~(iv)~~(vi) merchandise.

The Company’s revenue model primarily includes royalties received from the licensing of The Chosen as well as online store and wholesale sales of The Chosen merchandise and contributions. Our marketing efforts include limited and strategically focused advertising campaigns through targeted social media campaigns.

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Comparison of the Three Months and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and ~~June~~September 30, 2022

The following summary of our consolidated results of operations should be read in conjunction with our audited consolidated financial statements, and related notes, included herein.


	Three Months Ended								Six Months Ended								Three Months Ended								Nine Months Ended
	June 30,				Change				June 30,				Change				September 30,				Change				September 30,				Change
	2023		2022		2023 vs. 2022				2023		2022		2023 vs. 2022				2023		2022		2023 vs. 2022				2023		2022		2023 vs. 2022

	(in thousands, except percentages)								(in thousands, except percentages)								(in thousands, except percentages)								(in thousands, except percentages)
Revenues:
Licensed content and merchandise revenues	$	12,476	$	2,650	$	9,826	371	%	$	28,463	$	7,933	$	20,530	259	%	$	8,508	$	5,262	$	3,246	62	%	$	36,971	$	13,195	$	23,776	180	%
Contribution revenues		14,259		—		14,259	100	%		22,985		—		22,985	100	%		5,978		—		5,978	100	%		28,963		—		28,963	100	%
Total revenues		26,735		2,650		24,085	909	%		51,448		7,933		43,515	549	%		14,486		5,262		9,224	175	%		65,934		13,195		52,739	400	%

Cost of revenues		5,519		262		5,257	2,006	%		11,429		649		10,780	1,661	%		4,279		301		3,978	1,322	%		14,317		950		13,367	1,407	%
Advertising		2,559		68		2,491	3,663	%		4,186		326		3,860	1,184	%		3,775		705		3,070	435	%		7,961		1,031		6,930	672	%
Amortization of film costs		4,688		535		4,153	776	%		8,676		1,389		7,287	525	%		2,608		667		1,941	291	%		11,284		2,056		9,228	449	%
Depreciation and amortization		2,232		65		2,167	3,334	%		4,377		96		4,281	4,459	%		2,192		1,237		955	77	%		6,569		1,333		5,236	393	%
General and administrative		6,888		2,507		4,381	175	%		13,372		4,215		9,157	217	%		7,846		2,317		5,529	239	%		21,218		6,532		14,686	225	%
Net operating income (loss)		4,849		(787)		5,636	(716)	%		9,408		1,258		8,150	648	%		(6,214)		35		(6,249)	(17,854)	%		4,585		1,293		3,292	255	%
Interest income (expense), net		210		—		210	100	%		765		—		765	100	%
Other income		5		—		5	100	%		21		—		21	100	%
Interest income																		676		1		675	100	%		2,172		1		2,171	100	%
Interest expense																		(369)		(2)		(367)	100	%		(1,100)		(2)		(1,098)	100	%
Other income (expense)																		(46)		—		(46)	100	%		(25)		—		(25)	100	%
Net income (loss) before income taxes		5,064		(787)		5,851	(743)	%		10,194		1,258		8,936	710	%		(5,953)		34		(5,987)	(17,609)	%		5,632		1,292		4,340	336	%
Benefit (provision) for income taxes		(1,527)		192		(1,719)	(895)	%		(3,141)		(335)		(2,806)	838	%		1,851		(210)		2,061	981	%		(1,290)		(545)		(745)	137	%
Net income (loss)	$	3,537	$	(595)	$	4,132	(694)	%		7,053		923		6,130	664	%	$	(4,102)	$	(176)	$	(3,926)	2,231	%		4,342		747		3,595	481	%

Licensed Content and Merchandise Revenues

Licensed content and merchandise revenues include payments received, principally via royalties, from our licensing agreements, and merchandise sales. ~~Revenues~~Licensed content and merchandise revenues for the three months ended ~~June~~September 30, 2023 increased ~~$9,826~~$3,246 thousand, or ~~371%~~62%, as compared to the three months ended ~~June~~September 30, 2022, primarily due to the Company’s shift from managing licensing, distribution, and merchandise sales through our licensing agreement with Angel Studios to managing these functions internally as of October 2022, ~~and also due to~~ the ~~timing of the release~~addition of new ~~episodes~~distribution channels, with an increase in merchandise sales of ~~the Series. No episodes were released during the first or second quarters~~$3,340 thousand, partially offset by a decrease in revenues from licensed content of ~~2022, while episodes 4 – 8 of Season 3, including a Season 3 finale special in theatres were released in the first quarter of 2023.~~$94 thousand.

~~Revenues~~Licensed content and merchandise revenues for the ~~six~~nine months ended ~~June~~September 30, 2023 increased ~~$20,530~~$23,776 thousand, or ~~259%~~180%, as compared to the ~~six~~nine months ended ~~June~~September 30, 2022, primarily due to the Company’s shift from managing licensing, distribution, and merchandise sales through our licensing agreement with Angel Studios to managing these functions internally as of October 2022, ~~and also due to~~ the ~~timing of the release~~addition of new ~~episodes~~distribution channels, with an increase in merchandise sales of ~~the Series. No episodes were released during the first or second quarters~~$18,533 thousand and an increase in Licensed content revenue of ~~2022, while episodes 4 – 8 of Season 3, including a Season 3 finale special in theatres were released in the first quarter of 2023.~~$5,243 thousand.

Contribution Revenues

Contribution revenues is comprised of contributions received under ~~a non-reciprocal~~the agreement with the Come and See Foundation, Inc. (“CAS”) for donation proceeds received by CAS through The Chosen App. Such agreement requires that the Company utilize such donation receipts for the charitable purposes of CAS, which include the production of the Series. The Company did not receive any Contribution revenues for the three months or ~~six~~nine months ended ~~June~~September 30, 2022 as the agreement was entered into in November 2022.

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Cost of Revenues

Cost of revenues primarily include the costs of products, third party expenses to fulfill ~~third party~~ merchandise sales orders, and participation and residual costs owed to writers, producers, actors and other film participants. Cost of revenues for the three months ended ~~June~~September 30, 2023 increased ~~$5,257~~$3,978 thousand, or ~~2,006%~~1,322%, as compared to the three months ended ~~June~~September 30, 2022, primarily due to the Company’s shift from managing merchandise sales through our licensing agreement with Angel Studios to managing these functions internally as of October 2022, an increase in cost of sales related to merchandise of $2,519, and increased actor and residual costs of $1,736 as a result of the ~~release~~extended worldwide distribution of ~~new episodes of the Series.~~Seasons 1, 2, and 3.

Cost of revenues for the ~~six~~nine months ended ~~June~~September 30, 2023 increased ~~$10,780~~$13,367 thousand, or ~~1,661%~~1,407%, as compared to the ~~six~~nine months ended ~~June~~September 30, 2022, primarily due to the Company’s shift from managing merchandise sales through our licensing agreement with Angel Studios to managing these functions internally as of October 2022, an increase in cost of sales related to merchandise of $10,769 and increased actor and residual costs of $2,281 as a result of the release of ~~new episodes~~Season 3 across various platforms coupled with extended worldwide distribution of ~~the Series.~~Seasons 1, 2, and 3.

Advertising

Advertising includes costs to promote the Series and primarily includes advertising on social and digital platforms. Advertising expense for the three months ended ~~June~~September 30, 2023 increased ~~$2,491~~$3,070 thousand, or ~~3,663%~~435%, as compared to the three months ended ~~June~~September 30, 2022, which is mostly attributable to increased marketing costs related to the Company’s shift from managing the majority of our marketing through our licensing agreement with Angel Studios to managing these functions internally as of October 2022 as well as increased costs to promote ~~episodes 4 – 8~~Season 3, and extended worldwide distribution of ~~Season~~Seasons 1, 2, and 3.

Advertising expense for the ~~six~~nine months ended ~~June~~September 30, 2023 increased ~~$3,860~~$6,930 thousand, or ~~1,184%~~672%, as compared to the ~~six~~nine months ended ~~June~~September 30, 2022, which is mostly attributable to increased marketing costs related to the Company’s shift from managing the majority of our marketing through our licensing agreement with Angel Studios to managing these functions internally as of October 2022 as well as increased costs to promote episodes 4 – 8, including the Season 3 finale special released in ~~theatres.~~theatres and extended worldwide distribution of Seasons 1, 2, and 3.

Amortization of Film Costs

Costs of producing the Series are amortized using the individual-film-forecast method, based on the ratio of the current period’s revenues to the Company’s estimated ultimate revenue.

Amortization of film costs for the three months ended ~~June~~September 30, 2023 increased ~~$4,153~~$1,941 thousand, or ~~776%~~291%, as compared to the three months ended ~~June~~September 30, 2022, primarily due to the additional amortization of film costs as a result of the release of Season 3 in the fourth quarter of 2022 and first and second quarters of 2023.

Amortization of film costs for the ~~six~~nine months ended ~~June~~September 30, 2023 increased ~~$7,287~~$9,228 thousand, or ~~525%~~449%, as compared to the ~~six~~nine months ended ~~June~~September 30, 2022, primarily due to the additional amortization of film costs as a result of the release of Season 3 in the fourth quarter of 2022 and first quarter of ~~2023.~~2023 and an increase of revenues for Seasons 1, 2, and 3.

Depreciation and Amortization

Depreciation and amortization for the three months ended ~~June~~September 30, 2023 increased ~~$2,167~~$955 thousand, or ~~3,334%~~77%, as compared to the three months ended ~~June~~September 30, 2022, primarily due to the Company’s increase in acquired property and equipment, the majority of which related to ~~establish a~~the permanent set and film campus placed in service during ~~2022.~~the third and fourth quarters of 2022 and the second quarter of 2023.

Depreciation and amortization for the ~~six~~nine months ended ~~June~~September 30, 2023 increased ~~$4,281~~$5,236 thousand, or ~~4,459%~~393%, as compared to the ~~six~~nine months ended ~~June~~September 30, 2022, primarily due to the Company’s increase in acquired property and equipment the majority of which related to ~~establish a~~the permanent set and film campus placed in service during ~~2022.~~the third and fourth quarters of 2022 and the second quarter of 2023.

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General and Administrative

General and administrative expenses for the three months ended ~~June~~September 30, 2023 increased ~~$4,381~~$5,529 thousand, or ~~175%~~239%, as compared to the three months ended ~~June~~September 30, 2022, primarily due to ~~$2,166~~$2,367 thousand of increased payroll related expenses mostly attributable to increased headcount related to the Company’s shift from managing marketing, licensing/distribution and merchandising through our licensing agreement with Angel Studios to managing these functions internally as of October 2022. The Company also incurred additional legal, accounting and professional fees of ~~$1,776~~$313 thousand, travel related expenses of $446 thousand, and office related expenses of ~~$398~~$1,158 thousand.

General and administrative expenses for the ~~six~~nine months ended ~~June~~September 30, 2023 increased ~~$9,157~~$14,686 thousand, or ~~217%~~225%, as compared to the ~~six~~nine months ended ~~June~~September 30, 2022, primarily due to ~~$4,094~~$6,461 thousand of increased payroll related expenses mostly attributable to increased headcount related to the Company’s shift from managing marketing, licensing/distribution and merchandising through our licensing agreement with Angel Studios to managing these functions internally as of October 2022. The Company also incurred additional legal, accounting and professional fees of ~~$3,484~~$3,797 thousand, travel related expenses of $702 thousand, and office related expenses of ~~$789~~$1,947 thousand.

Income Taxes

Income tax provision for the three months ended ~~June~~September 30, 2023 ~~increased $1,719~~decreased $2,061 thousand, or ~~895%~~981% as compared to the three months ended ~~June~~September 30, 2022, primarily due to the increase in the Company’s net income before provision for income taxes of ~~$5,851.~~$5,953.

Income tax provision for the ~~six~~nine months ended ~~June~~September 30, 2023 increased ~~$2,806~~$745 thousand, or ~~838%~~137% as compared to the ~~six~~nine months ended ~~June~~September 30, 2022, primarily due to the increase in the Company’s net income before provision for income taxes of ~~$8,936~~$5,632 thousand.

The effective tax rate for the three months ended ~~June~~September 30, 2023 ~~increased 6%~~decreased 587%, as compared to the three months ended ~~June~~September 30, 2022, primarily due to the impact from the net loss attributable to NCI of ~~$1,290~~$694 thousand.

The effective tax rate for the ~~six~~nine months ended ~~June~~September 30, 2023 ~~increased 4%~~decreased 19%, as compared to the ~~six~~nine months ended ~~June~~September 30, 2022, primarily due to the impact from the net loss attributable to NCI of ~~$2,529~~$3,223 thousand.

Liquidity and Capital Resource

Comparison of ~~June~~September 30, 2023 and December 31, 2022


	As of						As of
	June 30,		December 31,				September 30,		December 31,
	2023		2022		Change		2023		2022		Change

	(in thousands)						(in thousands)
Cash	$	108,942	$	124,790	$	(15,848)	$	95,290	$	124,790	$	(29,500)
Long-term debt		145,387		145,840		(453)		145,416		145,840		(424)

The Company’s primary sources of liquidity are from cash flows generated from operations and financing activities. As of ~~June~~September 30, 2023 and December 31, 2022, the Company had cash of ~~$108,942~~$95,290 thousand and $124,790 thousand, respectively. As of ~~June~~September 30, 2023 and December 31, 2022, the Company had long-term debt of ~~$145,387~~$145,416 thousand and $145,840, ~~thousand,~~ respectively.

The Company’s primary uses of cash generally relate to film costs. The decrease in cash of ~~$15,848~~$29,500 thousand was primarily attributable to an increase of ~~$26,437~~$39,628 thousand in film costs related to the production of Season 4, a payment of $10,417 thousand related to dividends and the acquisition of property and equipment of ~~$1,488~~$6,677 thousand, partially offset by ~~$23,189~~$20,356 thousand of net income, exclusive of non-cash ~~items.~~items of $16,800.

The Company’s long-term debt relates to the agreement with CAS, whereby CAS provided $145,500 thousand for the Company’s use in the development, production, distribution and marketing of the Series and to provide the Company with operating

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and working capital. See the consolidated financial statements included in our Form 10, starting on page F-1 for further detail regarding the CAS transactions.

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The Company believes its existing cash and expected cash flows from operations will be sufficient to meet our working capital, capital expenditures, and expected cash requirements from known contractual obligations for the next twelve months and beyond.

Comparison of the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022

Our cash flow activities were as follows for the periods presented:


	Six Months Ended						Nine Months Ended
	June 30,						September 30,
	2023		2022		Change		2023		2022		Change

	(in thousands)						(in thousands)
Net cash flows provided by (used in) operating activities	$	(3,574)	$	2,832	$	(6,406)	$	(17,161)	$	(13,826)	$	(3,335)
Net cash flows provided by (used in) investing activities		(1,488)		(13,008)		11,520		(6,496)		(21,809)		15,313
Net cash flows provided by (used in) financing activities		(10,786)		4,145		(14,931)		(5,843)		21,623		(27,466)

Operating activities

Net cash flows ~~provided by (used in)~~used in operating activities was ~~$(3,574)~~$17,161 thousand and ~~$2,832~~$13,826 thousand for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. The ~~decrease~~increase of net cash flows ~~provided by~~used in operating activities of ~~$6,406~~$3,335 thousand was primarily driven by the ~~increased change~~increase of ~~$13,172~~$12,584 thousand in film costs, ~~and~~ a ~~decreased change~~decrease of ~~$10,012~~$4,216 thousand in collections of accounts receivable and an increase of $6,920 thousand in prepaids and other current assets, partially offset by the ~~increased change~~increase of ~~$20,108~~$20,356 thousand in net income, exclusive of non-cash items and the increased change of ~~$4,565 thousand~~$3,565 in accrued expenses and other accrued liabilities.

Investing activities

Net cash flows used in investing activities was ~~$1,488~~$6,496 thousand and ~~$13,008~~$21,809 thousand for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. The decrease of net cash flows used in investing activities of ~~$11,520~~$15,313 thousand was primarily driven by the decrease in acquisition of property and ~~equipment. There were no other significant investing activities during~~equipment due to the ~~six months ended June 30, 2023.~~substantial investments in and completion of the film campus in 2022.

Financing activities

~~The~~Net cash flows used in financing activities of ~~$(10,786)~~$5,843 thousand for the ~~six~~nine months ended ~~June~~September 30, 2023 ~~primarily included dividend payments of $10,417 thousand. The financing activities of $4,145 thousand for the six months ended June 30, 2022~~ primarily included contributions from noncontrolling interest member of ~~$4,152~~$5,023 offset by dividend payments of $10,417 and principal payments on long-term debt of $437 thousand. The financing activities of $21,623 thousand for the nine months ended September 30, 2022 primarily related to contributions from noncontrolling interest member of $6,630 thousand.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” of the Notes to condensed consolidated Financial Statements in Item 1 of this Quarterly Report and in the Notes to Consolidated Financial Statements in our Form 10, describe the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates included in our Annual Report on our Form 10 for the year ended December 31, 2022.

Film Costs

Costs of producing the Series are amortized, and residual and participation costs are accrued, using the individual-film-forecast method, based on the ratio of the current period’s revenues to the Company’s estimated remaining ultimate revenue per each episodic

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block. The initial estimate of ultimate revenue includes estimates of revenues through various distribution channels such as international, home entertainment and other distribution platforms and are based on historical experience for past seasons. The Company regularly monitors the performance of each season, and ~~evaluate~~evaluates whether impairment indicators are present (i.e., low ratings), and based upon our review, the Company revises the estimates as needed.

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Due to the inherent uncertainties involved in making such estimates of ultimate revenues and expenses, these estimates have differed in the past from actual results and are likely to differ to some extent in the future from actual results. In addition, in the normal course of our business, some seasons are more successful or less successful than anticipated. Management regularly reviews and revises, when necessary, its ultimate revenue and cost estimates, which may result in a change in the rate of amortization of film costs and participations and residuals and/or a write-down of all or a portion of the unamortized costs of the film or television program to its estimated fair value.

An increase in the estimate of ultimate revenue will generally result in a lower amortization rate and, therefore, lesser film amortization expense during a given period, while a decrease in the estimate of ultimate revenue will generally result in a higher amortization rate and, therefore, higher film amortization expense during a given period.

The amortization of film costs is on an accelerated basis, as the Company typically expects more upfront viewing. On average, over 50% of the film costs related to our produced content is expected to be amortized within one year after its month of first availability. The Company reviews factors that may impact the amortization of film costs on a monthly basis, such as the increased demand for home entertainment as a result of the global pandemic in 2020, which accelerated the adoption of streaming services and technology by consumers. Our estimates related to these factors require considerable management judgment.

Off-Balance Sheet Arrangements

As of ~~June~~September 30, 2023 and December 31, 2022, the Company had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and qualitative disclosures about market risks have been omitted as permitted under rules applicable to smaller reporting companies.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), we evaluated, under the supervision and with the participation of our management, including our President and our Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based on the foregoing evaluation, our President and our Chief Financial Officer concluded that, as of ~~June~~September 30, 2023, our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level that we would meet our disclosure obligations.

Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) of the Exchange Act) that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II - Other Information

Item 1. Legal Proceedings

From time to time we may be involved in various disputes and litigation matters that arise in the ordinary course of business. Other than as set forth below, we are currently not a party to any material legal proceeding.

As disclosed in the Company’s Current ~~Report~~Reports on Form 8-K filed with the SEC on April 10, 2023 and October 19, 2023, respectively, the Company delivered to Angel Studios ~~Inc. (“Angel Studios”) a Notice~~two separate Notices of Termination (the ~~“Notice of Termination”~~“Termination Notices”) of Content License Agreement, dated October 18, 2022 (the “License Agreement”), between Angel Studios and the Company. The Company seeks to terminate the License Agreement for previously noticed and uncured material breaches of contract in accordance with Section 14 of the License Agreement. The Company ~~and~~delivered the Termination Notices due to Angel ~~Studios are currently involved in an ongoing arbitration with respect to such matter.~~Studios’ material breach of the License Agreement. Such termination was effective on October 20, 2023. See Note 10 of the Company’s interim condensed consolidated financial statements for additional information concerning the termination of the License Agreement.

Item 1A. Risk Factors

Other than as set forth below, there have been no material changes from the risk factors previously disclosed within Item 1A “Risk Factors” in the Form 10.

Our business could be adversely affected by labor strikes or other union job actions.

Any strike by, or lockout of, one or more of the unions that provide personnel essential to the production of films or television programs could delay or halt our ongoing production activities. Halts or delays, depending on the length of time and breadth of personnel impacted, could cause a delay or interruption in our release of new television programs (including, but not limited to, future episodes of the Series), which could have a material adverse effect on our business, results of operations and financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Default upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

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Item 6. Exhibits


Exhibit No.		Description

2.1		Plan of Conversion of The Chosen, LLC into a Delaware corporation to be known as “The Chosen, Inc.”**

3.1		Certificate of Incorporation dated November 29, 2022**

3.2		Bylaws of The Chosen, Inc.**

10.1		Exclusive Video-On-Demand and Subscription Video-On-Demand Licensing Agreement by and between The Chosen, LLC and VidAngel, Inc.**

10.2		Writer Work-for-Hire Agreement dated October 29, 2019 by and between the Company and Dallas Jenkins**

10.3		Writer Work-for-Hire Agreement dated October 20, 2019 by and between the Company and Ryan Swanson**

10.4		Writer Work-for-Hire Agreement dated October 20, 2019 by and between the Company and Tyler Thompson.**

10.5		Consulting and Coordination Agreement dated August 11, 2020 by and between the Company and VidAngel, Inc.**

10.6		Employment Agreement dated July 12, 2020 by and between the Company and Colin McLeod**

10.7		Employment Agreement dated July 15, 2020 by and between the Company and Adam Swerdlow**

10.8		Employment Agreement dated August 1, 2020 by and between the Company and Derral Eves**

10.9		Employment Agreement dated August 1, 2020 by and between the Company and Dallas Jenkins**

10.10		Contribution Funding and Production Agreement, dated November 29, 2022, by and between The Chosen LLC, The Chosen, Inc. and Come and See Foundation, Inc.**

10.11		First Amendment to Contribution Funding and Production Agreement, dated December 19, 2022, by and between The Chosen, Inc. and Come and See Foundation, Inc.**

10.12		Second Amendment to Contribution Funding and Production Agreement, dated October 31, 2023, by and between The Chosen, Inc. and Come and See Foundation, Inc.***

10.13		IP Assignment Agreement, dated November 29, 2022, by and between The Chosen LLC, The Chosen, Inc. and Come and See Foundation, Inc.**

~~10.13~~10.14		License Agreement, dated November 29, 2022, by and between The Chosen LLC, The Chosen, Inc. and Come and See Foundation, Inc.**

~~10.14~~10.15		Short Term Lease Agreement, dated October 1, 2022, by and between the Company and The Salvation Army**

~~10.15~~10.16		Location Agreement, dated August 4, 2022, by and between the Company and The Salvation Army**

~~10.16~~10.17		Ground Lease Agreement, dated November 16, 2021, by and between the Company and The Salvation Army**

31.1		Certification of President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

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32.1		Certification of President pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

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101.SCH		Inline XBRL Schema Document

101.CAL		Inline XBRL Calculation Linkbase Document

101.DEF		Inline XBRL Definition Linkbase Document

101.LAB		Inline XBRL Label Linkbase Document

101.PRE		Inline XBRL Presentation Linkbase Document

101.INS		XBRL Instance Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).

*	Filed herewith.

**	Incorporated by reference to the Registrant’s Form 10 filed on February 2, 2023 and amended on April 3, 2023 and May 23, 2023.

*** Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on October 31, 2023.

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SIGNATURES

Pursuant to the requires of the Securities Exchange Act of 1934, the registrant has duly caused this report to be ~~singed~~signed on its behalf by the undersigned thereunto duly authorized.


	THE CHOSEN, INC.


	By:	/s/ Bradley Pelo
		Name: Bradley Pelo
		Title: President


	By:	/s/ JD Larsen
		Name: JD Larsen
		Title: Chief Financial Officer

Date: ~~August~~November 14, 2023

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